IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITIONS NO.164/2002 & 165/2002 Sesa Goa Limited, a Company incorporated under the Companies Act, 1956 and having its registered Office at Sesa Ghor, 20 EDC Complex, Patto, Panaji, Goa. ..... Petitioner. V/s. 1. The Commissioner of Sales Tax, Government of Goa, Panaji, Goa. 2. The State of Goa, (through the Chief Secretary) to the Government of Goa, having Office at Secretariat, Panaji, Goa.) ..... Respondents. Mr. S.K. Kakodkar, Sr. Advocate with Mr. Joel D’Souza, Advocate for the petitioner. Mr. V.P. Thali, Addl. Advocate General with Ms. S. Linhares, Addl. Govt. Advocate for the respondents. CORAM : V.C. DAGA & P.V. HARDAS, J.J. DATED : 10TH JUNE, 2002. ORAL JUDGMENT : (Per V.C.DAGA, J.) Rule. Respondents waive service. Heard finally by consent of parties. Parties were also given opportunity to circulate their written submissions in support of their oral submissions. In these petitions, the parties are same, issues raised herein are identical and can be disposed of by common Judgment, as such, both petitions were heard together. - 2 - FACTUAL MATRIX Factual matrix, in both petitions, lies in a narrow compass and it is thus : 2. The petitioner is a a mining company engaged in operation of extraction, processing and export of mineral ore from its various mines located in Goa. It also deals with resale of scrap, by-products, oils and lubricants and motor vehicles spares including tyres and tubes etc, required for transporting minerals. The petitioner is also a registered small scale industrial unit (SSI unit) engaged in the business of manufacturing barges at Sirsaim, Goa. 3. The first writ petition being W.P. No.164/2002, is directed against the notice bearing No.CST/ADM/11/Suo-Moto/01-02/02 dated 1.4.2002 issued by the Commissioner of Sales Tax, Government of Goa proposing to revise the assessment orders passed by the Sales Tax Officer on 31.3.2001, 17.8.2001 and 25.3.2002 relating to the sales of barges (manufactured by the petitioner) for the assessment years 1996-97 (under Local and Central Act), 1997-98 (under Local Act) and 1998-99 (under Local Act) respectively on the ground that the petitioner’s claim for exempting the said sale has been wrongly allowed holding it to be covered by Entry No.68 - 3 - of the Second Schedule appended to the Goa Sales Tax Act, 1964 ("the said Act" for short). 4. The petitioner, after receipt of show cause notice, by letter dated 2.5.2002, requested the Commissioner to furnish reasons, if any, recorded by him for proposing to revise the assessment orders. The Commissioner by letter dated 10.5.2002, furnished the following reasons : "It is noticed from the records that the Registration Certificate as SSI granted to you by the Directorate of Industries for barge manufacturing unit is a conditional one as the same is subject to the condition that the unit is not entitled for any type of special assistance under the Government’s SSI Programme. The Directorate of Industries has also confirmed vide their letter No.1/67/87/CST/Cert/DIM/133 dated 13.11.95 that your nit is a not entitled for any type of special assistance under Government’s SSI Programme including sales tax exemption.", 5. In the course of assessment of petitioner’s turnover for the year 1986-87, the Sales Tax Officer by his letter dated 7.2.1991 had invited petitioner’s - 4 - objection to his proposal to refuse exemption from sale tax for sale of barges under the said entry 68 on the ground that the Directorate of Industries had imposed a condition in the Certificate of Registration as a Small Scale Industry that the said unit shall not be entitled to the special assistance under Government’s SSI Programme. The petitioner filed his objections under letter dated February 25, 1991. After considering the petitioner’s objections the Sale Tax Officer dropped his proposal but disallowed exemption on a different ground, namely; that the petitioner’s unit had gone into production before 1.7.1983, the date on which the said Entry 68 was amended. 6. The petitioner’s appeal from the said assessment order was dismissed by the Assistant Commissioner of Sales Tax by order dated 19th September, 1991. The Assistant Commissioner did not dispute the Sales Tax Officer’s finding that Sales Tax exemption was not in the nature of special assistance under the Government’s SSI Programme. On Second Appeal, the Administrative Tribunal, by order dated 24.7.1995 held that the petitioner was entitled to exemption for sale of barges under the said entry 68 as it stood before its amendment on 1.7.1983 and found that the Government was disabled from depriving the petitioner of the said benefit on the touch stone of doctrine of promissory - 5 - estoppel, and allowed the appeal. The acceptance of the Petitioner’s contention that the petitioner’s certificate of registration as Small Scale Industry did not disqualify the petitioner for exemption in respect of sale of barges under the said entry 68 was not disputed by the Sales Tax Department. 