P.V.B Rao, J.:— These three applications under Article 226 of the Constitution are directed against the orders of the Collector of Sales Tax assessing the petitioners in each of the applications to sales tax on the ground that their turn-over escaped assessment and had been under-assessed. As these three applications involve a common question of law, they are heard together and are disposed of by this judgment.
2. The common question argued before us with regard to these three applications is whether the said re-assessment can be made after 36 months of the original assessment. In O.J.C No. 289 of 1956, the petitioner is a dealer in cocoanuts at Sakhigopal in Puri district and is a registered dealer under the Orissa Sales Tax Act, his registration number being 279. For the quarters ending 31-12-50 to 30-9-51, 31-3-52 to 30-9-52 and 31-3-53 the assessing officer assessed the dealer and disallowed the deductions claimed by him under Section 5(2)(a)(ii) of the Orissa Sales Tax Act.
3. But the appellate authority allowed them as claimed by the dealer in pursuance of the orders of the Board of Revenue in the case of Khemchand Chandanmal of Balangir on the ground that the deduction was legal till the amendment of the provisions of the Orissa Sales Tax Act on 26-11-51. In view of a subsequent decision of this Court in the case of Hindusthan Cellulose and Paper Mills Ltd. v. Collector of Sales Tax and the State, AIR 1957 Orissa 232 (A), the Collector of Sales Tax verified the records of this case under R. 54 of the Orissa Sales Tax Rules and coming to the conclusion that the appellate Orders were incorrect, issued a notice to the dealer and revised the appellate orders on 23-11-55 and ordered that the taxable turnovers allowed to be deducted by the Assistant Collector should be raised and fresh demand notices should be served on the dealer accordingly. In O.J.C No. 296 of 1956 the petitioner is a dealer under the Orissa Sales Tax Act and was assessed on his taxable turnover for the quarters ending 30-6-51, 30-9-51 and 31-12-51. Out of the total claims made by the dealer on account of sales of cocoanuts outside the state Rs. 7627-11-6. Rs. 34788-4-3 and Rs. 30731-9-0 were disallowed by the Sales Tax Officer, Puri, on assessment for the three quarters respectively on the ground that the dealer having purchased the goods of the value noted above in the respective quarters free of tax on the strength of his registration certificate from other registered dealers utilised otherwise than resale in Orissa.
4. But on appeal by the dealer against the orders of assessment disallowing the claims in full, the Assistant Collector of Sales Tax, Puri, held that the dealer was entitled to claim deductions towards the value of goods purchased free of tax from other registered dealers prior to 26-11-51 and sold outside the State and allowed further deductions of Rs. 7627-11-6, Rs. 34788-4-3 and Rs. 25737-1-0 for the said three quarters, being of the view that prior to the passing of the Orissa Sales Tax (Amendment) Act, 1951, on 26-11-51, re-sale for the purpose of S. 5(2)(a)(ii) will also include a re-sale outside the State.
5. But the Collector of Commercial Taxes, Orissa, after the decision of this Court above referred to, holding) that the re-sale for the purpose of S. 5(2)(a)(ii) meant re-sale in Orissa even prior to 26-11-51, revised the assessment on 28-2-56 under R. 54 of the Orissa Sales Tax Rules, 1947 after giving an opportunity to the petitioner of being heard and assessed him on the said sums of Rs. 7627-11-6, Rs. 34788-4-3 and Rs. 30569-8-0 for the three quarters.
6. In O.J.C No. 300 of 1956, the petitioner is a dealer under the Orissa Sales Tax Act and was assessed on his taxable turnover for the quarters ending 30-6-51 and 30-9-51. At the assessment stage the Sales Tax Officer who completed the assessment held the petitioner liable to pay tax for the value of goods purchased free of sales tax on the strength of his registration certificate for re-sale but utilised by him otherwise by means of export outside the State.
7. But at the appellate stage the Assistant Collector of Sales Tax wrongly allowed the contention of the petitioner that the said amounts should be deducted from the turnover. The Collector of Sales Tax under R. 54 of the. Orissa Sales Tax Rules, 1947 issued notice to the petitioner to show cause against the revision of the said assessment by the appellate authority. The Collector of Sales Tax revised the order of the appellate authority on 2-3-56 and assessed the turn-over which was deducted by the appellate authority.
