STATE OF MADRAS v. LATEEF HAMID & CO.
Citation: [1972] 1 S.C.R. 577; 1971 INSC 234
Court: Supreme Court of India
Bench: K.S. HEGDE , A.N. GROVER
Judgment date:
Case summary
1971 INSC 234. Supreme Court of India judgment dated 1971-09-02. STATE OF MADRAS v. LATEEF HAMID & CO. Read the judgment and case details on LawSphereX.
Judgment text
578 SUPREME COURT REPORTS STATE OF MADRAS v. LATEEF HAMID & CO. September 2, 1971 [K. S. HEGDE AND A. N, GROVER, JJ. ] Madras General Sales Tax Act 1 of 1959 s. 31-Sect'ion conferring power on ~4ppeilate Assistant Commissioner to enhance assessnzent- Power to enhance assessrnent under Madras General Sales Tax Act, 1939 exercisable by Co1nmercial Tax Officer-Appellate Assistant Commissioner hearing appeal under s. 31 of 1959 Act whether can exercise power of enhancement in respect of assess1nent year 1958~59 which lVas governed by 1939 Act-Whether any right or privilege of assessee under 1939 Act affected if polver of enhancement exercised by Appellate Assistant Conz-missioner under s. 31 of 1959 Act. The appellant was a dealer in hides and skins at Madras. Up to March 31, 1959 sales tax on dealers in the State of Madras was leviable under the Madras General Sales Tax Act, 1939.
The appellant's turnover for the assessment year 1958-59 thus stood charged with liability to pay tax as leviable under the 1939 Act The 1939 Act was repealed by the Madras General Sales Tax Act, 1959 which came into force on April 1, 1959. The appellant was assessed for the year 1958-59 on March 24, 1961. By an order dated August 16, 1962 the Appellate Assistant Commissioner while disposing of the appeal against the said assessment order enhanced the assessment undt! r power conferred on him by s. 31 of the 1959 Act. The Tribunal accepted the contention of the assessee that the Appellate Assistant Commissioner had no power to enhance the assessment. The High Court in revision held that since under the 1939 Act the appellate authority while exercising its appellate po'>vers had no power to enhance the assessment and the said immunity or protection was a vested right in the assessee, the same n f the right of the parties.
[582C-583A] No assessee has any vested right in 'the procedure p'rescribed under the 1939 Act. So long as the new procedure laid down in the 1959 Act does not interfere with any of his vested rights, an assessee has no right to claim that his case must be dealt with under the provisions of the re· pealed Act. It is well settled that the new procedure prescribed by law _governs all pending cases. The assessee in the present case filed its appeal under s. 31 of the 1959 Act and not under s. 11 of the 1939 Act. Its right of appeal under the 1959 Act does not take away in any manne-r . any ot its vested rights under the 1939 Act f,585 B-C] The appeal must accordingly be allowed. Deputy Conimissioner of Commercial Tax, Madras Division v. N. Balasundaram & Co. 14, S. T. C. 996, disapproved. Observations contra in Deputy Commissioner of Commercial Taxes, Madras Division v. Sri S. Swami & Co. , 13 S. T. C. 468, held incorrect.
[Since it was held that no vested right of the assessee was in'fringed . by the provisions of the 1959 Act the Court did not find it necessary to . consider the meaning of the words 'any right privilege ..... accrued ..... • under the Act' ins. 61(1)(ii)(c) of the Act or to examine the scope o[ s. 61(2) thereof. ] CIVIL APPELLATE JURISDICTION ; Civil Appeal No. 2186 of 1968. Appeal from the judgment and order dated July 3, 1967 of the Madras High Court in Tax Case No. 250 of 1964 (Revision No. 172). S. T. Desai and A. V. Rangam, for the appellant. R. K. P. Shankardass, R. Vasudeva Pillai, P. Keshava Pillai in the 1939 Act. s. ~ction 2(a-2) defines the expression "assessing authority" as meaning any person authorised by the State Government to make any assessment under the Act. The expression "Commercial Tax Officer" is defined in s. 2(a-3) as meaning any person appointed to be a Commercial Tax Officer under s. 2-B. The Deputy Commissioner is defined in s.
