Janata Oil Industrie... v. Deputy Commissioner ...

Patel, J.:— The petitioner seeks to challenge an order made by the Commissioner of Sales Tax rejecting his revision application as not competent. The short facts are as below: The petitioner is a dealer of Nagpur and is registered as such under the C.P and Berar Sales Tax Act, 1947. A notice was issued to him by the Sales Tax Officer regarding the assessment of sales tax for the period 1957-58 on 30th June, 1960. The Sales Tax Officer increased the turnover of the petitioner by 25 per cent. and did not allow any deduction under section 2(j)(a)(ii) in respect of sales purported to have been effected to registered dealers of goods. He was also directed to pay a penalty of Rs. 898. The petitioner presented an appeal to the Assistant Commissioner of Sales Tax, Eastern Division, Nagpur. This appeal was dismissed. The petitioner then filed a second appeal before the Deputy Commissioner of Sales Tax, Eastern Division, Nagpur. By a preliminary order, the Deputy Commissioner of Sales Tax called upon the petitioner to pay a part of the tax by a particular date. The same was not paid, with the result that the Deputy Commissioner of Sales Tax rejected the appeal summarily in terms of rule 55 framed under the Act, on 13th May, 1964. The petitioner then presented a revision application before the Commissioner of Sales Tax which purported to be a complaint against the order of the second appellate authority as well as against the order of the first appellate authority dismissing his appeal. The Commissioner of Sales Tax called upon the petitioner's counsel to clarify whether the appeal was against the first appellate order, or against the second appellate order, and the Advocate appearing for the petitioner clearly indicated that the revision application was against the order of the Assistant Commissioner of Sales Tax (Appeals) and not against the Deputy Commissioner's order in second appeal as shown by annexure B. The Deputy Commissioner, dealing with this revision application, was of the view that even though the second appeal was dismissed by the Deputy Commissioner summarily for non-payment of part of the tax, the order of the first appellate authority merged in the order of the second appellate authority, and no revision could lie. This order is sought to be challenged.

2. Section 22-A(1) enables the Commissioner to call for the record of a case suo motu, and make such orders after due enquiry as he may deem proper, subject to the condition that he shall not revise any order if (i) where an appeal against the order lies to an authority prescribed under sub-section (1) of section 22, the time within which such appeal may be made has not expired; or (2) the order is pending on an appeal before the authority prescribed under sub-section (1) of section 22 or has been made the subject of a revision to the Tribunal; or (3) the order has been made more than one year previously. Sub-section (2) of section 22-A enables the Commissioner to call for the record of the proceedings of a case on an application by a dealer for revision of an order made under the Act, and gives him the like powers of making enquiry and passing such orders as he may deem necessary. The qualifications are the same as under sub-section(1) of section 22-A. So far as the proviso is concerned which creates the exception, it is clear that no revision could be entertained by the Commissioner only where either an appeal is pending or the time for filing the appeal has not expired or that it is already pending in a revision application before a Tribunal. If this were all, then probably even though the appeal was dismissed by the Deputy Commissioner, an appeal would have been competent to the Commissioner. But after reorganisation of the States, however, for the purpose of section 22, the Deputy Commissioner exercises the same powers as that of a Commissioner. Under these circumstances if the decision dismissing the appeal is by the Deputy Commissioner acting as Commissioner, i.e by an authority of competent jurisdiction, then the revision evidently cannot lie. The question in this case, therefore, is whether the dismissal is such that it prevents the Commissioner from entertaining the revision application on the ground that the original order by the first appellate authority has merged in the order of the second appellate authority.

