Eastern Tea Corporation vs State of Assam and Others

V.D. Gyani, J.—The question of law as to "whether notices issued by the Superintendent of Taxes and delegation of power of the Commissioner u/s 19(A) of the Assam Sales Tax Act, 1947 (hereinafter referred to as the Act) to the Superintendent of Taxes are valid?" has been referred to this Bench.

The facts and circumstances leading to this reference have been briefly narrated by the learned Members of the Division Bench, making this reference in paragraph 5 of the Reference Order. In this Bench of writ petitions, the Petitioners had challenged the notice issued u/s 19(A) of the Act to re-assess the Petitioners and one of the question that was canvassed at the Bar was that the Superintendent of Taxes had no jurisdiction to initiate the proceedings nor to issue notice u/s 19(A) of the Act. Section 19(A) of the Act reads as follows:

Turnover escaping assessment - (1) If upon information which has come into his possession, the Commissioner is satisfied that any turnover in respect of sales of any goods chargeable to tax under this Act has escaped assessment during any return period or has been under assessed or assessed at a lower rate or any deduction has been wrongly made therefrom, he may, at any time within eight years of the end of the aforesaid period, serve on the dealer liable to pay the tax in respect of such turnover a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 16 or Sub-section (2) of Section 17 and may proceed to assess or reassess the dealer in respect of such period and the provisions of this Act shall apply accordingly as if the notice were a notice served under the aforesaid Sub-section.

Provided that the tax should be charged at the rate at which it would have been ordinarily chargeable.

(2) The Commissioner may authorise any person appointed u/s 8 to assist him in investigating any case or points in a case at any stage and to make a report thereon to the Commissioner or any of the authority in respect of all or any of the assessments made in relation to the case in order to prevent the evasion of tax. After considering the report of the investigating officer, the Commissioner may proceed to take action under Sub-section (1) besides initiating any other action under this act against the dealer concerned.

An earlier Division Bench of this Court in Sikaria Sons and Co. v. Superintendent of Taxes as reported in 1973 (31) STC 25 had upheld the delegation of power by the Commissioner to a subordinate authority under Scction 19(A) of the Act. It was submitted that the power of the commissioner cannot be delegated to any subordinate officer and the learned Members of the Division bench making the reference, considering the plain language of Section 19(A) of the Act and relying on the Apex Court judgment in The Barium Chemicals Ltd. and Another Vs. The Company Law Board and Others, felt it necessary to place the matter before a larger bench so as to resolve the controversy raised at the Bar.

Before we deal with the judgment relied upon we would like to first deal with Section 19(A) of the Act itself as already quoted above.

Mr. B.P. Bora, learned Sr. Govt. Advocate assisted by Shri A.K. Goswami appearing for the Respondent State submitted that llie view taken by the Division Bench in Sikaria Sons and Co. does not really call for any interference in face of the language of Section 19(A) of the Act, which permits both'' authorisation to as well as seeking of assistance from persons appointed u/s 8 of the Act.

Let us now examine Section 19A. Reading Sub-section (2) of Section 19A as it is, it clearly indicates that the Commissioner may authorise any person appointed u/s 8 to assist him in investigation of any case (Emphasis supplied). To assist in investigation of a case cannot be construed to mean that the power and authority of the Commissioner is also delegated in favour of the subordinate officer authorised to assist him (the Commissioner) in the investigation of a case. Seeking assistance in investigation cannot be equated with the exercise of substantial power vesting in the Commissioner himself. It would be further clear from the plain language of Sub-section (2) of Section 19A of the Act that the person appointed u/s 8 of the Act, whose assistance is sought by the commissioner at any stage of investigation of a case is to make a report thereon to the Commissioner. These words amply indicate that it is the Commissioner and Commissioner alone, who is to exercise the power and it is for the Commissioner, on consideration of the report so submitted by his subordinate on investigation of the case, to take action under Sub-section (I) of Section 19A of the Act. Besides, initiating any other action permissible under the Act, the words - "Commissioner may proceed to take action", leaves no manner of doubt, it is for the Commissioner alone to proceed to take any action. The plain language of Sub-section (2) of Section 19A of the Act leaves no scope nor permit any such inference supporting the delegation of power by the Commissioner in favour of his subordinates, who under the Act are merely supposed to assist him in investigation of a case. This assistance, in view of the plain language of Sub-section (2) of Section 19A of the Act, cannot be converted to, or construed to mean delegation of power in favour of the subordinate officers.

Delegata Potestas Non Potest Delegari means that a delegated power cannot be delegated. The maxim lays down the General Rule that an agent cannot delegate his powers or duties to another, in whole or in part, without the express authority of the principal or authority derived from statute. (Halsbury''s Laws of England, 3rd ed. Vol. I page 169). Wade in his Administrative Law (Seventh Edition) Indian reprint 1997 observes-

An element which is essential to the lawful exercise of power is that it should be exercised by the authority upon whom it is conferred, and by no one else. The principle is strictly applied, even where it causes administrative inconvenience, except in cases where it may reasonably be inferred that the power was intended to be delegable. Normally the Courts are rigorous in requiring the power to be exercised by the precise person or body stated in the statute, and in condemning as ultra vires action taken by agents, sub-committees or delegates, however, expressly authorised by the authority endowed with the power.

As has been rightly noted by the learned Members of the Division Bench, the Supreme Court in Barium Chemicals (supra) has pointed out-

But the maxim "delegatus non potest delegate" must not be pushed too far. The maxim does not embody a rule of law. It '' indicates a rule of construction of a statute or other instrument conferring an authority. Prima facie, a desertion conferred by a statute on any authority is intended to be exorcised by that authority and by no other. But the intention may be negatived by any contrary indications in the language, scope or object of the statue. The construction that would best achieve the purpose and object of the statue should be adopted.

The principle enunciated by the Supreme Court in Barium Chemicals (supra) still hold the filed, the same has been relied upon and followed right upto Harpal Singh Chauhan and others Vs. State of U.P.,

In view of the foregoing discussion and on express terms, and on a plain reading of Sub-section (2) of Section 19A, which should be strictly construed being the provision of a taxing statute as the principle of Rules of Interpretation is, the reference is answered in the Negative that is in favour of the Assessee and against the revenue. The view propounded by the Division Bench of this Court in Sikaria Sons and Co. (supra), cannot be subscribed to and not approved as good law.

We would, however, like to make it clear that this judgment shall be prospective in operation. This Bench of petitions of course stand disposed in the light of the judgment. The notice, issued by the Superintendent of Taxes, is held to be invalid, suffering from inherent lack of authority. Consequently, all subsequent actions in pursuance thereto are also rendered invalid.

The Reference is answered accordingly. There shall be no order as to costs.