2 (b-1) as meaning any person appointed to be a Deputy Commissic•ner of Commercial Taxes under s. 2-B. Section 2-B empowers the State Government to make appointments of as many Deputy Commisisoners of Commercial Taxes and Commercial Tax '. )fficers as they think fit for the purpose of performing the func- ;ions respectively conferred on them by or under the Act. The expression "Appellate Tribunal" is defined in s. 2(a-2) as meaning the Tribunal appointed under s. 2-A, which empowered the Government to appoint a Tribunal consisting of three members to exercise the functions conferred on the Appellate Tribunal by or under the Act. Section 11 provided for appeal by the assessee objecting to an assessment made on him under s. 9 (2) within the prescribed period. Section 9 prescribed the procedure to be followed by the assessing authority. Section 12 ( 1) conferred certain special powers on the Commercial Tax Officer. Ito said that "the Commercial Tax Officer may !
i) suo mo to or (ii) in cases in which an appeal does not lie to him under section 11, on application, call for and MADRAS v. LATEEF (Hegde, !. ) 5 81 examine the record· of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order or as to the regularity of such proceeding, and may pass such order with respect thereto as he thinks fit. " The application under s. 12( 1 )(ii) could have been made even by the assessing authority. It may also be remembered ! hat the Commercial Tax Officer was one of the authorities charged with th~ duty to see that no taxable turnover went un-taxed. The power under s. 12 ( 1) could have been exercised within three years from the date the assessee was served with assessment order. Power under s.
12(1)(ii) could have been exercised by the Commercial Tax Officer simultaneously with the exercise of his appellate powers under s. 11 ( 1). Section 12(2) conferred special powers on the Deputy Com- J) misisoner to call for and examine any order or proceeding recorded under the provisions of the Act satisfying himself as to the legality or propriety of that order or as to the regularity of such proceeding and may pass such order with respect thereto as he thinks fit. This power he could have exercised within four years from the date on which the assessment order was communicated to the assessee. Section 12-A provided for an appeal by an assessee objecting to an order relating to his assessment passed by the Commercial Tax Officer whether on appeal under s. 11 or under s. 12, sub-s. (1) or by the Deputy Commissioner under s. 12, sub-s. (2) subject to certain conditions with which we are not concernw in this case.
The assessee as well as the Deputy Commissioner were conferred with power to move the High Court under s. 12-B within the prescribed period against the order of the Appellate Tribunal on the ground that that order either decided enoneously a question of la~ or it failed to decide the question of law arising for decision. This takes us to the relevant provisions in the 1959 Act.. Therein again 'the assessing authority" is defined in s. 2 ( c) as meaning any person authorised by the Government or by any authority empowered by them to make assessment u~der the Act. Acrainst the order of assessment made by the assessmir authonty a; anneal by any person objecting to the assessment lies to the Anpellate Assistant Commissioner appointed un~er s. 28, sub:s. (3). Section 3 l empowers the Appellate Assistant Comm1s-sioner to confirm, reduce, enhance or annul the assessment. The power to e:nhance the assessment was conferred on the Appe'late Authority for the first time by the 1959 Act.
Under this Act also the Deputy Commissioner's power to suo moto revise the order of assessment is retained, subject to certain conditions. Any person objecting to the order made by the Appellate Assistant Commissioner under s. 31 ( 3) or against the order made by the ll Deputy Commissioner under s. 31 ( 1) can appeal to the Appellate Tribunal. Under s. 38 the assessee or the Deputy Commissioner can take up a revision to the High Court either on the ground that the Tribunal has decided a question of law errcneous- Jy or it has failed to decide a question of law arising for deci,,ion. In the matter of assessment, the purpose of the 1939 as well as the 1959 Act is identical. That purpose was and is to see that neither the assessee is over-assessed nor the State is deprived of the . Revenue to which it is entitled. Under the 1939 Act, an aggrieved assessee could first appeal to the Appellate Authority and then to Tribunal.
Further he could on questions of law go up in revision to the High Court. To protect the interest of the State, special powers were conferred on the Commercial Tax Officer as well as the Deputy Commissioner of Commercial Taxes. If the Deputy Commissioner was not satisfied with the decision of the Tribunal on questions of law, he could have gone up in revision to the High Court. Under the 1959 Act, the procedure was simplified to some extent. The Appellate Assistant Commissioner who primarily took over the quasi-judicial functions of the Commercial Tax Officer was conferred with power not only to confirm, vary or annual the assessment but also the power to enhance the assessment. The power conferred on him ·under s. 31 of the 1959 Act combines to an extent both the appellate power as well as the special power the Commercial Tax Officer had under s. 11 and 12(1) of the 1939 Act.
