Commercial Tax-Officer, Bangalore,. Etc. Etc. v. Sri Venkateswara Oil Mills & Anr. Etc. Etc.

HEGDE, J.-In these appeals by special leave, a common question of Jaw arises for decision and that question relates to the scope ancl effect of the Central Sales Ta11 (Amendment) Act, 1969.

The amendment in question came to be enacted under the following circumstances. The High Court of Mysore in Yadalam Lakshminarasimhiah Setty and Sons v. State of Mysore(1), held that under s. 8 (2) of the Central Sales Ta11 Act, 1956, prior to its amendment by Act 31 of 1958 a "sale" in the course of inter-State trade or commerce is to be ta11ed at the same rate and in the same manner as it would have been tued, under the appro-priate State law, if it had been an intra State transaction, but

fl) 13 S.T.C. 583.

without taking into consideration lhe mlnimdm twrnover fixed bly the State law for the purpose of determilring the liability of the "dealer" to be assessed under the State sales tax law. It further held that the words "same manner" in section 8(2) relate to the calculation of the tax and not refer to the procedure to be adopted while assessing the "dealer."

This decision was affirmed by the Supreme Court in State of Mysore v. Y addalam Lakshminarasimhiah Setty and Sons.(') Thereafter on June 9, 1969, the President of India promulgated the Central Sales Tax (Amendment) Ordinance 1969, with the object of superseding the effect of the decision in Y addalam Lakshminarasimhiah Setzy's case and to bring to tax sales effected by every dealer in the course of intrai State trade or commerce notwithstanding the fact that no tax could have been levied under the sales tax law of the appropriate State if that sale had been an intra State sale. The provision was given retrospective effect but it was provided in s. l 0 ( l ) of the Amendment Act :

"Where any sale of goods in the course of inter-state trade or commerce has been effected during the period between the 10th day of November, 1964 and the 9th day of June 1969, and the dealer effeating such sale has not collected any tax under the principal Act on the ground that no such tax could have been levied or col-lected in respect of such sale or any portion of the turn-over relating to such sale and no such tax could have been levied or collected if the amendments made in the principal Act by this Act had not been made, then, not-withstanding anything contained in section 9 or the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as amended by this Act, in respect of such sale or such part of the turnover relating to such sale."

Sub-section ( 2) of s. 10 provided :

"For the purposes of sub-section ( 1), the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub-section (1) or in respect of any portion of the turnover relating to such sale shall be on the dealer effecting such sale."

That Ordinance was replaced ~ the Cen_tral Sales Tax (Amendment) Act, 1969. After the amendment came into force several Sales Tax Officers who had earlier assessed the assessees in accordance with the decision in Y adalam Lakshinaraslmhiah Setty' s case issued notices to those assessees proposing to reotify their assessments on the ground that the earlier assessments suffe-red from mistakes . apparent ·on the record. The respondents in these appeals resisted those notices on the ground that he had no competence to reopen the assessment. The Sales-tax Officers re-jected that contention. Thereafter the respondents in these appeals challenged the orders made by the Sales-tax Officers before the High Court of Mysore l:fy means of petitions under Art. 226 of the Constitution on two grounds viz. ( 1) ihat the Sales-tax Officer had no .iurisdiction to reopen the assessment as there was no mistake apparent on the record and (2) that the said Officer was in error in coming to the conclusion that the assessee had collected tax on the turnover which was earlier considered as exempted. The High Court accepted the first of the two afore-mentioned contentions viz. that the Sales Tax. Officer had no jurisdiction to reassess the assessees as it was impermissible for him to receive any additional evidence with a view to decide the question whether the assessees had collected sales tax on the turn-overs in question and consequently he could not take any assist-ance from the 38 of the Mysore Sales Tax Rules, 1957.

Before proceeding to examine the question of law arising for decision, it is necessary to note that in all the cases before us ex-cept in one which will be dealt with separately, we are told that the assessees had been given opportunity to show that they had not collected sales tax in respect of the turnover with which they were concerned, but according to the OJJjcers concerned, the assessees had failed to discharge their burden. The finding of the assessing officers on this point is a finding of fact and was not open to review by the High Court in petitions under Art. 226 of the Constitution.

Rule 38 of the Mysore Sales Tax Rules, 1957 empowers the assessing, appellate or revising authority or the Appellate Tribunal at any time within five years from the date of any order passed by-it to rectify any mistake apparent on the record.

