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Judgment
S.R. Nayak , J.—This Special Appeal filed u/s 23(1) of the Andhra Pradesh General Sales Tax Act (for short `the Act'') is directed against the order of the Commissioner of Commercial Taxes of Andhra Pradesh passed in proceedings LV (2)/178/94, dated 17.5.1996.
The appellant is M/s.Seven Stars Liquors, Vijayawada. The appellant was assessed by the Commercial Tax Officer, Company Circle, Vijayawada for the year 1980-81 on the following turnovers vide assessment order in G.I.No.6026/80-81, dated 16.6.1981.
G.T.O. Rs. 1,12,01,686.00 E.T.O. Rs. 33,84,422.00 N.T.O. Rs. 78,17,264.00
The said assessment order was served on the petitioner-assessee on 8.7.1981. On further examination of the books of accounts and also basing on investigation by the assessing authority, it was found that the Excise Duty collected and paid on beer and liquor sold by the assessee was not reported in the A-2 returns nor submitted in the turnover statements filed before the Commercial Tax Officer at the time of finalisation of accounts. Therefore, the Commercial Tax Officer proposed the above turnover for levy of tax and accordingly issued show-cause notice No.G.I.No.6026/80-81, dated 1.9.1983 u/s 14(4) of the Act. It reads :
"G.I.No.6026/80-81 Office of the Commercial Tax Officer, (Company Circle), Vijayawada Dated : 1.9.1983
NOTICE
M/s.Seven Stars Liquors, Vijayawada were finally assessed by the Commercial Tax Officer (Company Circle), Vijayawada for the year 1980-81 on the following turnovers in proceedings in G.I.No.6026/80-81, dated 16.6.1981.
Gross Turnover Rs.1,12,01,686.00 Exempted Turnover Rs. 33,84,422.00 Net Turnover Rs. 78,17,264.00
On a further examination, it is seen that the dealers have paid/got paid certain amounts towards excise duty which is a pre-requisition for release of goods for sale. Such excise duty paid forms part of the turnover in view of the change in the excise law with effect from 25.1.1980. The dealers have failed to report this turnover either in the A-2 returns filed by them or at the time of final assessment. Thus this turnover has escaped assessment. To bring this turnover rights to assessment, it is proposed to revise the assessment already made as under :-
Gross turnover determined already Rs. 1,12,01,686.82 Add : Turnover that represents payments towards Excise duty : (a) Relating to Beer Rs. 27,97,860.00 (b) Relating to Liquors Rs. 9,43,979.80 ------------------------------------ Gross turnover now proposed for assignments Rs. 1,49,43,526.62 Exemptions allowed Rs. 33,84,422.84 ------------------------------------ Net turnover proposed Rs. 1,15,59,103.78 ------------------------------------ The above net turnover is taxable as follows : (A) From 1.4.1980 to 5.5.1980 : (1) Sales of Beer Cartons Rs. 82,215.00 @ 4% (2) Sales of Beer Rs.7,37,800.00 @ 10% Rs.2,62,080.00 @ 10% (3) Sales of Liquors Rs.5,803.98 @ 40 1/2 % --------------------- Rs.10,89,988.78 (B) From 6.5.1980 to 31.3.1981: (1) Sales of Beer Cartons Rs. 5,86,815.00 @ 4 1/2 % (2) Sales of Liquor Cartons Rs. 55,640.00 @ 4 1/2 % (3) Sales of Empty bottles Rs. 1,36,500.00 @ 6 1/2 % (4) Sales of glass tumblers Rs. 54,890.00 @ 6 1/2 % (5) Sales of Beer Rs.56,92,500.00 @ 10 1/2 % Rs.56,92,500.00 @ 10 1/2 % (6) Sales of Tape Records Rs. 7,500.00 @ 12 1/2 % (7) Sales of Liquors Rs.4,57,600.00 @ 40 1/2 % Rs.9,41,890.00 @ 40 1/2% ------------------------------------- Rs.1,04,69,115.00 --------------------- Total turnover Rs.1,15,59,103.78 -------------------------- The turnover under Item (B) above is also liable for surcharge @ 10% of the tax due.
Objections if any against the above proposed assessment may be filed within a week days from the date of receipt of this notice, failing which orders as deemed fit will be passed without any further notice.
Sd/- xx xx xx Commercial Tax Officer (FAC), Company Circle, Vijayawada
To
M/s.Seven Stars Liquors, 40-15-9, Bhavani Gardens, Labbipet, Vijayawada - 10"
The appellant-assessee filed Writ Petition No.10388 of 1983 in this Court against the said show-cause notice. Initially this Court granted stay of further proceedings in pursuance of the show-cause notice dated 1.9.1983 in an order made in WPMP No.14182 of 1983 filed in the above writ petition. Subsequently, the said writ petition was disposed of by this Court by order dated 22.11.1985. It reads :
"The Court made the following Order :
We do not think that we should pronounce anything on the merits of the case in this matter at this stage. Without prejudice to the right of the writ petitioner, to raise his contentions if any, before the appropriate authority, the writ petition is closed. The objections, if any, which the writ petitioner wants to file, may be submitted within one month from today."