Hence the changes effected by the 1959 Act in the machinery provisions do not touch the substance of the matter. Even as regards the time withi. n which the enhancement of assessment can be made the change excepting in exceptional cases is in favour of the assessees. The Commercial Tax Officer could have exercised his special powers under s. 12 ( 1) of the 1939 Act within three years from rhe date the assessment order was served on the assessee. Under the 1959 Act. he ca•1 enha. nce the assessment only during the pendency of the appeal and not thereafter. Herein we are not concerned with the special powers of the Deputy Commissioner nor with the powers of the Tribunal or the High Court. In our opinion there H: is no basis for saying that the provisions of the 1959 Act relating to the determination of the assessment are more onerous than those in the 1939 Act. The 1959 Act in our opinion merely MADRAS V, LATEEF (Hegde, J.
) 583 simplified the procedure without touching the substance of the right of the parties. No benefit that was available to an assessee as regards the procedure, was taken away by the 1959 Act, if we ignore the remote possibility of an appeal pending before an Appellate Assistant Commissioner for more than three years and that authority failing to exercise· his power to enhance the tax within that period. The assessee before us cannot even have the benefit of such a contingency because the order of assessment in this case was made on March 24, 1961 and the appellate order was passed on August 16, 1962. In this case it cannot be said that any vested right of the assessee had been in fact affected by the 1959 Act. Now we shall go to s. 61 of the 1959 Act on the basis of which the Tribunal and the High Court have upheld the contention of the assessee. Section 61 ( 1) to the extent material for onr purpose reads : "61 ( 1).
( i) The Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), (hereinafter in this section referred to as the said Act) , is hereby repealed. (ii) T! ie repeal of the said Act by clause (i) shall not affect- ( a) anything done or any offence committed, or any fine or penalty incurred or any proceedings begun before the commencement of this Act; or (b) the previous operation of the said Act or anything duly done or suffered thereunder; or ( c) any right, privilege, obligation or liability ac-quired, accrue or incurred under the said Act or; ( d) any fine, penalty, forfeiture.
or punishment incurred in respect of any offence, committed against the said Act; or ( e) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, fine, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may bi: instituted, continued or enforced and any such fine, penalty, forfeiture or punishment may be imposed, as if this Act had not been passed. (iii) Subject to the provisions of clause (ii), anything done or any action taken including any appointment made, notification, notice or ord~r issued, rule, form or regulation framed, certificate, licence or permit [1972] l S. C. R. granted, under the said Act shall be deemed to have been done or taken under the corresponding provision of this Act and shall continue in force accordingly, un-less and until, superseded by anything done or any action taken under this Act. (2) Notwithstanding anything contained in sub-s.
ll ( 1) any application, appeal, revision of other proceeding made or preferred to any officer or authority under the said Act and pending at the commencement of this Act, shall after such commencement, be transferred to and disposed of by the officer or authority who would have had jurisdiction· to entertain such application, appeal, revision or other proceeding under this Act if it had been in force on the date on which any application, appeal, revision or other proceeding was made or preferred. The rules framed under the 1939 Act (the Madras General Sales Tax Rules, 1939), provide for the appointment of Assistant Commercial Tax Officers and the Deputy Commercial Tax Officers. By his order dated September 15, 1939, in exercise o{ the powers conferred on him by cl. (a) of s. 2 and sub-ss. 1 and 2 of s.
14 of the 1939 Act, the Governor of Madras authorised the Assistant Commercial Tax Officers to exercise the powers of the assessing authority in the case of dealers whose turnover does not exceed Rs. 20,000/- and Deputy Commercial Tax Officers to exercise the powers of an assessing authority in the case of dealers whose turnover exceeds Rs. 20,000/-. It is not necessary to refer to the exceptional cases for which provision is made in the provisos to cl. (1) of that order. Rule 13 (1) of the Rules prescribed that subject to the provisions of s. 11 any person aggrieved by any original order of an assessing authority may appeal to the Commercial Tax Officer of the District. The proviso to that section permits the Board of Revenue to transfer an appeal pending before a Commercial Tax Officer to another Commercial Tax Officer for reasons to be recorded in writing. But the usual appellate authority is the Commercial Tax Officer of the District.
