Case: M/S. Master Cables Pvt. Ltd Vs. State Of Kerala

Appellant is engaged in business of manufacture and sale of insulated electrical cable. It is registered under the Kerala General Sales Tax Act, 1963 (for short "thet proceedings in respect of the assessment years 1995-96 and 1996-97 were completed relying upon or on the basis of the books of accounts maintained by it. An inspection, however, was carried out in the premises of the appellant. Certain amount of unaccounted production and sale of goods wasadmittedly took recourse to the provisions of the said Scheme. Declaration made by it there under was accepted. By an order dated 14.01.2003, the earlier assessment order was set aside. Appellant filed an appeal before the Kerala Sales Tax Appellate Tribunal. The matter was remitted to the Deputy Commissioner for its re-examination. By an order dated 20.05.2003, the assessment in respect of the Assessment Year 1996-97 was set aside. The said authority directed re-assessment for the year 1995-96 by an order dated 7.11.2003. Questioning the said orders, appeals were filed by the appellant before the Tribunal which by reason of a common judgment dated 21.12.2005 were dismissed. Two Sales Tax revisions wee filed there against before the High Court, which by reason of the impugned judgment have been dismissed.

Court's reasoning:
10. Admittedly, the case of the appellant does not come within the purview thereof. Amplitude of the provisions of the Scheme having been extended only to the enactments made by the Parliament, having regard to the constitutional Scheme contained in Article 246 of the Constitution of India, in our opinion, the same cannot be extended to assessment of sales tax under a State legislature. The legislative field to enact a law relating to sales tax is within the exclusive domain of a State Legislature in terms of Entry 54, List II of the Seventh Schedule of the Constitution of India. The power and jurisdiction of the assessing authorities as also other authorities is required to be exercised in terms of the provisions of the said Act. Power to tax, it iscarries with it power to do all things which are necessary and ancillary therefor including taking preventive measures in regard to evasion of tax.11. Once it is found that a statutory authority had the jurisdiction to reopen a proceeding or set aside the order of the assessing authority, only the higher authorities can interfere therewith. Only because the appellant had taken recourse to the Scheme, the same, in our opinion, would not attract either(3) of Section 90 of the Scheme or Section 91 thereof so as to cover a subject which is within the exclusive domain of the State Legislature. In that sense, the said Scheme must be read as limited to those laws which the Parliament has the legislative competence to enact and not which falls within the exclusive legislative field of a State, save and except where expressly so stated or inferred by necessary implication. A Legislature is presumed to enact a law only within its domain of field of legislation. If the contention that the provisions of the Scheme would also apply to tax laws created by the State is accepted, it being beyond the legislative competence, would amount to colourable piece of legislation.12. Reliance placed on Clause (3) of Article 286 of the Constitution of India, in our opinion, issaid provision had to be enacted in view of the decision of this Court in Bengal Immunity Company Limited v. State of Bihar and Others [(1955) 2 SCR 603] . Indisputably in exercise of the said power, the Parliament has the requisite legislative competence but therefor a specific law is required to be enacted. The Act in question neither is referable to Clause (3) of Article 286 of the Constitution of India nor(c) and (d) of Clause (29A) of Article 366 thereof. It provides only for tax on the sale or purchase of goods.13. Strong reliance has been placed by Mr. Ahmadi on Sushila Rani (Smt) v. Commissioner of Income Tax and Another [(2002) 2 SCC 697]  and Hira Lal Hari Lal Bhagwati v. CBI, New Delhi [(2003) 5 SCC 257] . In Sushila Rani (supra), a question arose as to whether the authority had a power to correct clerical or arithmetical error. It wasThe appellant in the course of the declarations filed specifically stated that any adjustment of refunds towards tax arrears of the appellant by the Department in the earlier years without following the mandatory procedure of Section 245 of the Act would still remain as tax arrears for the purpose of KVSS and it is on that basis the declarations were accepted by the Department. Having accepted the claim of the appellant on that basis, it will not be permissible for the respondents now to turn around and take a different stand.11. Even assuming that the authorities under KVSS have inherent powers to correct an error of clerical or arithmetical nature, the same should be so obvious, apparent or patent as not to admit of any debate or discussion. In this case, the respondents have to establish adjustment of refund, which had been made against arrears after due notice to the appellant and which is denied by her, and hence admits of investigation of facts and serious debate on the question. Such an error cannot be stated to be an inadvertent error of clerical or arithmetical nature, so plain as to be rectified without muchneed not go into the correctness or otherwise of the saidsaid decisions cannot be said to have any application so far as the first contention of Mr. Ahmadi is concerned.We do not see any reason as to why the observations contained therein shall not be treated to be prima facie ones and, thus, all contentions of the parties shall remain open.18. We have no doubt, in our mind, that the appropriate authority would consider the matter with an open mind irrespective of any observations made for the purpose of invocation of power under Section 35 of the Act. The Tribunal has also noticed that the entire matter has been left open to the assessing authority. It would, thus, not only be open to the appellant to raise all contentions, they would also be at liberty to produce all relevant materials before the assessing authority to show that the orders of assessment passed earlier were legal and no deviation therefrom is warranted.