As permitted by this Court, the petitioner filed objections to the show-cause notice on 20.12.1985. After receipt of the objections to the show-cause notice, the Commercial Tax Officer, Company Circle, Vijayawada referred the case to the Deputy Commissioner of Commercial Taxes, Vijayawada for taking-up revision of the assessment order dated 16.6.1981 u/s 20 of the Act. The Deputy Commissioner of Commercial Taxes, Vijayawada issued show-cause notice No.G.I.No.6026/80-81, dated 4.2.1986 in the purported exercise of the power u/s 14(4) and Section 20(2) of the Act proposing to tax sales of cartons and empty bottles and calling upon the appellant-assessee to produce all the relevant books of account in support of their contentions. In response to that show-cause notice, the appellant-assessee filed objections on 26.2.1986 opposing the proposed revision. On consideration of the objections filed by the appellant-assessee, the Deputy Commissioner of Commercial Taxes, Krishna District, Vijayawada by his Proceedings No.G.I.No.6026/80-81, dated 28.2.1996 dropped the proposed revision of assessment order dated 16.6.1981 u/s 20 of the Act relating to taxation of cartons and empty bottles at higher rate and referred back the matter to the Commercial Tax Officer, Company Circle, Vijayawada, for disposal on the merits of the case. The order reads :
"M/s.Seven Stars Liquors, Vijayawada were served with notice proposing to bring certain turnover under re-assessment u/s 14(4) of the Act taking into account, the Excise duty collections made by the dealers in the year 1980-81. In the same notice, it was proposed to exercise revisional powers u/s 20(2) of the Act bringing the turnover of cartons and empty bottles to tax at higher rate. The dealers in their objections letter dated 28.2.1986 pointed out that the benefit of deduction of the power of pendency in W.P.No.10388 of 1983, dated 25.11.1983 is not available to the Deputy Commissioner to invoke the powers u/s 14(4-C) and also Section 20(2) of the Act. It was stated that the time limit for revision expired on 8.7.1985 itself.
It is noticed that the assessment order was served on 8.7.1981 and the time limit for revision u/s 20(2) of the Act expired on 8.7.1985. As the issue relating to application of increased rate to bottles and cartons was not the subject matter of dispute before the Hon''ble High Court, the extension of time provided in Section 20(6) of the Act will not apply. I, therefore, drop the proposed revision of assessment u/s 20(2) of the Act relating to taxation of cartons and empty bottles at higher rate.
Regarding the re-assessment proposed in the show-cause notice dated 4.2.1986 taking into account the excise duty collections of Rs.37,41,839.80 n.p. u/s 14(4) of the Act, the issue is referred back to the Commercial Tax Officer (Company Circle), Vijayawada for the reason that the Commercial Tax Officer (Company Circle), Vijayawada originally issued show-cause notice proposing re-assessment, on which, the dealers filed Writ petition. In the said writ petition, further proceedings were stayed and the Writ was finally disposed of by the High Court on 22.11.1985 with the order that without prejudice to the right of the writ petitioner to raise his contentions if any, before the appropriate authority, the writ petition is closed and the objections, if any which the writ petitioner wants to file may be submitted within one month.
In the light of the above High Court orders, dated 22.11.1985 the matter is referred back to the Commercial Tax Officer (Company Circle), Vijayawada to examine and give a disposal on the merits of the case.
The dealers are hereby required to represent their case before the Commercial Tax Officer (Company Circle), Vijayawada for suitable orders in the matter.
Sd/- xx xx xx Deputy Commissioner (CT), Vijayawada"
Against the order of the Deputy Commissioner of Commercial Taxes, dated 28.2.1996, the appellant-assessee preferred Tribunal Appeal No.489 of 1986 to the Sales Tax Appellate Tribunal (STAT), Andhra Pradesh, Hyderabad. It was contended before the STAT, Andhra Pradesh, Hyderabad, that the Deputy Commissioner of Commercial Taxes has no competence to give direction to the Commercial Tax Officer to dispose of the matter on merits of the case placing reliance on the judgment of this Court in State of Andhra Pradesh v. Vogireddy Venkata Reddy & Company, 6 APSTJ 215. The Appellate Tribunal accepting that contention and in the light of the above judgment of this Court allowed the appeal of the assessee by its order dated 21.7.1989 and while doing so, the STAT observed that the said order does not come in the way of the Commercial Tax Officer exercising his power vested in him u/s 14(4) of the Act independently by applying his mind. In the meanwhile, the Commercial Tax Officer after disposal of the proceedings by the Deputy Commissioner of Commercial Taxes, dated 28.2.1986, on consideration of the objections filed by the appellant-assessee dated 20.12.1985, passed an order on 3.3.1986 by which he revised the assessment order dated 16.6.1981 and determine the additional tax liability of the assessee to the tune of Rs.5,57,091/- and directed the demand notice in Form B-3 for realisation of the said balance tax of Rs.5,57,091/-. The assessee being aggrieved by the revised order of the Commercial Tax Officer dated 3.3.1986 preferred Appeal No.1447/85-86 to the Appellate Deputy Commissioner, Commercial Taxes, Guntur, who allowed the appeal by his order dated 11.6.1992 placing reliance on the judgment of this Court in Vogireddy Venkata Reddy & Company (1 supra) opining that the order passed by the Commercial Tax Officer dated 3.3.1986 tantamounts to exercising the revisional jurisdiction more than once and such a course of action is impermissible in the light of the ratio of the judgment in Vogireddy Venkata Reddy & Company (1 supra). When the matter stood thus, the Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad, proposed to revise the order passed by the Appellate Deputy Commissioner, Commercial Taxes, dated 11.6.1992, u/s 20 of the Act opining that the ratio of the judgment in Vogireddy Venkata Reddy & Company''s case (1 supra) applicable to the facts and circumstances of the case on hand and the order of the Appellate Deputy Commissioner is prejudicial to the interest of the revenue. Accordingly, he issued show-cause notice and the appellant-assessee filed reply on 11.12.1995 before the Commissioner, Commercial Taxes. The assessee reiterated same contention that the decision in the case of Vogireddy Venkata Reddy & Company (1 supra) is applicable and therefore no exception could be taken to the order made by the Appellate Deputy Commissioner, Commercial Taxes. The Commissioner placing reliance on the judgment in M/s.Raj Sheel and others v. State of Andhra Prades 2 APSTJ 149 (Supreme Court) M/s.Mc Dowell & Company v. Commercial Tax Office 11 APSTJ 262 (HC) M/s.Mc Dowell & Company Limited v. State of Andhra Pradesh 14 APSTJ 262 and State of Andhra Pradesh v. Manmohan Wines 15 APSTJ 258 (APHC) opined that the amount of Excise duty collected from the buyers on liquor and beer and paid to the Excise Department forms part of turnover and is exigible to tax. In view of that opinion, the Commissioner, Commercial Taxes, by his order dated 17.5.1996 revised the order of the Appellate Deputy Commissioner, Guntur dated 11.6.1992 and restored the order of the Commercial Tax Officer, Company Circle, Vijayawada, dated 3.3.1986. Hence, this Special Appeal u/s 23(1) of the Act.
