Konijeti Mallaiah and Co. vs Commissioner of Commercial Taxes, Andhra Pradesh

S. Parvatha Rao, J.—The appellant-assessee questions the order of the Commissioner of Commercial Taxes dated February 20, 1989 made in purported exercise of the revisional powers u/s 20 of the Andhra Pradesh General Sales Tax Act, 1957 ("the Act", for short) on the revision petition filed by the appellant-assessee on March 23, 1983 questioning the assessment order of the Commercial Taxes Officer dated July 11, 1979. Earlier the Commissioner in his proceedings dated July 13, 1984 dismissed the said revision petition on the ground that there was no inherent right of revision and hence it could not be entertained. The appellant herein then approached this Court by way of Special Appeal No. 53 of 1984 and this Court allowed the said appeal on February 9, 1988 and set aside the order of the Commissioner dated July 13, 1984 and directed him "to entertain the revision petition preferred by the appellant and dispose of the same in accordance with law". Pursuant to that direction of this Court, the Commissioner entertained the said revision petition and made the present impugned order dated February 20, 1989 disallowing the claims of the appellant herein on merits and dismissing the revision petition.

The learned Government Pleader for Commercial Taxes contends that the said order of the Commissioner is without jurisdiction in view of the recent decision of the Supreme Court in State of Andhra Pradesh v. Lakshmaiah Setty & Sons [1994] 94 STC 190 directly dealing with the scope and ambit of section 20 of the Act. In that case a two Judges Bench of the Supreme Court observed that the question whether the assessee had a right to make an application for the exercise of suo motu power by the Commissioner called for consideration in the light of the other provisions in the Act, expressly providing for a right of appeal to the assessee - sections 19 and 21. After referring to the decision of the Privy Council in AIR 1948 102 (Privy Council) ; and the decisions of this Court dealing with the scope of section 20 of the Act in Kalluri Bheemalingam, In re : [1967] 19 STC 116 and Sree Ramachandra Ginning and Oil Mills v. State of Andhra Pradesh [1967] 19 STC 354, the Supreme Court held :

"..........It must, therefore, be held that the validity of an assessment order must be tested in an appeal or revision filed by an assessee as provided for in the Act and in no other way. The assessee cannot invoke the suo motu power of the authorities u/s 20. Any order validly made does not become void or illegal by subsequent declaration of law. The suo motu power was conferred on higher authorities to correct errors of law or to correct improper or irregular procedure or illegality in the procedure, to safeguard the interests of the revenue, as there was no express power given to the State, to file an appeal against order of assessment."

It is therefore now settled law that the aggrieved assessee under the Act has only to pursue the remedies provided in the Act and he has no right to make an application u/s 20 of the Act seeking revision of the orders of assessments made under the Act by original authorities. Under article 141 of the Constitution of India "the law declared by the Supreme Court shall be binding on all courts within the territory of India". In view of this position we have to accept the contention urged by the learned Government Pleader for Commercial Taxes that the order of the Commissioner under appeal was made without any jurisdiction and ultra vires the powers of the Commissioner u/s 20 of the Act.

The learned counsel for the appellant-assessee submits that the decision of the two Judges Bench of the Supreme Court in Lakshmaiah Setty & Sons case [1994] 94 STC 190 is per incuriam because the decision of a three Judges Bench of the Supreme Court in Board of Revenue v. Raj Brothers Agencies [1973] 31 STC 434 was not brought to the notice of the learned Judges who decided State of Andhra Pradesh Vs. M/s. T.G. Lakshmaiah Setty and Sons, and was not considered by them. We do not agree. The decision of the Supreme Court in Raj Brothers Agencies'' case [1973] 31 STC 434 dealt with an altogether different provision, i.e., section 34 of the Madras General Sales Tax Act, 1959. Sub-section (1) of that section 34 conferred on the Board of Revenue suo motu power to call for and examine an order passed or proceeding recorded by the appropriate authorities under some of the provisions of the Act. The Supreme Court rejected the contention advanced on behalf of the State that the assessee had no right to invoke the jurisdiction of the Board to exercise its revisional power observing as follows :

