C A PRODUCE Vs. STATE OF KERALA

JUDGEMENT

(1.) THE matter arises under the Kerala General Sales Tax Act, 1963 (for short, "the Act" ). THE assessee is the revision-petitioner. He is a dealer in hill produce. His assessment for the year 1989-90 was completed on February 1, 1994 by fixing total and taxable turnover of Rs. 2, 42, 72, 121. 10 and Rs. 2, 15, 52, 880 respectively. THE assessee took up the assessment in appeal before the Deputy Commissioner (Appeals), Kozhikod e. THE assessment was set aside by order dated november 11, 1996 and remitted the matter to the assessing authority with certain directions. THE assessing authority subsequently passed a fresh assessment order on September 19, 1997. According to the Deputy Commissioner, the assessing authority committed irregularity and illegality in the said assessment order. THE Deputy Commissioner noted that the turnover of arecanut, dry ginger and pepper amounting to Rs. 1, 97, 48, 510 escaped from levy of turnover tax. He also noted that to get exemption from the turnover tax under s. R. O. No. 717 of 1988 the dealer has to produce evidence to the effect that the impugned turnover has suffered turnover tax. In the circumstances, the deputy Commissioner in exercise of the power vested in him under section 35 of the Act by annexure C order set aside the assessment order dated September 19, 1997 and remanded the case to the assessing authority for fresh disposal according to law. This order was challenged by the assessee in appeal before the Sales Tax Appellate Tribunal, Additional Bench, Kozhikod e. THE Tribunal agreed with the view taken by the Deputy Commissioner and dismissed the appeal. THE revision is filed against the said order. THE main contention taken by Sri P. Balachandran, learned counsel for the revision-petitioner, is that the order passed by the Deputy commissioner under section 35 of the Act was beyond the period of limitation specified in the said section itself and therefore the order, annexure C, passed by him is barred by limitation and without jurisdiction. According to the revision-petitioner, the period of four years has to be reckoned from the date of the original assessment order passed on February 1, 1994, for, the alleged omission occurred in the original assessment order itself and further the fresh assessment order dated September 19, 1997 which is set aside by the deputy Commissioner is one passed by the assessing authority on the basis of the directions issued in annexure A appellate order. THE counsel also submitted that the appellate order, annexure A, did not set aside the original assessment in toto and same was only for a limited purpose. He submitted that the assessing authority, in such circumstances cannot go beyond the scope of the directions contained in the appellate order. In other words, the contention is that the original assessment order dated February 1, 1994 was not completely effaced. THE counsel accordingly submitted that the finding of the Tribunal contrary to the above is erroneous and unsustainable. He also relied on the decision of the Andhra Pradesh High Court in State of A. P. v. Hotel Ganesh 1996 100 STC 256 in support of the above. Learned Special Government Pleader (Taxes), on the other hand, submitted that the appellate authority has set aside the assessment order in toto with directions and therefore the department was not at all aggrieved by the original assessment order. He submitted that it was open to the assessing authority while passing the fresh order to impose turnover tax on the turnover which has not suffered tax at the hands of the assessee. He submitted that the effect of setting aside the assessment order is that the order in its entirety goes and a fresh order has to be substituted in its place. He further submitted that the Revenue was aggrieved only when the fresh order was passed. So according to the Government Pleader, the four years period referred to in section 35 runs only from the date of the fresh assessment order.

(2.) WE have considered the rival submissions. Section 35 of the Act gives power to the Deputy Commissioner to initiate proceedings under the said section if the assessment order in his opinion is prejudicial to revenue and pass such orders thereon as he thinks fit after conducting enquiry. However, certain limitations are provided in sub-section (2) thereof. One such limitation is that the Deputy Commissioner shall not pass any order under sub-section (1), if more than four years have expired after the passing of the order referred to therein. Another limitation is that if the order has been made the subject-matter of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court, he cannot pass an order under sub-section (1 ). However, sub-section (2a) provides that the Deputy commissioner may pass an order under sub-section (1) on any point which has not been decided in an appeal or revision referred to in clause (b) of sub-section (2), before the expiry of the period of four years referred to in clause (c) of that sub-section, whichever is later. In view of the aforesaid provisions the first thing to be considered is as to whether there has been an appeal against the original order passed by the assessing authority and if so whether the omission contemplated in section 35 was the subject-matter of the said appeal. If it was the subject-matter of the said appeal, it was not open to the Deputy commissioner to invoke section 35 by virtue of the provisions of clause (b) of sub-section (2) of section 35, for, even sub-section (2a) does not save the situation. If, on the other hand, it is found that the issue which is sought to be corrected by invoking the provisions of section 35 was not the subject-matter of the appeal and the omission was there in the original order itself, the order which must be corrected is the original order and the limitation runs from that date. Another situation may also arise where in an appeal filed by the assessee against the original assessment order the appellate authority set aside the original assessment order in toto and directing the assessing authority to complete the assessment afresh. In such a case even if there was an omission in the original assessment which resulted in prejudice to the revenue the Revenue will not be aggrieved since the said order has become non est in law. In such a case, if the omission comes again in the fresh order, certainly the Revenue will be prejudiced only by the said order and the time specified in clause (c) of sub-section (2) of section 35 runs only from the date of that order. So the question to be decided is as to whether the appellate order, annexure A, makes an open remand as held by the authorities and by the tribunal or only a remand for a limited purpose as contended by the assessee. The petitioner, being aggrieved by the assessment order dated February 1, 1994 as rectified by order dated May 7, 1994, filed appeal before the Deputy commissioner (Appeals), Kozhikode. In the said appeal, the assessee challenged the assessment order in its entirety. One of the disputes in the appeal was regarding the levy of tax on the turnover of purchase of arecanut, black pepper and dry ginger effected by the assessee in pursuance of buying agency agreements entered into with non-resident principals and transferred them to their outside State place of business. According to the assessee, this claim was specifically made in the objection to the pre-assessment notice and that this was not considered by the assessing authority while completing the assessment. The assessing authority did not make even a casual reference to the said claim. In that view of the matter, the appellate authority thought that the matter must go back to the assessing authority for considering the said issue. In the said circumstances, the appellate authority did not consider the other questions raised in the appeal. All those questions were left open. The assessment order was set aside and the matter remitted to the assessing authority for de novo disposal in the light of the observations and directions. The relevant portion of the appellate order is extracted below : "i find that the appellant had tersely raised this issue before the assessing authority through the reply dated August 24, 1993 to the pre-assessment notice. But, strangely enough, the assessing authority has not made in the assessment order even a casual reference to this important disputed issue. This stand of the assessing authority is neither reasonable nor justifiable. As the original authority he has to examine the issue in the light of the decision relied on by the appellant and take a decision thereon. For this purpose, the case has to go back to the assessing authority. As such, I leave open the other issues raised in the appeal. Accordingly, I do hereby set aside the assessment and remit the case to the assessing authority for de novo disposal in the light of the above observations and directions. "

(3.) ACCORDING to us, the principles laid down in the above decision will equally apply to a case where the original assessment is set aside by the appellate authority unless the appellate authority specifically limits the scope of the remand. The decision of the Andhra Pradesh High Court in State of A. P. v. Hotel Ganesh 1996 100 STC 256 is inconsistent with the decision mentioned above. That apart, it is not clear from the said decision as to what are all matters which were dealt with by the appellate authority while setting aside the assessment order. We do not find any illegality in the finding of the appellate Tribunal. There is no merit in this revision. It is accordingly dismissed. Petition dismissed. . .