8. The petitioner in this case did not file the order of the Collector along with his application and it is regrettable that this defect was not noticed by the Stamp Reporter and no defect was noted at the time of the stamp reporting. I could not get at the order at the time of writing the judgment as it is not in the record. The Stamp Reporter should, if any necessary document is not filed along with the application, note that defect in the Stamp report.
9. The petitioners' case in all these three applications is that as under Section 12(7) of the Orissa Sales Tax Act nobody shall be assessed on amounts that had escaped assessment or that had been under-assessed after 36 months of the end of the period for which the tax is payable, the assessments in these cases which are admittedly after 36 months are contrary to law and without jurisdiction. The petitioners further contend that R. 54 of the Sales Tax Rules is subordinate to and controlled by Section 12(7) of the Sales Tax Act.
10. The petitioners also contend that the amendment of the Orissa Sales Tax Act by Orissa 1 of 1955 by enacting a proviso to Cl. (6) of S. 12 does not in any way alter the position, but that on the other hand it would show that it was not the intention of the Legislature by enacting Cl. (7) to S. 12 that it should be subordinate to R. 54 or Section 23(3) of the said Act.
11. The contention of the Department is that R. 54 of the Orissa Sales Tax Rules is subordinate to Section 23(3) and not to Section 12(7) of the Orissa Sales Tax Act, 1947 and that the assessments made in these three cases by the Collector in revision do not amount to fresh assessments or re-assessments under Section 12 read with R. 31 of the Orissa Sales Tax Act and the period of limitation set forth in S. 12 of the Act does not apply to revisions under R. 54.
12. Mr. Misra contends that R. 54 envisages a revision by the Collector of Sales Tax of any order passed by any subordinate officer from which no appeal has been preferred; that in these cases the orders which had been revised under R. 54 by the Collector of Sales Tax, Orissa, are the appellate orders of the Assistant Collectors of Sales Tax, Puri, from which no appeals had been preferred; and that therefore the said orders of revision passed by the Collector of Sales Tax are in conformity with the requirements of the said R. 54.
13. Section 12 of the Orissa Sales Tax Act, 1947 is the assessment section. Clause (7) provides:
“(7) If for any reason the turnover of a dealer for any period to which this Act applies has escaped assessment or has been under-assessed, the Collector may at any time within thirty-six months of the end of that period call for a return under sub-s. (I) of S. 11 and may proceed to assess the amount of tax due from the dealer in the manner laid down in sub-s. (5) of this section and may also direct, in cases where such escapement or under-assessment is due to the dealer having concealed particulars of his turnover or having without sufficient causes has furnished incorrect particulars thereof, that the dealer shall pay, by way of penalty, in addition to the tax assessed under this sub-section, a sum not exceeding one and a half times of the said tax so assessed.” Section 23, Cl. (3) provides:
“(3) Subject to such rules as may be prescribed and for reasons to be recorded in writing, the Collector may, upon application or of his own motion, revise any order passed under this Act or the rules thereunder by a person appointed under S. 3 to assist him, and, subject as aforesaid, the Revenue Commissioner may, in like manner, revise any order passed by the Collector:
Provided that before rejecting any application for the revision of any such order the Collector or the Revenue Commissioner, as the case may be, shall consider it and shall record reasons for such rejection,”
14. Rule 54: of the Orissa Sales Tax Rules, 1947, is as follows:
“54. Revision by Collector and Revenue Commissioner suo motu — The Collector may, of his own motion, at any time within one year from the date of passing of any order by the Assistant Sales Tax Officer or by the Sales Tax Officer or by the Assistant Collector, as the case may be call for the record of the proceeding in which such order was passed and revise any such order from which no appeal has been preferred, and the Revenue Commissioner may in like manner, at any time within one year from the date of passing of any order by the Collector call for the record of proceeding in which such order was passed and revise any such order from which no appeal has been preferred:
15. By Section 7 of the Orissa Sales Tax (Amendment) Act, 1954 (Orissa Act 1 of 1955), it was enacted,
“7. To the existing provisos to sub-s. (8) of Section 12 of the said Act, the following new proviso shall be added, namely:
Provided further that the period of limitation fixed in the proviso immediately preceding shall not apply to assessment under sub-s. (7) of this section or to enhancement of assessment or order of fresh assessment made or passed under S. 23.”