"...........It was contended on behalf of the State that the assessee had no right to invoke the jurisdiction of the Board to exercise its revisional power. This contention too has to be rejected. The power is conferred on the Board to remedy any injustice. It is open to an assessee or the revenue to bring to the notice of the Board any error made by the subordinate authorities. It is up to the Board to consider whether the case is a fit case for exercising its revisional jurisdiction, If the Board had gone into the case and come to the conclusion that there was no justification for exercising its jurisdiction u/s 34, then in the absence of any vitiating circumstance recognised by law, the High Court would not have interfered with the discretion of the Board.......Whether the case is a fit one for exercising jurisdiction of the Board or not is entirely a matter for the Board to consider and decide."

It is significant that thereafter the Supreme Court also observed as follows with reference to the two decisions of the Andhra Pradesh High Court brought to its notice :

"Mr. Rangam drew our attention to two decisions of the Andhra Pradesh High Court where the High Court held that no appeal lay against the order of the Andhra Pradesh Revenue Board u/s 20(1) of the Andhra Pradesh General Sales Tax Act, 1957, which provision is similar to section 34 of the Act (Tamil Nadu Act). Those decisions lend no assistance to the appellant''s case."

The Supreme Court did not overrule the said two decisions. Even though no citation or reference was given of those two decisions in the judgment of the Supreme Court, in the context it would appear that those two decisions of the Andhra Pradesh High Court are Kalluri Bheemalingam, In re : [1967] 19 STC 116 and Sree Ramachandra Ginning and Oil Mills [1967] 19 STC 354. Sub-section (1) of section 20 of the Act, as it then was, empowered the Board of Revenue to exercise revisional powers "for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding". Act 18 of 1985 substituted the said words with the following words with effect from July 1, 1985 :

"and if such order or proceeding recorded is prejudicial to the interests of revenue, may make such enquiry, or cause such enquiry to be made and subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order or proceeding."

From January 17, 1978 the authority to exercise the revisional power under sub-section (1) of section 20 is Commissioner of Commercial Taxes. Therefore, from July 1, 1985 the Commissioner of Commercial Taxes could exercise the revisional power u/s 20(1) only if the order or proceeding of any authority, officer or person subordinate to him is prejudicial to the interests of revenue, and not otherwise. In view of this change, the decision of the Supreme Court in Raj Brothers Agencies [1973] 31 STC 434 cannot be relied upon by the learned counsel for the appellant. For the same reason, the decision of the Division Bench of this Court in Gill & Co. v. Commissioner of Commercial Taxes [1987] 65 STC 232 cannot also be relied upon by him. Sub-section (1) of section 20 of the Act interpreted by the Division Bench in Gill and Co. Vs. Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad, was as it was before amendment by Act 18 of 1985 and it was as follows :

"20. Revision by Commissioner of Commercial Taxes and other prescribed authorities. - (1) The Commissioner of Commercial Taxes may suo motu call for and examine the record of any order passed or proceeding recorded by any authority, officer or person subordinate to it, under the provisions of this Act, including sub-section (2) of this section, for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding and may pass such order in reference thereto as it thinks fit."

We have also to point out that earlier Division Bench took care to clarify that section 20 did not confer a right of revision upon the assessee. That Division Bench stated the position under the old sub-section (1) as follows :

"In the absence of any words restricting the exercise of power at the instance of the assessee, we see no ground to hold that it is not open to an assessee to invoke the said power. This does not mean that this section confers a right of revision upon the assessee, nor does it mean that the Commissioner or other authority is bound to exercise the power, as and when it is invoked by an assessee. It is a power vested in certain authorities to ensure proper administration of the Act - which means that neither should an assessee be allowed to escape the tax due nor should he be burdened with tax which is not due in law. Since the power is to be exercised suo motu, the authority can treat the revision filed by an assessee, if any, as information or as an application placing certain information and/or material for his consideration. If he thinks that such information or application calls for exercise of his power, he may exercise it; otherwise, not. All that we are saying is that while it is open to the assessee to invoke the power of revision, it does not mean that the authorities are bound to exercise that power in each case where such power is invoked by the assessee."

