Deputy Commissioner (Law), Board of Revenue (Taxes) vs Cochin Agencies

K.S. Paripoornan, J.—The Revenue is the petitioner in this revision. The respondent is an assessee under the Kerala General Sales Tax Act. We are concerned with the assessment year 1979-80. The assessment was completed on 28th February, 1983 by adding 60 per cent of the admitted taxable turnover of Rs. 11,31,544. The taxable turnover was determined at Rs. 16,97,316. The assessee filed an appeal before the Appellate Assistant Commissioner as S.T.A. No. 986/83, which was dismissed on 30th July, 1984. In the meanwhile, the Deputy Commissioner of Sales Tax noticed that the assessee had paid excise duty on foreign liquor to the tune of Rs. 12,70,624.10 and this point or aspect was totally ignored in the assessment. He initiated suo motu revision proceedings u/s 35 of the Kerala General Sales Tax Act, by notice dated 26th August, 1985. The assessee objected to the initiation of proceedings. Notwithstanding the objections of assessee, the Deputy Commissioner of Sales Tax passed an order dated 4th October, 1985 setting aside the assessment for the year 1979-80 and directed the assessing authority to make a fresh assessment in accordance with law. The assessee took up the matter in appeal before the Sales Tax Appellate Tribunal, as T.A. No. 785 of 1985 and contended that the original assessment order dated 28th February, 1983 was the subject of an appeal before the Appellate Assistant Commissioner and in this view of the matter, the initiation of proceedings u/s 35 of the Kerala General Sales Tax Act is patently barred. The Appellate Tribunal held that the Deputy Commissioner of Sales Tax has no jurisdiction to issue the notice dated 26th August, 1985 and pass the impugned order. It was held that the assessment order had merged with the appellate order and the Deputy Commissioner could not initiate proceedings u/s 35 of the Kerala General Sales Tax Act. The Revenue, being aggrieved by the said order passed by the Sales Tax Appellate Tribunal dated 26th September, 1986, has come up in revision.

We heard counsel for the Revenue, Mr. N.N. Divakaran Pillai, as also counsel for the respondent/assessee. The sole question that arises for consideration is, whether the order passed in revision by the Deputy Commissioner dated 4th October, 1985 is valid and proper ? According to the Appellate Tribunal and the respondent/assessee, the proceedings initiated by the Deputy Commissioner is patently barred. It is stated that the original order of assessment was the subject of an appeal before the Appellate Assistant Commissioner and so the assessment cannot be suo motu revised by the Deputy Commissioner of Sales Tax u/s 35 of the Kerala General Sales Tax Act. On the other hand, counsel for the Revenue contended that though ordinarily the Deputy Commissioner of Sales Tax cannot revise the order of assessment, once it was subject of an appeal before the Appellate Assistant Commissioner u/s 35(2) of the Act, the Deputy Commissioner can exercise the powers of revision u/s 35(2A), on any point which has not been decided in an appeal or revision, before the expiry of a period of one year from the date of the order passed or within four years of the order of assessment. In this case, the excise duty paid by the respondent/assessee was not reckoned in the original assessment and it escaped assessment. The payment of excise duty was not denied by the respondent/assessee. That is a point which has not been decided in the appeal, either. So, it was open to the Deputy Commissioner to initiate suo motu revision proceedings u/s 35(2A) of the Kerala General Sales Tax Act within the period of limitation provided therein. In this case, the revisional proceedings were initiated within the time-limit specified in Section 35(2A) of the Act. The excise duty paid by the assessee was not reckoned; nor was it in issue; nor decided in the appeal disposed of by the Appellate Assistant Commissioner on 30th July, 1984. So, the order passed by the Deputy Commissioner dated 4th October, 1985 is competent and valid, in view of Section 35(2A) of the Kerala General Sales Tax Act. In order to decide the controversy involved in this revision, it will be useful to quote Section 35 of the Kerala General Sales Tax Act:

Powers of revision of the Deputy Commissioner suo motu.-

(1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit.

(2) The Deputy Commissioner shall not pass any order under Sub-section (1) if-

(a) the time for appeal against the order has not expired;

(b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court; or

(c) more than four years have expired after the passing of the order referred to therein.

(2A) Notwithstanding anything contained in Sub-section (2), the Deputy Commissioner may pass an order under Sub-section (1) on any point which has not been decided in an appeal or revision referred to in Clause (b) of Sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or revision or before the expiry of the period of four years referred to in Clause (c) of that Sub-section, whichever is later.

(3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard.