16. It may be noted that the original assessments in all these three applications by the appellate authority were completed before the Orissa Act 1 of 1955 which received the assent of the President on 14-1-55 and was first published in an extra-ordinary issue of the Orissa Gazette on 1-2-55.
17. Mr. G.K Misra, the learned counsel for the Department contends that S. 12(7) contemplates a re-assessment of escaped assessment or under-assessment by the original taxing officer and does not in any way control the powers vested in the Collector of Sales Tax under Section 23(3) and R. 54 of the Sales Tax Act. He referred us to the definition of ‘Collector’ under S. 2(a) of the Act which is,
“(a) ‘Collector’ means any Collector of Sales Tax appointed under sub-s. (1) of S. 3; and contended that the word ‘Collector’ in S. 12(7) contemplated an assessing officer in the first instance and the word ‘Collector’ in S. 23(3) contemplated the revising authority under the Act and therefore he contends that the provision of S. 12(7) does not apply to the case of revision by the Collector of Sales Tax under S. 23(3). According to the definition in S. 2(a), Collector means any Collector of Sales Tax appointed under sub-s. (1) of S. 3 and S. 3(1) says,
“(1) The Provincial Government may appoint any person to be a Collector of Sales Tax, and such other persons under any prescribed designations to assist him as it thinks fit.”
18. Under R. 2 of the Orissa Sales Tax Rules, 1947, Cl. (b) defines ‘Assistant Collector’ which is stated to mean an Assistant Collector of Sales Tax appointed by that designation by the Provincial Government under S. 3 of the Act to assist the Collector, Clause (c) defines Assistant Sales Tax Officer as to mean in respect of any place of business of a dealer the Assistant Sales Tax Officer appointed by that designation by the Provincial Government under S. 3 of the Act to assist the Collector, within whose jurisdiction that place of business is situated; and Cl. (e) says, “Collector means the Collector of Sales Tax and includes any officer to whom the Collector of Sales Tax may delegate under S. 17 his powers and duties under the Act.”
19. No delegation of such power under S. 17 by the Collector to the Assistant Sales Tax Officer is placed before us. Consequently on a reading of the various definitions stated above, I cannot accept the contention of the learned counsel that the word ‘Collector’ as used in S. 12(7) refers to only the officer making the re-assessment as an officer in the first instance and does not refer to a Collector revising a re-assessment under S. 23(3). Rule 3 enumerates the Sales Tax Authorities and it says,
“1. Under S. 3 of the Act the Provincial Government may appoint the following classes of Sales Tax Authorities, with jurisdiction over specified areas, namely:
(a) Collector of Sales Tax,
(b) Assistant Collectors of Sales Tax,
(c) Sales Tax Officers,
(d) Assistant Sales Tax Officers, and
(e) Inspectors of Sales Tax.
2. The Assistant Collectors of Sales Tax, the Sales Tax Officers and the Assistant Sales Tax Officers shall be subordinate to the Collector of Sales Tax……
3. The authorities specified in Cls. (b), (c), (d) and (e) shall be under the administrative control of the Collector of Sales Tax.”
20. Though, as stated above, according to the classification of the various officers under the Sales Tax Act ‘Collector’ seems to refer to a Collector contemplated under S. 23(3) yet by a reading of S. 12, Cls. (1) and (2), it appears, the original assessing authority also is referred to as Collector. In my opinion, therefore, as the sections stand in the Act and as the rules stand, the word ‘Collector’ seems to apply both to the original assessing officer as also the revising authority and it cannot, as contended by Mr. Misra, be held that the Collector in S. 12(7) is different from the Collector in S. 23(3) and that the word in the form means only the original assessing officer and not the revising authority. In my opinion, therefore, S. 12(7) includes also the re-assessment made by the revising authority under S. 23(3).
