WP/4626/2001 of TVL.NEW KRISHNA BHAVAN Vs THE DY. COMMERCIAL TAX OFFICER on 12 December 2002

:ORDER

(Order of the Court was made by K.RAVIRAJA PANDIAN,J).

The two Writ Petitions are filed against the orders of the Special Tribunal made in O.P.No.714 of1998 dated 19.3.1998 and Tax Case AppealNo.4 of 1997 dated 5.1.2001.

2. The short facts for the disposal of the Writ Petitions are

Conclusion

that the assessee is a hotelier. It reported a total and taxable turnover ofRs.5,80,827.95 and 'Nil' respectively for the assessment year 1989-90. Oncheck of accounts, the Assessing Authority found several defects. The defectswere that the sales per day has been suppressed and the normal sales were notdisclosed that the gross profit of 33% was found to be too low that thepurchases of raw materials were not covered by bill and the opening andclosing stocks were not prepared and produced. Hence the Junior ResearchOfficer conducted sales observation on 15.12.1989 and 6.3.1990. Having regardto the several defects, it was proposed to reject the returns and accounts asincorrect and incomplete and to determine the total taxable turnover accordingto the best judgment assessment. The sale on 15.12.1989 was Rs.3,514.75 andon 6.3.1990 was Rs.1,900.15. The average sale per day was worked out toRs.2,708/- and the total sale for the year was worked out to Rs.9,83,004.00.It was found that all the purchases of provisions were made from unregistereddealer and not even a bought note, was prepared and produced. The AssessingAuthority treated the purchases suppression of Rs.7,157/- as monthly purchasesand multiplied the same by 12 for the entire year. Thus, the AssessingAuthority arrived at a figure of Rs.90,884/-. He proceeded to assess thepurchases at the appropriate rate by bringing the taxable turnover toRs.10,73,888/-. As against that order, the writ petitioner filed an appealbefore the first appellate authority-the Appellate Assistant Commissioner.The Appellate Assistant Commissioner held that the determination ofRs.9,83,004/- as sales turnover for the entire year was perfectly justified.However, with regard to the purchase turnover of Rs.90,884/-, he held that itwas excessive and he adopted one time addition, thus arriving at a figure ofRs.14,314/-. In view of his modification in respect of the purchase addition,the total and taxable turnover came to Rs.9,97,318/-, being less thanRs.10,00,000/- and there was no tax liability on the assessee since theturnover upto Rs.1 0,00,000/- was exempted from tax by notification. The saidorder of the first Appellate Authority-Appellant Assistant Commissioner hasbeen taken by the Joint Commissioner on suo motu revision. In the suo motuproceedings the Joint Commissioner proposed to revise the order of theAppellate Assistant Commissioner in so far as it related to Section 7Aturnover. The petitioner was given an opportunity to file its objection.After hearing the objection, the Joint Commissioner justified the order of theAssessing Authority in estimating Section 7A turnover at 12 times. However,he found that for some of the goods like Sombu, Pepper, Jeera and Fried gram,no estimation was called for because these goods are normally from upcountrydealers and manufacturers and on that ground, he reduced the total turnoverarrived at by the Assessing Officer to Rs.25,000/- and fixed the taxableturnover as Rs.10,08,004/-. That order was carried on appeal by thepetitioner herein in Tax Case Appeal before the Special Tribunal. In the TaxCase Appeal, the one and the only contention raised by the writ petitioner wasthat when the Joint Commissioner has taken the order of the appellateauthority for revision suo motu by considering a part of the order wasprejudicial to the interest of the Revenue, the entire order including thatpart of the order, which went against the assessee has to be taken for the

purpose of revision and the petitioner should have been allowed to questionthe adverse part of the order notwithstanding the fact that objecting thatportion of the order the petitioner has not filed any appeal. The SpecialTribunal has negatived the submission on the ground that Section 34 of theTamil Nadu General Sales Tax Act (hereinafter referred to as 'the Act') didnot provide for any such contingency for the assessee to agitate that point,which went against him, in the suo motu proceedings subsequent to theamendment made to Section 34 of the Act. The correctness of the order of theSpecial Tribunal is challenged in the Writ Petition No.4626 of 2002 .3.When the appeal was pending before the Special Tribunal, thepetitioner filed O.P.714 of 1998 challenging the correctness of the order ofthe first Appellate Authority-Appellate Assistant Commissioner dated 7.8.1991,sustaining the order of assessment in respect of sales turnover in a sum ofRs.9,83,004/-. The Special Tribunal has dismissed the O.P on the ground thatthe order sought to be questioned in the O.P was taken on revision and orderswere passed after hearing the petitioner. As against that order, thepetitioner filed a statutory appeal before the Special Tribunal and obtained astay order therein. Therefore, the O.P directed against the AppellateAssistant Commissioner is no longer suvives. The said order has been impugnedin W.P.No.4 625 of 2001.

