Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Writ No. 2548 of 1986

Attorney(S)

; Mr. S. T. Desai, Sr. Advocate with Mr. P.A.S Rao and Ms. Anjali Verma, Advocates.

Judges

Mr. Justice R.N. Aggarwal
Mr. Justice C.L. Chaudhry

Acts

section 46 applies. Rule 35 of the Delhi Sales Tax Rules
section 46 of the Delhi Sales Tax Act, 1975 (hereinafter
section 14(4) of the Central Sales Tax Act. 1956
ARTICLE 226 CONSTITUTION OF INDIA
(4) Section 9 of the Delhi Sales Tax Act
sub-sections (1) arid (2) of section 43
Sales Tax Act. Sections 46 and 47
section 46 of the Sales Tax Act,
Act. Sub-rule 2(n) of section 71
Sales Tax (Amendment) Act, 1963,
sub-section (1) of section 43
sub-section (2) of section 43
sub-section (2) of section 9
section 43. Section 9(2)
COMPANIES ACT 1956
Act." (13) Section 46
Act." (5) Section 13
section 22-B." WE
(11) Rule 35

See more information ...

Smart Summary

Judgment Summary

Factual and Procedural Background

The petitioner, Pratap Steel Rolling Mills Ltd., a company registered under the Companies Act, 1956 and a registered dealer in Delhi, filed a writ petition under Article 226 of the Constitution of India challenging the legality and vires of a notice dated 22 August 1986. The notice was issued by the Commissioner of Sales Tax, Delhi, calling upon the petitioner to show cause why the order dated 28 November 1983 of the Additional Commissioner of Sales Tax should not be suo moto revised under section 46 of the Delhi Sales Tax Act, 1975 ("the Act").

The petitioner manufactures and sells goods described under section 14(4) of the Central Sales Tax Act, 1956 as "iron and steel." For the assessment years 1978-79, 1979-80 and 1980-81, the Assessing Authority raised demands against the petitioner amounting to Rs. 3,12,668; Rs. 3,98,140; and Rs. 4,76,652 respectively, which included interest levied under section 27(1) of the Act. The petitioner appealed those orders to the Additional Commissioner of Sales Tax, who allowed the appeals and granted relief to the petitioner. The Commissioner then issued the impugned notice seeking to revise the Additional Commissioner's order under section 46.

Legal Issues Presented

Whether the Commissioner has jurisdiction under section 46 of the Delhi Sales Tax Act to suo moto revise an order passed by the Additional Commissioner of Sales Tax (an order passed in appeal).
Whether, because the Commissioner had a right under section 43(2) to appeal against the Additional Commissioner's order to the Appellate Tribunal and did not exercise that right, the Commissioner is thereby precluded from exercising revisionary power under section 46.
Whether the Additional Commissioner, while exercising appellate powers under rule 35 framed under section 71, is to be regarded as an authority "appointed under sub-section (2) of section 9 to assist" the Commissioner and thus within the scope of orders which the Commissioner can revise under section 46.

Arguments of the Parties

Petitioner's Arguments (as presented in the opinion)