21. Mr. Misra next contended that the revisional powers of the Collector under S. 23(3) cannot be said to be controlled by the prior S. 12(7). In support of his contention, he relies upon a decision of the Patna High Court in the case of Gajo Ram Basant Ram v. State of Bihar, reported in 1956-7 STC 248 : (AIR 1956 Pat 113) (B). This was a case under the Bihar Sales Tax Act. In this case it was held by a Division Bench of the Patna High Court consisting of Chief Justice S.K Das (as he then was) and Justice Kanhaiya Singh, that the proviso to Section 10(6) of the Bihar Sales Tax Act, 1944, providing that no order assessing the amount of tax due from a dealer in respect of any period should be passed later than 24 months from the expiry of such period in its true meaning and effect was restricted in its application to an original order of assessment and did not affect the power of review under S. 20(4) or apply to a fresh order of assessment directed by the appellate or revisional authority and that the principle laid down with regard to the provisions of Sections 24, 26 and 27 of the Bihar Agricultural Income-tax Act, 1938, and Sections 33, 34 and 35 of the Indian Income-tax Act, 1922 could not be applied with regard to the provisions contained in the proviso to Section 10 A3 and Sections 20 of the Bihar Sales Tax Act, 1944.
22. In a very learned Judgment, if I may say so with respect, Das, C.J (as he then was) discussed the various provisions, referred to above, of the Bihar Agricultural Income-tax Act of 1938 and of the Indian Income-tax Act of 1922, compared them to the sections in the Bihar Sales Tax Act and came to the conclusion that as in the said two Acts the revisional power was subject to the other provisions of the Act, the principle laid down under the said Acts could not be applied to the provisions of the Sales Tax where the revisional power is not subject to the other sections of the Sales Tax Act. In the course of the judgment, the learned Chief Justice (as he then was) observed:
‘In my opinion, this argument fails to take note of several important distinctions which exist between the provisions of the Bihar Agricultural Income-tax Act, 1938, and the Indian Income-tax Act on the one hand and the provisions in the Bihar Sales Tax Act, 1944, on the other. First of all, Section 24 of the Bihar Agricultural Income-tax Act, 3.938, says in clear terms that the power of revision given by sub-s. (2) of that section is ‘subject’ to the provisions of this Act. Therefore, in express terms S. 24 is made subject to the provisions of Ss. 26 and 27.
The position is the same with regard to the Indian Income-tax Act. Sub-section (2) of Section 33 of the Indian Income-tax Act (before the amendments of 1939 and thereafter) stated in express terms that the power of review given to the Commissioner was ‘subject to the provisions of this Act’. Therefore, S. 33 was subject to the provisions of Ss. 34 and 35. The Bihar Sales Tax Act, 1944, however, contains no provisions similar to the provisions of Sections 26 and 27 of the Bihar Agricultural Income-tax Act, 1938; nor does it contain provisions similar to the provisions of Sections 34 and 35 of the Indian Income-tax Act.
Moreover, sub-s. (4) of Section 20 of the Bihar Sale Tax Act states that the power of review is ‘subject to such rules as may be prescribed’. The power is not subject to the ‘other provisions of the Act’ so as to attract the operation of the proviso to sub-s. (6) of S. 10. Then there is another very important distinction. The general rule is that the operation of a proviso should be confined to that clause or portion of the statute which directly precedes it.”
23. Finally he observed,
“The proviso to sub-s. (6) of S. 10 will render nugatory the powers given to the appellate authority under Cl. (b) of sub-s. (2) of S. 20. I do not think that could have been the intention of the legislature. Such a construction will result in an absurdity; and after the period mentioned in the proviso to sub-s. (6) of S. 10 is over, it would not be possible for the appellate authority or revisional authority to pass the orders which under S. 20 it would be competent to pass.
24. I think that a distinction must be drawn between an original order of assessment under S. 10, which is subject to the proviso to sub-s. (6) of that section, and a fresh order of assessment directed by an appellate or revisional authority as mentioned in sub-sections (2) and (3) of Section 20 of the Bihar Sales Tax Act, 1944. I am aware that the only section dealing with assessment of tax is Section 10 of the Bihar Sales Tax Act, 1944, and a fresh order of assessment will also proceed on the principles laid down in S. 10.
