MADURA MILLS COMPANY LIMITED Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE Board of Revenue, Madras, in exercise of its powers of revision under section 12 of the Madras General Sales Tax Act acted suo motu and revised the assessment made by the Deputy Commercial Tax Officer, Madurai, on 28th November, 1952, in respect of the business turnover of the Madura Mills Co., Ltd. THE mills have preferred this appeal against the order of the Board of Revenue dated 25th August, 1958, challenging the decision against them on the ground, amongst others, that the Board exceeded its jurisdiction in having exercised the powers of revision beyond the period of limitation fixed under the Act.

(2.) THE facts necessary for the disposal of this appeal can be shortly stated. THE Madura Mills Co., Ltd., are dealers in yarn, purchasing raw materials like cotton, staple fibre etc., manufacturing them into yarn and selling them. In the assessment year 1950-51 they returned a total turnover of Rs. 15, 27, 61, 883-8-4 before the Deputy Commercial Tax Officer, Madurai. THE officer, after scrutiny of the account books produced by them, held that the net turnover was Rs. 15, 44, 09, 109-3-11. THE assessee aggrieved by this order preferred an appeal before the Commercial Tax Officer, Madurai South. THEy contended before the appellate authority that a sum of Rs. 1, 44, 294-14-4 was wrongly included by the first assessing authority in the purchase value of cotton purchased by them for production of yarn as that amount only represented commission paid by them to the Comorin Investment Trading Co., Ltd., for the purchase. THEy further contended that another sum of Rs. 81, 546-0-1, which represented sale proceeds realised by them by selling empty drums and other miscellaneous articles, were not realisations in the course of their business as they never dealt with such articles. THE Commercial Tax Officer upheld their contention and excluded the sum of Rs. 1, 44, 294-14-4 from the total turnover on the ground that the amount was commission paid by the assessee for the purchase of cotton, but negatived their contention in regard to the sum of Rs. 81, 546-0-1. THE view of the Commercial Tax Officer was that the sale of the empty drums and miscellaneous articles was part of the business of the assessee. THE Deputy Commercial Tax Officer issued a revised assessment. THE assessee then preferred a revision petition before the Deputy Commissioner of Commercial Taxes in which the only objection they raised was that they should not have been assessed to tax on amounts collected by them by way of tax amounting to Rs. 6, 57, 971-4-9. In other words, they contended that the Sales Tax Act did not permit inclusion of the tax amount collected by the assessee in their business turnover. It must be noted that the assessee did not raise any objection against the order of assessment by the Deputy Commercial Tax Officer or the Commercial Tax Officer in regard to any other matter. By order dated 21st August, 1954, the Deputy Commissioner, the revising authority, dismissed the revision petition. He held that the assessee was not entitled to raise the contention at that stage before him for the first time and that even otherwise the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954, permitted the inclusion of tax in the taxable turnover. THE Board of Revenue issued a notice to the assessee on 4th August, 1958, stating that it proposed to revise the assessment of the Deputy Commercial Tax Officer, Madurai, by including in the net turnover the sum of Rs. 7, 74, 62, 706-1-6 as that amount was wrongly excluded by the assessing authority. THE assessee filed written objections to this proposed revision and also prayed for an opportunity to be heard through their counsel before the Board passes final orders revising the assessment originally made. In this objection they raised the point that the revision proceedings started suo motu by the Board were barred by limitation as prescribed under section 12 of the Madras General Sales Tax Act, and they also submitted that there was no wrongful exclusion of the sum of Rs. 7, 74, 62, 706-1-6 by the Deputy Commercial Tax Officer in assessing the net turnover. By order dated 25th August, 1958, the Board overruled both these contentions and fixed the net turnover as Rs. 23, 17, 15, 948-15-2. It is the correctness of this decision of the Board which is now called in question by the assessee.THE appellant contends that the Board of Revenue invoked its revisional jurisdiction after the expiry of the period of limitation prescribed under section 12 of the Act. Section 12(4)(b) is the relevant provision prescribing the period of limitation and it is in these terms :

(3.) THE plain words of section 12(4)(b) of the Act indicate that the period of four years from the date on which the assessee was communicated with the order has reference only to the order which is called in question and which is the subject-matter of revision. It is equally plain that in this case the subject-matter of the revision proceedings before the Board was only the revised assessment of the Deputy Commercial Tax Officer, Madurai, dated 28th November, 1952. THEre should therefore be no difficulty in holding that the Board exercised its powers of revision beyond the period of limitation fixed under the Act. This is, in short, the argument of Mr. K. V. Venkatasubramania Iyer, learned counsel for the appellant. But the contention urged by the learned Government Pleader is that, having regard to the scope of the powers of revision conferred by the Act on the revising authority, the order of the Deputy Commercial Tax Officer dated 28th November, 1952, became merged with the order of the Deputy Commissioner dated 21st August, 1954, and that therefore the period of limitation can only begin to run from the date on which the order of the Deputy Commissioner was served upon the assessee.