Commissioner of Sales Tax, Gujarat vs Saurashtra Rachnatamak Samiti

S.D. Dave, J.—Acting upon the request made by the Commissioner the following question of law has been referred to the High Court by

the Gujarat Sales Tax Tribunal at Ahmedabad, u/s 69 of the Gujarat Sales tax Act, 1969.

Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in holding that merely because the assessee had not filed

any appeal against the order of the subordinate officer, that would not operate as a bar for raising the plea about the impropriety or illegality of the

order in suo motu revision u/s 67 of the Gujarat Sales Tax Act, 1969 ?

The facts and the background behind the reference are not in dispute. The assessee Saurashtra Rachnatamak Samiti of Rajkot carries on

business in products of village industries as defined in the Khadi and Village Industries Commission Act, 1956 and they are the dealers registered

under the Gujarat Sales Tax Act, 1969. The assessee had paid sales tax at a lower rate on certain sales effected by them. Any how the learned

Sales Tax Officer, Rajkot, had accepted the payments to be correct in the course of the assessment of the dealer for the period from April 1, 1975

to March 31, 1976. The Assistant Commissioner, Sales Tax, Rajkot, on scrutiny of the assessment orders of the applicant was able to trace out

the error and therefore the necessary notice in form 49 of the Act was given to the assessee and the matter was taken in suo motu revision u/s 67

of the Act. During the course of the revision proceedings the sales tax practitioner appearing on behalf of the assessee had accepted the proposed

increase in the tax to be levied against the assessee by the Assistant Commissioner. However, during this proceedings it was urged on behalf of the

assessee that the sales of honey which is the product of the village industries as defined in the Khadi and Village Industries Commission Act, 1956,

were through misunderstanding judged by the assessee as liable to tax though the same is exempted under entry No. 35 in Schedule I to the Act.

Therefore the assessee had urged that the abovesaid tax so paid under the erroneous belief should be adjusted against the amount of additional tax

proposed to be levied during the revision proceedings. Anyhow the learned Assistant Commissioner did not accept the abovesaid contention

raised by the assessee, placing reliance upon the provision contained in section 67(2) of the Act. Naturally therefore the request made by the

assessee in this respect came to be negatived. The abovesaid orders of rejection were pronounced by the Assistant Commissioner of Sales Tax on

October 28, 1980 and the matter was carried before the Gujarat Sales Tax Tribunal by way of filing the second appeal. The abovesaid second

appeal came to be allowed by the Tribunal by the orders dated December 31, 1981. It appears that the contention of the assessee came to be

recognised and the matter was ordered to be remanded to the Sales tax Officer. Anyhow later on the application was submitted on behalf of the

Revenue for making necessary reference to this Court, as a result of which the question as mentioned above has been referred to the High Court.

It appears that the learned Assistant Commissioner had not accepted the contention raised by the assessee placing reliance upon the provisions

contained u/s 67(2) of the Act of 1969. It was urged before us also that the scope and and ambit of section 67(2) of the Act of 1969 is limited. It

is also in fact urged that looking to the provisions contained u/s 67(2) of the Act of 1969 no orders at the revisional stage could have been passed

in favour of the assessee because though the appeal would lie no appeal was preferred on behalf of the assessee. Looking to the abovesaid

possible contention and the actual contention raised before us it becomes necessary to have a reference to the provisions contained u/s 67 of the

Act of 1969. Section 67 relates to the revisional powers and it says that subject to the provisions of section 66 and any rules which may be made

in that behalf the Commissioner on his own motion may call for and examine the record of any such order and pass such order thereon as he thinks

just and proper. The emphasis requires to be placed beneath the words ""and pass such order thereon as he thinks just and proper"". Looking to the

abovesaid text of section 67(1)(a) of the Act of 1969 it becomes clear that the Commissioner is entitled and authorised to pass such order thereon

as he thinks just and proper. The very words and terminology employed u/s 67(1)(a) go to make it abundantly clear that the scope and ambit of

the provisions as stated above are wide and would embrace in its lap given a case either it may be in favour of the Revenue or the assessee. It

cannot be urged that during the revisional proceedings the Commissioner can only revise such orders that are against the Revenue and he cannot

pass any orders which would ultimately go for the benefit of the assessee. This is ultimately the spirit behind the section 67 of the Act of 1969. The

jurisdiction of revision being one of superintendence and correction in appropriate cases it is exercisable even suo motu for safeguarding the

interest of the Revenue as well also that of the assessee. Suo motu powers conferred on the Commissioner have been conferred with a purpose to

ensure that the injustice to the Revenue or to the assessee is avoided and that in a case in which the question is of ensuring justice to the assessee

concerned it cannot be said that the Commissioner cannot exercise the powers contained u/s 67 of the Act of 1969. The Tribunal had taken

support from the Madras High Court decision in Coimbatore Murugan Mills Ltd. v. Board of Revenue [1976] 37 STC 622. The Tribunal has

reproduced a portion of the judgment rendered by the Division Bench of the Madras High Court. It has been made clear by the Division Bench of

the Madras High Court that if the circumstances demand the exercise of suo motu power in favour of the assessee, the Board is under a duty-

bound to exercise the same and give relief to the assessee. It is indeed true that the abovesaid observations have been made by the Division Bench

of the Madras High Court while considering certain provisions of the Local Act of Madras. But the principle remains the same and it appears that

the Tribunal was perfectly justified in acting upon the abovesaid clear observations made by the Madras High Court.

