Deputy Commissioner of Commercial Taxes vs M. Balasundaram and Company

Jagadisan, J.—The petitioner is a firm of partnership dealing in hides and skins. They were assessed by the Deputy Commercial Tax Officer,

Moore Market, No. 1, under the Madras General Sales Tax Act, 1939, on their turnover for the year 1955-56. The order of assessment was

passed on 22nd November, 1956. They filed an appeal to the Commercial Tax Officer, and the appeal was pending when Madras Act 1 of 1959

came into force. The appeal was transferred to the file of the Appellate Assistant Commissioner under the provisions of Section 61(2) of Act I of

1959. The Appellate Assistant Commissioner noticed that the assessing authority had omitted to include in the total turnover certain purchases up

to 6th September, 1955, for an amount of Rs. 53,205-29 nP., and that the sales of the assessee through W. A. Beardsell and Co. for an amount

of Rs. 47,725-11-6 were treated as sales in the course of export and excluded from the turnover. The appellate authority issued notice to the

assessee on 10th July, 1959, to show cause why the turnover should not be revised and enhanced. The assessee objected but to no purpose. The

Appellate Assistant Commissioner revised the turnover which resulted in enhancement of the assessment made by the Deputy Commercial Tax

Officer. The assessee preferred an appeal to the Appellate Tribunal. They did not press their claim regarding the turnover of Rs. 53,205-29 nP.,

which was originally claimed to be purchased outside the State. In respect of the turnover of Rs. 47,725-11-6 the Appellate Tribunal took the

view that the finding of the Appellate Assistant Commissioner that it related to local sales was correct. The assessee however urged the contention

before the Tribunal that the Appellate Assistant Commissioner had no jurisdiction to enhance the turnover fixed by the Deputy Commercial Tax

Officer. The Tribunal upheld this objection of the assessee and set aside the order of assessment of the Appellate Assistant Commissioner and

restored the order of the Deputy Commercial Tax Officer. This revision petition has been preferred by the State, and the contention urged on their

behalf is that the appellate powers of the Assistant Commissioner are governed by the provisions of Section 31(3) of Madras Act I of 1959 which

specifically provide for enhancement.

Under the old Act the power of the appellate authority is that prescribed u/s 11 of the Act. In so far as it is material it reads as follows :-

(1) Any assessee objecting to an assessment made on him u/s 9, Sub-section (2), may within thirty days from the date on which he was served

with notice of the assessment, appeal to such authority as may be prescribed.

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(3) The appellate authority may, after giving the appellant an opportunity of being heard, pass such orders on the appeal as such authority may

think fit.

The right of appeal was conferred only on the assessee objecting to an assessment by the assessing authority and the appellate authority can

pass orders only on that appeal, the subject-matter of which could only be the assessment against the assessee and not the order on any

assessment favourable to the assessee. Indeed it is not disputed that the Commercial Tax Officer, the prescribed appellate authority u/s 11 of the

old Act, could not pass prejudicial orders against the assessee in an appeal filed by him. But Section 12 of the Act clothed the Commercial Tax

Officer with powers of revision. That officer may suo motu call for and examine the record of any order passed or proceeding recorded under the

Act by any officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of such order or as to the regularity of such

proceeding and may pass such order with respect thereto as he thinks fit. Where the officer wanted to exercise this revisional power he should

afford an opportunity to the assessee to show cause against the proposed assessment. Though the officer had power to enhance the assessment to

the prejudice of the assessee, this was an independent power conferred by a special provision under the Act outside the content of his appellate

power. There was nothing common between the appellate power and the revisional power except that the same officer was competent to exercise

both the powers.

The scheme of Madras Act 1 of 1959 in regard to the remedies by way of appeal and revision is different from what was contained under the

old Act. Under the new Act the Appellate Assistant Commissioner is the appellate authority (vide Section 31). The appellate authority can enhance

the assessment against the assessee. The revising authority which can act even suo motu is the Deputy Commissioner as provided for u/s 32.

Section 2(a) of the Act provides that the ""Appellate Assistant Commissioner"" means any person appointed to be an Appellate Assistant

Commissioner u/s 28. Section 2(i) provides that the ""Deputy Commissioner"" means any person appointed to be a Deputy Commissioner of

Commercial Taxes u/s 28. Section 28 provides that the Government may appoint as many Deputy Commissioners of Commercial Taxes,

Appellate Assistant Commissioners of Commercial Taxes and Commercial Tax Officers as they think fit, for the purpose of performing the

functions respectively conferred on them by or under this Act. Under the new Act, the Appellate Assistant Commissioner, who has no doubt taken

the place of the Commercial Tax Officer functioning under the old Act as the prescribed appellate authority, is not the revising authority. It cannot

be pretended that the Appellate Assistant Commissioner in making the enhancement against the assessee in this case could have passed such an

order in exercise of any revisional power.

What then is the effect of Section 61(2) of the new Act ? The learned Government Pleader contends that the Appellate Assistant Commissioner

is only a substituted machinery for the old Commercial Tax Officer and that all the powers exercisable under the old Act by the latter officer could

be exercised by the Appellate Assistant Commissioner when he dealt with appeals arising out of orders of assessment passed under the old Act. In

our opinion this argument is fallacious. The Appellate Assistant Commissioner is the creature of the new statute and his jurisdiction and powers are

those specifically conferred upon him by that statute. In view of the fiction enacted u/s 61(2) of the Act, this authority is empowered to hear and

dispose of appeals pending on the file of the Commercial Tax Officer who ceases to function after the repeal of the old Act. It must not be

overlooked that this fiction is for a very limited purpose and there is no warrant for taking the view that the newly constituted tribunals have

succeeded to or inherited the power and jurisdiction of the extinct tribunals. Neither the express provisions of Madras Act I of 1959 nor the

scheme and implications of the Act would lend support to the taking of such a view.

The assessee had undoubtedly a vested right at the time when the new Act came into force to prevent the then appellate authority, the

Commercial Tax Officer, from enhancing the assessment in the course of an appeal preferred by him. It may be that there was always the peril of

the Commercial Tax Officer, who was also the revising authority, revising the assessment to his prejudice in exercise of his revisional power. But

that peril effectively disappeared when under the new Act, the revisional power was conferred upon the Deputy Commissioner for Commercial

Taxes and not upon the Appellate Assistant Commissioner. Any interference by the Appellate Assistant Commissioner with the assessment order

passed by the Deputy Commercial Tax Officer to the prejudice of the assessee, in the purported exercise of his appellate power, is clearly violative

of his vested rights.

We agree with the conclusion of the Appellate Tribunal that the order of the Appellate Assistant Commissioner was erroneous in law. The

petition fails and is dismissed with costs. Counsel''s fee Rs. 100.