Revisional power and last-purchaser liability fail where no revenue prejudice is shown and contractor tax was already paid.

Revisional jurisdiction conditioned on prejudice to revenue could not be exercised where the authority itself found no revenue loss and the relevant tax had already been paid by the contractor. The court also held that a procedural objection based on natural justice failed because the assessee had notice of the proposed grounds, filed detailed objections, and showed no material prejudice from the form of notice. On the tax issue, the agreement and accounts showed a commission arrangement for manufacture and supply of finished beedies, with the contractor purchasing the beedi leaves on its own account, so the assessee was not liable as the last purchaser of beedi leaves.

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Issues: (i) Whether the revisional order was vitiated for breach of natural justice and absence of prejudice. (ii) Whether the assessee was liable to sales tax as the last purchaser of beedi leaves. (iii) Whether revisional power under section 20(1) could be exercised in the absence of prejudice to the interests of revenue.

Issue (i): Whether the revisional order was vitiated for breach of natural justice and absence of prejudice.

Analysis: The assessee had notice of the grounds on which revision was proposed and filed detailed objections meeting the proposed action. The record showed full opportunity to answer the grounds and no material prejudice resulting from the form of the notice. In such circumstances, a procedural objection unsupported by demonstrated prejudice could not invalidate the revisional order.

Conclusion: The objection based on natural justice failed.

Issue (ii): Whether the assessee was liable to sales tax as the last purchaser of beedi leaves.

Analysis: The agreement between the parties, read as a whole, showed that the contractor was to manufacture and supply finished beedies on commission basis, while the assessee supplied several inputs and the contractor purchased the remaining raw materials, including beedi leaves, on its own terms and was responsible for the tax on such purchases. The books of account did not show separate payment by the assessee towards beedi leaves, and the amounts paid were composite payments including labour and other charges. The material on record therefore did not support the inference that the assessee purchased beedi leaves or that such purchase was the primary object of the transaction.

Conclusion: The assessee was not liable as the last purchaser of beedi leaves.

Issue (iii): Whether revisional power under section 20(1) could be exercised in the absence of prejudice to the interests of revenue.

Analysis: The statutory condition for revision was prejudice to the interests of revenue. The revisional authority itself recorded that there was no loss of revenue, and the record showed that tax on the beedi leaves had already been paid by the contractor. Since the prerequisite of revenue prejudice was absent, the assumption of revisional jurisdiction was unsustainable.

Conclusion: The revision under section 20(1) could not be sustained.

Final Conclusion: The revisional orders were unsustainable and the appeals succeeded, with the assessee obtaining complete relief.

Ratio Decidendi: Revisional power conditioned on prejudice to revenue cannot be exercised where the relevant turnover has already suffered tax and the impugned transaction, properly construed, does not show tax liability in the assessee's hands.

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