Appeal No 637 of 1967
Appeal from the judgment and order dated January 27 1966 of the Bombay High Court in Misc
Application No 112 of 1963
section T Desai G L Sanghi B Datta and O C Mathur for the appellant
R M Hazarnavis section P Nayar and R H Dhebar for the respondents
The Judgment of the Court was delivered by Bhargava J
The Swastik Oil Mills Ltd appellant carries on business of manufacturing vegetable oils soaps and other products and selling them in India as well as exporting them outside India
It was registered as a dealer under the various Sales Tax Acts in force in Bombay
The first of these Acts was the Bombay Sales Tax Act 5 of 1946 which was replaced by th Bombay Sales Tax Act 3 of 1953
The third and the latest Act now in force in Bombay is the Bombay Sales Tax Act 51 of 1959
 The appellant was assessed to sales tax on its turnover for the periods from 1st April 1948 to 31st March 1950 and from 1st April 1950 to 31st March 1951 on the basis of Returns of turnover submitted by it
In these Returns the appellant claimed exemption from tax in respect of the turnover representing the despatches or transfer of goods from its Head Office Bombay to its various Depots or Branches in other States in India and also exemption in respect of sales which were alleged to have taken place in the course of inter State trade after 26th January 1950
The Sales Tax Officer in his order of assessment dated 2nd January 1954 rejected both these claims
The appellant went up in appeal before the Assistant Collector of Sales Tax who in his appellate order dated 29th October 1956 accepted the claim of the appellant in respect of the despatches to its various Depots or Branches in other States in India but disallowed the claim in respect of the alleged inter State sales
As a result of partially allowing the claim of the appellant the Assistant Collector reduced the tax imposed by a sum of Rs 19240 15 6 for the period between 1st April 1948 to 31st March 1950 and Rs 97208for the second period between 1st April 1950 to 31st March 1951 and directed refund of these amounts to the appellant
The revisions filed by the appellant against the rejection of its claim in respect of inter State sales were still pending when on 7th January 1963 a notice was issued by the Deputy Commissioner of Sales Tax Bombay City Division in Form XXIV under 495 section 31 of the Bombay Sales Tax Act 1953 intimating the appellant that he proposed to revise suo motu the appellate orders passed by the Assistant Collector of Sales Tax insofar as he had allowed deduction in respect of the entire goods despatched to its Branches in other States outside Maharashtra because in so doing he had overlooked the provisions contained in proviso b to sub clause ii of Rule 1 under sub section 3 of section 6 of the Bombay Sales Tax Act 1946 as amended by the Bombay Sales Tax Amendment Act 48 of 1949
On receipt of this notice the appellant put in appearance before the Deputy Commissioner who is the respondent in this appeal and raised several objections against the proposed revisional proceedings making a request that the proceedings be dropped
Since the respondent did not accept this request the appellant filed a petition under Article 226 of the Constitution in the High Court of Bombay challenging the notice dated 7th January 1963 with the prayer that the notice be quashed and the respondent be restrained from taking any action against the appellant in pursuance thereof
The petition was dismissed by the High Court and now on certificate granted by that Court the appellant has come up in this appeal to this Court
In this appeal Mr section T Desai appearing on behalf of the appellant urged the same objections against the notice which were the basis of the prayer for writ in the High Court and we proceed to deal with them in the order in which he has put them forward before us in his submissions
The first point urged by learned counsel was that in exercise of the revisional powers the Deputy Commissioner of Sales Tax whether acting under the Sales Tax Act of 1946 or of 1953 or of 1959 could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material in order to judge the correctness of the order sought to be revised
In support of this proposition learned counsel referred us to a decision of the Andhra Pradesh High Court in State of Andhra Pradesh vs T G Lakshmaiah Setty  Sons1
In that case the Deputy Commissioner in exercising the revisional jurisdiction was found by the High Court to have based his assessment on guess work and the Court held that this conjecture could not be a _justification for seeking to revise the order of the assessing authority
If the Deputy Commissioner could on the material before him find data for revising the assessment it was open to him to do so
It must be made clear that he has no jurisdiction to travel beyond the record that is available to the assessing authority and the basis should be found on the record already in existence
 We are unable to accept this principle laid down by that High Court as 1 12 STC 663
496 correct