Hence the Commercial Tax Officer had both the powers of the appellate authority as well as the special powers conferred on him under s. 12(1) of the 1939 Act. By the exercise of those two powers. he could have confirmed, altered, amended or enhanced the assessment made. The power conferred on the appellate authority under the 1959 Act. is not wider than that the Commercial Tax Officer had under the 1939 Act. Hence the 1959 Act doe~ not adversely affect in any manner the right of appeal an assessee had under the 1939 Act. If one probes into the grievance of MADRAS V, LATEEF (Hegde, J. ) 585 the assessee before us, it would be obvious that it is wholly ima-ginary. No assessee has any vested right in the procedure pre. s-cribed under the 1939 Act. So long as the new procedure laid down in the 1959 Act does not interfere with any of his vested rights, an assessee has no right to claim that his case m_ust be dealt with under the provisions of the repealed Act.
It 1s well settled that the new procedure prescribed by law governs all pending cases. As seen earlier, the assessee filed its appeal under s. 31 of the 1959 Act and not under s. 11 of the 1939 A~t. But that is a minor aspect. What is of the essence is ! hat his nght of appeal under the 1959 Act does not take away m any manner any of his vested rights under the 1939 Act. In view of what we have said hereinbefore, it is not necessary for us to consider the meaning of the words "any right, privilege .......... accrued ............ under the Act" in s. 61 (1) (ii) ( c). We repeat that no right of the assessee was infringed by the provisions of the 1959 Act. In this view, it is not necessary to examine the scope of s. 61 (2) of the 1'959 Act about which there was considerable argument before us. The decision under appeal is based on the earlier two decisions of that High Court i. e. in Deputy Commissioner Commercial Taxes, Madras Division v. Sri Swami & Co.
(1) and Deputy E Commissioner of Commercial Taxes, Madras Division v. M. Ba/a- 2 sundaram and Co. ( ). Hence it is necessary to examine the correctness of those decisions. In Swami & Co. 's case (supra) the assessee was assessed by the Deputy Commercial Tax Officer for its turnover for the year 1955-56 under the 1939 Act. The order or assessment was passed on December 15, 1956. The assessee filed an appeal before the Commercial Tax Officer on F February 15, 1957. During the pendency of the appeal, the 1959 Act came into force on April l, 1959. Thereafter the appeal was transferred to the Appellate Assistant Commissioner. The Appel- , late Assistant Commissioner reduced the turnover of the assessee to certain extent. Not being satisfied with the order of the Appellate Assistant Commissioner, the assessee preferred a fur- G ther appeal to the Appellate Tribunal.
In the course of the hearing of the appeal by the Tribunal, the State representative filed a petition seeking enhancement of the turnover of the assessee on . certain grounds. The Tribunal rejected that plea holding that the assessee had a vested right to have his appeal disposed of under the provisions of the 1939 Act. It may be noted that H under the 1939 Act, only an assessee could have appealed to the Tribunal against the order of the Appellate Assistant Com- (2) 14. S. T. C. 996. A sioner but under the 1959 Act both the assessee as well as the Deputy Conunissioner can appeal against his order. Aggrieved by the order of the Tnbunal, the :Deputy Commissioner took up the matter i11 revision to the High Court. The High Court allowed the revision petition. It held that the Tribunal went wrong in holding that the petition filed by the State representative for enhancement of the assessment was not maintainable.
In ll the course of its judgment the High Court observed : "The immunity or protection which the assessee had under the 1939 Act so as to save the assessment made by the Deputy Commercial Tax Officer, the prim-ary assessing authority, from being enhanced by the c exercise of the appellate power by the Commercial Tax Officer, is a vested right, which cannot be interfered with or in any way impaired having regard to the speci-fic provision of s. 61 ( 1) of the Madras Act I of 1959. The order of the Appellate Assistant Commissioner only reduced the turnover to the benefit of the assessee, and it is clear that there was no violation of the vested right of the assessee by reason of the said order. The order of the Appellate Assistant Commissioner was passed after the coming into force of the 1959 Act and on that date the assessee had no vested right to prevent an enhancement of his assessment by the future appellate authority, namely the Tribunal. The Tribunal enter-tai.
ned an appeal at the instance of the assessee only under the new Act as the order appealed against was one passed after the coming into force of the new Act, and by a Tribunal which functioned under the new Act. It is impossible for the assessee to maintain the posifon that any order of the Appellate Tribunal enhancing the assessment made by the Appellate Assistant Commissioner would amount to deprivation of their vested rights or violation of the provisions of section 61 (1) of the 1959 Act. " These observations appear to us to be somewhat incongru-ous. As seen earlier under the 1939 Act, the Revenue could not have anpealed either against the order of the assessing authority or against that of the ·-apnellate authority.
