1977 (1) TMI 112 - SC - VAT and Sales Tax

Fresh Assessment Order Date Controls Escaped Turnover Revision under Section 12A

The Deputy Commissioner of Commercial Taxes Versus HR. Sri Ramulu

The Supreme Court allowed the appeals, holding that the revision of assessment orders for escaped turnover assessment should be calculated from the date ... Whether the period of four years is to be calculated from March 21, 1963, when the initial assessment orders were made, or from June 8, 1966, when the orders under section 12A of the Act were made? Held that:- Appeal allowed. As the period of four years should be calculated from June 8, 1966, i.e., the date on which orders under section 12A of the Act were made. The reason for that is that once an assessment is reopened, the initial order for assessment ceases to be operative. Issues:1. Revision of assessment orders beyond the limitation period under section 21(3) of the Act.2. Computation of the period of four years for revisional powers under section 21(3) in cases of escaped turnover assessment.Analysis:1. The case involved two appeals against the High Court's judgment that quashed two orders made by the Deputy Commissioner of Commercial Taxes under the Mysore Sales Tax Act, 1957. The respondent, an excise contractor, was initially assessed for the years 1959-60 and 1960-61, where certain deductions were allowed for shop rent and tree tax. Subsequently, the Commercial Tax Officer initiated proceedings under section 12A as some turnover had escaped assessment. The Deputy Commissioner revised the orders, disallowing the shop rent deduction based on a Supreme Court decision. The respondent's applications for rectification were rejected, leading to appeals to the Sales Tax Appellate Tribunal, which were also dismissed.2. The core issue was the computation of the four-year period under section 21(3) for revisional powers concerning escaped turnover assessment. The appellant argued that the period should start from the order under section 12A, not the initial assessment order. The Supreme Court held that once an assessment is reopened, the initial order ceases to be operative, and a fresh order is made. Therefore, the period for revision should be calculated from the date of the order under section 12A. The Court cited precedents from tax laws to support the principle that reassessment starts afresh, and the former assessment is completely reopened.3. The Court highlighted judgments related to reassessment in tax laws to emphasize that once assessment is reopened, the previous under-assessment is set aside, and fresh assessment proceedings begin. The cases discussed the implications of reassessment, the power of the assessing authority, and the starting point for the period of limitation for further rectification or revision. The Court found that the principle of reassessment starting afresh applied to cases of escaped turnover assessment under the Mysore Sales Tax Act.4. The Court also noted the absence of a specific prohibition on revising reassessment orders in the Act under consideration, unlike in certain income tax laws. Consequently, the Court allowed the appeals, set aside the High Court's judgment, and dismissed the petitions under article 226 filed by the respondent. Each party was directed to bear their own costs in both the High Court and the Supreme Court.