Sri S.Dwarakanath, learned counsel appearing for the appellant-assessee firstly contended that the revised order of the Commercial Tax Officer dated 3.3.1986 is one without authority of law and nonest. Elaborating this contention, the learned counsel would maintain that the Commercial Tax Officer having abandoned the show-cause notice issued by him on 1.9.1983 and requesting the Deputy Commissioner, Commercial Taxes, to initiate revision proceedings u/s 20 of the Act, it was totally impermissible for the Commercial Tax Officer to pass the order on 3.3.1986 in pursuance of the abandoned show-cause notice dated 1.9.1983. The learned counsel would further maintain that the order of the Commercial Tax Officer, dated 3.3.1986 tantamounts to revising the same assessment order more than once inasmuch as the revision proposed by the Deputy Commissioner, Commercial Taxes, ended in dropping the proceedings vide his order dated 28.2.1986. The learned counsel would further submit that even the direction issued by the Deputy Commissioner, Commercial Taxes, in his order dated 28.2.1986 to the Commercial Tax Officer to dispose of the matter on merit was also set aside by the STAT in T.A.No.489 of 1986 dated 21.7.1989 and looking from that angle also the order made by the Commercial Tax Officer dated 3.3.1986 in pursuance of the show-cause notice dated 1.9.1983 should be held to be one without authority of law. Secondly, the learned counsel would contend that the order dated 3.3.1986 passed by the Commercial Tax Officer, cannot be sustained in law for violation of principles of natural justice and fairplay in action. The learned counsel would maintain that even assuming that the Commercial Tax Officer had the jurisdiction to revise the order u/s 14(4) of the Act in pursuance of the show-cause notice dated 1.9.1983 issued by him, nevertheless having due regard to the principles of natural justice and fairplay in action, he ought to have issued a notice of hearing to the appellant - assessee after the disposal of the proceedings by the Deputy Commissioner, Commercial Taxes on 28.2.1986. Thirdly, the learned counsel would point out that the Commercial Tax Officer, Company Circle, Vijayawada in passing the revised order dated 3.3.1986 denied fair hearing to the appellant-assessee and in fact he passed the order in a most hurried manner without giving any opportunity to the assessee. The learned counsel would maintain that the Commercial Tax Officer, Company Circle, Vijayawada, has ante-dated the order as 3.3.1986. In making this allegation, the learned counsel would draw our attention to Page 45 of the material papers where the Commercial Tax Officer has stated that on 4.3.1986, the assessee filed a petition dated 3.3.1986 requesting him to give opportunity to represent its case before passing final orders in the proposed revision and if the correct date of the revised order is 3.3.1986, there was no question of the Commercial Tax Officer referring to an event which occurred on 4.3.1986 in an order made on 3.3.1986. Further, the learned counsel would contend that even the order made by the Commissioner of Commercial Taxes, dated 17.5.1996 cannot be sustained in law for violation of principles of natural justice. The learned counsel would point out that the notice of hearing fixed on 17.5.1996 was served on the appellant-assessee on 20.5.1996 whereas the Commissioner heard the appeal on 17.5.1996 itself and passed the order on the same day, thereby totally denying opportunity of being heard. The learned counsel would also maintain that on merits of the matter also, the decision of the Commercial Tax Officer and the Commissioner of Commercial Taxes cannot be sustained inasmuch as fresh materials envisaged u/s 14(4) of the Act did not exist for revising the order.
