TaxTMI 
TaxTMI 
1989 (3) TMI 362
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.... March, 1983. The Assistant Commissioner of Commercial Taxes (Assessment-I), Bangalore-9, was the assessing authority. Out of the gross turnover of the assessee during the relevant period, the turnover relating to sales of rayon yarn was to the tune of Rs. 1,87,29,328. In the assessment order, the authority levied tax at the rate of 3 per cent. The order of assessment was dated 22nd August, 1985. Within four months thereafter, namely, on 19th December, 1985, the assessing authority issued a notice under section 12A of the Act to the petitioner. The contents of that notice read: "Notice under section 12A of the Karnataka Sales Tax Act, 1957. (Period: 1st April, 1982 to 31st March, 1983) Please take notice that the assessment for the period from 1st April, 1982 to 31st March, 1983 in respect of your company had been concluded vide order dated 22nd August, 1985. In the said assessment order you have been assessed under the Karnataka Sales Tax Act, 1957 on turnovers as detailed below: Gross turnover Rs. 4,33,64,297.57 Exempted turnover Rs. 1,57,70,195.69 ------------------ Taxable turnover Rs. 2,75,94,101.88 ------------------ Out of the taxable turnover ....
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....notice, the assessing authority issued the notice on his finding that the "synthetic fibre" was included at entry 147 of the Second Schedule to the Act by the amending Act 13 of 1982, which had come into force with effect from 1st April, 1982 and according to that entry in respect of synthetic yarn the prescribed rate of tax was six per cent. Overlooking the said provision the authority had taxed the turnover of rayon which is undisputedly a synthetic fibre, at 3 per cent under the impression that it fell within entry 24 of the Second Schedule to the Act which read "all kinds of mill yarn excluding cotton yarn, spun silk yarn" though actually it could not fall within that entry. Therefore, he proposed, under the notice, to reassess that part of the turnover of rayon and to tax the said turnover at 6 per cent under entry 147 of the Second Schedule. Questioning the jurisdiction of the assessing authority to initiate action under section 12A of the Act, the petitioner has come up with this writ petition. (ii) In W.P. Nos. 3342 and 3343 of 1987: In these cases also on similar grounds the assessing authority issued show cause notice proposing to make reassessment as similar mistake h....
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....ns of sub-section (2), at any time within a period of five years from the expiry of the year to which the tax relates, proceed to assess or reassess to the best of its judgment, the tax payable by the dealer in respect of such turnover after issuing a notice to the dealer and after making such enquiry as it may consider necessary." (underlining* by us) As can be seen from the language of section 12A, under four circumstances the assessing authority is given the power to make a reassessment. They are: first, when there was escapement of the whole or any part of the turnover; secondly, when a dealer has been under-assessed; thirdly, when there was assessment at a rate lower than the rate at which a dealer is liable to be assessed under the provisions of the Act and, fourthly, when deductions or exemptions have been wrongly allowed in respect of such turnover. Under any one of the four circumstances the assessing authority has the power under section 12A to initiate action. No doubt the heading of the section gives an impression that the power conferred under the section is only in respect of escaped turnover, but a careful analysis of the section would show that the power of reassess....
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....ander was not an oil-seed. On the basis of that opinion notice under section 12A was issued. The validity of that notice was challenged before this Court. The contention of the assessee therein, which is found at page 101 of the report, was that section 12A conferred power to make a reassessment in respect of escaped turnover and the said section could not be invoked for assessing the turnover of coriander which was already before the assessing authority and which had been exempted under the assessment order, on the ground it was oilseed. Old section 12A of the Act as inserted into the Act by Act 9 of 1970 and as it stood up to 1st April, 1983, was the section under which the notice impugned in that case was issued. The heading of the section was the same namely "Assessment of escaped turnover". The wording of old section 12A(1) was as follows: "Where for any reason the whole or any part of the turnover of a dealer has escaped assessment to tax or licence fee, or has been assessed at a lower rate than the rate at which it is assessable, the assessing authority may, subject to the provisions of sub-section (2) at any time within a period of five years from the expiry of the year ....
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....een extracted and interpreted. The fact that section 12A also conferred power on the authority to make reassessment in cases in which any particular turnover was taxed at a rate lower than the prescribed rate was neither pointed out to the court nor dealt with in the said decision. In the decision of the Supreme Court in Dhanalakshmi Vilas Cashew Company's case [1969] 24 STC 491 the provisions interpreted were section 16(1)(i) of the Kerala General Sales Tax Act and rule 33 of the Kerala General Sales Tax Rules. The Supreme Court held that rule 33 of the Kerala General Sales Tax Rules conferred power to make a reassessment only in cases where the turnover of a dealer had escaped assessment and that power of revision under section 15 of that Act was exercisable when the order of assessment is found otherwise to be erroneous. Rule 33 of the Kerala General Sales Tax Rules reads: "(1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority as the case may be, subject to the provisions of sub-rule (2) may a....
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.... namely, whether the authority which had committed a patent error in the matter of rate of tax in the assessment order could rectify the assessment order in exercise of power under section 12A of the Act, did not arise for consideration. However, it should be pointed out that the matter is placed beyond controversy by new section 12A which was substituted by Act 10 of 1983 with effect from 1st April, 1983 which unlike the old section 12A contains a non obstante clause, namely, "notwithstanding the fact that the whole or any part of such escaped turnover was already before the said authority at the time of the original assessment or reassessment". Obviously this clause was introduced to place the matter beyond doubt. It is the new section 12A which is applicable and invoked in these cases. For these reasons we answer the question set out first as follows: Under section 12A of the Karnataka Sales Tax Act, 1957, the assessing authority has the power to make a reassessment, if after making an assessment, it finds that the assessment of tax on the turnover of any item of goods had been made at a rate lower than the rate at which that particular turnover was assessable to tax under th....