25. That does not, however, mean that si distinction between an original order of assessment under S. 10 and a fresh order of assessment directed by the appellate or revisional authority cannot be made. In my opinion, such a distinction can and ought to be made in order to avoid absurdity and repugnance between the different provisions of the Bihar Sales Tax Act, 1944.”
26. On the authority of this decision which, according to Mr. Misra, is on all fours with the present case before us, he contends that the orders complained against are perfectly valid as they are not subject to Section 12(7) of the Orissa Sales Tax Act. I cannot accept this contention. The provision in Section 10(6) of the Bihar Sales Tax Act of 1944 is quite different from that contained in Section 12(7) of the Orissa Sales Tax Act. There is no provision in the Bihar Sales Tax Act of 1944 or of 1947 corresponding to Section 12(7) of the Orissa Sales Tax Act. The learned Chief Justice (as he then was) in the above Patna case himself makes an express reservation by saying
“I should make it quite clear at the very outset that the question which we have to answer has to be answered with reference to the provisions of the Bihar Sales Tax Act, 1944, and not the Bihar Sales Tax Act, 1947. The Act of 1947 contains different provisions, which provisions do not fall for consideration in the present case.”
27. Section 12(7) specifically enacts that if for any reason the turnover of a dealer for any period to which the Act applies has escaped assessment or has been under-assessed, the Collector may at any time within thirty six months of the end of that period call for a return under sub-s. (1) of S. 11…… The period of thirty six months is fixed not by a proviso as in Section 10(6) of the Bihar Sales Tax Act of 1944 but by an independent sub-section itself.
28. According to S. 12(7), there can be no reassessment on the ground either of escapement or of under-assessment by the Collector after thirty-six months after the end of that period. ‘Collector’ in this section is the same as the word ‘Collector’ used in S. 23(3) and as there is a limitation provided under a specific section of the Act this must be taken to apply to the case of re-assessment by virtue of the exercise of the power of re-assessment in revision also and R. 54 of the Orissa Sales Tax Rules does not and cannot give any greater power to the Collector exercising revisional authority than what is granted under the Act itself.
29. The Collector cannot by virtue of that rule which says that the Collector may, of his own motion, at any time within one year from the date of passing of any order by the Assistant Sales Tax Officer or by the Sales Tax Officer or by the Assistant Collector as the case may be,…… revise any such order from which no appeal has been preferred……, re-assess the turnover which escaped assessment or which was under-assessed within one year of the date of passing of the; appellate order after 36 months provided by S. 12(7). The provision in this rule to that effect is contrary to the express enactment under S. 12(7).
30. That Section 12(7) prohibits a re-assessment of escaped turnover or under-assessed turnover beyond thirty-six months of the end of the period is also clear by the legislature making an amendment by Act I of 1955. The amendment is already noted above and it expressly enacts as a proviso to the already existing proviso to sub-s. (6) that the period of limitation fixed in the proviso immediately preceding shall not apply to assessment under sub-s. (7) of this section or to enhancement of assessment or order of fresh assessment made or passed under S. 23.
31. Though this new amendment is made as a proviso to sub-s. (6) of S. 12, yet it says that the period of limitation of thirty-six months shall not apply to assessment under sub-s. (7) or order of fresh assessment made or passed under S. 23. This ??? shows that but for this amendment S. 12(7) prohibited any fresh assessment after thirty-six months from the end of the period. This amendment of sub-s. (6) of S. 12 by adding a proviso is, in my opinion, a clear legislative recognition that prior to the amendment no re-assessment can be made by the Collector alter thirty six months.
32. In my opinion, therefore, the orders of re-assessment made by the Collector of Sales Tax are contrary to law which is apparent on the face of the orders.
33. The orders are therefore quashed. The petitions are allowed with costs. A consolidated hearing fee for all the three petitions is fixed at Rs. 250/-.
34. S. Barman, J.:— I agree.
V.B.B
35. Petitions allowed.