Suo motu revision and defective demand notice invalid where suppression issue was outside appeal and fair hearing was lacking.

Suo motu revision cannot be sustained on an alleged suppression of sales that was never part of the assessment or appeal, especially where the revisional authority does not independently examine the record and relies mainly on an investigation report without proper opportunity to meet the allegation. The doctrine of merger does not extend to issues outside the scope of the appeal. The demand notice in Form No. 33 was also invalid because it was issued in the wrong form and the turnover tax was levied at an incorrect rate; the absence of an express reference to turnover tax did not by itself invalidate a consequential levy, but the defective revision and notice could not stand.

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Issues: (i) whether the suo motu revisional order could be sustained when the issue of alleged suppression of sales had not formed the subject-matter of the assessment or appeal and the revisional authority acted without independent application of mind; and (ii) whether the demand notice in Form No. 33 and the levy of turnover tax were valid.

Issue (i): whether the suo motu revisional order could be sustained when the issue of alleged suppression of sales had not formed the subject-matter of the assessment or appeal and the revisional authority acted without independent application of mind.

Analysis: The revisional authority sought to reopen the appellate order on a ground of alleged suppression of sales that had not been an issue before the assessing authority or the appellate authority. On the facts, the appellate order dealt with different questions, and the doctrine of merger did not extend to matters outside the scope of the appeal. The revisional order also showed no independent scrutiny of the relevant materials and was founded mainly on the investigation report, without giving the dealer a proper opportunity to meet the allegation.

Conclusion: The suo motu revisional order was not sustainable and was liable to be set aside.

Issue (ii): whether the demand notice in Form No. 33 and the levy of turnover tax were valid.

Analysis: The respondents admitted that the notice was issued in the wrong form and that turnover tax was levied at an incorrect rate. The demand in Form No. 33 was therefore not in accordance with law. However, the absence of express mention of turnover tax in the notice did not by itself invalidate the levy where it followed as a consequential result of the proposed revisional action; the decisive defect remained the wrong form of demand and the unsustainable revision.

Conclusion: The demand notice in Form No. 33 was invalid and was set aside.

Final Conclusion: The revisional action, together with the consequential demand notice, could not be sustained in law, and the application succeeded.

Ratio Decidendi: Suo motu revision cannot be founded on a matter not comprised in the assessment or appeal without independent application of mind and observance of fair hearing, and a demand based on an erroneously issued statutory form is invalid.

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