The High Court opined, in our opinion rightly that in order to attract the .power to rectify, it is not sufficient, ii there is merely a mistake in the order sougnt to be rectified. The mistake to be rectified must be one apparent on the record. It is well settled that if a subsequent legislation is given retrospective effect and is deemed to have bieen in force at the time when the order to be rectified was made then the law to be applied is the amended law-see M. K. VenkaNichaa/am, Income-tax Officer and Anr. v. Bombay Dyeing and Manufacturing Co. Ltd.(1). In other words for finding out whether. there is a mistake apparent on the record, the authority has to look to the amended law and not to the law that was in force at the time the original order was made. The High Court had accepted this principle but rt proceeded to rule that for finding out whether there was a mistake apparent on the record or not, it is not permissible for the Sales Tax Officer to take any . evidence whatsoever as the mistake to be rectified must be apparent on the record. On that premises it held that because it is not permissible for the assessee to adduce additional evidence to show that they have not collected tax, It is not open to the assessing authorities to reopen the assessments. This approach is neither !ogical nor sound in· law. Section 10 of ihe Amend-ment. Act mitigates the rigor of the amendment made to s. 6 ol the Principal Act. But for s. 10 of the Amendment Act, every dealer would have had to pay tax on the turnovers in GUestiom whether he had collected taJt or not. If the impact of s. 10 is-ignored, as the High Court has done, then the assessments in ques• tion are liable to be re-opened whether the assessees had collected the tax or not. The assessees cannot have the benefit of s. 10(1) but not the burden of proof placed on them under s. 10(2). If the reasoning of the High CoUlt is correct then it is the' assessees who will bie deprived of the benefit ol s. 10(1) of the Amendment Act because there could not have been any finding in the original assessment orders that the assessees had not collected tax. The legislative intention is clear and beyond doubt. The law gives a farther oppPrtunity to the assessees whose assessments are soµght to be reopened to satisfy the assessing authorities that they had· not collected tax in respect of the turnovers in question. a Rule 3 8 of the Mysore Sales Tax Rules must be read with s. 1 of the Amendment Act. If so read, it is clear that the assessing authori~ ties before rc::,assessing the dealers should afford them reasonable opportunity to satisfy them that they have not collected tax.

For the reasons mentioned above, we allow these appeal~. set aside the orders of the High Court and dismiss the Writ Petitions with costs. But in the case of Malnad Arecanut Syndicate (P) Ltd., represented by its Manager K. Rama Rao, Arecanut Mar. chants, Shimoga v. Commercial Tax Officer, Shimoga and Ors. (Writ Petition No. 5223 ol 1969-Civil Appeal No. 2632 of 1972) we are informed that r~tification proceedings are still pending before the assessing authority. If that is so, the sales tax officer shall proceed to dispose of the same according to law. The G" respondents shall pay the costs of the. appellant in these appeals -one hearing fee .

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2593, 2594-2596, 2599, 2601-2605, 2609-2614, 2615, 2616, 2618, 2619-2627, 2628, 2629-2631, 2632 and 2634 of 1972.

Appeals by special leave from the judgment and order dated O~tober 12 and 13, 1971, November 15, 1971, October 25, and 13, 1971 and November 18, 1971 of the Mysore High Court at Bangalore in Writ Petitions Nos. 3978 of 1970, 1003-1005 of 1971. 5542, 6343, 6428, 6466, 6469, 6790, 6988, 7035, 7057, 5504, 5514, 5525, 6001, 6082, 6110, 5959, 6111, 6775, 2779, 5538, 5540, 6080, 6081 and 6084 of 1969, 2780, 2925, 2926, 3347170, 5006 of 1970, 997 and 998 of 1971, 844 of 1971, and 699 of 1969.

A. K. Sen, S. S. Javali and M. Veerappa, for the appellants (in C.A. No. 2593).

M. Veernppa, for the appellants (in all other appeals).

K. Srinivasan and Vineet Kumar, for respondent No. 1 (in C.A. Nos. 2624, 2616, 2611, 2614 & 2544 & 2593) for the res-pondent (in C. A. Nos. 2594-2596 & 2628).

M .. C. Setalvad and K. N. Bhatt, for the respondents (in C.A. No. 2598 in C.A. No. 2632).

K. R. Chowdhary and K. Rajendra ChowdhtlfY., for respondent No. 1 (in C. A. No. 2598).

S. P. Nayar and R. N. Sachthey, for respondent No. 2 (in C.A. Nos. 2593, 2597-2605, 2606-2608, 2609-2614, 2615-2618, 2619-2627, 2633-2634).