7. The petitioner states that for the assessment years 1987-88 to 1990-91, the Sales Tax Officer disallowed the claim for exemption in respect of sale of barges under the said entry 68 on the same ground on which it was refused for the year 1986-87. The petitioner appealed from the said assessment orders to the Assistant Commissioner, who by his order dated 28.9.1996 dismissed the appeal denying exemption under the said entry 68 holding that the petitioner’s certificate of registration as Small Scale Industry was conditional as such, the petitioner’s barge manufacturing unit could not be considered as a SSI unit under the said entry 68. The petitioner, being aggrieved by the said order, preferred second appeal to the Administrative Tribunal, which is still pending for final adjudication. 8. For the assessment years 1992-93 to 1995-96 the Sales Tax Officer refused exemption in respect of sale of barges relying on the order of the Assistant Commissioner of Sales Tax dated 28.9.1996. However the - 6 - successor Assistant Commissioner of Sales Tax disagreed with his predecessor and allowed all the appeals holding; inter alia; that the petitioner’s certificate of registration as Small Scale Industry did not disqualify it for Sales Tax exemption, as the special assistance envisaged in the Government of India’s SSI Programme did not embrace exemption under the said entry 68. Now the Commissioner is seeking to revise the assessment orders passed by the Sales Tax Officer for the years 1996-97 to 1998-99 allowing exemption in respect of sales of barges under the said entry 68 relying on the orders of the Assistant Commissioners of Sales Tax in appeal for the years 1992-93 to 1995-96. These orders of the Commissioner seeking to revise the orders passed by the Assistant Commissioner, are the subject matter of challenge in the second writ petition being W.P.No.165/2002. 9. The petitioner seeks to prohibit the continuance of proceedings initiated by the Commissioner of Sales Tax by the impugned notices proposing to revise the orders passed by the Assistant Commissioner of Sales Tax in appeals (WP. No.165/2002) and the assessments made by the Sales Tax Officer relying upon the orders of the Asst. Commissioner of Sales Tax (WP. No.164/2002). A R G U M E N T S : - 7 - 10. The petitioner contends that in seeking to revise the said orders, the Commissioner has contravened the conditions and transgressed the limits, express and implied, upon which the power to revise is predicated under Section 27(3) of the Goa Sales Tax Act, 1964 which reads as follows : "Section "Section "Section 27, Appeal, revision and review - 27, Appeal, revision and review - 27, Appeal, revision and review - (1) ... (2) ... (2A) ... (2B) ... (2C) ... (3) Subject to such rules as may be prescribed and for reasons to be recorded in writing, the Commissioner upon application or of his own motion may revise any assessment made or order passed under this Act or the rules made thereunder by a person appointed under Section 3 to assist him. Provided that before rejecting any application for the revision of any such order the Commissioner shall consider it and shall record reasons for such rejection : - 8 - Provided further that no application for revision shall lie to the Commissioner in respect of any assessment if an appeal lies under sub-section (1) to the prescribed authority in respect of such assessment. " 11. The learned Counsel for the Petitioner submits that the Commissioner acquires jurisdiction to revise upon "recording of reasons in writing". This requirement is to prevent invocation of revisional power for extraneous or collateral reasons and for a purpose alien to the conferral of power. The recording of reasons in writing ensures that the power is not invoked for wrong reasons or for reasons which do not bear logical or legal scrutiny. In his submission, there is nothing like unfettered discretion in public law. When it is said that something is to be done within discretion of the authorities that something is required to be done in accordance with the rules of reason and justice, not according to private opinion. Exercise of power must not be arbitrary, vague and on fanciful grounds, but according to law. It must be exercised within the limit to which an honest man competent to discharge duties of his office ought to confine himself. He submits that section 27(3) of the Act does not lay down in which circumstances the revisional jurisdiction is to be invoked and therefore, in absence of guidelines it ought - 9 - to be read subject to the foregoing limitations. 