Case: Thvl Bombay Ammonia Pvt. Ltd Vs. State Of Tamil Nadu

to the scope of the revisional power :-"The Deputy Commissioner is hereby invested with power to satisfy himself about the legality or propriety of any order passed or proceeding recorded by any officer subordinate to him, or the regularity of any proceeding of such officer, and to pass such orders with respect thereto as he thinks fit. For exercising this power, he may suo motu or on application call for and examine the record of any proceedings or order. There is not 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 irregularly in the proceedings, he cannot make or direct any further enquiry ..... 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. Jurisdiction to revise the order or proceeding of a subordinate officer has to be exercised for the purpose of rectifying any illegality or impropriety of the order or irregularity in the proceeding.13. The limitations to which the revisional power is subject were indicated by the majority thus :-"It would not invest the revising authority with power to launch upon enquiries at large so as to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore 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 be open to the revising authority to assume that power."14. The above view was affirmed by this Court in the case of Swastik Oil Mills Ltd. In regard to the limitations to which the revisional power is subject, this Court went on in that case to observe :-"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.s case (1). 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 authorities and should not ignore the limitations inherent in the exercise of those powers."15. In view of the above, we are of opinion that the suo motu power of revision of the Deputy Commissioner is of wide amplitude and can be exercised in favour of the revenue as well as the taxpayer in order to correct any error or illegality committed by the assessing authority in his order of assessment.16. With regard to the second question relating to the refusal by the Deputy Commissioner to exercise his revisional power in favour of the appellants, we are of the view that the order does not suffer from any infirmity. It is true that money paid under a mistake of law common both to the assessee and the taxing authority can be got refunded (see the decision of this court in State of Kerala v. Aluminium Industries Ltd. But, in the instant case, the appellants themselves submitted a return showing taxable turnover of Rs. 6, 41, 031.77. At no stage of the assessment proceedings before the assessing authority did they bring it to his notice that a substantial portion of the turnover related to works contracts and was as such except from liability to tax. The appellants not having raised the question by claiming the exemption, the assessing authority had no occasion to consider it. It cannot, therefore, be said that the order of assessment suffered from any illegality. It is also significant that the appellants acquiesced in the order of assessment passed by the assessing authority and did not prefer any appeal against it nor did they take any other step to have it modified. Even in the objections filed by them to the show-cause notice issued by the Deputy Commissioner in regard to the levy of penalty, they made a halfhearted attempt to claim exemption. It will be relevant in this connection to advert to the prayer made by them which is couched in the following terms :"In the circumstances we request you that the Deputy Commissioner may either totally drop the proposal to levy penalty or in the alternative totally cure the illegality of the assessment and render justice."17. The plea put fort by the appellants that they did not claim exemption under the mistaken impression that the transactions amounted to sale of goods cannot also be countenanced in view of the fact that so far back as in 1954 it was held by the Madras High Court in Gannon Dunkerley and Co. Ltd. vs. State of Madras that works contracts did not involve any element of sale of materials and the levy of sales tax thereon was unlawful. This ruling was affirmed by this Court in State of Madras v. Gannon Dunkerley and Co. Ltd. We are, therefore, of the view that the Deputy Commissioner rightly refused to exercise his revisional jurisdiction in favour of the appellants and the High Court was right in reversing the order of the appellant tribunal in so far as it related to the appellants claim to the aforesaid exemption.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]11. The language of this section makes it clear that the suo motu power conferred on the Deputy Commissioner in regard to the order or proceedings specified therein is quite wide and he can, subject to the conditions laid down in sub-sections (2) and (3), exercise the same even at the instance of an assessee who has not filed an appeal against the order for the purpose of rectifying any illegality or impropriety therein.In view of the above, we are of opinion that the suo motu power of revision of the Deputy Commissioner is of wide amplitude and can be exercised in favour of the revenue as well as the taxpayer in order to correct any error or illegality committed by the assessing authority in his order of assessment.16. With regard to the second question relating to the refusal by the Deputy Commissioner to exercise his revisional power in favour of the appellants, we are of the view that the order does not suffer from any infirmity. It is true that money paid under a mistake of law common both to the assessee and the taxing authority can be got refunded (see the decision of this court in State of Kerala v. Aluminium Industries Ltd. But, in the instant case, the appellants themselves submitted a return showing taxable turnover of Rs. 6, 41, 031.77. At no stage of the assessment proceedings before the assessing authority did they bring it to his notice that a substantial portion of the turnover related to works contracts and was as such except from liability to tax. The appellants not having raised the question by claiming the exemption, the assessing authority had no occasion to consider it. It cannot, therefore, be said that the order of assessment suffered from any illegality. It is also significant that the appellants acquiesced in the order of assessment passed by the assessing authority and did not prefer any appeal against it nor did they take any other step to have it modified. Even in the objections filed by them to the show-cause notice issued by the Deputy Commissioner in regard to the levy of penalty, they made a halfhearted attempt to claim exemption. It will be relevant in this connection to advert to the prayer made by them which is couched in the following termsthe circumstances we request you that the Deputy Commissioner may either totally drop the proposal to levy penalty or in the alternative totally cure the illegality of the assessment and render justice.The plea put fort by the appellants that they did not claim exemption under the mistaken impression that the transactions amounted to sale of goods cannot also be countenanced in view of the fact that so far back as in 1954 it was held by the Madras High Court in Gannon Dunkerley and Co. Ltd. vs. State of Madras that works contracts did not involve any element of sale of materials and the levy of sales tax thereon was unlawful. This ruling was affirmed by this Court in State of Madras v. Gannon Dunkerley and Co. Ltd. We are, therefore, of the view that the Deputy Commissioner rightly refused to exercise his revisional jurisdiction in favour of the appellants and the High Court was right in reversing the order of the appellant tribunal in so far as it related to the appellants claim to the aforesaid exemption.