Learned counsel for the petitioner, Shri S. T. Desai, argued that the Commissioner lacks jurisdiction to revise the order of the Additional Commissioner under section 46 of the Act on at least two grounds.
First, under sub-section (2) of section 43 the Commissioner had the right to appeal against the Additional Commissioner's order to the Appellate Tribunal; having not exercised that appellate right, the Commissioner cannot now invoke section 46 to revise the order.
Second, section 43(1) confers a right to appeal to the prescribed authority and Rule 35 prescribes the authority to which the appeal shall lie; since the Additional Commissioner exercises the power of appellate authority under Rule 35, the Additional Commissioner could not be said to be an authority "appointed under sub-section (2) of section 9 to assist the Commissioner" for purposes of section 46.
The counsel relied on the decision in Commissioner of Sales Tax, Madhya Pradesh, Indore v. Shri Amarjeet Singh ((1963) 14 Sales Tax Cases 501) to support the contention that an appellate authority acting under rules is not to be equated with a person appointed under the statutory provision (section 3 in the cited case) to assist the head of the department.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner of Sales Tax, Madhya Pradesh, Indore v. Shri Amarjeet Singh ((1963) 14 Sales Tax Cases 501)	The Bench held that the power to hear an appeal is referable to rules framed under the statute, and therefore an appellate authority hears an appeal by virtue of those rules and not by virtue of appointment under the statutory provision; hence such an appellate authority is not within the expression "any person appointed under [the statute] to assist" used in the corresponding provision.	The court recorded that counsel relied on this authority but expressly disagreed with the contention based on it. The opinion rejects the interpretation urged from this precedent and does not follow it for the present statutory scheme.
Mohamed Samiullah v. Commissioner of Commercial Taxes ((1986) 61 Sales Tax Cases 107) — Full Bench, Karnataka High Court	The Full Bench held that an "appellate authority" must be understood as the officer holding that post and that such an officer (whether appellate or original) is subordinate to the Commissioner; and that provisions for appeal by revenue do not curtail the exclusive revisionary power of the Commissioner under the corresponding statutory provision (section 22-A of the Karnataka Act).	The court relied upon and cited this Full Bench decision to support its view that the Additional Commissioner (as an officer/post) is subordinate to the Commissioner and falls within the scope of authorities appointed under section 9(2) whose orders (including appellate orders) the Commissioner can examine and revise under section 46.

Court's Reasoning and Analysis

The court's analysis proceeded by reference to the statutory scheme and the rule-making power under the Act. Key statutory provisions discussed were section 9 (appointment of sales tax authorities), section 43 (appeals), section 46 (revision of orders prejudicial to revenue), section 47, and section 71 (power to make rules). The court relied on Rule 35, framed under section 71, which prescribes the authority to which appeals under section 43(1) shall lie.

The court made the following principal points in its step-by-step reasoning:

The Additional Commissioner and other authorities are statutory creations appointed under section 9(2) to assist the Commissioner; the Commissioner is the overall head of the Sales Tax department for Delhi (section 9(3) and (4)).
Section 43 grants the right of appeal to the prescribed authority; section 71 permits the Administrator to make rules about the authority to whom appeals are to be filed. Rule 35, framed under this rule-making power, names the authority to which appeals shall lie (an appeal under section 43(1) shall lie to the Commissioner or other officers not below the rank of an Assistant Commissioner).
Appellate powers conferred on the Additional Commissioner by Rule 35 derive their authority from the Act: the conferment of appellate powers under the rules is not independent of the statute. Therefore, the Additional Commissioner exercising appellate power is nonetheless an officer "appointed under sub-section (2) of section 9 to assist" the Commissioner.
Section 46 expressly empowers the Commissioner to call for and examine the record of any proceeding under the Act, and if he considers any order passed by any person appointed under section 9(2) to assist him is erroneous and prejudicial to revenue, he may, after giving opportunity of hearing and making such enquiry as he deems necessary, pass such order as the circumstances justify — including modifying or enhancing an assessment, cancelling it and directing a fresh assessment. This power extends to orders passed in appeal by such subordinate authorities, subject to the time limitation in the proviso (a final order under section 46 must be made before expiry of five years from the date of the order sought to be revised).
The court rejected the petitioner's contention that the Commissioner's appellate right under section 43(2) (to appeal to the Appellate Tribunal) precluded the use of section 46 for revision. It found no force in the submission that the existence of a separate appeal by the revenue curtailed or excluded the Commissioner's revisional power conferred by section 46.
In rejecting the contention based on the Madhya Pradesh decision (Amarjeet Singh), the court stated that the Additional Commissioner, while exercising appellate powers under Rule 35, remained an authority appointed under section 9(2) to assist the Commissioner; hence section 46 applies to orders passed by the Additional Commissioner, including appellate orders.
The court reinforced its conclusion by reference to the Karnataka Full Bench decision (Mohamed Samiullah), which supported the proposition that an appellate authority is to be treated as the officer holding that post and that such an officer is subordinate to the Commissioner; the Full Bench also held that provisions allowing an appeal by revenue do not curtail the Commissioner's special revisionary power.