12. The petitioner contends that on a true and proper construction of the provision of section 27 of the Act the power of revision under sub-section (3) is not available to the Commissioner for the following reasons : (i) from an order passed in appeal (WP 165/2002); as the revenue has the right of second appeal to the Administrative Tribunal from order of the ACST under sub-section (24) of Section 27; especially when the reasons (grounds) on which revision is proposed are open to contest in appeal before the hierarchical superior appellate authority namely, the Administrative Tribunal. (ii) In absence of any express period of limitation, providing for exercise of powers, it ought to be revised within a reasonable period i.e. sixty days, it being period of limitation provided for appeal. The said period be read as reasonable period for invoking revisional jurisdiction. 13. The learned Counsel for the peti- tioner submitted that the High Court while exercising - 10 - writ jurisdiction under Article 226 of the Constitution is entitled to examine on its own, whether the conditions upon which the exercise of power conferred by law is predicated are satisfied or whether there are other implied limitations upon the exercise of such power. Upon such examination; if it finds that they are not satisfied or that there are other limitations on exercise of power then this Court should issue a writ in nature of prohibition restraining the authorities from invoking and/or continuing with the proceeding initiated in exercise of such power, holding it to be without jurisdiction. He brought to our notice that in Income Tax Law it has been so held in connection with the power to re-assess predicated upon "reason to believe’ that income has escaped assessment. In his submission, the Supreme Court has held that the reasons to believe that income has escaped assessment furnished by the ITO can be examined by High Court under Article 226 and, if found bad, the High Court can prohibit the ITO from proceeding with reassessment. Reliance is placed on Calcutta Discount Co. Ltd., v. Income-tax Officer, Companies District I, Calcutta and another, A.I.R. 1961 SC 372. M/s. East India Commercial Co. Ltd., Calcutta and another v. Collector of Customs, Calcutta, A.I.R. 1962 S.C. 1893; and Sha M. Hastimal and Co. and others V/s. Deputy Commissioner of Commercial Taxes, (1989) 72 STC 308. - 11 - 14. In the submission of the petitioner, under Section 27(3), the Commissioner can invoke revisional power only for good reasons which can bear legal and logical scrutiny. If the reasons given are bad, the Commissioner cannot clutch at the jurisdiction. The next submission is that upon request to furnish reasons recorded, the Commissioner disclosed vide his reply dated 10.5.2002 that his conclusion was based on two grounds, namely; (a) that the registration certificate as SSI (Small Scale Industry) granted to the petitioner is a conditional one as the same is subject to the condition that the unit is not entitled to any type of special assistance under Government’s SSI Programme; and, (b) the Directorate of Industries has also confirmed vide its letter No.1/67/87/CST/Cert/ DIM/133 dated 13.11.1995 that the petitioner’s unit is not entitled to any type of special assistance under the Government’s SSI programme including Sales Tax exemption, both the reasons are bad in law and therefore, cannot justify the invocation of suo motu revisional power by the Commissioner under Section 27(3). 15. The petitioner while challenging the constitutionality of Section 27(3), submitted that if the interpretation and construction of Section 27 as - 12 - canvassed hereinabove, is not accepted and the Commissioner under sub-Section (3) is held to have unlimited, unfettered and uncanalised discretionary powers, then the said Section will be exposed to the vice of Article 14 of the constitution and such power would have to be treated as unreasonable, arbitrary, oppressive and void. He points out that no time limit within which the power can be exercised has been prescribed. If reasonable time can be read into the provision; what length of time can be considered reasonable will itself be an arbitrary decision left to the sweet will of the authorities. The Power is not made conditional; upon the order sought to be revised being erroneous in law and prejudicial to the interest of the revenue, as made in other fiscal laws. He submits that sub-Section (3) of Section 27 is, therefore, liable to be struck down. On the aforesaid backdrop of the submissions, the petitioner is seeking to prohibit the respondents from proceeding with the impugned notices and the proceedings initiated thereunder. PER CONTRA 16. The learned Addl. Advocate General Shri V.P. Thali has raised a preliminary objection to the maintainability of the writ petitions on the ground that show cause notices are not open to challenge in the suit - 13 - petitions as laid down by the Supreme Court in various decisions, one of such decisions sought to be relied upon is Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., and ors. A.I.R. 1985 SC 330. 