Case: Deputy Commissioner of Tax and Sales Tax, Quilon, and Another Vs. Dhanalakshmi Vilas Cashew Company

The facts in C.A. No. 804 of 1967 may alone be stated. The respondent was assessed under the General Sales-Tax Act, 1125 (Act 11 of 1125) (State of Kerala), hereinafter called the "Act", for the year 1958-59 by the Assistant Sales Tax Officer, First Circle, Alleppey, by his order dated November 13, 1959. Subsequently the Deputy Commissioner of Agricultural Income-tax and Sales Tax, South Zone, Quilon, issued a notice dated October 29, 1963, to the respondent under section 15(1)(i) of the Act proposing to revise the assessment on the ground that the assessing authority had committed a mistake in computing the assessable turnover to the extent of Rs. 17, 000. In response to the notice the respondent submitted the objections on November 2, 1963. His contention, inter alia, was that the Deputy Commissioner had no jurisdiction to proceed in the matter under section 15(1)(i) and he could proceed only under rule 33 of the General Sales Tax Rules, 1950. It was also contended that for the aforesaid reason the proceedings proposed by the Deputy Commissioner were barred by limitation under that rule. The Deputy Commissioner overruled these contentions and revised the assessment by including an additional turnover of Rs. 17, 994. The respondent took the matter in appeal to the Sales Tax Appellate Tribunal, Trivandrum. The Tribunal held that rule 35 did not apply as it was not a case of escapement of turnover but it was a case of illegal and improper exemption having been granted by the assessing authority to which section 15(1)(i) of the Act was applicable. The respondent filed a tax revision petition before the High Court which was allowed by the High Court following a decision given by it in Ninan v. Stata of Kerala. (1965 K.L.J.

Reasoning: Now section 15 of the Act empowers the Deputy Commissioner to call for and examine the record of any case suo motu or on application for the purpose of satisfying himself as to the legality or propriety of an order made by the subordinate authority or as to the regularity of the proceedings. He is further empowered to pass any order with respect thereto as he thinks fit. This jurisdiction is quite distinct and separate from the one created by rule 33 which obviously has been framed under clause (f) of section 24(2). That rule enables the assessing authority within the prescribed period to determine to the best of its judgment the turnover of a "dealer" which has escaped assessment Section 15(1) is meant for interference when there is some illegality or impropriety or irregularity in the order of the assessing authority which has to be set right. It can hardly be said to cover those cases in which the turnover has escaped assessment. As has been observed in the State of Kerala v. M. Appukutty ([1963] 14 S. T.C. 242 (S.C.) in which similar provisions relating to the Madras General Sales Tax Act came up for consideration, the Deputy Commissioner while exercising revisional jurisdiction would be restricted to the examination of the record for determining whether the order of assessment was according to law. The rule which confers power to assess escaped turnover is normally to be exercised "on matters de hers the record of assessment proceedings" before the assessing authority. It has been pointed out that although the substantive provisions of the Act do not expressly deal with the power and procedure for assessment of escaped turnover but the Legislature has left it to be dealt with by statutory rules. In our judgment the present case is covered by the previous decision of this court,The High Court has followed its previous decision in Ninan v. State of Kerala (1965 K.L.J. 819.) which was based on K. Sarvothama Shenoy and Co. v. Deputy Commissioner of Agricultural Income-tax & sales Tax, Kozhikode. (1965 K.L.J. 438.). That was a case in which the provisions of the Madras General Sales Tax Act 1939, came up for consideration. Govindan Nair, J., referred to the decision of this court in the State of Kerala v. M. Appukutty, ([1963] 14 S.T.C. 242 (S.C.) but felt that if the escapement of turnover was a special matter such action should be taken within the period provided by the rule. It may be that the case before the learned Judge involved a question of escapement of turnover but there can be no manner of doubt that in the present appeals before us the previous decision of this court in State of Kerala v. M. Appukutty ([1963] 14 S.T.C. 242 (S.C.) would be fully applicable.