Based on the textual scheme of the Act, the rule-making provision and Rule 35, and the cited Karnataka Full Bench authority, the court concluded that there was no illegality or want of jurisdiction in the impugned notice issued by the Commissioner seeking revision under section 46.

Holding and Implications

Holding: The petition is dismissed. The court held that there was no illegality or want of jurisdiction in the notice dated 22 August 1986 issued by the Commissioner under section 46 seeking suo moto revision of the Additional Commissioner's order dated 28 November 1983.

Implications:

The direct effect on the parties is that the Commissioner's notice for revision under section 46 stands validated by the court's dismissal of the petition; the Commissioner may proceed in accordance with the statutory procedure set out in section 46 (including giving the dealer an opportunity of being heard and making such inquiry as he deems necessary), subject to the statutory time-limit for making a final order.
The court relied on existing precedents (including a Karnataka Full Bench decision) to interpret the statutory scheme; the opinion does not purport to lay down a novel principle beyond that interpretation. The judgment also states that the same order will govern civil writs Nos. 2549/86, 2550/86 and 2551/86, which raise identical questions of fact and law.
The opinion does not discuss broader implications beyond the direct validation of the Commissioner's jurisdiction in this factual and legal context; no separate new precedent is recorded by the court as having been created in this judgment beyond applying and preferring the Karnataka Full Bench approach to the statutory scheme under consideration.

Show full summary ...

Pratap Steel Rolling Mills Ltd. Petitioner v. Commissioner Of Sales Tax

(1) By this petition, under Article 226 of the Constitution of India, the petitioner Pratap Steel Rolling Mills Ltd. has challenged the legality and vires of the notice dated 22nd August, 1986 issued by the Commissioner of Sales Tax, Delhi, requiring the petitioner to show cause as to why the order of the Additional Commissioner of Sales Tax dated 28th November, 1983 be not suo moto revised under section 46 of the Delhi Sales Tax Act, 1975 (hereinafter for the sake of brevity called 'the Act').

(2) The petitioner is a company registered under the Companies Act, 1956 and it has its registered office at A-4, Kalindi, New Delhi. The petitioner is registered with the respondents as a registered dealer. The petitioner deals in the manufacture and sale of various goods enumerated in section 14(4) of the Central Sales Tax Act. 1956 under the expression 'iron and steel. The Assessing Authority for the years 1978-79, 1979-80 and 1980-81 raised demands against the petitioner in the amounts of Rs. 3,12,668, Rs. 3,98,140 and Rs. 4.76,652, respectively. These demands include the interest levied by the Assessing Authority under section 27(1) of the Act.

(3) Against the aforesaid orders, the petitioner filed appeals before the Additional Commissioner of Sales Tax. The Additional Commissioner of Sales Tax allowed the appeals and granted certain reliefs to the petitioner. It is this order of the Additional Commissioner of Sales Tax which is sought to be revised suo moto by the Commissioner by the impugned notice.

(4) Section 9 of the Delhi Sales Tax Act deals with the appointment of sales tax authorities. Section 9 reads as follows :

"9.SALES Tax AUTHORITIES-(1) For carrying out the purposes of this Act, the Administrator shall appoint a person to be the Commissioner of Sales Tax.

(2)To assist the Commissioner in the execution of his functions under this Act, the Administrator may appoint as many additional Commissioners of Sales Tax, Sales Tax Officers and such other persons with such designations as the Administrator things necessary.