4. Mr.Murali Kumaran, learned counsel for the petitioner vehemently contended that even after the amendment introduced to Section 34 ofthe Act, whereby the provision has been modified to the effect that the JointCommissioner could invoke the suo motu power only when he considered that theorder of the Appellate Assistant Commissioner was prejudicial to the interestof the Revenue, it is open for the assessee to agitate that part of the orderof the Appellate Assistant Commissioner, which went against the assesseebefore the Joint Commissioner even without filing an appeal against that partof the order. He further contended that the reasoning given by the SpecialTribunal for non suiting the petitioner to challenge the order of theAppellate Assistant Commissioner dated 7.8.1991 in the Original Petition isnot at all correct. The mere filing of an appeal against the order of theJoint Commissioner could not preclude the petitioner to agitate thecorrectness of the order passed by the Appellate Assistant Commissioner in aproceedings under Section 7 of the Special Tribunal Act.5.On the other hand, the learned Government Pleader submittedthat the order of the Assessing Officer itself is an order made on estimation,it is not as if the taxable turnover was arrived at on the basis of single daysurvey but the taxable turnover has been arrived at on the basis of surveyconducted on two different dates and an average of two different dates saleshas been taken as basis for calculating the taxable turnover and as such, noexception could be taken to this method. He further submitted that theargument of the learned counsel for the petitioner regarding the power of theJoint Commissioner in suo motu proceedings to consider the grievance of thepetitioner in respect of the finding, which went against him in the orderpassed by the Appellate Tribunal also cannot be accepted, because of thejudgment of the Division Bench of this Court as well as the decision of theSupreme Court, which has considered the scope of Section 34 of the Act, andheld the assessee cannot invoke the suo motu provisions which imply that in asuo motu revision under Section 34 of the Act, the petitioner cannot agitatethat part of the order, which was decided against him by the Appellate Authority.

6. We heard the arguments of the learned counsel on either side and perused the materials on record.

7. The argument of the learned counsel Mr.Murali Kumaran that

after initiating the suo motu proceedings by the Joint Commissioner underSection 34, it is open to the assessee to agitate before the JointCommissioner that part of the appellate order, which went against the assesseecannot be accepted.

8. Under the scheme of the Act, the assessees are provided with an appellate remedy under Section 31, a second appellate remedy under Section36 and Revisional remedy before the Special Tribunal under Section 38 of theTamil Nadu General Sales Tax Act. Even if the assessee considered that theassessment order contained error apparent on the face of the record, he couldinvoke the provisions under Section 55 of the Act to rectify the errors. Butif an order of assessment has been erroneously framed to the prejudice of theRevenue, there is no provision, which authorises the Revenue to take thematter on appeal. Hence as seen from Section 34, the suo motu revisionalpower is exclusively given to the Joint Commissioner to revise the order orproceedings recorded by the statutory authorities under Sections 4A, Section12A, Section 14, Section 15 or sub-section (1) or (2) of Section 16 or anorder passed by the Appellate Assistant Commissioner under subsection (3) ofSection 31 or by the Appellate Deputy Commissioner under sub-section (3) ofSection 31-A or by the Deputy Commissioner under sub-section (1) of Section 32or sub-section (3) of Section 33, if such order or proceedings recorded isprejudicial to the interest of the Revenue. Under Section 34, no right isaccrued to in favour of the assessee. But power is vested on the JointCommissioner to correct the order, which he considered prejudicial to theRevenue. The language employed in the Section clearly indicates the intentionof the Legislature to provide administrative machinery by which a higherOfficer may review the orders of his subordinates and take necessary actionupon such review. In that proceedings, we are of the view that it is not opento the assessee to agitate some other issue, which is not basis for theinvocation of the suo motu revision.

9. When a question raised as to whether an assessee can invoke suo motu provision vested with the Deputy Commissioner under Section 32 of theTNGST Act which is identically worded as that of Section 34, this Court in thecase of STATE OF TAMIL NADU .VS. SAMCO METALS AND ALLOYS (PRIVATE) LTD., (104STC page 616) has held in unequivocal terms that the assessee could not invokethe revisional jurisdiction of the Deputy Commissioner to revise or modify theassessment. The Deputy Commissioner could revise the assessment only if hecomes to the conclusion that the assessment made by the Officer was erroneousand prejudicial to the interest of the Revenue. The assessee could not saythat the assessment made by the Assessing Officer was erroneous or prejudicialto the interest of the Revenue. Therefore, the assessee could not approachthe Deputy Commissioner to invoke his revisional jurisdiction under Section32.