If the ~on-exi~ience of the right of appeal on the part of the Department 1s considered as an immunity or protection and if that immunity or protection is con~idered as a vested right, the assessce will have that right HI both at the stage of the aopeal to the A_ppellate Assistant. Commission~r as well as at the stage of the appeal to the Tnbunal. It is difficult to follow how the High Court was able to make a MADRAS v. LATEEF (Hegde, J. ) 587 dichotomy as between the powers of the Appellate Assistant Commissioner and that of the Tribunal in that regard. If the: newly constituted Tribunal were clothed with wider and larger powers as opined by the High Court, the same would be the case with the Appellate Assistant Commissioner. In our opinion, the true test to be applied to the case was whether in fact any vested right of the assessee had been taken away under the 1959 Act because of the enlargement of the powers of the first appellate authority or that of the Tribunal.
As seen earlier, no real right of the assessee was infringed by the 1959 Act because of the enlargement of the powers of those authorities. This takes us to the decision in Balasundaram & Co's case (supra). This case was decided by the same bench which decided Swami & Co's case. Therein the assessee was assessed to sales tax under the 1939 Act. During the pendency of its appeal to the Commercial Tax Officer, the 1959 Act came into force. Its appeal was transferred to the Appellate Assistant Commissioner who enhanced the assessment. But on a further appeal, the Tribunal came to the conclusion that the Appellate Assistant Commissioner had no jurisdiction to enhance the assessment. As against that order, the Deputy Commissioner of Commercial Taxes went up in revision to the High Court.
The High Court held that the assessee had a vested right at the time when the 19 59 Act came into force to prevent the Commercial Tax Oilicer from enhancing the assessment in the course of the appeal preferred by him. However, there was always the peril of the , Commercial Tax Officer, who was also the revising authority, ·revising the assessment to his prejudice in exercise of his revisional power, but that peril effectively disappeared when under the 1959 Act, the revisional power was conferred upon the Deputy Com- F missioner of Commercial Taxes and not upon the Appellate Assistant Commissioner. Therefore the interference by the Appellate Assistant Commissioner with the assessment order passed by the Deputy Commercial Tax Officer to the prejudice of the assessee in the purported exercise of his appellate power, was clearly violative of the assessee's vested rights. In our opinion this decision proceeded on a wrong basis.
The question before the G High Court was whether there was a vested right in the assessee not to have his assessment enhanced, under the 1939 Act and whether that vested right had been in any manner infringed by the 1959 Act. As seen earlier he had no such vested right under . the 1939 Act. The fact that a different procedure is prescribed under the 1959 Act for enhancing the assessment cannot be said H to be an infringement of a vested right. No one can have a vested right in a mere procedure. We are of opinion that Balasundaram's case (supra) was wrongly decided and some of the observations A in Swami & Co's case '(supra) are not correct though the decision in that case is not open to question. Mr. S. T. Desai, learned Counsel for the Revenue placed strong reliance on the decision of a Division Bench of the Kerala High Court in Velukutty v. Kera/a Sales Tax Appellate Tribunal, 1 Trivandrum and Ors. ( ) Therein, interpreting a provision similar to s.
61(2) of the Act, the High Court carne to the conclusion . B that the clause "be transferred to and disposed of by the officer or authority who would have had jurisdiction to entertain such application, appeal, revision or other proceeding under this Act, if it had been in force on the date on which any application. appeal, revision or other proceeding was made or preferred" conferred power on the appellate authority to enhance assessment. C The correctness of this conclusion was contested by Mr. Shankar- ·dass, learned Counsel for the assessee. According to him that clause merely provided for transference of the appeals pending before the authorities under the 1939 Act to the authorities under the 1959 Act without enlarging their powers. In view of our conclusion that no vested right of the assessee had been interfered D with, it is not necessary for us to go into this controversy.
For the reasons mentioned above, this appeal is allowed, orders of the High Court as well as that of the Tribunal are set aside and the case is remitted to the Tribunal for disposal according to law. In the circumstances of the case we direct the parties to bear their own costs both in this Court as well as in E the High Court. G. C. Appeal allowed. --~----·-- (! ) 20 S. T. C. 28.
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