COMMISSIONER OF SALES TAX Vs. STATE

JUDGEMENT

(1.) THIS is a reference under section 16(1) of the Mysore Sales Tax Act, 1948. The assessee is a manufacturer of ready-made garments in Bangalore. It is not disputed that his sales extend all over India and a large part of his sales are to dealers outside the Mysore State and for consumption outside the said State. The assessee was assessed for the accounting year 1949-50. The order of assessment was made on 22nd March, 1952. In the statement of case sent to this Court in this reference it is stated that originally the assessment order was passed on 22nd March, 1952, estimating the turnover at Rs. 8,00,000 and assessing to a tax of Rs. 12,500 at 3 pies in the rupee. It is further stated in the said statement that in making that assessment the officer concerned did not notice certain statement in which the turnover of the year 1949 had been declared by the petitioner dealer at Rs. 14,57,880-5-4 and also did not notice that the previous Sales Tax Officer had checked the accounts and found a turnover in the petitioner's books of Rs. 14,57,880-5-4 for the year 1949-50 but no orders were passed by him. In the order subsequently passed by the Sales Tax Officer under rule 35(1) of the rules made under the Mysore Sales Tax Act, 1948, the validity of which is in question in this reference, it is stated that the said statement was enclosed to the assessee's letter dated 12th July, 1950, and this letter with the statement of turnover was mixed up with the assessment record of 1950-51 and escaped his notice. The Sales Tax Officer, however, made the said assessment according to his best judgment under section 12(2)(b) of the Sales Tax Act. It is not disputed that the return of the turnover for the year 1949-50 had not been filed by the assessee in the prescribed form. The Sales Tax Officer proceeded on the basis that no return was submitted by the dealer and he made his order of assessment according to his best judgment as already mentioned. It is said that subsequent thereto it came to the notice of the Sales Tax Officer that there was on the record a statement filed by the assessee according to which the turnover of the assessee for that year was Rs. 14,57,880-5-4. The Sales Tax Officer having come to know of that fact started proceedings under rule 34 of the rules framed under the Mysore Sales Tax Act. The said rule inter alia provides that if for any reason the whole or any port of the turnover of business of a dealer or license has escaped assessment to the tax in any year, the assessing authority or licensing authority, as the case may be, may, at any time within the year or the two years next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment. The Sales Tax Officer in the said proceedings revised his previous order and passed a new order of assessment on 23rd July, 1952, on the basis of an enhanced turnover of Rs. 14,57,880-5-4 and served a revised demand notice on the assessee. The said order, however, was cancelled by the Deputy Commissioner of Sales Tax who by his order dated 6th October, 1952, directed the Sales Tax Officer to take action under rule 35 of the Mysore Sales Tax Rules and pass suitable orders. Thereafter the Sales Tax Office started proceedings under rule 35 of the said rules and on 28th October, 1952, made the final order of assessment on the basis of a total turnover of Rs. 14,57,880-5-4. Against that order the assessee preferred an appeal to the Assistant Commissioner. On 31st January, 1953, that appeal was dismissed. Thereafter a review petition was filed before the Commissioner of Sales Tax which was also dismissed. Thereafter on 4th December, 1953, the assessee applied to the Commissioner of Sales Tax under section 16(1) of the Sales Tax Act for making a reference to this Court. Thereupon the said Commissioner made the present reference to this Court.

(2.) THE questions which have been referred to this Court for decision are as follows :-

(3.) THE first question, therefore, which we have to determine, in order to decide this point, is whether or not rule 35 can be applied to a case where there is a best judgment assessment. This question no doubt requires careful consideration, but in view of the fact that our decision on the order two grounds urged by the learned Advocate for the assessee sufficiently disposes of this particular point, it would not be necessary for us to decide this question in this reference. We have come to the conclusion that even if rule 35 can be applied to a case where there has been a best judgment assessment, the order passed by the assessing authority in this case could not be made under the said rule. It appears from the final order passed by the Sales Tax Officer himself on 28th October, 1952, that in making the said final order the said officer not only looked into materials which were already existing on the record but also examined new materials which were not on the record. For instance, it is stated by him in his said order that he examined the accounts for the year 1950-51 and also the accounts for the year 1949-50. The accounts for the year 1950-51 were not on the record of the previous assessment. They are, therefore, new materials which the assessing authority took into consideration in making the new order of assessment. This, in my opinion, the assessing authority was not permitted to do under rule 35 of the said rules. He is entitled under the said rule to rectify a mistake which may be found out from the record itself, that is to say, from the materials which are already on the record. He cannot under rule 35 take into consideration new materials and then come to a conclusion that there has been a mistake and proceed to rectify the said mistake.