Nathmal Tolaram versus Superintendent of Taxes, Dhubri and Another.

Sales Tax-Reassessment-] urisdiction of the Sales Tax Officer-High Court's power in References-Advisor>' jurisdiclionPeriod of limitation for proceedings for reassessment-Assam Sales Tax Act. r947 (Assam r7 of r947), ss. 2(r2). r6(2), r9, r9A, 32(8), 34.

¶10

The appellants who were dealers registered under the Assam Sales Tax Act, r947, submitted a return of their turnover for the account period April I, r948 to September 30, r948, which included sales in Assam of all goods other than jute. The Superintendent of Taxes, however, summarily assessed the appellants under sub-s. 4 of s. 17 of the Act by order dated September 30, 1950, to pay tax on sales of jute despatched by them to Calcutta during the account period. The order of assessment was confirmed by the Commissioner of Taxes. On an application by the appellants the Commissioner referred certain questions of law arising out of the assessment to the High Court, which then gave its opinion that as the consignments in question were not sales within the meaning of sub-s. 12 of s. 2 of the Act, they were not taxable, and that as to whether the sales could thereafter be assessed if they fell within the purview of the Explanation to sub-s. 12 of s. 2, it expressed no opinion. On receipt of the opinion the Commissioner directed the Superintendent of Taxes to dispose of the case in accordance with the judgment of the High Court. The Superintendent of Taxes then set aside the order of assessment dated September 30, r950, and issued a notice to the appellants on January 30, r953, directing them to produce the necessary evidence in order to enable him to ascertain whether the contract of sale involved in the case came within the purview of the ExpJanation to sub- s. 12 of s. 2 of the Act. The appellant claimed that the Super- intendent had no jurisdiction to commence any further proceed- ing for assessment as the notice issued to him was beyond three years from the end of the assessment period as provided by s. rg of the Act.

¶11

Held, that the High Court in answering the questions refetred to it was exercising an advisory jurisdiction and could not and did not give any direction to the sales tax authorities to proceed to assess or not to assess the appellants to sales tax; it merely gave its opinion that the transactions were not sales within the meaning of s. 2, sub-s. 12 of the Act and were accordingly not taxable.

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41

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2 S.C.R. SUPREME COURT REPORTS

¶21

Held,. further, that the Commissioner not having issued any I96° i.. notice under s. l9A of the Act or exercised his revisional authority under s. 31, but having merely directed the case to be Nathmal Tola.am disposed of in accordance with the judgment of the High Court, v. the Superintendent of Taxes had no jurisdiction to initiate Sitperintendmt fresh proceedings for reassessment under s. 19 after the expiry of Taxes of three years from the assessment period.

¶22

Commissioner of Income Tax, Bombay Presidency and Aden and others v. Bombay Trust Corporation Ltd., (1936) L.R. 63 I. A. 408, distinguished.

¶23

CIVIL APPELLATE JURISDICTION: . Civil Appeal No. 196 of 1958.

¶24

Appeal by special leave from the judgment and ..,. order dated April 27, 1953, of the Assam High Court in Civil Rule No. 66 of 1953.

¶25

Sukumar Mitter and Sukumar Ghose, for the appel. lant. · ~

¶26

Veda Vyasa and Naunit Lal, for the respondents.

¶27

October 18. The Judgment of the Court was delivered by

¶28

~ , ... ·Ii

¶29

SHAH J.-The appellants are dealers registered under the Assam Sales Tax Act XVII of 1947-hereinafter referred to as the Act. For the account period April 1, 1948 to September 30, 1948, the appellants submitted a return of their turnover which included sales in Assam of all goods other than jute. The Superintendent of Taxes, Dhubri, summarily assessed the appellants under sub-s. 4 of s. 17 of the Act to pay tax on sales of jute despatched by them to Calcutta during the account- period. Appeals against the order of assessment to the Assistant Commissioner of Taxes and to the Commissioner of Taxes, Assam, proved unsuccessful. The appellants then applied to the Commissioner of Taxe,s to refer certain questions arising out of the assessment to the High Court in Assam under s. 34 of the Act. The Commissioner referred the following questions and another to the High Court of Judicature in Assam:

¶30

(1) Whether, in view of the aforesaid facts and circumstances the turnover from 20,515 maunds of 6

Shah ].