The learned Special Government Pleader for Taxes on the other hand would contest the contention of the learned counsel for the petitioner that the Commercial Tax Officer hurriedly and without giving an opportunity passed the revised order dated 3.3.1986. The learned Special Government Pleader would point out that having regard to the period of stay granted by this Court in W.P.No.10388 of 1983 between 25.11.1983 and 22.1.1985, the Commercial Tax Officer, has had time till 7.7.1987 to revise the order and therefore it cannot be said that the Commercial Tax Officer hurriedly concluded the proceedings and passed the revised order u/s 14(4) of the Act. The learned Special Government Pleader would also hotly contest the contention of the appellant that there did not exist necessary grounds to revise the order and he would point out that admittedly the petitioner did not report the turnover either in the A-2 returns filed by them or at the time of final assessment and this fact would undoubtedly constitute a good ground to revise the assessment order dated 16.6.1981 u/s 14(4) of the Act. The learned Special Government Pleader would contend that the revised order made by the Commercial Tax Officer, dated 3.3.1986 cannot be equated to a second revision order in respect of the same subject matter so as to attract the ratio of the decision in Vogireddy Venkata Reddy & Company (1 supra). That simply because the Deputy Commissioner, Commercial Taxes, by his order dated 28.2.1986 dropped the proceedings initiated by him u/s 20 of the Act in pursuance of the show-cause notice dated 4.2.1986, that fact itself would not divest the power vested in the Commercial Tax Officer u/s 14(4) of the Act to revise the order if there were good grounds to revise the order. At any rate, the Deputy Commissioner, Commercial Taxes, did not revise the order in pursuance of the show-cause notice dated 4.2.1986 issued by him u/s 20(2) of the Act and therefore applying the ratio of Vogireddy Venkata Reddy & Company''s case (1 supra) would not arise at all. The contention that there are two revisions, one by the Deputy Commissioner, Commercial Taxes and another by the Commercial Tax Officer is totally misconceived. The order made by the Commercial Tax Officer on 3.3.1986 in pursuance of the show-cause notice dated 1.9.1983 issued by him u/s 14(4) of the Act on consideration of the objections filed by the appellant-assessee dated 20.12.1985 is perfectly valid and legal. The learned Special Government Pleader further submitted that the contention of the learned counsel for the appellant that the Deputy Commissioner, Commercial Taxes, superseded the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 by issuing the show-cause notice dated 4.2.1986 under Section20 of the Act is again totally misconceived and such a consideration cannot be placed in interpreting the power of the Commercial Tax Officer u/s 14(4) of the Act and power of the Deputy Commissioner, Commercial Taxes u/s 20 of the Act. The Deputy Commissioner, Commercial Taxes, by initiating proceedings u/s 20 of the Act by issuing show-cause notice dated 4.2.1986 and passing the final order on 28.2.1986 dropping the proceedings revised the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 and therefore after the disposal of the proceedings by the Deputy Commissioner, Commercial Taxes on 28.2.1986, the show-cause notice dated 1.9.1983 did not exist in the eye of law and therefore the Commercial Tax Officer passing the revised order on 3.3.1986 in pursuance of such a non-existing show-cause notice would not arise, is totally misconceived and untenable, firstly, because revising show-cause notice dated 1.9.1983 by the Deputy Commissioner, Commercial Taxes, u/s 20 of the Act would not arise at all and secondly even assuming that a show-cause notice issued by the Commercial Tax Officer u/s 14(4) of the Act could be revised by the Deputy Commissioner, Commercial Taxes, u/s 20 of the Act, even then, such a revision could be taken up by the Deputy Commissioner, Commercial Taxes, only if the proceedings thereby meaning show-cause notice issued by the Commercial Tax Officer on 1.9.1983 was prejudicial to the interest of the revenue and not otherwise and by no stretch of imagination it could be stated that the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 is prejudicial to the interest of the revenue. On the other hand, the step taken by the Commercial Tax Officer by issuing the show-cause notice dated 1.9.1983 was undoubtedly a step further in protecting the interest of the revenue. Looking from that angle also, the learned Government Pleader would maintain that the contention of the learned counsel for the appellant is untenable.
Having heard the learned counsel for the parties, the following three points arise for the decision of the Court.
(1) Whether the order made by the Commercial Tax Officer, Company Circle, Vijayawada, dated 3.3.1986 u/s 14(4) of the Act is one without authority of law.
(2) Whether conditions precedent to invoke the power under sub-section (4) of Section 14 of the Act existed when the Commercial Tax Officer issued the show-cause notice u/s 14(4) of the Act on 1.9.1983.
(3) Whether the order of the Commercial Tax Officer dated 3.3.1986 and the order of the Commissioner of Commercial Tax dated 17.5.1996 are unsustainable in law for infraction of principles of natural justice and fairplay in action.
Point No.1 : There is no merit in the contention of the learned counsel for the appellant that the order of the Commercial Tax Officer revising the order u/s 14(4) of the Act is one without authority of law. This contention of the learned counsel is based on the assumption that the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 was superseded by the Deputy Commissioner of Commercial Taxes when he issued show-cause notice dated 4.2.1986 on a reference made by the Commercial Tax Officer on administrative side to initiate proceedings u/s 20 of the Act. Alternatively, it is contended that the Deputy Commissioner, Commercial Taxes, by issuing show-cause notice dated 4.2.1986 revised the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 and therefore the show-cause notice dated 1.9.1983 was not in existence when the Commercial Tax Officer passed the order u/s 14(4) of the Act on 3.3.1986. The whole argument, if I may say so, is based on misconception of the Statute. Before dealing with the contentions of the learned counsel for the parties, it is appropriate to refer to the relevant statutory provisions. Sub-Section (4) of Section 14 reads:
"14. Assessment of tax :
(4) In any of the following events, namely, where the whole or any part of the turnover of a business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate, the assessing authority may, after issuing a notice to the dealer, and after making such enquiry as he may consider necessary, by order, setting out the grounds therefore -
(a) determine to the best of his judgment the turnover that has escaped assessment and assess the turnover so determined;
(b) assess the correct amount of tax payable on the turnover that has been under-assessed;
(c) assess at the correct rate the turnover that has been assessed at a lower rate;
(cc) assess the correct amount of tax payable, in a case where any deduction or exemption has been wrongly allowed;
(d) levy the licence fee after determining to the best of his judgment the turnover on which such fee is payable.
