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Judgment
Ramachandra Iyer, J.
(1) These revision petitions are filed on behalf of the state of Madras and arise out of assessments to sales-tax in the years 1951-52 and 1952-53,
with regard to the Asher Textiles, Tiruppur, the respondent herein. The latter is the owner of a spinning mill at Tiruppur, and it was assessed by the
Deputy Commercial Tax officer to sales-tax on a turnover of Rs. 22,76,160-1-0 for 1951-52, and Rs. 25,73,907-6-3 for 1952-53. The
Commercial Tax officer, proceeding to act suo motu under. S. 12(1) of the Madras General Sales-tax Act, revised the assessable turnover in a
sum of Rs. 31,94,143-10-6 and Rs. 36,42,116-10-5, respectively. The assessee preferred appeals to the Sales-tax Appellate Tribunal which
reduced the respective turnovers by Rs. 2,62,206-4-3-and Rs. 3,98,343-0-5. Those sums represented the price of cotton sold and despatched
by dealers outside Madras State and delivered to the assessee at Tiruppur, intended to be and later utilised for consumption in the spinning mills
belonging to the assessee. The Sales-tax Appellate Tribunal, relying on the decision in The Bengal Immunity Company Limited Vs. The State of
Bihar and Others, held that the assessment in regard to the turnover representing the price of cotton purchased outside the State of Madras would
come within the ban of Art. 286(2) of the Constitution, and, therefore, it would not be liable to be taxed.
(2) It is disputed before us that the decision of the Tribunal was correct, having regard to the law prevailing on the date when it made the order.
But the learned Government Pleader relied for the validity of the assessments on the provisions contained in Ordinance III of 1956, which was
subsequently replaced by the Sales-tax Validation Act, VII of 1956. The ordinance and the enactment were passed subsequent to the decision of
the Tribunal and had the effect of validating the assessments like those concerned in the disputed transactions.
(3) The sales in the instant case were inter-State ones, under which the goods were delivered within this State for the purpose of consumption in
this State and were assessable under the provisions of the Madras General Sales-tax Act, 1939, having regard to the definition of the word ""sale
in S. 2(h) read with S. 22 of the Act. The question, whether a State Legislature could enact laws to tax such sales was considered in The State of
Bombay and Another Vs. The United Motors (India) Ltd. and Others, where it was held that a sale of goods which was essentially an inter-State
dealing could be validly taxed in the State, where the goods were delivered for consumption.
Conformably to this view the various state legislatures enacted laws to tax sales inter-State in character where delivery for the purpose of
consumption was made within the taxing State. Section 22 of the Madras Act enabled the levy of tax on such sales. The question of the validity of
such taxing provisions was again considered by the Supreme Court in The Bengal Immunity Company Limited Vs. The State of Bihar and Others,
where it was held that no State could impose or authorise the imposition of any tax on sales or purchases when such sales or purchases took place
in the course of inter-State trade or commerce irrespective of the fact, whether the goods were delivered for consumption or not.
The explanation to Art. 286(1)(a) of the Constitution, which was relied on in the earlier case for interpreting the scope of Art. 286(2), was held
inapplicable for the purpose, and the learned Judges of the Supreme Court held by a majority that, except in s far as Parliament might by law
provide otherwise, no State law could impose or authorise the imposition of any tax on sales or purchases which took place in the course of the
inter-State trade or commerce. The result was that all taxes on inter-State sales by the State in which delivery was intended and effected became
invalid after 1-4-1951 (till which date there was an order by the President under Art. 286(2) proviso).
The decision in The Bengal Immunity Company Limited Vs. The State of Bihar and Others, was rendered on 6-9-1955. Ordinance III of 1956,
which was intended to validate all levies and collections of the tax from 1-4-1951 to 6-9-1955, came into force on 30-1-1956. The ordinance
was followed by Act VII of 1956, and S. 2 of the enactment validated all the taxes in regard to inter-State sales during the period 1-4-1951 to 6-
9-1955. Neither the ordinance nor the enactment by itself imposed any tax; but they removed the ban imposed by Art. 286(2) in cases where
there had been an enactment authorising a tax on such sales by the concerned State legislature.