Whenever a power is conferred on an authority to revise an order the authority is entitled to examine the correctness legality and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular case before it
When exercising such powers there is no reason why the authority should not be entitled to hold an enquiry or direct an enquiry to be held and for that purpose admit additional material
The proceedings for revision if started suo motu must not of course be based on a mere conjecture and there should be some ground for invoking the revisional powers
Once those powers are invoked the actual interference must be based on sufficient grounds and if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority
This principle has been clearly recognised by this Court in The State of Kerala vs K M Cheria Abdulla and Company1
In that case sub section 2 of section 12 of the Madras General Sales Tax Act 1939 which came up for interpretation empowered the Deputy Commissioner suo motu or under certain circumstances on an application to call for and examine the record of any order passed or proceeding recorded under the provisions of that Act by any officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of such order or as to the regularity of such proceeding and to pass such order with respect thereto as he thought fit
This Court held  There is no doubt that the revising authority may only call for the record of the order or the proceeding and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding
But there is nothing in the Act that for passing an order in exercise of his revisional jurisdiction if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding be cannot make or direct any further enquiry
 It was further held It is therefore not right baldly to propound that in passing an order in the exercise of his revisional jurisdiction the  Deputy Commissioner must in all cases be restricted to the record maintained by the officer subordinate to him and can never make enquiry outside that record 1  497 While thus explaining the scope of the revisional power the Court also indicated the limitations within which such power can be exercised holding   It would not invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers
For instance the power to reassess escaped turnover is primarily vested by rule 17 in the assessing officer and is to be exercised subject to certain limitations and the revising authority will not be competent to make an enquiry for reassessing a taxpayer
Similarly the power to make a best judgment assessment is vested by section 9 2 b in the assessing authority and has to be exercised in the manner provided
It would not be open to the revising authority to assume that power p 887
In the present case the notice issued by the Deputy Commis sioner of Sales Tax on the face of it discloses the reasons which led him to take proceedings for exercising his revisional powers suo motu and it cannot be said on those facts that he was acting merely on conjecture
The Deputy Commissioner has not yet proceeded further under the notice to make the assessment
We have no doubt that when the Deputy Commissioner does make an enquiry if any for the purpose of exercising his revisional powers he will keep within the limitations indicated by this Court in the case cited above
The notice cannot be quashed or the proceedings restrained merely on the ground that the Deputy Commissioner may have to hold some enquiries in order to properly exercise his revisional jurisdiction
Mr Desai on behalf of the appellant emphasised the circumstance that in section 122 of the Madras General Sales Tax Act which was considered by this Court the Deputy Commissioner s power was expressed by stating that he may pass such order as he thinks fit while no such words occur in the corresponding provisions in the Bombay Sales Tax Acts with which we are concerned but we do not think that this circumstance makes any difference
A revising authority necessarily has the power to make such order as in the opinion of that authority the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional powers
In fact in section 122 of the Madras General Sales Tax Act the Deputy Commissioner when exercising his powers was to call for the record of the order or proceeding before passing any order which he thought fit so that there was an expression used which could have been interpreted as limiting his powers to the examination of the record only without holding any further 498 enquiry and yet this Court held that the Deputy Commissioner could not be restricted to the record and was empowered to make an enquiry outside that record
In the provisions relating to revisions in the three Bombay Sales Tax Acts there are no such words indicating any limitation and that would be an additional reason for holding that there can be no bar to an appropriate enquiry being held by the Deputy Commissioner when seeking to exercise his revisional powers suo motu
The next point urged by learned counsel was that the notice in question was issued on the 7th January 1963 when the Act of 1959 had already come into force and the Act of 1953 had been repealed so that if any revisional jurisdiction could be exercised by the Deputy Commissioner it could only be under the Act of 1959 and not under the Act of 1953