(e) Levy the registration fee that has escaped levy;
(f) Levy the correct amount of licence fee or registration fee in a case where such fee has been levied at a rate lower than the correct rate.
In addition to the tax assessed or fee levied under this sub-section, the assessing authority may also direct the dealer to pay a penalty as specified in sub-section (8).
Sub-section (4-C) of Section 14 reads:
"(4-C). The powers conferred by sub-section (4) on the assessing authority may, subject to the same conditions as are applicable in the case of that authority; be exercised also by any of the authorities higher than the assessing authority including the Assistant Commissioner (Intelligence), the Deputy Commissioner and the Joint Commissioner."
Sub-Sections (1) and (2) of Section 20 read:
"20. Revision by Commissioner of Commercial Taxes and other prescribed authorities: (1) The Commissioner of Commercial Taxes may also 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 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 and may pass such order in reference thereto as it thinks fit.
(2) Powers of the nature referred to in sub-section (1) may also be exercised by the Additional Commissioner, Joint Commissioner, Deputy Commissioner, Assistant Commissioner and the Commercial Tax Officer in the case of orders passed or proceedings recorded by authorities, officers or persons subordinate to them."
The power granted by the Statute to the assessing authority under sub-section (4) of Section 14 and to the revisional authority specified under sub-section (2) of Section 20 to revise the orders passed or proceedings recorded by any authority, officer or person subordinate to them operate in two different planes and they are intended to achieve different statutory goals/purposes. Section 2(b) of the Act defines `assessing authority'' to mean any person authorised by the State Government or by any other authority empowered by them in this behalf, to make any assessment in such area or areas or the whole of the State of Andhra Pradesh under the Act. In other words, any person authorised by the State Government or by any authority empowered by them is competent to exercise the powers of an "Assessing Authority". Section 14(4) of the Act gives in express terms the power of re-assessment to the assessing authority. However, under sub-section (4-C) of Section 14 of the Act, the power conferred upon the Assessing Authority under sub-section (4) of Section 14 can also be exercised by the authorities higher than the assessing authority including the Assistant Commissioner (Intelligence), Deputy Commissioner and the Joint Commissioner subject to the same conditions as are applicable in the case of the assessing authority. But it needs to be emphasised that neither section 14 nor any other provisions of the Act enable the assessing authority to refer a proceeding initiated by him under sub-section (4) of section 14 of the Act to any of the higher authorities including the Deputy Commissioner to take steps to revise the assessment as envisaged under sub-section (4) of section 14 of the Act or u/s 20 of the Act. The power conferred upon the assessing authority u/s 14(4) of the Act and the power conferred upon the authorities higher than the assessing authority u/s 14(4-C) or u/s 20(1) of the Act are independent powers vested in those authorities, and not the powers to be exercised by any of those authorities on reference from another. In that view of the matter, the reference made by the assessing authority to the Deputy Commissioner (CT) on administrative side for taking up revision of the assessment should be held to be one without any authority of law. Alternatively, it needs to be emphasised that the Assessing Officer by referring the matter to the Deputy Commissioner (CT) for taking up revision of the assessment did not divest himself of the power conferred upon him u/s 14(4) of the Act. Be that as it may, the Deputy Commissioner (CT) being a higher authority than the assessing authority can also exercise the power conferred on the assessing authority under sub-section (4) of section 14 of the Act by virtue of provisions of section 14(4-C) of the Act. The Deputy Commissioner can also exercise the power of revision under sub-section (1) of section 20 of the Act in the light of the power conferred upon him under sub-section (2) of Section 20 of the Act. However, as pointed out supra, the power conferred upon the authorities under sub-section (4) of section 14 and the authorities under sub-sections (1) and (2) of section 20 of the Act operate in different planes and that even the scope of powers also differ. The power of the revising authority u/s 20 is not of such wide amplitude so as to enable the revising authority to correct assessments based on information subsequently gathered. In taking this view, I am fortified by the judgment of this Court in Manepalli Venkatanarayana, Proprietor, Venkateswara Electrical Rice Mill, Eluru Vs. The State of Andhra Pradesh and Another, Sub-Section (4) of Section 14 of the Act envisages reopening of the assessment already concluded where the assessing authority subsequently finds certain conditions specified in sub-section (4) of Section 14, whereas sub-section (1) of Section 20 confers revisional power on Commissioner of Commercial Taxes and other authorities specified under sub-section (2) to suo motu call for and examine the record of any order passed or proceedings recorded by any authority, officer or person, subordinate to them, under the provisions of the Act. But this power of revision conferred upon the Commissioner of Commercial Taxes and other authorities is subjected to a rider, the rider being that the order or proceeding sought to be revised under sub-section (1) of Section 20 of the Act should be one which is prejudicial to the interest of the revenue. In other words, if the order or proceeding which is sought