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	42 SUPREMECOURTREPORTS [1961)
'9⁶⁰ - NathmalTolarani v. sup"intendent ofTam	jute mentioned under item(i)istaxable underthe ~? W . . . (2) hether, m viewofthe aforesaid facts a.nd circumstances the turnover from 5,500 maundsof jute mentioned under item(ii)istaxable under the Act?
Shalij.	(3) Whether, in viewofthe aforesaid factsand circumstances,theturnover from 25,209 ma.undsof jute mentioned under item(iii)ista.xa.ble underthe Act? Inrespectofea.chofthe three questions 1 to 3, the High Court recorded the following answer : "Notbeinga.ea.lewithin the meaningofsub- s.12ofs.2 of the Act, the consignmentsa.renottax- able". TheHigh Court, however observed : "Asto whethes these consignments can hereafter be assessediftheyfall withinthepurviewofthe Explanation to sub-s.12ofs.2,weexpress no opi- nion". Asrequired bys.32(8) of the Act, the Commissioner of Ta.xesbyhis order dated August 1, 1952, directed the SuperintendentofTa.xes to dispose of the case in accordance with the judgmentofthe High Court. The SuperintendentofTa.xes thereafter issued on January30, 1953, the following notice to the appel- lants:

42
SUPREMECOURTREPORTS
[1961)

'9⁶⁰
-
NathmalTolarani
v.
sup"intendent
ofTam

jute mentioned under item(i)istaxable underthe
~?

W
.
.
.
(2)
hether, m viewofthe aforesaid facts a.nd
circumstances the turnover from 5,500 maundsof
jute mentioned under item(ii)istaxable under the
Act?

Shalij.

(3)
Whether, in viewofthe aforesaid factsand
circumstances,theturnover from 25,209 ma.undsof
jute mentioned under item(iii)ista.xa.ble underthe
Act?
Inrespectofea.chofthe three questions 1 to 3, the
High Court recorded the following answer :
"Notbeinga.ea.lewithin the meaningofsub-
s.12ofs.2 of the Act, the consignmentsa.renottax-
able".
TheHigh Court, however observed :
"Asto whethes these consignments can hereafter
be assessediftheyfall withinthepurviewofthe
Explanation to sub-s.12ofs.2,weexpress no opi-
nion".
Asrequired bys.32(8) of the Act, the Commissioner
of Ta.xesbyhis order dated August 1, 1952, directed
the SuperintendentofTa.xes to dispose of the case
in accordance with the judgmentofthe High Court.
The SuperintendentofTa.xes thereafter issued on
January30, 1953, the following notice to the appel-
lants:

¶35

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"In view of the Hon'ble High Court's order in Sales-tax Reference No. 3 of 1951, the assessment order dated 30th September, 1950, for the return period 30th September, 1948, has been set a.side a.nd you a.re directed to produce necessary evidence, contra.ct papers, account books, etc .................. in order to see whether the contra.ct of sale involved in this case come within the purview of the Explanation to sub-s. 12 of s. 2 of the Act".

¶37

By their lettllr da.ted March 23, 1953, the a.priella.nts called upon the Commissioner of Ta.xes to direct t.he Superintendent of Ta.xes not to proceed with the notice. The Commissioner having failed to direct a.s requested, the appellant petitioned the High Court in Assam under Art. 226 of the Constitution for a writ

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I

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2 S.C.R. SUPREME COURT REPORTS

¶41

43

¶42

>- prohibiting the Superintendent of Taxes from re-open- I9⁶⁰ lants under the Assam Sales ing and proceeding with the assessment of the Tax Act and for a. a.ppel-writ N th a nia ~ v. 0 1 aram quashing the order dated August 1, 1952, passed by Superintendent the Commissioner. The High Court summarily dis- of Taxes missed the petition. Against the order passed by the High Court, this appeal is filed with special leave Shah J. under Art. 136 of the Constitution. ·

¶43

The High Court, in answering the questions submitted to it, was exercising a.n advisory jurisdiction and could not and did not give any direction to the sales tax authorities to proceed to assess or not to assess the .... appellants to sales tax : it merely recored its opinion that the transactions referred to in the questions were not sales within the meaning of s. 2, sub-s. 12, of the Act a.rid were accordingly not taxable. Pursuant to the opinion of the High Court, the Commissioner directed the Superintendent of Taxes to dispose of the case " in accordance with " the judgment of the High Court; but the Superintendent of Taxes thought that he was entitled to re-open the assessment proceedings and to assess the appellants in the light of the Expla.1 ., · nation to s. 2, sub-s. 12 . .In so doing, the Superintendent of Taxes, in our judgment, acted without authority. The Superintendent had ma.de the assessment, and that assessment was confirmed in appeal by the Assista.rit Commissioner. On the questions arising out .of that assessment, the High Court had opined that the transactions sought to be assessed were not liable to tax. The Superintendent of Taxes, on this opinion was right in vacating the order of assessment. But - any further proceeding for assessment which he sought to commence by issuing a notice requiring the appellants to produce evidence, contra.ct papers, account books, etc. so as to enable him to determine whether the transactions were taxable under the Explanation to sub-s. 12 of s. 2 had to be supported by some authority under the Act. The Superintendent of Taxes has not referred to the authority in exercise of which he issued this notice. It is true that under 1 • s. 19 o'f the Act, the "taxation Officer " if satisfied upon infor~ation coming into his possession that any

¶44

44 SUPREME COURT REPORTS . [1961)

¶45

...