10. The pari materia provision of the Andhra Preadesh GeneralSales Tax Act was the subject matter for consideration before the SupremeCourt in the case of STATE OF ANDHRA PRADESH .VS. LAKSHMAIAH SETTY AND SONS(94 STC 190 (SC). In that case, the Supreme Court has held that the validityof assessment order must be tested by the aggrieved dealer in an appeal or revision provided under the Act and in no other way. The dealer cannot invokethe suo motu power of the authorities. The suo motu power was conferred onhigher authority to correct the errors of law or to correct improper orirregular procedure or illegality in the procedure to safeguard the interestof the Revenue as there was no express power given to the State to file anappeal against the order of assessment.

11. In the present case, it might be argued that since the

assessee is aggrieved against the assessment order, by which the taxableturnover was arrived at more than Rs.10,00,000/- over and above the exemptedlimit, he filed an appeal before the appellate authority. Though theappellate authority has confirmed the sales turnover, which confirmation isagainst the interest of the assessee, however, reduced the purchase turnoverthereby the taxable turnover was reduced to below Rs.10,00,000/- ,the exemptedlimit. Having regard to the exemption granted from payment of tax upto theturnover of Rs.10,00,000/- the assessee was not liable to pay tax. Hence hehas not taken the adverse finding confirmed by the appellate authority inappeal. The need to agitate the adverse finding arose only when the order ofappellate authority was taken in Revision suo-motu. Though the argument seemsto be somewhat appealing on the first blush, if we construe the appellateprovisions under Sections 31 and 36, the right of appeals are not restrictedto the event of payment of tax arose. If the assessee is not accepting to thefinding even when no tax liability arises, he can appeal against that finding.If the contention of the assessee is accepted that would amount to enlarge thescope of the provision of Section 34 by converting the same as another appealin disguise, which cannot be legislative intend in enacting Section 34 and notpermissible with regard to the language employed in the provision.12.Even on merits also, we are of the view that the assessmentitself is based on survey conducted on two different dates. Both the sales aswell as purchase turnover have been arrived at by giving reasons by theassessing Officer, which was confirmed by the Joint Commissioner and furtherconfirmed by the Special Tribunal. The Joint Commissioner has given aconsiderable relief in respect of the purchase of Menthi, sombu, pepper,Jeera, Fried Grams on the ground that those purchases are upcountry purchases.Hence in the order passed on estimation, this court while exercising thejurisdiction under Article 226 of the Constitution would seldom interfereunless or otherwise some glaring mistake has been pointed out by the assessee.In this case, the Assessing Authority has taken a reasonable view, which hasbeen further affirmed by the Joint Commissioner in a suo motu revision.Obviously the first Appellate Authority has not taken into consideration ofthe purchase turnover in respect of the coffee powder and that was the reasonfor the initiation of the suo motu proceedings. When that being the position,we find no reason, much less any valid reason so as to interfere with theorder passed in the appeal.

13. The other writ petition in W.P.No.4625 of 2001 is filedchallenging the order of the Appellate Assistant Commissioner made on 7.8.1991.That order was revised by the Joint Commissioner by his order dated2.11.1995. As against that order, the petitioner filed an appeal in T.C.(A)No.4 of 1997 before the Special Tribunal. When the appeal was pending, thepetitioner thought it fit to challenge the order of the Appellate AssistantCommissioner dated 7.8.1991 in the year 1998 by filing Original Petition underSection 7 of the Special Tribunal Act. We find no error in the order of the

Special Tribunal in dismissing the O.P for the reasons stated therein. Whenthe order dated 7.8.1991 has been revised in the year 1995 and the revisedorder was also taken on appeal in the year 1997 and pending before the SpecialTribunal, the petitioner cannot challenge the order dated 7.8.1991 in O.P. Wehave recorded our finding already on merits also. Hence there is no merit inthe Writ Petition and it is also liable to be dismissed on the point of lachesalso.14.Accordingly, both the Writ Petitions are dismissed.However, there is no order as to costs.

Index:Yes.Website:Yes.nyrTo1.The Deputy Commercial Tax Officer,Vandavasi, N.A.A. District.

2. The Appellate Assistant Commissioner,Vellore.3.The Joint Commissioner III,(S.M.R.) (CT), Chepauk,Chennai. 600 005.

4. The Tamil Nadu TaxationSpecial Tribunal,rep by its Registrar,Chennai.600 001.