17. In his submission, the jurisdiction of the Commissioner is no where circumscribed by any other limitation or by the fact that the second appeal is available to the tribunal against such an order under Section (2A). According to him, Section 27(3) does not say that the revisional powers are subject to other provisions of Section 27 and, more particularly, Section 27(2A). He, therefore, submits that the contention of the petitioner that an appellate order is not open to revision as there is second appeal provided under Section 27(2A) can not be accepted. Relying upon the case of State of Maharashtra v. Nanded Parbhani Z.L.B.M.V. Operator Sangh (2000) 2 SCC 69, he submitted that it is well settled that when language of the provision is clear, it has to be given effect to instead of resorting to a construction which requires for its support any addition or rejection of words. 18. The learned Addl. Advocate General next submitted that similarly, the Supreme Court in Union of India v. Deovki Nandan Agarwal, (1992 Supp. (1) SCC - 14 - 323) to contend that: " It is not the duty of the court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. He submits that the Court can not rewrite, recast or reframe the legislation for the very good reason that it ha no power to legislate. 19. Learned Addl. Advocate General then submitted that in the case of S.B. Gubaksh Singh v. U.O.I. ((1976) 2 SCC 181, one of the orders challenged was the revisional order of the Commissioner by which the Commissioner had revised the appellate orders. Therefore, he contends that there is nothing in the Act which bars the revision of an appellate order. 20. As regards W.P.No.164/2002, he submitted that the orders sought to be revised are passed by the Sales Tax Officer which are the assessment orders made under Section 17 of the Goa Sales Tax Act. The Sales Tax Officer is a person who assist the Commissioner as appointed under Section 3(2) (aa) of the Act, as such the contention advanced in this behalf needs rejection. 21. He further submitted that the next requirement for exercising jurisdiction under Section 27(3) is that the order of the Commissioner revising the - 15 - assessment should be "for reasons to be recorded in writing". In short, he submitted that the reasons to be recorded in writing are required to be recorded by the Commissioner in his order to be passed under Section 27(3). It is not the requirement required to be observed while issuing a notice for revising the order. 22. Learned Addl. Advocate General while replying to the submission advanced by the petitioner that the requirement of "recording and communicating reasons in writing, has to be followed while issuing notice to revise, he submitted that such requirement cannot be read in the section. Alternatively, he submitted looking to the text of the impugned notices, the said requirement has been fulfilled, the Commissioner in the notices dated 1.4.2002 (both the writ petitions) has given reasons in writing by stating : "Your claim for exempting the sale of Barges manufactured by you have been wrongly allowed as being covered by entry No.68 of second schedule appended to the said Act" He further submitted that the Commissioner has also disclosed two reasons in his letter dated 10.5.2001, namely : - 16 - (a) exemption vide entry 68 of second schedule appended to the Goa Sales Tax Act has been wrongly allowed (b) registration certificate as SSI granted to the petitioner by the Directorate of Industries for being manufacturing unit is a conditional one as the same is subject to the condition that the unit is not entitled for any type of special assistance under Government’s SSI programme. 