On this basis advantage was sought to be taken of the circumstance that under the Act of 1959 the revisional powers conferred by section 57 can be exercised within five years from the date of the order sought to be revised and at the relevant time in 1963 could only be exercised within two years from the date of that order
The order sought to be revised was passed on 29th October 1956 so that the notice to exercise revisional powers was being issued more than 6 years after that order had been passed
It appears to us that this submission is adequately met by the provisions contained in section 77 of the Act of 1959
The Act of 1953 was repealed by section 76 of the Act of 1959 and then section 77 lays down  1 Notwithstanding the repeal by section 76 of any of the laws referred to therein a those laws including any earlier law continued in force under any provisions thereof and all rules regulations orders notifications forms and notices issued under those laws and in force immediately before the appointed day shall subject to the provisions of section 42 continue to have effect for the purposes of the levy assessment reassessment collection refund or set off of any tax or the granting of a draw back in respect thereof or the imposition of any penalty which levy assessment reassessment collection refund setoff draw back or penalty relates to any period before the appointed day or for any other purpose whatsoever connected with or incidental to any of the purposes aforesaid 499 3 Without prejudice to the provisions contained in the foregoing sub sections and section thereto section 7 of the Bombay General Clauses Act 1904 shall apply in relation to the repeal of any of the laws referred to in section 76 as if the law so repealed had been an enactment within the meaning of section 7 of that Act We have only quoted the portions of section 77 with which we are concerned
The effect of section 77 1a is to continue in force the Bombay Sales Tax Act of 1953 as well as the Bombay Sales Tax Act of 1946 to the extent to which they were in force when this Act of 1959 came into force for the purposes mentioned in that clause
These purposes included levy assessment reassessment and collection of sales tax so that the proceedings against the appellant which had been initiated under the Act of 1946 continued to be governed by the provisions of that Act
Section 7 of the Bombay General Clauses Act 1 of 1904 which was made applicable by section 773 to the repeal of the Act of 1953 includes the following provisions   Where this Act or any Bombay Act or Maha rashtra Act made after the commencement of this Act repeals any enactment hitherto made or hereafter to be made then unless a different intention appears the repeal shall not c affect any right privilege obligation or liability acquired accrued or incurred under any enactment so repealed or e affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid and any such investigation legal proceeding or remedy may be instituted continued or enforced and any such penalty forfeiture or punishment may be imposed as if the repealing Act had not been passed
 Very clearly the repeal of the Act of 1953 by the Act of 1959 did not affect the rights and liabilities of the assessee to tax under the Act of 1953 or the Act of 1946 in respect of the turnover which became liable to sales tax under the Act of 1946
The effect of clause e of section 7 of the Bombay General Clauses Act 500 further is that any legal proceeding in respect of levy imposition or recovery of that tax is to continue and any fresh investigation legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959
Consequently the repeal of the Act of 1953 did not in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been passed in exercise of his powers under the Act of 1946
It is true as urged by Mr Desai in the alternative that in fact the proceedings should have been taken not under section 31 of the Act of 1953 but under section 22 of the Act of 1946
This is so because when the Act of 1946 was repealed by the Act of 1953 similar provisions were made in the Act of 1953 to continue in force the provisions of the Act of 1946 in respect of rights and liabilities which may have accrued or have been incurred under the Act of 1946
Section 482 and section 491 clearly contained provisions indicating that in respect of a liability to tax under the Act of 1946 the rights and liabilities of the assessee had to be determined in accordance with the provisions of the Act of 1946 and all legal proceedings or remedies in respect thereof had also to be taken under the same Act
Consequently the Deputy Commissioner in seeking to exercise revisional powers against the order of the Assistant Collector passed under the Act of 1946 had to proceed under section 22 of the Act of 1946
That however is not at all material because the provisions of section 22 of the Act of 1946 are quite similar to those of section 31 of the Act of 1953
