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Judgment
P. Govindan Nair, J.—The same question arises for determination in these writ applications and I am disposing them by a common judgment. Shortly stated, the question is whether the Deputy Commissioner acting u/s 12(2) of the Madras General Sales Tax Act, 1939, can revise an order passed by the Appellate Assistant Commissioner after the period prescribed by rule 17(1) of the Madras General Sales Tax Rules, 1939 has expired, on the ground that turnover had escaped assessment. The year of assessment in each of these cases is 1953-1954. On the expiry of nearly three years after the end of that year, notices were issued to the petitioners, apparently under rule 17 of the Madras General Sales Tax Rules, 1939, to show cause why turnover which it was alleged had escaped assessment should not be assessed. Though the petitioners showed cause, the proceedings ended against the petitioners in that assessments were made relating to the alleged escaped turnovers. The petitioners appealed and the appellate authority by Ext. P. 4 in each of these cases accepted the contention of the petitioners and held that there has been no escape of turnover, that the turnover in question is not taxable and therefore set aside the orders of assessment passed by the Sales Tax Officer. The order Ext. P.4 in O. P. No. 16 of 1963 was passed on 18--9--1958 and communicated to the petitioner therein on 3--10--1958, and the order Ext. P. 4. in O. P. No. 108 of 1963 was passed on 16--9--1958 and communicated to the petitioner on 2--10--1958. Nearly four years after the dates of communication of the orders Exts. P. 4 in each of these cases, orders have been passed by the Deputy Commissioner which are Exts. P.5 in each of these cases and which have been communicated to the petitioners on 30--9--1962. By Exts. P.5 orders, the Deputy Commissioner has set aside Exts. P.4 orders and has directed the appellate authority to decide the question afresh.
The short contention that is raised is that the Deputy Commissioner has no jurisdiction to do what he has done by Ext. P.5 in each of these cases. This contention was sought to be supported on three grounds. The first of these is that since the turnover in question is escaped turnover according to the revenue, action relating to this could and must have been taken only on or before 31--3--1957 the assessment year having ended on 31--3--1954, i.e. within three years of the expiry of the assessment year. It was also urged that the orders Exts. P.5 have been passed in violation of the principles of natural justice in that they were passed without notice to the petitioners. Thirdly it was contended that the particular Deputy Commissioner who passed the orders Exts. P.5 was not notified to be the authority competent to exercise such powers. I am not dealing with the last two grounds in this judgment for, I think the case can be disposed of on the first of the grounds relied on by counsel on behalf of the petitioners.
It is necessary to read Section 12(2) as also rule 17(1) of the Madias General Sales Tax Act and Rules, 1939.
12 (2) The Deputy Commissioner may-
(i) suo motu, or
(ii) in respect of any order passed or proceeding recorded by the Commercial Tax Officer under sub-section (1) or any other provision of this Act and against which no appeal has been preferred to the Appellate Tribunal u/s 12A, on application, call for and examine the record of any order passed or proceeding recorded under the provisions of this 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.
"17. (1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority as the case may be, (subject to the provisions in sub-rule 1A) may, at any time within three years next succeeding that to which the tax or licence fee relates, (determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable in such turnover) or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary.
The rule has been framed u/s 19 and rules framed under that section became a part of the Statute. Therefore in interpreting the section the principle of harmonious construction must be adopted and the provision in the rule cannot be ignored. This position is not disputed.
It is clear further that rule 17 is a special provision in the sense that it deals with and deals only with escaped turnover or an application of a lower rate. Section 12 on the other hand, enables the officers enumerated therein to re-open orders and pass such orders as they deem fit provided they are satisfied from the records that the orders are lacking in legality or propriety. In this respect the powers u/s 12 are very much wider than that conferred on the authorities by rule 17(1). In another sense, as pointed out by counsel on behalf of the revenue, the powers u/s 12 are limited in that the scope of the enquiry under that section must always be limited to an examination of the records of proceedings which culminated in the order which is sought to be revised. But I cannot help coming to the conclusion that notwithstanding this limitation, Section 12 is a general section enabling re-opening of orders of assessments which would otherwise be final, whenever the Commercial Tax Officer or the Deputy Commissioner is satisfied from the records that the order is lacking in legality or propriety. In fact, thee is no limitation whatever to the exercise of this power apart from the one pointed out by the Government Pleader on behalf of the revenue. If I am right in my conclusion that a special provision has been made in regard to a particular matter, viz., escape of turnover, by rule 17(1), I am of the view that that special power in regard to the special matter must be exercised subject to the conditions under which that power can be exercised. One of those conditions is that the escaped turnover must be assessed within three years of the end of the assessment year relating to which the assessment was made. It may be, that subject to this condition, in appropriate cases, a revisional authority, when he is able to discern from the records of the case that there has been escape of turnover, may also act and pass appropriate orders in relation to escaped turnover.
I am supported in this view by a number of decisions. This Court considered the question with reference to Sections 34 and 35 of the Travancore-Cochin Agricultural Income Tax Act (Act XXII of 1950). The wording of those sections are very similar to the wording of Section 12 and Rule 17 here. In fact the only change that I can notice is that in Section 34 of the Travancore-Cochin Agricultural Income Tax Act XXII of 1950, there are the words "subject to the provisions of this Act" which are not found in Section 12 of the Madras General Sales Tax Act, 1939. Counsel on behalf of the Revenue is correct that, this aspect has also been relied on by the learned Judges who decided the case in 1958 K. L. J. 834. Their Lordships concluded that in relation to escaped turnover, no action can be taken u/s 34 of the Travancore-Cochin Agricultural Income Tax Act XXII of 1950, after the period prescribed in Section 35 which specifically provides for assessment of escaped income. The principle of that decision, notwithstanding the omission of the words "subject to the provisions of this Act'' in Section 12, I think, must govern the conclusion to be reached herein. Mr. Justice Mathew considered the identical question in his judgment in O. P. No. 888 of 1963 (since reported in 1964 K. L. J. 1115) and has come to the same conclusion. With respect, I agree with these pronouncements.
Counsel on behalf of the petitioner has also invited my attention to the decisions reported in Purushottam v Commissioner of Sales Tax, Madhya Pradesh (1959 10 S.T.C. 574) and Berar Oil Industries v State of Andhra (1961 12 S. T. C. 797). The decisions therein also point to the same conclusion.
Before closing, I must refer to the argument advanced by the Government Pleader on behalf of the Revenue that the powers u/s 12 and Rule 17 are distinct and separate. He relied on the decision of the Supreme Court in State of Kerala v M. Appukutty (1963 S. C. 796) (1963 14 S. T. C. 242) (1963 K. L. J. 432) for this proposition.
The powers are distinct and separate but there is overlapping in the sense that even in relation to the escaped turnover action can be taken u/s 12 (2) provided that the escape of turnover is discernable from the records of the case. The question is whether in such cases it is the period of four years provided by sub-section 4 of Section 12 that should apply or whether it is the period of three years provided in rule 17(1) that should apply. If escape of turnover is a special matter, I feel no doubt that such action must be taken within the period provided by Rule 17 (1). Otherwise, that provision according to me becomes nugatory and practically ineffectual. The purpose of the provision seems to be that there should be finality at least regarding the question of escaped turnover after the expiry of three years from the end of the assessment year. This purpose will not be served if assessment orders could be reopened after the expiry of the said three years. And such construction of Section 12 would have the effect of overriding the provision in Rule 17 (1) which is as much law as the Section and will be against the rule of harmonious construction. I quash Ext. P. 5 in each of these cases and allow these writ applications; but in the circumstances make no order as to costs.