Case: State Of Kerala Vs. Shri M. Appukutty

2. The assessment period for the purposes of the turnover in dispute is 1952-53. By an order dated March 27, 1954 the Deputy Commercial Tax Officer, Kozhikode, imposed sales tax on the respondent on a net turnover of Rs. 12,56,178-14 -0 and the appeal taken against that order to the Commercial Tax Officer was dismissed. On March 15, 1956 a notice was issued by the Deputy Commissioner of Commercial Taxes against the assessee proposing to determine the escaped turnover for the period of assessment. By an order dated March 31, 1956, the Deputy Commissioner determined the revised turnover. An appeal was taken against that order to the Sales Tax Appellate Tribunal, Trivandrum, but that appeal was dismissed on March 23, 1957. Against that order a revision was taken to the Kerala High Court and by its judgment dated September 25, 1958 the High Court set aside the order of the Deputy Commissioner on the ground that the notice issued by the Deputy Commissioner of Commercial Taxes was without jurisdiction and the order of the appellate tribunal was therefore erroneous. Another question which had been raised before the High Court that the rule under which the Deputy Commissioner purported to act was ultra vires of the Act was not decided because of the decision on the first question i.e. of jurisdiction. Against that judgment and order the State of Kerala has come in appeal by special leave to this court.

Court's reasoning:
It is true that the substantive provisions of the Act do not expressly deal with the power and procedure for assessment of escaped turnover, the legislature has left it to be dealt with by statutory rules to be framed under S. 19, and R. 17 has been framed thereunder. Rule 17 (1) and (3A) ex facie properly fall under S. 19(2) (f)Therefore in our opinion R. 17 and the various clause thereof made under S. 19 are not beyond the rule making power of the State Government as contained in S. 19In the present case after an appeal to the Commercial Tax Officer there was no further proceeding and therefore the Deputy Commissioner who is the revising authority acted under R. 17 (3A) and issued a notice which, according to that sub-rule he had power to issue and then determined the escaped turnover. We have already held that R. 17 is a valid rule under S. 19 of the Act. Sub-rule (3A) of R. 17 on its plain construction confers jurisdiction on the revising authority to issue the notice which it did issue and in our opinion, and we say so with respect, the judgment of the High Court is, to that extent, erroneous and it cannot be said that the notice was without jurisdiction. Therefore the impugned order was not incorrectIt cannot be said in view of R. 17 that the power of revision by the Deputy Commissioners is limited to powers under S. 12(2). Rule 17 deals with a separate and independent jurisdiction in regard to the determining and taxing escaped turnovers. The provisions of S. 12 (2) are in no way in conflict with the powers conferred under Rr. 17 (1), 17(1A) and 17(3A)8. The further argument that sub-r. (3A) is confined to cases where the revision filed under S. 12(2) is pending is not supported by the language of that ruleBut that case does not deal with R. 3A which came into force later.