Therefore, in order that a levy of sales-tax on inter-State sales could be validated by its provisions, there must have been some legislation in the
State concerned levying such a tax. Under S. 22 of the Madras General Sales-Tax Act read with S. 2(h) such sales were liable to be included in
the taxable turnover. The question whether in respect of the sales of the nature specified in the Explanation to Art. 286(1)(a) of the Constitution,
more compendiously referred to as ""explanation sales"" (which could not be taxed by any State legislature), there had been a levy which was
validated subsequently was considered with reference to the effect of S. 2 of Ordinance III of 1956 in Mettur Industries Ltd. Vs. The State of
Madras, . It was held that S. 2 of the Ordinance would have the effect of removing the ban on the legislative powers of the State, and that the levy
of the taxes on sales between the two dates specified thereunder would be valid. This view was accepted and affirmed in M.P.V. Sundararamier
and Co. Vs. The State of Andhra Pradesh and Another, by the Supreme Court. It would follow that S. 2 of Act VII of 1956 which replaced the
Ordinance will have a similar effect. The assessment in the instant case should he held therefore to have been valid.
(4) Mr. K. Rajah Iyer, the learned advocate for the respondent, did not dispute that the assessments which had been held by the Tribunal to be
illegal by reason of the decision in The Bengal Immunity Company Limited Vs. The State of Bihar and Others, would be validated by the
provisions of Act VII of 1956. But he contended that inasmuch as the order of the Sales-tax Appellate Tribunal was passed on 18-1-1956 before
30-1-1956 when the Ordinance came into force, the order of the Appellate Tribunal should be held to be correct. under the law as it existed on
that date, and whatever the other remedy of the State might be, this court, acting under s. 12(b) would have no jurisdiction to set aside the order,
which was a proper one on the date when it was passed.
It was contended that it would not be open as a court of revision to apply the provisions of a subsequent retrospective enactment as its powers
would be limited to considering the question of the correctness of the order of the subordinate authority on its face in the light of the state of the law
existing when such authority passed the order. It was contended that the superior court would have jurisdiction to take notice of and apply the
provisions of any law passed subsequent to the order of the subordinate court only in those cases where it would be competent to dispose of the
matter afresh, that is in those cases where it had authority to re-hear the matter, and not where its jurisdiction is limited to correcting or revising
errors in the orders of the inferior tribunal.
In support of his contention, the learned counsel relied on the decision in Louis Dreyfus and Co. Ltd. v. Province of Madras, 1952 3 S. T. C. 19,
where Krishnaswami Nayudu J. held that under Rule 14(2) of the Madras General Sales-tax Rules, 1931, the Commercial Tax Officer who had a
revisional jurisdiction could only examine the records to decide the legality and propriety of the proceedings and that it was not open to him to go
beyond the order or the records and act upon further information or evidence placed before him so as to disturb the order originally passed and
hold that it was not proper.
(5) Before considering the correctness or otherwise of the view expressed in that decision, it will be necessary to consider the powers of a court
exercising revisional jurisdiction, with particular reference to the powers under S. 12-B of the Madras General Sales-tax Act. Mr. Rajah Iyer''s
contention is that generally a revision petition does not involve a rehearing of the matter, and the powers of the superior court entertaining the
revision should be confined to or analogous to the exercise of jurisdiction by the King''s Bench in England over the inferior courts by the issue of a
writ known as a writ of error.
In former times the King''s Bench in England had jurisdiction to call for a judgment from the inferior courts by the issue of a writ of error. The writ
was issued either on the ground of a mere fact which affected the validity of the action, as for example, that the unsuccessful party was an infant or
not properly represented or that there was some error in point of law apparent on the face of the proceedings, or, in other words error apparent in
the face of the record. In such proceedings the superior court had no jurisdiction to go beyond the record to set aside or alter the judgment of the
inferior court.