¶46

1 96° dealer has been liable to pay tax under the Act in res- N at h ma^- 1^T o aram 1 t' pect of d any period k h and has failed to apply for registra. t · d f h' v. ion an to ma e t e re urn require o 1m, may at superintendent any time within three years of the end of the afore- of Taxes said period serve on the dealer a notice containing all or any of the requirements which may be included Shah ]. in a notice under sub-s. 2 of s. 16 and may proceed to assess the dealer in respect of such period. But admittedly, the appellants were registered as dealers and had submitted their returns : the power to reassess could not therefore be exercised by virtue of s. 19 of the Act. Bnder s. 19-A, the Commissioner has also power, if satisfied upon information coming into his ... possession, that any turnover in respect of sales of any goods chargeable to tax has escaped assessment during the return period, to serve at any time within three years of the aforesaid period, on the dealer liable to pay the tax in respect of such turnover a notice containing all or any of the requirements which may be included in a notice under sub.a. 2 of s. 16 and may proceed to assess or reassess the dealer in respect of such period. But the Commissioner had not issued any such notice under s. 19A. Nor had the Commissioner in exercise of his revisional authority under s. 31 of the Act set aside the original order of assessment. The Commissioner merely directed u'nder s. 32, sub-s. 8, that the case be disposed of in accordance with the judgment of the High Court, and acting under that direction, the Superintendent of Taxes had no power to reopen the assessment and to call upon the appellants to produce documentary evidence with · a view to commence an enquiry whether the sales involved in the case fell "within the purview of the Explanation to s. 2 su b-s. 12 ". In any event, the account period as has already been observed was April 1, 1948 to September 30, 1948, and three years from the end of that period, expired before the date on which the notice was issued. Fresh proceedings for reassessment could not be initiated by the Superintendent of Taxes under s. 19 after the expiry-of three yea.rs from the assessment period assuming that ·' this could be regarded as a case of failure tp apply for

¶47

45

¶48

2 S.C.R. SUPREME COURT REPORTS

¶49

t •

¶50

1960

¶51

registration and to make a return required of the appellants.

¶52

Nalhmal Tola.am v.

¶53

In support of his contention that the Superinten. v. dent of Taxes had authority to proceed to reassess the superintendent appellants in the light of the ob.servations made in the of Taxes judgment of the High Court, counsel for the appel. Shah J. lants invited our attention to the judgment of the Privy Council in Commissioner of Income Tax, Bombay Presidency and Aden and others v. Bombay Trust Corporation Ltd. (¹ ). In that case, a foreign company was assessed by the Income Tax authorities in the name of a resident company for profits and gains received by the latter as its agent under ss. 42(1) and 43 of the Indian Income-tax Act, 1922. In a reference under s. 66 of the Income-tax Act, the High Court at Bombay opined that the assessment was illegal. The Commissioner of Income-tax thereafter sent back the case · with a direction to set aside the assessment and to make a fresh assessment after making such further enquiry as the Income-tax Officer might think fit. Acting upon that order, the Income-tax Officer required the resident company as agent of the foreign company to produce or cause to be produced books of account for the year of assessment and also to produce such other evidence on which it might seek to rely in respect of its return, and the resident company having failed to produce the books of the foreign company, he proceeded to make an assessment under s. 23(4) of the InQome-tax Act, 1922. By its petition under s. 45 of the Specific Relief Act filed in the High Court at Bombay, the resident compan,Y prayed for an order for refund of the taxes already paid under the original assessment, and for an order for disposal of certain proceedings initiated by it before the Assistant Com. missioner and the Income-tax Officer. The High Court made an order directing refund of tax paid, and further directing cancellation of assessment. In an appeal preferred by the Commissioner of Income-tax against the order of the High Court, it was observed by the Privy Council that the Commissioner was not -obliged to discontinue proceedings against the resident (1) (1936) L.R. 63 I.A. 408.