(3)The Commissioner shall have jurisdiction over the whole of Delhi and the other persons appointed under sub-section (2) shall have jurisdiction over such areas as the Commissioner may specify.

(4)The Commissioner and other persons appointed under sub-section (2) shall exercise such powers as may be conferred, and perform such duties as may be required, by or under this Act."

(5) Section 13 provides for the appointment of appellate Tribunal. Section 43 deals with appeals and sub-sections (1) arid (2) of section 43 with which we are concerned read as follows :

"43.APPEALS.-(1) Any person aggrieved by any order, not being an order mentioned in section 44 passed under this Act or the rules made there under, may appeal to the prescribed authority :

PROVIDED that where an order, not being an order mentioned in section 44 or made under section 47 is passed by the Commissioner, the person aggrieved may appeal there from to the Appellate Tribunal.

(2)The Commissioner or any person aggrieved by an order passed in appeal by the prescribed authority may appeal to the Appellate Tribunal against such order."

(6) Section 44 enumerates the orders which are not appealable. Section 45 deals with the statement of case to the High Court. Section 46 gives power to the Commissioner to revise the orders prejudicial to revenue. This section is important and it reads as under :

"46.REVISION Of Orders Prejudicial To REVENUE.-The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by any person appointed under sub-section (2) of section 9 to assist him is erroneous in so far as it is prejudicial to the interests of revenue, he may, after giving the dealer an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment and penalty (if any) imposed or cancelling the assessment and penalty (if any) imposed arid directing a fresh assessment.

PROVIDED that a final order under this section shall be made before the expiry of five years from the date of the order sought to be revised."

(7) Section 47 gives power of revision against orders except the orders referred to in section 44 or to which section 46 applies. Rule 35 of the Delhi Sales Tax Rules provides that an appeal under sub-section (1) of section 43 shall lie to the Commissioner or other officers not below the rank of an assistant Commissioner.

(8) Shri S. T. Desai, learned counsel for the petitioner, contended that the Commissioner has no jurisdiction to revise the order of the Additional Commissioner under section 46 of the Sales Tax Act, inter-alia, on the grounds (i) that under sub-section (2) of section 43 it was the Commissioner who could have appealed against the order of the Additional Commissioner to the Appellate Tribunal and he not having exercised that right he cannot revise the order of the Additional Commissioner under section 46 of the Act, and (ii) that section 43(1) confers the right on a person aggrieved by any order to appeal to the prescribed authority and rule 35 prescribes the authorities to which the appeal shall lie and that the Additional Commissioner exercises the power of appellate authority under rule 35 and. therefore the Additional Commissioner as the appellate authority could not be said to be an authority appointed under section 9(2) to assist the Commissioner within the meaning of the expression "appointed under sub-section (2) of section 9 to assist him" employed in section 46.

(9) The counsel in support of his contention has relied on Commissioner of Sales Tax, Madhya Pradesh, Indore, v. Shri Amarjeet Singh, (1963) 14 Sales Tax Cases 501 (1) wherein a Bench of the Madhya Pradesh High Court held as under :

"THE power to hear an appeal is referable to the rules framed under section 22(1) and therefore an appellate authority hears an appeal qua his powers there under and not by virtue of his appointment under section 3, though he may happen to be a person appointed there under. That being so, the appellate authority is in that capacity not within the expression "any person appointed under section 3 to assist him" in section 22-B."

WE are unable to agree in the contentions of Shri Desai.

(10) The Additional Commissioner, Sales Tax Officers and other authorities appointed under section 9 are the creatures of the statute. Section 43 provides for appeal and it states that the appeal shall lie to the prescribed authority. Section 71 empowers the Administrator to frame rules for carrying out the purposes of the Act. Sub-rule 2(n) of section 71 with which we are concerned reads as under :

"(N)the form and manner in which, and the authority to whom, appeals against assessment may be filed under section 43, the manner in which such appeals shall be verified and the fees payable in respect thereof and the procedure to be followed by such authority."