That rule, however, has not been applied in this country in the matter of exercise of appellate jurisdiction. In Krishnamachariar v. Mangammal, ILR
26 Mad. 91, Bhashyam Aiyangar J. observed that, when an appeal was preferred from a decree of the court of first instance, the suit should be
deemed to continue in the court of appeal and re-heard either fully or in part. In Kanakayya v. Janardhana Padhi, ILR 36 Mad 439, there was a
decree for ejectment by the lower court. Pending the appeal, the Madras Estates Land Act I of 1908 was enacted, which conferred occupancy
rights on all tenants who were in possession on the date when the Act came into force.
The Full Bench held that the appellant would be entitled to claim relief under the Act. Krishnaswami Iyer J. in the order of reference to the Full
Bench, considered the powers of an appellate court. The learned Judge observed that, of the appellate court was a mere court of error whose
functions were limited to correcting the error committed by the original court, a change in the law subsequent to the original court''s decision would
not entitle it to interfere with the original decision. But having regard to the provisions of Order 41, Rule 33 C. P. C he held that the powers of an
appellate Tribunal were not merely those of a court of error in England, but one where it had all the powers of the original court. A similar question
arose before the Federal Court in AIR 1941 5 (Federal Court) where that court had to consider the effect of a statute passed pending an appeal
to it. Varadhachariar J. held that an appeal being in the nature of re-hearing, it would be open to the court to mould the relief to be granted after
taking into account even the facts and events which had come into existence after the decree appealed against.
Mr. Rajah Aiyar distinguished the two cases on the ground that they related to the powers of an appellate Court which by virtue of Order 41 R. 33
C.P.C. were co-extensive with those of the original court. In this connection, he referred to the decision in Quilter v. Mapleson, (1882) 9 Q. B. D.
It was held in that case that though a judgment of the Subordinate Court was correct according to law as it stood on the date thereof, the
court of appeal could grant relief to the appellant according to the law as it stood at the date of hearing of the appeal.
The learned Judges of the court of appeal in so deciding relied on the provisions of Order 58 Rule 1 of the Rules of Supreme Court, where it was
stated that appeals would be by way of rehearing. From this it was contended that, where there were no powers expressly conferred on the
appellate court like those in O. 59 R. 1 of the Rules of the English procedure or Order 41 Rule 33 of the CPC there would be no authority even in
an appellate court to do more than merely decide whether the order of the inferior court or tribunal was in accordance with the law which prevailed
then. Relying on that argument it was further contended that a court of revision would have no jurisdiction to take note of any subsequent
enactment or change in the law to afford relief to the aggrieved party.
(6) This contention cannot, however be accepted. The principle that an appellate court had authority to take note of change in the law subsequent
to the original court''s decision and mould the relief in accordance therewith does not rest merely on the provisions like Order 41 Rule 33 C. P.
Code. Such power is inherent in the very nature of the appellate jurisdiction possessed by it. The decision in ILR 26 Mad 91, was given when
there was no provision corresponding to Order 41 Rule 33 in the C. P. Code of 1888. Nor was that rule applicable to the appeals before the
Federal Court in AIR 1941 5 (Federal Court) . But it was held in both those cases that the appellate court had the jurisdiction as if the original
proceedings were continued therein. In ILR 36 Mad 439 Krishnaswami Aiyar J. observed.
Even before the passing of the CPC it was not the theory under the old Code that the appellate court had only the limited authority to rectify any
errors that might be pointed in the original decision.
The learned Judge held that there was no warrant for supposing that the appellate courts in India were confined to the determination of the
correctness of the original decision in accordance with the law as it stood at the date of that decision.
(7) It follows that the principle that an appellate court''s powers are co-extensive with those of the original court (subject of course to such
statutory restrictions as may be imposed in regard to the exercise of such power) is not the result of any statutory provision like Order 41 Rule 33
C. P. Code, but inherent in the nature of appellate jurisdiction.
(8) The question then is, what exactly is the nature of revisional jurisdiction. If revisional jurisdiction is equated to appellate jurisdiction, the court
exercising that jurisdiction would have al its powers under that jurisdiction, limited in regard to the mode or conditions of the exercise of that
jurisdiction only by the statute which conferred it. If however, it is not an appellate jurisdiction but a special one conferred by statute, the question
will arise as to the extent of the powers. The contention on behalf of the respondent before us was that the revisional jurisdiction under S. 12-B of
the Act was a special one to which the powers of an appellate court would not be attracted. Reliance was placed on the decision of Nagpur High
Court in Narayana Rao v. Mt. R. D. Swame, AIR 1953 Nag 271.