It is true that the original order of assessment was passed on 28th February, 1983 adding 50 per cent to the taxable turnover returned. The order of assessment dated 28th February, 1983 was "the subject of an appeal" to the Appellate Assistant Commissioner. But, it is common ground that the amount of excise duty paid by the assessee was never in issue in the said proceedings. It escaped assessment. The said point was not mooted or decided, in the appeal, which was disposed of by the Appellate Assistant Commissioner on 30th July, 1984. The mere fact that the order of assessment was "the subject of an appeal" to the Appellate Assistant Commissioner by itself will not preclude the Deputy Commissioner from exercising the powers vested in him u/s 35(2A) of the Kerala General Sales Tax Act, unless the precise point or exact point, on the basis of which the revisional powers are initiated u/s 35(2A) of the Act, was one "decided" in the appeal. This seems to follow from a plain reading of Section 35(2)(b) along with Section 35(2A) of the Act. The exercise of the revisional jurisdiction u/s 35(2A) of the Act will be incompetent only if the precise point, on the basis of which the revisional order is passed, was not only the subject of an appeal but was also decided therein.

We find that the Sales Tax Appellate Tribunal took the view that the point which was "in dispute in the appeal", or was "decided", is "the taxable turnover of the assessee" and the only question was whether "the taxable turnover assessed was adequate". The Appellate Tribunal further observed that within that genus, the species, quantum of excise duty paid will also be taken in. In other words, the point decided in the appeal should be taken to be the taxable turnover of the assessee. The adequacy of the turnover was the subject-matter of an appeal and so the Deputy Commissioner was incompetent to initiate proceedings u/s 35(2A) of the Act.

We are afraid that the Appellate Tribunal has failed to bear in mind the distinction between the "subject of an appeal to the Appellate Assistant Commissioner" dealt with in Section 35(2)(b) of the Act and "on any point which has not been decided in an appeal or revision referred to in Clause (b) of Sub-section (2)", occurring in Section 35(2A) of the Act. If any particular point was not decided in an appeal or revision, that is sufficient to clothe the Deputy Commissioner with jurisdiction to initiate proceedings u/s 35(2A) of the Act. The Sales Tax Appellate Tribunal has mixed up the two different ideas in its order in coming to an erroneous conclusion. It has assumed that the words "subject of an appeal" and "the decision in the appeal" are synonymous. The language used in Section 35(2)(b) and Section 35(2A) of the Act, has dealt with "the subject of an appeal" and "an order on any point which has not been decided in an appeal", as distinct and different. We understand the words "on any point which has not been decided in an appeal or revision" to mean, "any particular aspect or plea, which was not specifically, the subject-matter of an adjudication in the appeal". The emphasis is on "any point" not decided in an appeal. The word "point" has many shades of meaning as could be seen from standard dictionaries. The following are a few shades of meaning given in dictionaries :- "an idea or objection which may require consideration"; "a quality or attribute to be taken into consideration"; "an individual part or element of something" - (See Random House Dictionary of the English Language). Webster''s Third New International Dictionary states:-"Point" "an individual detail of a pair or group of details"; "something to be gained"; "something that one has proposed and is trying to get established or accepted"; "something that is the subject-matter of discussion or attention or concern"; "something (as a vital idea, an essential detail) that is important enough to require serious discussion or consideration". In the Concise Oxford Dictionary, it is specified thus :- "Point" may take in a "detail" or "particular", etc. So, we hold that though the Appellate Assistant Commissioner dismissed the appeal from the original assessment on 30th July, 1984, "the point" regarding excise duty paid by the assessee was not in issue therein; nor considered or decided in the said appeal.

In this view of the matter, we hold that the Appellate Tribunal was in error in taking the view that the point decided in the appeal was the turnover of the assessee in a broad sense and so the particular point or aspect, regarding the excise duty paid by the assessee, should also be taken within its fold, to bar the exercise of jurisdiction vested in the Deputy Commissioner u/s 35(2A) of the Kerala General Sales Tax Act. To state that the point decided in every appeal is the taxable turnover of the assessee, is too wide a proposition, difficult of acceptance in the context and background of Section 35(2)(b) and Section 35(2A) of the Kerala General Sales Tax Act. The above approach fails to give proper emphasis and meaning to the crucial words "any point which has not been decided", occurring in Section 35(2A) of the Act. The interpretation adopted by the Appellate Tribunal practically renders the distinct and different provision contained in Section 35(2A) of the Act, with the superadded non obstante clause, meaningless and unworkable. We cannot accept such an interpretation as reflecting the correct statement of the law. We are of the view that though in a larger sense, the ultimate point in every appeal is the determination of the taxable turnover of the assessee, there will be many or varied or different points or aspects in every appeal which may arise for consideration. If any such point or aspect was not expressly decided in an appeal, that will be sufficient to give jurisdiction to the Deputy Commissioner u/s 35(2A) of the Act, to exercise his powers, in the circumstances stated therein.

We set aside the order passed by the Appellate Tribunal in T.A. No. 785 of 1985 dated 26th September, 1986 and hold that the order passed by the Deputy Commissioner of Sales Tax dated 4th October, 1985 is valid and justified in law.

The above tax revision case is allowed.