3. The question, which arises in this case, has arisen under the provisions of the Civil Procedure Code in relation to powers of review, powers of setting aside ex parte decrees under Order 9, rule 13, and powers of amendment of judgments, decrees or orders under sections 151 and 152 of the Civil Procedure Code. The matter has been discussed by Sir Dinshah Mulla at pages 194 and 590 of the Civil Procedure Code, 13th Edition. The authorities indicate that where an appeal is dismissed on a preliminary ground, such as for non-compliance with the orders of the Court, or for non-payment of court-fees or for any other defect, there can be no question of merger of the decree of the trial court in the order of the appellate court. This Court in Hussain Sab v. Sitaram I.L.R 1953 Bom. 309., and the Patna High Court in Batuk Prasad Singh v. Ambica Prasad Singh 1932 I.L.R 11 Pat. 409., have gone to the length of holding that, even when an appeal is dismissed under Order 41, rule 11, as the decree of the lower court is untouched, it is the lower court which is entitled to amend the decree. It is not necessary for us to go to that length, but it is sufficient to say, as was said in Phaltan Bank v. Baburao A.I.R 1954 Bom. 43., that “where an appeal is rejected on the ground that proper court-fees have not been paid, the appeal virtually has not come before the court of appeal for disposal on the merits, but has faded out for the reason that the preliminary steps to present the appeal before the appellate court properly and effectively were not taken by the appellant.” The court held that the order amounted to mere rejection of the memo., and the decree of the trial court did not merge in the order. The court held this in spite of the fact that a decree was in fact drawn up. In the present case, the tax demanded by the second appellate authority as a condition precedent to hearing the appeal, was admittedly not paid. Rule 55 of the C.P and Berar Sales Tax Rules, 1947, provides that if the memorandum of appeal fails to comply with all or any of the requirements of rule 54 or is time-barred, or the appellant fails to pay the amount of the tax or penalty or both, as the case may be, within the time allowed by the appellate authority, the appeal shall be liable to be rejected sum marily. “Summary rejection of appeal” has got a different meaning under the Civil Procedure Code than the “summary rejection of appeal” under this rule. Under Order 41, rule 11, of the Civil Procedure Code, an appeal is placed for admission before the court on merits and thereafter if the court, agreeing with the decision of the lower court, dismisses the appeal, without issuing notice to the respondent, it is called “summary dismissal of appeal”. In the present case, if the preliminary condition for hearing of the appeal is not complied with, power is given to the authority to reject the appeal summarily. Such rejection of a memorandum of appeal either for non-payment of court-fees or for non-compliance with any other requisition under the rules, cannot have any other effect than a rejection of a memorandum of appeal under the Civil Procedure Code. In our view, therefore, mere summary rejection of the appeal cannot mean that the appeal should be deemed to be heard on merits before. No doubt, an indirect effect of such rejection is that the order of the subordinate authority is left intact, but that is far from saying that the order is confirmed on merits. In this conclusion, we find support in the decision of the Mysore High Court under the Income-tax Act in Krishna Flour Mills v. Income-tax Commissioner and in the decision of this Court under the Wealth-tax Act in Jagmohandas Gokaldas v. Commissioner of Wealth-tax. No doubt, in the latter case, the exception clause is “where the order is subject of an appeal”. In our view, the principle however is the same.

4. Mr. Dharmadhikari placed special reliance upon the decision of the Supreme Court in Mela Ram & Sons v. Income-tax Commissioner. The question there was whether an appeal lay under section 33(1) against an order dismissing an appeal as time-barred under section 30(1) of the Income-tax Act, 1922. The Court was construing the provisions of section 30 which provided for appeals against assessment under the Act, under which an appeal had to be filed after complying with certain conditions and within a certain time. Time limit was prescribed under section 30(2) and the Appellate Assistant Commissioner was given authority to admit the appeal if he were satisfied that the appellant had sufficient cause for not presenting it within that time. The appeal was dismissed as time-barred and the question was whether an appeal was competent under section 33(1) which provided that “any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 28 or section 31 may appeal to the Appellate Tribunal within sixty days of the date on which such order is communicated to him.” The question that was discussed was whether an appeal dismissed as barred by time amounted to a decision under section 31 against which an appeal could lie under section 33 and the Supreme Court interpreting the provisions of section 33 somewhat liberally held that when the Assistant Commissioner refused to entertain the appeal, the effect of the order was that he confirmed the original order. This decision cannot be pressed into service for determining the scope of a revision application when the question is only whether the order of the first appellate authority merges in the order of the second appellate authority. It is possible to say that for the purpose of an appeal, refusal to entertain the appeal on the ground that it is barred by limitation virtually amounts to a confirmation of the assessment, still for the purpose of a revision, it cannot merge within it the order of the first appellate authority. If the provisions giving a right of appeal to a party have to be construed liberally, we do not see why the same principle of construction should not apply to the provisions concerning powers of revision which are intended for preventing grave injustice.

5. Mr. Dharmadhikari then referred us to the decision in Commissioner Of Income Tax, Bombay v. Amritlal Bhogilal & Co., where the only statement on which Mr. Dharmadhikari can rely upon is : “In law the position would be just the same even if the appellate decision merely confirms the decision of the tribunal.” It only means that even in the cases where there is confirmation of the original order, it is the appellate order that becomes effective and could be enforced. He also relied on the decisions in Commissioner of Sales Tax, Orissa v. Ramakaran Agar-walla and Commissioner of Sales Tax, Orissa v. Aurobindo Auto Service which again construed the provisions of section 23(2) of the Orissa Sales Tax Act in relation to the right of appeal against an order summarily rejecting a first appeal. As we have observed earlier, these decisions also do not touch the present point at issue. In our view, the principles enunciated by this Court in Jagmohandas Gokaldas v. Commissioner of Wealth-tax [1963] 50 I.T.R 578. and Krishna Flour Mills v. Income-tax Commissioner [1965] 55 I.T.R 259 are, with respect, the correct principles to be applied in respect of the present provisions. We accordingly hold that summary rejection of the appeal of the petitioner by the Deputy Commissioner does not bar a revision application which the petitioner preferred. We, therefore, quash the order of the Deputy Commissioner, dated 18th March, 1965, and direct that the case be heard on merits. The petitioner will get his costs from the respondents.

6. Order quashed.