But the position is very clear in view of the Supreme Court decision in the case of Bombay Ammonia Pvt. Ltd. v. State of Tamil Nadu [1976]

37 STC 517. In that case while interpreting a similar provision, namely, section 32 of the Tamil Nadu General Sales Tax Act, 1959, the Supreme

Court has said very clearly that the powers are of wide scope and amplitude. The Supreme Court has said thus at page 521 :

In fact, when a revisional power is no be exercised, we think that the only limitation, to which that power is subject, are those indicated by this

Court in K. M. Cheria Abdulla & Co.''s case [1965] 16 STC 875. These limitations are the revising authority should not trench upon the powers

which are expressly reserved by the Acts or by the Rules to other authorities and should not ignore the limitations inherent in the exercise of those

powers.

The Supreme Court has also made it very clear that the suo motu powers of the Commissioner are of wide amplitude and can be exercised in

favour of the Revenue as well as the tax-payer in order to correct any error or illegality committed by the assessing authority in his order of

assessment. This position becomes clear from the following observation made by the Supreme Court on the same page :

In view of the above, we are of the opinion that the suo motu power of revision of the Deputy Commissioner is of wide amplitude and can be

exercised in favour of the Revenue as well as the tax-payer in order to correct any error or illegality committed by the assessing authority in his

order of assessment.

After laying down the abovesaid broad principle regarding the scope and amplitude of the authority acting under the legal powers the Supreme

Court has taken up the facts of the case for examination. In that case before the Supreme Court the assessees themselves had submitted a return

showing the taxable turnover of Rs. 6,41,031,77. At no stage of the assessment proceeding, before the assessing authority, the assessee had

brought it to the notice that a substantial portion of the turnover related to works contracts and was as such exempt from liability to tax. The

question therefore before the Supreme Court was as to whether on the facts and circumstances of that case, the Commissioner could have granted

the relief to the assessee while exercising the revisional jurisdiction. It requires to be appreciated that the abovesaid question was a complicated

question of fact which required detailed examination, scrutiny and study. It appears very clearly that the abovesaid decision of the Supreme Court

confirming the decision of the High Court and sales tax authorities that it would not be open to the Commissioner to grant the relief to the assessee

was based on the facts and circumstances of that case. Be it pertinently noted that the question was raised ultimately at the revisional proceedings

saying that a substantial portion of the turnover relates to the works contracts and was as such exempt from the liability of tax.

Reverting to the facts of this case, it requires to be noticed pertinently that, admittedly beyond any scope of dispute the sale of honey was

exempted under entry 35 of the First Schedule to the Act. No detailed examination or investigation in respect of question of fact was required or

warranted. In view of this position the facts being entirely different the abovesaid Supreme Court decision will not render any assistance to the

Revenue. On the contrary the abovesaid Supreme Court decision goes to make it abundantly clear that the power of revision of the Commissioner

is of a wide amplitude and can be exercised in favour of the Revenue as well as the tax-payer in order to correct any error or illegality committed

by the assessing authority in the order of assessment. Looking to this position it becomes clear that in the instant cases the Sales Tax Tribunal was

perfectly justified in reversing the order pronounced by the authority below and in saying that the Assistant Commissioner was required to consider

the abovesaid question which was raised by the assessee. It also requires to be appreciated that the Assistant Commissioner has not stated in his

orders that in fact the assessee is not entitled to the reliefs by way of exemption taking shelter beneath entry 35 of the First Schedule to the Act.

What he has said is to the effect that he cannot enter into the arena of the question raised by the assessee.

Ms. Doshit, the learned counsel who appears on behalf of the Revenue, while taking up the second contention has urged that looking to the

provisions contained u/s 67(2) the reliefs could not have been granted in the revision proceedings, because though the appeal lies no appeal

whatsoever was preferred or filed by the assessee. Ms. Doshit appears to be placing emphasis upon the words ""while an appeal lies u/s 65 and no

appeal has been filed"". But it requires to be appreciated that the present one cannot be said to be a revision filed by the assessee to be entertained

upon application. It is clear that the provisions u/s 67 of the Act 1969 were invoked by the Commissioner by way of the suo motu revision. If the

revisional proceedings were to be entertained upon the application of the assessee naturally he could not have done so because, though the appeal

has been provided the assessee had not filed any appeal. In view of this position this contention raised by Ms. Doshit cannot be accepted.

In support of our consideration regarding the scope ambit of the powers of revision contained u/s 67 of the Act of 1969, the reference also

requires to be made to the Gujarat High Court decision in Nagindas Keshawlal Mehta v. Competent Authority and Deputy Collector (1983) 24

GLR 558. It was a case regarding the construction and the correct meaning of the provisions contained u/s 33(2) and section 34 of the Urban

Land (Ceiling and Regulation) Act, 1976. In that decision the question was regarding the interpretation or the construction of the words ""pass such

orders thereon as he deems fit"". While examining the abovesaid terminology used in abovesaid provision it has been said by this Court that if the

order in a matter is germane to the Act and in its purpose the order would be within the powers of the appellate authority as well as perfectly legal

and valid. Looking to the abovesaid decision of this High Court also it becomes clear that if any particular order is germane to the provisions under

which the authority is acting it cannot be said that the order would be bad in law. The abovesaid of this High Court also goes to support us in our

view that the Commissioner while exercising the powers contained u/s 67 of the Act 1969 was entitled and authorised to pass any order which he

thinks just and proper and which is germane with the purpose and instant object of the Act. Looking to the present question from this angle also, it

becomes clear that the Tribunal was justified in taking the view as stated above. In view of this position we are inclined to answer the question

referred to the High Court in the affirmative and in favour of the assessee and against the Revenue. We do hereby accordingly answer and reply

the question referred to this Court with no order as to costs.

Reference answered in the affirmative.