to be revised under sub-section (1) of Section 20 of the Act by the competent authority is not prejudicial to the interest of the revenue, it should be held that the authority lacks jurisdiction and competence to revise such order or proceeding which is not prejudicial to the interest of revenue. It is well settled that the power of revision u/s 20 of the Act can be exercised by looking into the record of assessment only whereas the power of reopening has to be exercised on the basis of material de hors the record. In other words, the power of reopening u/s 14(4) of the Act can be exercised if and when there is materials de hors the assessment record to show that any turnover of the business of the dealer escaped assessment of tax. It is true that a proceeding taken by issuing a show-cause notice under sub-section (4) of Section 14 or a final order revising the assessment may be subject matter of revision by the prescribed authority under sub-section (1) of Section 20 of the Act. No doubt, the show-cause notice issued by the Commercial Tax Officer on 1.9.1983 under sub-section (4) of Section 14 of the Act is a proceeding within the contemplation of that term and therefore it is revisable under sub-section (1) of Section 20 of the Act. But as pointed out supra, the concerned authority can revise that proceeding provided that proceeding is prejudicial to the interest of the revenue. In order to appreciate the contention of the learned counsel for the appellant that the show-cause notice issued by the Commercial Tax Officer dated 1.9.1983 u/s 14(4) of the Act was revised and superseded by the Deputy Commissioner, Commercial Taxes, by issuing a show-cause notice on 4.2.1986 u/s 20(1) of the Act and ultimately passing the order on 28.2.1986, it is relevant to consider whether show-cause notice dated 1.9.1983 was prejudicial to the interest of the revenue. By no stretch of imagination, it could be said that the show-cause notice issued by the Commercial Tax Officer u/s 14(4) of the Act on 1.9.1983 was a proceeding prejudicial to the interest of the revenue. The step taken by the Commercial Tax Officer in issuing the show-cause notice u/s 14(4) was intended to protect the interest of the revenue. In other words, that step was in the interest of the revenue and not prejudicial to the interest of the revenue. Therefore, the very condition precedent to exercise revisional power u/s 20(1) of the Act did not exist when the Commercial Tax Officer referred the matter on administrative side to the Deputy Commissioner, Commercial Taxes and that the action of the Commercial Tax Officer in referring the matter to the Deputy Commissioner, Commercial Taxes, is one without any statutory backing. Therefore, the Deputy Commissioner, Commercial Taxes, revising the show-cause notice dated 1.9.1983 issued by the Commercial Tax Officer u/s 14(4) or superseding the same by exercising the power u/s 20(1) of the Act would not arise and it is beyond comprehension of the Statute. It needs to be emphasised that the Commercial Tax Officer, out of his ignorance and without any authority of law, on administrative side, referred the matter to the Deputy Commissioner (CT), for taking up revision, obviously u/s 20(1) of the Act. Nothing is placed before us to show that the Commercial Tax Officer wanted the Deputy Commissioner (CT) to initiate the proceedings under sub-section (4) of section 14 of the Act. No doubt, in the show cause notice issued by the Deputy Commissioner (CT), there is reference to section 14(4) as well as section 20(2) of the Act. Simply because there is reference to sections 14(4) and 20(2) of the Act, the show cause notice issued by the Deputy Commissioner (CT) dated 4.2.1986 cannot be treated as a composite notice issued by him under sub-section (4) of section 14 of the Act as well as section 20(2) of the Act, because as pointed out supra, the plane and scope of enquiry would differ depending upon whether the enquiry is initiated u/s 14(4) of the Act or section 20(2) of the Act. Be that as it may, even assuming that on reference made by the Commercial Tax Officer, the Deputy Commissioner (CT) initiated the proceedings by issuing the show cause notice dated 4.2.1986 both under sections 14(4) and 20(2) of the Act, it is relevant to notice that the Deputy Commissioner (CT) by the order dated 28.2.1986 dropped the proceedings initiated by him u/s 20(2) of the Act, and not the action taken by him u/s 14(4) of the Act. In his order dated 28.2.1986, the Deputy Commissioner observed-
"I, therefore, drop the proposed revision of assessment u/s 20(2) of the Act relating to taxation of cartons and empty bottles at higher rate."
Further, the Deputy Commissioner (CT) in the same order has stated-
"Regarding the re-assessment proposed in the show cause notice dated 4.2.1986 taking into account the excise duty collections of Rs.37,41,839-80 ps u/s 14(4) of the Act, the issue is referred back to the Commercial Tax Officer (Company Circle), Vijayawada for the reason that the Commercial Tax Officer (Company Circle) Vijayawada originally issued show cause notice proposing re-assessment, on which, the dealers filed writ petition. In the said writ petition, further proceedings were stayed and the writ was finally disposed of by the High Court on 22.11.1985 with the order that without prejudice to the right of the writ petitioner to raise his contentions if any, before the appropriate authority, the writ petition is closed and the objections, if any which the writ petitioner wants to file may be submitted within one month.
In the light of the above High Court orders, dated 22.11.1985 the matter is referred back to the Commercial Tax Officer (Company Circle), Vijayawada to examine and give a disposal on the merits of the case.
The dealers are hereby required to represent their case before the Commercial Tax Officer (Company Circle), Vijayawada for suitable orders in the matter."