The mere incorrect mention of section 31 of the Act of 1953 in the notice is immaterial
The Deputy Commissioner has the jurisdiction and power to revise the order under section 22 of the Act of 1946 and consequently the proceedings initiated by him are not without jurisdiction
The last submission made by Mr Desai was that if it be held that the revisional powers are sought to be exercised under the Act of 1946 it should be held that the proceedings sought to be instituted are barred by time because limitation of a reasonable time within which the revisional powers are to be exercised must be implied in the statute itself
Section 22 of the Act of 1946 and section 31 of the Act of 1953 do not lay down any limitation for exercise of the power of revision by a Deputy Commissioner sue motu and we are not prepared to accept that any such limitation must be necessarily read in the two Acts
In support of his proposition that such a limitation must be read by us Mr Desai referred to the decision of this Court in the State of Orissa vs Debaki Debi and Others1
That case however has no relevance at all because in the Orissa Sales Tax Act there was a proviso in general terms laying down that no order assessing the 1 15 STC 153
501 amount of tax shall be passed after the lapse of 36 months from the expiry of the period and it was held that this provision was in substance not a real proviso to the section in which it was placed but was in fact a period of limitation prescribed for all orders of assessment made under any other provision of the Act
In the Bombay Sales Tax Acts of 1946 and 1953 there is no such general provision prescribing a period of limitation for making an assessment and even though the effect of the order of the Dy
Commissioner passed in revision may be to bring about an assessment to tax of turnover which was set aside by the Assistant Collector in appeal
 such an assessment does not come under any provision relating to limitation
The decision of the Bombay High Court in Commissioner of Income tax Bombay City 1 vs Narsee Nagsee  Co 1 is also similarly inapplicable
In that case section 11 of the Business Profits Tax Act 1947 which had no limitation prescribed for an order of assessment was held to be governed by the 4 years  period of limitation which was prescribed under section 14 for issue of a notice for reassessment
The decision in that case turned on the fact that if proceeding for reassessment could not be started after the expiry of four years from the end of the chargeable accounting period concerned it would be totally unreasonable to hold that the first assessment of tax can be made after the expiry of that period
The case before us relates to exercise of revisional powers and does not deal with the question of the first assessment to be made when the Return is initially filed by an assessee
In fact when a revisional power is to be exercised we think that the only limitations to which that power is subject are those indicated by this Court in K M Cheria Abdulla  Co s2 case
These limitations are that the revising authority should not trench upon the powers which are expressly reserved by the Acts or by the Rules to other authority and should not ignore the limitations inherent in the exercise of those powers
In the present case the Deputy Commissioner when seeking to exercise his revisional powers is clearly not encroaching upon the powers reserved to other authorities
Under the Act of 1946 the first assessment is made by the Sales Tax Officer under section 11
If information comes into his possession that any turnover in respect of sales or supplies of any goods chargeable to tax has escaped assessment in any year or has been under assessed or assessed at a lower rate or any deductions have been wrongly made therefrom proceedings can be taken afresh under section 11A
On the face of it if a first assessment order is made under section 11 and any turnover escapes assessment the appropriate provision under which action is to be taken for assessing that turnover to tax is section 11A
There is however no provision under which the power now sought to be exercised by 1 2  502 the Deputy Commissioner in the case before us could have been exercised by any other authority
In this case as we have indicated earlier the first assessment of tax was made by the Sales Tax Officer and the turnover now in question was assessed to tax by him
Having once assessed that turnover to tax he could not initiate a fresh proceeding in respect of it under section 11A
The assessment made by him was set aside in appeal by the Assistant Collector and it is this order of the Assistant Collector which is sought to be revised by the Deputy Commissioner
This is therefore not a case where the powers are being exercised for the purpose of assessing or reassessing an escaped turnover
The case is one where the revisional powers are sought to be exercised to correct what appears to be an incorrect order passed in appeal by the Assistant Collector and for such a purpose proceedings could not possibly have been taken under section 11A