This position is also made very clear by another Division Bench of this Court in State of Andhra Pradesh, In re : [1983] 54 STC 132 referred to in Gill and Co. Vs. Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad, . The Division Bench held in In Re: State of Andhra Pradesh, as follows :

"What section 20 in our opinion lays down is that while no aggrieved party has any right to file a revision petition u/s 20, the Commissioner of Commercial Taxes could suo motu exercise the revisional powers and call for and examine records of any order or proceeding taken by the authority subordinate to him. In that view of the matter no question of law arises in these cases. It was however argued that the Sales Tax Appellate Tribunal has no jurisdiction to direct the Deputy Commissioner to exercise the revisional jurisdiction. Such a contention was not raised before the Tribunal nor was any decision taken by it. That question of law therefore does not arise in these tax revision cases."

We have also to notice that in Gill & Co. case [1987] 65 STC 232 the question that arose for consideration was whether the Commissioner of Commercial Taxes was right in holding that the Deputy Commissioner of Commercial Taxes erred in exercising his suo motu power of revision under sub-section (2) of section 20 of the Act at the instance of the assessee and the Division Bench in that case held that "the Commissioner was in error in holding that the Deputy Commissioner had no power to exercise his revisionary power at the instance of the assessee" and that the Deputy Commissioner did have such power. That was not a case where this Court directed the authority concerned to exercise suo motu revisional power when that authority refused to exercise that power on the merits of the case before him.

From the above it is clear that even as per the decisions of the earlier Division Benches of this Court in State of Andhra Pradesh, In re : [1983] 54 STC 132 and Gill & Co. [1987] 65 STC 232 the assessee had no vested right of revision under sub-section (1) of section 20 as it stood before it was amended by Act 18 of 1985. Therefore, we are of the view that, even apart from our conclusions based on the decision of the Supreme Court in Lakshmaiah Setty & Sons [1994] 94 STC 190, inasmuch as the assessee had never any right to invoke the revisional power u/s 20 of the Act, he cannot complain against the order of the Commissioner of Commercial Taxes refusing to exercise his suo motu powers of revision at the instance of the assessee in his favour - much more so after it was amended by Act 18 of 1985 restricting the exercise of revisional power of the Commissioner of Commercial Taxes to only orders or proceedings "prejudicial to the interests of revenue", as in the present case. We have also to observe that in Lakshmaiah Setty & Son''s case [1994] 94 STC 190 sub-section (1) of section 20 dealt with by the Supreme Court was as it stands today after it was amended by Act 18 of 1985 with effect from July 1, 1985.

The contention of the learned counsel for the appellant-assessee that remains to be considered is that inasmuch as the decision of this Court in Special Appeal No. 53 of 1984 directing the Commissioner to entertain the revision petition of the appellant was not questioned by the State and therefore had become final, the State is barred by res judicata from questioning the present order of the Commissioner on the ground that he had no jurisdiction. But that contention cannot be countenanced in view of the decision of the Supreme Court in Smt. Isabella Johnson Vs. M.A. Susai, , wherein it was held as follows :

"In our opinion a court which has no jurisdiction in law cannot be conferred with the jurisdiction by applying principles of res judicata. It is well-settled that there can be no estoppel on a pure question of law and in this case the question of jurisdiction is a pure question of law."

In holding so, the Supreme Court relied on its earlier decisions rendered by Benches of three learned Judges in Mathura Prasad Bajoo Jaiswal and Others Vs. Dossibai N.B. Jeejeebhoy, and Sushil Kumar Mehta Vs. Gobind Ram Bohra (Dead) through his Lrs., . In Smt. Isabella Johnson Vs. M.A. Susai, , the Supreme Court also held that to the extent the judgment in Avtar Singh and Others Vs. Jagjit Singh and Another, "takes the view that the principle of res judicata is applicable to an erroneous decision on jurisdiction, it cannot be regarded as good law", observing that the Division Bench of two learned Judges in that case did not notice the decision of the Bench of three learned Judges in Mathura Prasad Bajoo Jaiswal and Others Vs. Dossibai N.B. Jeejeebhoy, . In Mathura Prasad Bajoo Jaiswal and Others Vs. Dossibai N.B. Jeejeebhoy, the Supreme Court held as follows :

"But the doctrine of res judicata belongs to the domain of procedure, it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby...........A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law .............