It is quite apparent and undoubtedly clear that by the order dated 28.2.1986, the Deputy Commissioner (CT) dropped the proceedings taken u/s 20(2) of the Act only and he referred back the proceedings initiated by him u/s 14(4) of the Act to the Commercial Tax Officer (Company Circle), Vijayawada to examine and dispose of the same on merits. The order of the Deputy Commissioner (CT) dated 28.2.1986 cannot be equated to an order disposing of the proceedings initiated by him u/s 14(4) of the Act and, therefore, the subsequent order made by the Commercial Tax Officer on 3.3.1986 revising the assessment order dated 16.6.1981 u/s 14(4) of the Act cannot be considered to be a second revision order u/s 14(4) of the Act so as to attract the ratio of the Judgment in Vogireddy Venkata Reddy and Company case (1 supra)., as contended by the learned counsel for the dealer. In Vogireddy Venkata Reddy & Company''s case (1 supra), the respondent was a firm dealing in jaggery. For the assessment year 1974-75, the Commercial Tax Officer, Ramachandrapuram, exempted the entire turnover relating to sales of Jaggery. The Deputy Commissioner (CT), Kakinada initiated revision proceedings seeking to revise the assessment by levying tax on the exempted turnover and issued revision notice. The respondent filed detailed objections. Thereupon the Deputy Commissioner called for an enquiry report from the Commercial Tax Officer observing that he should afford reasonable opportunity to the respondent at the time of enquiry. The Commercial Tax Officer did not afford any such opportunity to the respondent though the respondent did make a request and submitted the report to the Deputy Commissioner. The Deputy Commissioner instead of passing an order on the basis of the report directed the Commercial Tax Officer without notice to the respondent to revise the assessment himself. The Commercial Tax Officer thereupon made a reassessment u/s 14(4) (cc) without affording any opportunity to the respondent. The said reassessment was challenged in appeal. The Assistant Commissioner (CT) Appeals, set aside the assessment and the matter was again remanded to the Commercial Tax Officer for affording an opportunity to the respondent as directed by the Deputy Commissioner. The said order was appealed by the respondent before the Sales Tax Appellate Tribunal. The Tribunal placing reliance on the judgment of the Supreme Court in Mahadayal Premchandra Vs. Commercial Tax Officer, Calcutta and Another, allowed the Appeal and quashed both the order of the Asst.Commissioner (CT) and the revised order of assessment made by the Commercial Tax Officer. In that case, the Supreme Court held :
"We are really surprised at the manner in which the first respondent dealt with the matter of this assessment. It is clear that he did not exercise his own judgment in the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner (CT) without giving the appellants an opportunity to meet the points urged against them. The whole procedure was contrary to the principles of natural justice. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the sales tax department concerned".
On a TRC filed by the State, this Court observed that the Commercial Tax Officer "merely acted at the behest of the Deputy Commissioner of Commercial Taxes, Kakinada and carried out his directions instead of applying his mind independently" and the Tribunal therefore rightly set aside the revised order of assessment. Before this Court, it was contended on behalf of the State Government that the Tribunal instead of quashing the revised assessment order should have remitted the matter to the Deputy Commissioner. This Court while rejecting that contention pointed out that the proceedings initiated by the Deputy Commissioner (CT), Kakinada, u/s 20(2) of the Act were still pending before him when the Tribunal passed the impugned order. I am at a loss to understand how the judgment of this Court in the case of Vogireddy Venkata Reddy & Company''s case (1 supra) and that of the Supreme Court in the case of Mahadayal Premchandra (7 supra) would advance the case of the appellant-dealer here in this case. In this case, the proceedings u/s 14(4) of the Act were initially initiated by the Commercial Tax Officer himself independently by issuing show-cause notice dated 1.9.1983 and thereafterwards he had on administrative side, of course, without any statutory backing, referred the matter to the Deputy Commissioner (CT) to revise the order u/s 20(1) of the Act and the Deputy Commissioner finding that the action would not be taken legally u/s 20(1) of the Act advised the Commercial Tax Officer to go ahead in pursuance of the show-cause notice already issued by him dated 1.9.1983. In the instant case, the initiation of the proceeding to reopen the assessment u/s 14(4) of the Act by the Commercial Tax Officer cannot be said to be at the dictation of the Deputy Commissioner (CT) or any other superior authority nor can it be said that there was no independent application of mind on the part of the Commercial Tax Officer in initiating the proceedings u/s 14(4) of the Act. The show-cause notice issued by the Commercial Tax Officer on 1.9.1983 is an independent notice and not dictated by the Deputy Commissioner (CT) or by other higher authority and it clearly establishes due application of mind on the part of the Commercial Tax Officer where he has stated that on a further examination it was seen that the appellant-dealer has not included the excise duty paid/got paid by them in the turnover which they should have done it having regard to the change in the Excise Law with effect from 25.1.1980. This satisfaction recorded in the show-cause notice is not the satisfaction of any superior officer of the Department including the Deputy Commissioner of Commercial Taxes, but it is the satisfaction of the Commercial Tax Officer himself after due application of his mind to the books of account and fresh materials referred to by him in the show-cause notice.
Point No.2 : Under sub-Section (4) of Section 14 of the APGST Act, the assessing authority may reopen the assessment proceedings provided certain conditions specified in that sub-section exist. In other words, the assessing authority acquires power to initiate proceedings under sub-section (4) of Section 14 of the Act to reopen the assessment only where the whole or in part of the turnover of a business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or whether the licence fee or registration fee escaped levy or had been levied at a rate lower than the correct rate. The contention of the dealer is that when the Commercial Tax Officer issued the show-cause notice u/s 14(4) of the APGST Act on 1.9.1983, none of those conditions did exist to confer power on the Commercial Tax Officer to invoke the power to reopen the assessment. The question is whether there is any substance in this contention.