In exercising his revisional powers therefore the Deputy Commissioner is not encroaching upon the jurisdiction of any other authority specially entrusted with taking such proceedings
In this connection Mr Desai relied on a decision of the Bombay High Court in Manordas Kalidas vs V V Tatke1
The decision in that case also related to this very Act of 1946 but the point to be kept in view is that in that case the revisional power was sought to be exercised in respect of the original assessment order passed by the Sales Tax Officer under section 11 of the Act
It was in these circumstances that the Bombay High Court after referring to its two decisions in Bisesar House vs State of Bombay 2 and Commr
of Income tax vs Narsee Nagsee  Co held  In neither of those two cases revisional powers were sought to be exercised but the principle of those cases must in our judgment apply for the same reasons to the exercise of revisional jurisdiction and that jurisdiction must be exercised w ithin a reasonable period and the yard stick of reasonableness will be the period prescribed for re assessment It appears that in view of the fact that proceedings for re assessment could have been taken under section 11A in that case and instead revisional powers were sought to be exercised that Court held that the exercise of such revisional powers must be governed by the same limitation which applied to the exercise of power of reassessment
In fact the correct principle that should have been applied in that case is the principle mentioned by us earlier laid down in K M Cheria Abdulla  Co4
The revision should have been held to be incompetent on the ground that the power 1 11 STC 87
2 9 STC 654
3 4  503 was sought to be exercised for assessment of escaped turnover which had not been assessed at all at the initial stage of assessment under section 11 and proceedings under section 11A could have been competently initiated for bringing that turnover to tax
Instead the Court equated the proceeding in revision with the proceeding for reassessment and applied the 4 year period of limitation which was prescribed only for reassessment and not for exercise of revisional power
In our opinion the ultimate decision in that case was perfectly correct but we are unable to affirm the vie that the revisional power is governed by any period of limitation laid down in section 11A for proceedings for reassessment of escaped turn over
Reference in this connection was also made to a decision of this Court in Maharaj Kumar Kamal Singh vs Commissioner of Income tax Bihar and Orissa1 in which the Court dealt with a case of an assessee whose income to the extent of Rs 93604representing interest on arrears of rent was omitted to be brought to assessment by the Income tax Officer
Subsequently in another case the Privy Council held that interest on arrears of rent payable in respect of agricultural land was not agricultural income and consequently the Income tax Officer initiated reassessment proceedings under section 341 b of the Income tax Act
The circumstance relied upon by learned counsel for the appellant was that the omission by the Income tax Officer to bring to assessment that interest was part of an order made by him after his initial assessment order had been set aside by the Appellate Assistant Commissioner who directed a fresh assessment allowing the appeal against that order
In that case it was held that the escaped income could be brought to tax under section 34 of the Income Tax Act and on the basis of this decision it was urged that similarly in the present case the turnover now sought to be brought to tax in exercise of revisional powers could be re assessed under section 11A
This argument ignores the circumstance that in that case the last order under which the income from interest had been exempted from tax was an order made by the Income Tax Officer himself though after the assessment proceedings had been remanded to him by the Appellate Assistant Commissioner
Since the income had escaped assessment under an order passed by the Income tax Officer himself he could competently take proceedings under section 34
In the case before us the turnover of the assessee now sought to be taxed in the revisional proceedings did not escape liability to tax under the orders of the Sales tax Officer and on the other hand was actually taxed by him which imposition of tax was set aside in appeal
Consequently the Sales Tax Officer could not possibly take proceedings under section II A in respect of that turnover
1 504 For these reasons we hold that the proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant are not incompetent and the High Court was right in refusing the writ sought by the appellant
The appeal fails and is dismissed with costs
RKPS Appeal dismissed


Summary:
The appellant was registered as a dealer under the various Sales Tax Acts in force in Bombay from time to time ie Bombay Acts 5 of 1946 3 of 1953 and 51 of 1959
In the course of its assessments to sales tax for the periods from 1st April 1948 to 31st March 1950 and from 1st April 1950 to 31st March 1951 the appellant claimed exemption from tax inter alia in respect of certain despatches of goods from its head office in Bombay to its branches in other States