(11) Rule 35 has been framed under the aforesaid powers and it names the authority to which appeal shall lie under section 43. Section 9(2) states that the Administrator shall appoint & Commissioner and to assist the Commissioner in the execution of his functions under the Act the Administrator may appoint as many Additional Commissioners of Sales Tax, Sales Tax Officers and such other persons with such designations as he may think necessary. The scheme of the Act clearly is that the Commissioner is to head the Sales Tax department and the Additional Commissioner of Sales Tax and other officers ap- pointed under section 9(2) are to assist him in the execution of his functions. Section 43(1) gives the right of appeal and also provides that the appeal shall lie to the prescribed authority. Rule 35 prescribes that an appeal under sub-section (1) of section 43 shall lie to the Commissioner or other officers not below the rank of an Assistant Commissioner. The Commissioner is clearly the over-all in-charge of the entire set up under the Sales Tax Act. Sections 46 and 47 confer upon the Commissioner the powers of revision against the order passed by the authorities appointed under section 9(2) of the Act to assist him.

(12) We are unable to see how the Additional Commissioner while exercising the appellate power could be said to be an authority

"not appointed under section 9(2) to assist the Commissioner. The Additional Commissioner is appointed by the Administrator under section 9(2) to assist the Commissioner in the execution of his function's. Rule 35 derives its force from the Act. The conferment of appellate powers on the Additional Commissioner under rule 35 is not independent of the Act. The main source is the Act."

(13) Section 46 confers powers of revision on the Commissioner and it enables the Commissioner to call for and examine the record of any order passed, including the one passed in appeal, by any person appointed under section 9(2) of the Act to assist him, subject to the limitation provided in the section. Thus, any order including an order passed in appeal by an authority appointed under section 9(2) of the Act can be examined by the Commissioner under the powers conferred on him under section 46 and he can modify or vary the order as the circumstances of the case may justify.

(14) We find that the Kamataka Sales Tax Act, 1957 has a provision (section 22-A) similar to section 46 of the Act. The said section came up for interpretation before a Full Bench of the Kamataka High Court in the case Mohamed Samiullah v. Commissioner of Commercial Taxes (1986) 61 Sales Tax Cases 107(7) Mr. Justice Puttaswamy speaking for the Full Bench held as under :

"AN"appellate authority" under the Act cannot exist without an officer holding that post. The officer holding the post of an appellate authority cannot be treated as different from the appellate authority itself. If the officer is subordinate, then that officer holding the post, whether it be appellate or original, must necessarily be subordinate to the Commissioner. In that context, the appellate authority has to be interpreted as the officer holding the post of an appellate authority under the Act, as subordinate to the Commissioner. Therefore, no distinction can be made between the officer holding the post, the post, or the appellate authority.

THE provision for an appeal by the revenue before the Tribunal is independent of the exclusive power conferred in the Commissioner by section 22-A of the Act. The provision for an appeal by the revenue cannot also be read as restricting the power of the Commissioner conferred by section 22-A of the Act. Every one of the amendments made by the Karnataka Sales Tax (Amendment) Act, 1963, in particular, the introduction of section 22-A in the place of section 21(2) of the Act, did not provide for curtailing the exclusive and special power of revision conferred on the Commissioner. The power conferred by section 22-A is in no way controlled by the provisions made for an appeal by the revenue."

(15) For the reasons stated we see no illegality or want of jurisdiction in the impugned notice. The petition is without merit and is dismissed.

(16) This order shall also govern civil writs No. 2549186. 2550)86 and 2551186 as they raise identical questions of fact and law.

Pratap Steel Rolling Mills Ltd. Petitioner v. Commissioner Of Sales Tax

Judgment Summary

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments (as presented in the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Pratap Steel Rolling Mills Ltd. Petitioner v. Commissioner Of Sales Tax

Comments