That was a case under Art. 226 of the Constitution. The proceedings related to a Rent Controller''s order in respect of a building. Pending the
proceedings under Art. 226 of the Constitution, there was an amendment in the statute. A question arose whether the High Court, while seized of
the matter under Art. 226 was bound to apply the statute as amended, or decide the case on the basis of the law, as it stood on the date of the
order of the inferior tribunal. The learned Judges held that the proceedings under Art. 226 were not in continuation of the application before the
inferior tribunal or an appeal therefrom, and that the High Court could only decide the matter according to the law in force at the time of the
decision of the inferior court.
As the learned Judges in that case pointed out, proceedings under Art. 226 are original in their nature and the powers of the superior court would
not be those of an appellate court. The decision in that case however is opposed to the decision of this court in Lakkaju Satyanarayana Vs. Majati
Venkatarattamma and Another, . In that case the facts were similar. There was a statutory amendment of the law pending the application under
Art. 226 to quash the order of the inferior tribunal. The learned Judges held that, after the issue of the rule nisi the decision of the inferior tribunal
was set at large, and that the provisions of the amended statute could be applied.
(9) The question whether the power of revision exercised by the High Court was a part of the appellate court''s jurisdiction was considered in
Chappan v. Moidin Kutti, ILR 22 Mad 68, where it was answered in the affirmative. At page 81, Subramania Aiyar J. observed:
''An appellate jurisdiction'' as pointed out by Story in the passage immediately following that already quoted, ''may be exercised in a variety of
forms and indeed in any form which the legislature may choose to prescribe.'' Such jurisdiction may be exercisable only in certain specified classes
of cases. Its exercise may be climbable by a party as a matter of right or only subject to his obtaining the leave of the court which passed the
decision to be appealed against. Again, the power to review or revise may be confined, to points of law or may extend to matters of fact also.
Clearly legislative provisions as to such matters only law down some of the limitations under which the jurisdiction is allowed to be exercised.
Nor are the conditions prescribed by S. 622 of the exercise of the power of revision conferred by it, different in essence from the kind of limitation
just above referred to and more commonly imposed by legislatures on the exercise of appellate functions. But none of such limitations, however
much it may circumscribe the exercise of the power, touches as already remarked, the intrinsic quality of the power itself. Now, as S. 622 in
question gives in terms to this court the power to revise decisions of courts subordinate to it, it follows that the essential criterion of appellate
jurisdiction embodied in the above quotations, is present in the case of proceedings held by this court under that section and that the power
exercised in such proceedings is therefore a part of the court''s appellate jurisdiction.
Earlier in the judgment, the learned Judge referred to a passage in S. 1761 of ""The commentaries on the Constitution of the United States"" by
Story, which stated that the essential criterion of an appellate jurisdiction was that it revised and corrected the proceedings in a cause already
instituted and did not create that cause. That question with reference to S. 115 C. P. Code was again considered by a Full Bench in P.P.P.
Chidambara Nadar Vs. C.P.A. Rama Nadar (deceased) Pichaimani alias Arunachalam by guardian Thillai Ammal as L.R. of the deceased and
Others, . Venkatasubba Rao J. delivering the judgment of the Full Bench, held that the remedy by way of revision did not differ from the right of
appeal (the only difference being in the mode, in which the power was exercised).
The learned Judge referred to the several decisions on the subject and held that there was no essential difference between proceedings by way of
appeal and by way of revision, except in regard to condition for the exercise of the powers. It follows that a court of revision would have all the
powers of an appellate court except that the conditions of interference would have to be in accord with the relevant statutory provision. Therefore
it will be open to a revisional court to take note of a subsequent change in the law, and grant reliefs to the parties on the basis of such law.