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46 SUPREME COURT REPORTS

¶58

[1961)

¶59

z96o
N th
1^T1
•_ma_v.
0•••m
superintendent
of.Taxes
ShahJ.

companyasagentoftheforeign company in respect
oftheyearofassessment,anditwas withinthejuris-
dictionofthe Commissioner unders.33(2)ofthe
Income-tax Acttodirectfurtherenquiryifhethought
suchanenquirytobe reasonableandto be profitable
inthepublic interest.
Theprincipleofthis case has in ourjudgmentno
applicationtothepresent case.TheHigh Courtat
Bombay in its advisory jurisdictionhaddeclaredthe
assessment already ma.detobe.illegal.ButtheCommis-
sioner was unders.33oftheIndianIncome-taxAct
invested with jurisdictiontodirectfurtherenquiry,
andhe purportedtoexercisethatjurisdiction.The
PrivyCouncil rejected the challengetotheexerciseof
thatjurisdiction.Inthe present case, no proceedings
werestartedbytheCommissionerofTaxes in exercise
ofhis revisional authority. The . Col!lmissionerof
Taxeshaddirected the SuperintendentofTaxes
merelytodisposeofthe case accordingtothe judg-
mentoftheHighCourt, andtheSuperintendenthad
to carry outthatorder.Ifhe wascompetent-and
onthatquestion,weexpress noopinion-hecould,if
theconditions precedent totheexerciseofhis jurisdic-
tion existed, proceed to reassesstheappellants.But
the proceedings for reassessment were clearly barred
becausetheperiod prescribed for reassessmenthad
expired. The Superintendent thereforehadno power
to issue a notice calling upontheappellantstoproduce
evidence to enable him tostartanenquiry which was
barred by the expiryofthe periodoflimitation pre-
scribedbythe Act.Inthe_BombayTrU8tOorpora._
tioncase{supra), the Income-tax Officer acted- in
pursuanceofthedirectionoftheCommissioner lawfully
given in exerciseofrevisionalauthorityand reopened
theassessment.Inthe present case, no such direction
has been givenbyanauthoritycompetent inthat
behalf:andtheSuperintendenthadno powerto
reassesstheincome unders.19assumingthatthe
section appliedtoa case wheretheassessee though
registeredhadfailed to include his sales in aparticular
commodityinhis turnover, because the periodof
limitation prescribedinthatbehalfhadexpired.

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2 S.C.R. SUPREME COURT REPORTS 47

¶61

,

¶62

The appeal must therefore be allowed and the order r960 - passed by the High Court set a.side. In the circum"ll b d Nathmal Tolaram stances o t f h e case, no use f u purpose 1 w1 e serve by remanding the case to the High Court. We superi:;endent accordingly direct that a. writ quashing the proceed- of Tam ings commenced by the Superintendent of Taxes, Dhubri, by his notice dated January 30, 1953, be Shah J. issued. The appellants will be entitled to their costs of the appeal.

A ppeaJ, al,lowed.

THAKUR KESARI SINGH

v.

O&lober r9.

THE STATE OF RAJASTHAN AND OTHERS.

¶68

(JAFER IMAM, A. K. SARKAR and RAGHUBAR DAYAL, JJ.)

¶69

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¶70

Landlord and Tenant-General refusal of payment of rentNotijication by Government-Application for recovery of rent as arrears of land revenue-Rescission of notijication-V alidity of proceeding-Procedure-Marwar Tenancy Act, z949 (XXXIX of z949), s. 85-Rajasthan Revenue Courts (Procedure and Jurisdiction) Act, z95r (I of z95rJ, s. 2.

¶71

The Marwar Tenancy Act, r949, now repealed but which was in force in the State of Jodhpur at the relevant period, by s. 85 authorised the Government in case of any general refusal by tenants to pay rent to declare by notification that such rents might be recovered as arrears of land revenue. A notification having been issued by the Government of Rajasthan under that section the appellant, a jagirdar, applied to the Collector thereunder for the recovery of rents due to · him from his tenants. The tenants also applied to the Collector stating that notice of the said application should be served on them and they should be given a hearing as required by the rule framed uncer the Rajasthan Revenue Courts (Procedure arid Jurisdiction) Act, r95r. The Collector rejected the tenants' application and passed an order directing the recovery of the sum found to be due to: the appellant as arrears of land revenue. The Additional Commissioner on appeal and the Board of Revenue in revision upheld the Collector's order. But before the Board passed its order the

Nathmal Tolaram v. Superintendent of Taxes, Dhubri and Another.

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Nathmal Tolaram v. Superintendent of Taxes, Dhubri and Another.

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