A question relating to the jurisdiction of a court cannot be deemed to have been finally determined by an erroneous decision of the court. If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata. Similarly by an erroneous decision if the court assumes jurisdiction which it does not possess under the statute the question cannot operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.

............Where, however, the question is one purely of law and it relates to the jurisdiction of the court or a decision of the court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of the order under the rule of res judicata, for a rule of procedure cannot supersede the law of the land."

In Sushil Kumar Mehta Vs. Gobind Ram Bohra (Dead) through his Lrs., , the Supreme Court held as follows :

"Thus it is settled law that normally a decree passed by a court of competent jurisdiction, after adjudication on merits of the rights of the parties, operates as res judicata in a subsequent suit or proceedings and binds the parties or the persons claiming right, title or interest from the parties. Its validity should be assailed only in an appeal or revision as the case may be. In subsequent proceedings its validity cannot be questioned. A decree passed by a court without jurisdiction over the subject-matter or on other grounds which goes to the root of its exercise or jurisdiction, lacks inherent jurisdiction. It is a coram non judice. A decree passed by such a court is a nullity and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings. The defect of jurisdiction strikes at the authority of the court to pass a decree which cannot be cured by consent or waiver of the party.........But the question relating to the interpretation of a statute touching the jurisdiction of a court unrelated to questions of fact or law or mixed questions does not operate as res judicata even between the parties or persons claiming under them. The reason is obvious; a pure question of law unrelated to facts which are the basis or foundation of a right, cannot be deemed to be a matter in issue. The principle of res judicata is a facet of procedure but not of substantive law. The decision on an issue of law founded on fact in issue would operate as res judicata. But when the law has since the earlier decision been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibition by law it does not operate as res judicata..........A question relating to jurisdiction of a court or interpretation of provisions of a statute cannot be deemed to have been finally determined by an erroneous decision of a court. Therefore, the doctrine of res judicata does not apply to a case of decree of nullity. If the court inherently lacks jurisdiction consent cannot confer jurisdiction."

In view of these decisions, we see no merit in the contention advanced by the learned counsel for the appellant based on the principle of res judicata and on the principle of finality.

We may also observe that the decision of the Division Bench of this Court in Special Appeal No. 53 of 1984 dated February 9, 1988 is per incuriam because it did not notice the amendment effected to sub-section (1) of section 20 by Act 18 of 1985. The Division Bench merely purported to follow the decision of the other Division Bench in Gill and Co. Vs. Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad, . The Division Bench held as follows :

"The question raised by the learned counsel (appearing for the appellant) is squarely covered by the decision of a Division Bench of this Court in Gill & Co. v. Commissioner of Commercial Taxes, Andhra Pradesh [1987] 65 STC 232. Following the same, we set aside the impugned order of the Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad and direct him to entertain the revision petition preferred by the appellant and dispose of the same in accordance with law."

Though the judgment in Gill and Co. Vs. Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad, was rendered on November 20, 1986, as pointed out earlier, the learned Judges in that case dealt with sub-section (1) of section 20 as it was prior to its amendment by Act 18 of 1985 because they were considering whether the Commissioner of Commercial Taxes was right in setting aside the order of the Deputy Commissioner of Commercial Taxes dated June 21, 1982 made in exercise of his power under sub-section (2) of section 20 read with sub-section (1) of that section as it stood prior to amending Act 18 of 1985. As pointed out by us already, after the amendment of sub-section (1) of section 20 by Act 18 of 1985 the power of revision under that section can be exercised only if the order or proceeding sought to be revised is prejudicial to the interests of Revenue.

In view of the declaration of law made by the Supreme Court in Lakshmaiah Setty & Sons [1994] 94 STC 190 and in view of the decision in Sushil Kumar Mehta Vs. Gobind Ram Bohra (Dead) through his Lrs., , we have therefore to hold that the order of the Commissioner dated February 20, 1989 impugned in this appeal is without jurisdiction and therefore non est. In that view of the matter, the special appeal has to be dismissed as it is preferred against a non est order, and it is accordingly dismissed. No costs.

Appeal dismissed.