It is needless to point out that it has been an almost invariable practice of this court to take note of subsequent events, while disposing of civil
revision petitions under S. 115 C. P. Code and grant reliefs to the parties in accordance with the altered circumstances. The nature of the
jurisdiction is appellate and all the powers inherent in an appellate court would be available to the court of revision, subject to the limitation that it
could interfere only under those conditions prescribed by the statute. If those conditions are satisfied, its powers are as wide as the court of first
instance or the appellate court.
In one sense the jurisdiction under Sec. 115 C.P.C. is wider than even the jurisdiction of an appellate court. In a case under S. 115 C.P.C. for
instance, the High Court can call for records of the case suo motu. Although the party had not moved in the matter, the High Court could interfere
with the order of the lower court within the ambit of the provision, irrespective of the fact that the party against whom the order was passed did or
did not complain against it, whereas in an appeal the powers of the court would be circumscribed or limited to the actual matter in dispute before it,
and would not extend to the matter which has not the subject matter of the appeal.
(10) Section 12-B(4) of the Madras General Sales-tax Act gives a wider jurisdiction than S. 115 C.P.C. to this court. under S. 12-B(4) the High
Court has got powers to determine the questions of law raised in the case, and reverse of affirm or amend the order against which the revision
petition was filed or remit the same to the appellate tribunal with its opinion on the questions of law. The decision in Louis Dreyfus and Co. Ltd. v.
Province of Madras, 1952 3 S. T. C. 19, to which reference was made already has been overruled in the The State of Madras Vs. Louis Dreyfus
and Company Ltd., .
But the Full Bench did not consider whether the observation contained in the former decision in regard to the powers of the appellate authority was
correct or not. On the principles discussed already, the jurisdiction under that section should he held to be appellate jurisdiction; this court would,
therefore, have plenary powers of interference where there is any error law. Such error would include an error by reason of any subsequent
retrospective enactment. In A. Thippanna Rayappa Vs. Government of Andhra, it was held that S. 12-A(4) would enable an appellate Tribunal to
rehear the case.
(11) In M.K. Venkatachalam, I.T.O. and Another Vs. Bombay Dyeing and Mfg. Co., Ltd., a question arose under S. 35 of the Indian Income
Tax Act. On the date of the assessment, the assessee was entitled to interest on the advance tax paid under Sec. 18-A. Subsequently there was an
amendment of the enactment, under which the assessee would be entitled to interest not on the whole of the advance tax paid by him, but only on
the difference between payment made and the amount assessed. The amending Act provided that it was to have retrospective operation from 1-4-
1952, which was prior to the date of the assessment.
The Income Tax Officer, proceeding to act under S. 35 of the Act, rectified the assessment order holding that the assessee was entitled only to the
amount sanctioned by the amending Act. Before the Supreme Court, it was contended that the retrospective operation of the statute could not
affect the completed assessment. At p. 711 (of SCR): (at p. 880 of AIR) the Supreme Court observed:
Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and
wrong by virtue f the retrospective operation of the amendment Act. But such a result is necessarily involved in the legal fiction about the
retrospective operation of the amendment Act. If, as a result of the said fiction we must read the subsequently inserted proviso as forming part of
S. 18-A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of
the said proviso and must be deemed to suffer from a mistake apparent from the record.
The principle enunciated by the Supreme Court would support the view, that in the case of a retrospective enactment the law as later enacted
should be deemed to have been in existence on the date of the order of the inferior tribunal, even though it was not actually so. On that principle it
would follow that the decision of the inferior tribunal was against law and a superior court which had seisin of the case as a court of revision at the
time when the retrospective legislation was enacted and which had the jurisdiction to interfere in case where an error of law was committed could
give effect to that law.
In the instant case the effect of S. 2 of Act VII of 1956 is that assessments were lawful on the date on which they were made. It follows that there
was an error in the order of the Appellate Tribunal when it held that the disputed turnover should not be taken into account. Being an error of law,
this, court would have jurisdiction to rectify it u/s 12-B of the Madras General Sales-tax Act. The order of the Appellate Tribunal granting
exemption in respect of the turnovers aforesaid is set aside and they will be directed to be included in the assessable turnover.
(12) The revision petitions are allowed. But there will be no order as to costs.
(13) Revisions allowed.