The allegation in the show-cause notice dated 1.9.1983 is that the dealer has not disclosed the excise duty paid/got paid as part of the turnover as required having regard to the change in the Excise Law with effect from 25.1.1980. It is also alleged that the dealers have failed to report that part of the turnover either in the A2 returns filed by them or at the time of final assessment. Undoubtedly, if the turnover of a business of the dealer has escaped assessment of tax wholly or in part, the existence of that condition would confer the power on the Commercial Tax Officer to invoke sub-section (4) of Section 14 of the Act to reopen the assessment. Therefore, it cannot be said that when the Commercial Tax Officer in the instant case issued the show-cause notice on 1.9.1983 under sub-section (4) of Section 14 of the Act, the condition precedent for exercising that power did not exist. It is not a case where the Commercial Tax Officer issued the notice under sub-section (4) of Section 14 of the Act on a mere change of his opinion. On the other hand, the Commercial Tax Officer thought it appropriate to reopen the assessment by invoking the power under sub-section (4) of Section 14 of the Act on the basis of the fresh material or information not available at the time of making the assessment. Therefore, I do not find any merit in the second contention. Therefore, I hold that when the Commercial Tax Officer issued the show-cause notice dated 1.9.1983, necessary conditions for invoking the power under sub-section (4) of Section 14 of the Act did exist and therefore it cannot be said that the action taken by the Commercial Tax Officer to reopen the assessment is one without authority of law.
Point No.3 : However, I find considerable force in the contention of the learned counsel for the appellant-dealer that the order made by the Commercial Tax Officer dated 3.3.1986 and the order made by the Commissioner of Commercial Taxes dated 17.5.1996 are vitiated on account of infraction of principles of natural justice and fair-play in action. It is borne out from the records that the Commercial Tax Officer passed the final order under sub-section (4) of Section 14 of the Act on 3.3.1986 without issuing any further notice to the appellant-dealer after the Deputy Commissioner of Commercial Taxes, Appeals, disposed of the proceedings on 28.2.1986. In the first place, the time gap between the two events is only three days and secondly, admittedly no fresh notice was issued to the appellant-dealer before passing the order on 3.3.1986. It is true that in pursuance of the notice dated 1.9.1983 issued by the Commercial Tax Officer u/s 14(4) of the Act, the petitioner had submitted his reply on 20.12.1985. It is relevant to note that the Commercial Tax Officer initially in pursuance of the notice issued by him dated 1.9.1983 did not take further steps contemplated u/s 14 of the Act, but referred the matter to the Deputy Commissioner of Commercial Taxes, Appeals, to take action u/s 20 of the Act and the Deputy Commissioner of Commercial Taxes, Appeals, in turn, issued the notice to the appellant-dealer and on consideration of the objections raised by the dealer, dropped the proceedings u/s 20 of the Act and advised the Commercial Tax Officer to go ahead and take further steps u/s 14(4) of the Act. In that view of the matter and having regard to the facts and circumstances of the case and the time lag between 1.9.1983 and 28.2.1986, I am of the considered opinion, that it was imperative and necessary for the Commercial Tax Officer to issue at least notice of hearing to the appellant-dealer after disposal of the proceedings by the Deputy Commissioner of Commercial Taxes on 28.2.1986. Such a course of action would have satisfied the demands of principles of natural justice and fair-play in action. There is also some force in the contention of the appellant - dealer that the Commercial Tax Officer passed the Order on 3.3.1986 with haste and in a hurried manner. Although the appellant has contended that the Commercial Tax Officer has antedated the order as 3.3.1986,though the order was actually made subsequently, I do not think it necessary to dilate on that aspect much because even otherwise I find that the action of the Commercial Tax Officer in passing the order on 3.3.1986, even if that date is true, was not in consonance with principles of natural justice and it does not satisfy the principle of fairness in action. The Commercial Tax Officer in his order dated 3.3.1986, at page 45 of the material papers placed before us, has stated that on 4.3.1986, the dealer filed a petition dated 3.3.1986 requesting him to give opportunity to represent his case before passing final orders in the proposed revision and if the correct date of revised order is 3.3.1986, there is no question of the Commercial Tax Officer referring to an event which occurred on 4.3.1986 in an order made on 3.3.1986. There is also substance in the contention of the appellant - dealer that even the Commissioner of Commercial Taxes violated principles of natural justice in passing the order on 17.5.1996. It is shown that the notice of hearing fixed on 17.5.1996 was served on the appellant-dealer on 20.5.1996 whereas admittedly the Commissioner heard the appeal on 17.5.1996 itself and he also passed the order on the same day, thereby totally denying any opportunity of being heard to the petitioner. I am satisfied that the Commercial Tax Officer as well as the Commissioner of Commercial Taxes (Appeals) did not afford a fair opportunity to the appellant-dealer to meet the points urged against them and the procedure adopted by them was contrary to the principles of natural justice and fair play in action. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the Sales Tax Department concerned. ''Justice should be done and at the same time it is seem to have been done'' is the cardinal principle of fair play inaction and the latter part of the rule in the instant case is undoubtedly breached by the Commercial Tax Officer as well as by the Commissioner of Commercial Taxes. Since I find that the orders made by the Commercial Tax Officer as well as the Commissioner of Commercial Taxes are in violation of principles of natural justice and fair play in action, it becomes necessary for the Court to interfere with the order of the Commissioner and afford reasonable opportunity to the appellant-dealer to state its case of being heard.
In the result and for the foregoing reasons, I allow the Special Appeal and set aside the order of the Commissioner of Commercial Taxes dated 17.5.1996 made in Proceedings LV (2)/178/94 and remand the proceedings to the Commissioner of Commercial Taxes with a direction to dispose of the proceedings afresh after giving reasonable opportunity to the appellant-dealer of being heard. However, it is made very clear that the parties to the appeal are bound by the opinion on Point Nos.1 and 2, and this appeal is allowed solely on the ground that the orders made by the Commercial Tax Officer and the Commissioner of Commercial Taxes are in violation of principles of natural justice, in the sense that the appellant-dealer was not given fair opportunity of being heard. No costs.