SABARI FOUNDRY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE three tax appeals arise out of a common order made by the Joint Commissioner on 27th September, 1982, in respect of the same assessee for the assessment years 1974-75, 1975-76 and 1976-77. Considering the nature of the controversy involved in the cases it is appropriate at this stage to notice the facts giving rise to the filing of these appeals.

(2.) THE appellants are dealers in pumps and electric motors. For the assessment years 1974-75, 1975-76 and 1976-77 they had collected tax at the rate of 9 per cent and 12 per cent, respectively, from the customers on the sale of electric motors. THE assessing authority, like the assessees, treated the electric motors as electrical goods failing under item 41 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 and levied sales tax at the rate of 9 per cent and 12 per cent on the sales turnover in respect of the electric motors. It transpires that the Board of Revenue clarified on 23rd March, 1978, that the electric motors were taxable at 5 per cent with effect from 3rd March, 1975 to 20th February, 1978 and at 6 per cent from 21st February, 1978 under item 81 of the First Schedule. THE assessee wanted to take advantage of the clarification of the Board of Revenue. THEy filed appeals before the Appellate Assistant Commissioner in respect of the assessments of all the three years. THE Appellate Assistant Commissioner noticed the circumstances under which the appeals came to be filed before him and after finding that there was a clarification issued by the Board on 23rd March, 1978, clarifying that the electric motors were taxable at 5 per cent with effect from 3rd March, 1975 to 20th February, 1978 and at 6 per cent from 21st February, 1978 under item 81 of the First Schedule, condoned the delay in filing the appeals and proceeded to dispose of the appeals on merits. THE Appellate Assistant Commissioner noticed while disposing of the appeals that since the assessees as well as the assessing authority were labouring under a belief that electric motors would fall under item 41 till the Board of Revenue clarified the position on 23rd March, 1978, that they fell under item 81, with a view to do justice, the delay in filing the appeals should not be held against the assessees, and consequently condoning the delay disposed of the appeals on merits. THE Appellate Assistant Commissioner also noticed that had the correct rate of tax been applied by the assessing officers for each of the assessment years, the need for filing the appeals would not have arisen. With a view to do justice between the parties, therefore, the appeals were allowed, and the electric motors were held taxable as per the clarification issued by the Board of Revenue and the assessing authority was directed to give effect to the order. THE Appellate Assistant Commissioner also recorded a finding that since the assessee had collected taxes at 9 per cent under a bona fide, impression, it was not a case for the levy of penalty under section22(2) of the Tamil Nadu General Sales Tax Act, particularly when the mistake was mutual between the assessees and the department and the assessees had claimed that they had refunded the excess tax to the customers. Subsequently however, the Appellate Assistant Commissioner on 9th July, 1980, issued an erratum and deleted the observation with regard to the levy of penalty, etc. in the last paragraph of the order dated 3rd July, 1980. THE following direction was substituted :

(3.) THE Joint Commissioner, however, we find, after dealing with the jurisdiction under section34 of the Act, did not advert to or consider the other pleas raised on behalf of the assessees in the reply to the proposal and set aside the order of the Appellate Assistant Commissioner and restored that of the assessing authority. It was an obligation on the Joint Commissioner while disposing of the revision in exercise of the suo motu powers of revision to have dealt with the objections raised by the assesses and also consider whether or not the discretion had been properly exercised by the Appellate Assistant Commissioner in condoning the delay in filing the appeal. THE Joint Commissioner did not advert to those aspects at all and only after recording a finding that the suo motu powers of revision could be exercised by him in the facts and circumstances of the case, against the order of the Appellate Assistant Commissioner, set aside the order of the Appellate Assistant Commissioner. That is clearly erroneous and the order of the Joint Commissioner on that aspect cannot he sustained and we have to set it aside to the extent indicated above.