23. Learned Addl. Advocate General also sought to answer the contentions raised by the petitioner on merits and tried to justify the impugned action. He contended that even on merits, the facts would justify that petitioner is not entitled for exemption under entry 68 of Second Schedule of the Act. He took us through the assessment orders and entry 68 as amended from time to time including the amendment introduced with effect from 1.4.1992. He contended that as per said entry 68, following are the requirements : (a) The small scale industry must have been set up on or after 1.7.1983; (b) Production must have been started on or - 17 - after 1.7.1983; and (c) The sale of the goods manufactured must have been on or after 1.7.1983. He urged that in the present case, the petitioner’s industry though registered on 5.3.1985 had been admittedly set up much before 1.7.1983. Therefore, on this count alone exemption under the said entry is not available for the petitioner. In order to substantiate this submission, he placed reliance on SSI registration Certificate and the date of commencement of the production by the petitioner’s industry mentioned therein as May, 1982, much before 1.7.1983. He also contended that the certificate in respect of the petitioner’s industry as SSI is conditional one;inasmuch as, the registration certificate itself shows that the unit is not entitled for any special assistance under the Government SSI Programme. He also placed reliance on the communication issued by the Directorate of Industries, the author of the registration certificate, who himself has reiterated and clarified vide his letter dated 13.11.1995 that the unit was not entitled for any type of special assistance under Government’s SSI programme which included exemption under Sales-tax legislation. 24. Learned Addl. Advocate General submitted - 18 - that the reasons sought to be recorded are valid reasons. He, however, submitted that this Court while deciding these petitions should not dwell on merits of the matter as the same would lie within the jurisdiction of the revising authority. He made it clear that the submissions in this behalf were made not to establish merits of the matter, but to demonstrate prima facie that the reasons are valid and good based on the facts of the case and could not be said to be irrelevant, perverse or untenable in the eye of law. The learned Addl. Advocate General further submitted that the disputed facts cannot be gone into in these writ petitions and, therefore, challenge to the notices on merits at this stage of the petitions is unwarranted. 25. As regards the validity of Section 27(3) is concerned, he tried to meet the first argument of the petitioner that as there is no time limit prescribed for exercising revisional jurisdiction, as such, the same is arbitrary and violative of Article 14 of the Constitution of India. He made two submissions to meet this argument: (a) While exercising suo motu revisional power, if no time limit is prescribed by statute, it cannot be said that limitation of reasonable time is implied in the statute. - 19 - (b) Alternatively, if no such time limit is fixed, limitation of reasonable time can always be read as implied condition. 26. He submitted that the Supreme Court while analysing Section 31 (Revisional Jurisdiction) of Bombay Sales Tax Act 1953, in the case of Swastik Oil Mills Ltd., v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay, A.I.R. 1968 S.C. 843, has held that when no time limit for suo motu revision is prescribed it cannot be said that limitation of reasonable time within which the revisional powers are to be exercised must be implied in the statute. 27. He further submitted that in the Sales Tax legislations of various States; where similar power of revision is provided for, the time limit of either 3 to 4 years is found to be prescribed. In case of Bombay Sales Tax Act, 1959, itself under Section 57 a similar and identical provision of revision is provided for and the time limit of three years has been prescribed under the proviso to Section 57. Relying upon the case of State of Orissa and ors. v. Brundaban Sharma (1995 Suppl.(3) SCC (pr.15 and 16), he submitted that in the said case the supreme Court has held that whenever the power is given under the statute, but no time limit is prescribed, the power has to be exercised within reasonable time. What - 20 - would be the reasonable period of time would depend upon particular statute. He, therefore, submitted that there is no substance in the submission advanced in this behalf and the petitions are liable to be dismissed with costs. I S S U E S : 28. On the basis of the foregoing submissions, the crucial questions which arise in these petitions are petitions are: (1) Whether Section 27(3) is ultra vires the provision of Article 14 of the Constitution for want of time limit prescribed for exercising the revisional jurisdiction ? (2) Whether the suo motu notice issued by the Commissioner of Sales Tax under Section 27(3) of the Goa Sales Tax Act to revise the orders passed by the Assistant Commissioner of Sales Tax dated 27.6.2000 and 20.9.2001 and the orders of Sales Tax Officer dated 31.3.2001, 17.8.2001 and 25.3.2002 are without jurisdiction ? F I N D I N G S - 21 - 29. The first challenge relates to the constitutional validity of sub-Section (3) of Section 27 of the said Act on the touchstone of Article 14 of the Constitution. It is well