DURGA DISTILLERY Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THIS appeal is directed against an order dated May 27, 1997 of the revisional authority, i. e. , additional Commissioner of Commercial Taxes, Mysore Zone, Mysore. The authority had set aside an appellate order of the Additional J. C. C. T, (Appeals), Bangalore dated June 30, 1994 and had restored the order of the assessing authority dated April 29, 1989. It is material to point out that the order in question concerned the assessment period July 1, 1985 to June 30, 1986.

(2.) WE shall refer only to a few of the relevant facts. The appellant is a registered dealer under the provisions of the Karnataka Sales Tax Act. He is a manufacturer of fenny which being sold by him in bottled and packed condition during the relevant period. The assessing authority levied the tax on the total turnover value of the fenny which included the packing material and disallowed the claim by the appellant for the value of the packing material. We need to straight away point out that the amendment to Section 5 of the Act whereby Sub-section (3-D) came to be inserted was effected on April 1, 1986 and that this appeal concerns the period prior to the date of the amendment. It is however necessary to clarify that since the appellant was following the co-operative year and not the financial year, that one part of the sales covers the period April 1, 1986 to June 30, 1986 which period will have to be excluded from the purview of this order. The reason for this is because after the amendment and particularly in view of the law as settled by the Supreme Court, no distinction can any longer be made with regard to the tax differential as far as the packaging material is concerned.

(3.) THE appellant's learned counsel submitted that there is a clear error on the part of the revisional authority in so far as according to him the authority has proceeded to revise an order passed by the appellate authority which order in turn was on the basis of a factual assessment. Learned counsel had submitted that effectively, the scope of Section 22 (A) must necessarily be restricted to revising that class of orders wherein the authority concerned has effectively gone wrong on a point of law and it was his submission that these powers are not to be exercised for purposes of carrying out a reassessment. As far as this submission is concerned, we do not need to examin it in any effective detail. We do concede that the revisional powers which are invariably exercised, suo motu have been incorporated for purposes of taking corrective action in those of the cases where there has been effective miscarriage of justice which in turn has resulted in prejudice to the Revenue. While it is more or less a well-settled norm that such revisional powers would ordinarily be exercised in cases where there has been a misreading or misapplication of the law, we do need to clarify that there could arise a small category of cases where the earlier order has gone so cronically and basically into the arena of error or for instance where the order itself is virtually perverse. It may be that in some or several such instances the department on its own has not taken corrective action for a variety of reasons and it would therefore be wrong to lay down an inflexible rule that the revisional powers should exclude this category of cases. In the present instance, the grievance put forward by the learned counsel is reasonably well-founded because of the faulty reasoning or lack of supportive reasoning that manifests itself in the impugned order.