The Sales Tax Officer rejected these claims but in appeal the Assistant Collector accepted the claim in respect of the despatches to various branches though he rejected all other claims for exemption
He also directed a refund of the excess tax collected from the appellants
While revision petitions filed by the appellant against these orders were pending a notice was issued to him on January 7 1963 by the Deputy Commissioner of Sales Tax in Form XXIV under section 31 of the Bombay Sales Tax Act 1953 intimating the appellant that he proposed to revise suo motu the orders passed by the Assistant Collector in so far as he had allowed deduction in respect of the entire goods despatched to the appellants  branches outside Maharashtra because in so doing he had overlooked certain provisions of law which were specified in the notice
Tile appellant filed a petition under article 226 of the Institution seeking to quash the notice dated 7th January 1963 but his petition was dismissed by the High Court
In the appeal to this Court it was contended on behalf of the appellant inter alia i that in exercise of the revisional powers the Deputy Commissioner whether acting under the Sales Tax Act of 1946 or of 1953 or of 1959 could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material nor to judge the correctness of the order sought to be revised ii that the notice in question was issued on 7th January 1963 when the Act of 1959 had already come into force and the Act of 1953 had been repealed so that any revisional jurisdiction could only be exercised by the Deputy Commissioner under the Act of 1959 and not under the Act of 1953  as the power under section 57 of the Act of 1959 could only be exercised within five years from the date of the order sought to be revised the notice issued by the Deputy Commissioner was time barred and iii that the proceedings to be instituted were barred by time because limitation of a reasonable time within which the revisional Powers are to be exercised must be implied in the statute itself
493 HELD  The proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant were not incompetent and the High Court was right in refusing the writ sought by the appellant
i Whenever a power is conferred on an authority to revise an order it is entitled to examine the correctness legality and propriety of the order and to pass such suitable orders as it may think fit in the circumstances of the particular case
The proceedings for revision if started suo motu must not be based on a mere conjecture and there should be some ground for invoking the revisional powers
Once these powers are invoked the actual interference must be based on sufficient grounds and if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision there can be no bar to the revising authority holding or directing a further enquiry and thereafter admitting additional material
496 A C The State of Kerala vs K M Cheria Ahdulla and Company   explained and followed
State of Andhra Pradesh vs T G Lakshmnaiah Setty  Sons 12 STC 663 disapproves
In the present case
the notice issued by the Deputy Commissioner on the face of it disclosed the reasons which led him to take proceedings for exercising his revisional powers suo motu and it could not be said on those facts that he was acting merely on conjecture
There was no reason to think that when proceeding with his inquiry he would not keep within the limitations indicated by this Court in K M Cheria Abdullas case
ii The effect of section 771 a of the Act of 1959 is to continue in force the Act of 1953 as well as the Act of 1946 to the extent to which they were in force when the Act of 1959 came into force for the purposes of levy assessment reassessment and collection of sales tax
Fur thermore by virtue of section 7e of the Bombay General Clauses Act 1904 which was made applicable to the repeal of the Act of 1953 by section 773 of the 1959 Act any legal proceeding in respect of levy imposition or recovery of tax is to continue and any fresh investigation legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959
Consequently the repeal of the Act of 1953 did not in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been Passed in exercise of his power under the Act of 1946
499 C 500 B Although the Deputy Commissioner in seeking to exercise revisional powers should have proceeded under section 22 of the Act of 1946 and not under section 31 of the 1953 Act this fact was immaterial as the provisions of the two Sections were similar
500 D E iii Section 22 of the Act of 1946 and section 31 of the Act of 1953 do not lay down any period of limitation for the exercise of the power of revision by a Deputy Commissioner suo motu and no such limitation could be read in the two Acts
500 G The State of Orissa vs Debaki Debi and Others 15 STC 153
Commissioner of Income tax Bombay City 1 vs Narsee Nagsee  Co  Manordas Kalidas vs V V Tatke 11 STC 87
Disesar House vs State of Bombay 9 STC 654 distinguished
494 Maharaj Kumar Kamal Singh vs CIT Bihar and Orissa  referred to