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PETITIONER: COMMERCIAL TAX-OFFICER, BANGALORE, ETC.  ETC.

       Vs.

RESPONDENT: SRI VENKATESWARA OIL MILLS & ANR.  ETC.  ETC.

DATE OF JUDGMENT16/03/1973

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. REDDY, P. JAGANMOHAN KHANNA, HANS RAJ

CITATION:  1973 AIR 1325            1973 SCR  (3) 742  1974 SCC  (3)   5

ACT: Central  Sales Tax (Amendment) Act, 1959, s. 10  and  Mysore Sales  Tax  Rules 1957,  r.  38--Retrospective  amendment-In correcting mistakes it is the law as amended that has to  be applied-Rule  38 has to be read with s. 10 of amending  Act- Assessees   cannot   have  advantage  of   s.10(1)   without discharging  burden placed on them  in s.10(2)

HEADNOTE: After    the   decision   of   this   Court    in    Yadalam Lakshminarasimhiah  Setty’s case the President of  India  on June  9, 1969 promulgated the Central Sales Tax  (Amendment) Ordinance 1969 with the object of superseding the effect  of that  decision and to bring to tax sales effected  by  every dealer  in  the  course of inter  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.  That provision was given retrospective  effect  but  s. 10(1) of  the  Amendment  Act provided  that if during the relevant period dealer had  not collected  sales-tax  on the ground that sales-tax  was  not leviable on the sale in question under the unamended Act ’he would not be liable to pay sales-tax under the amended  Act. The  burden of proving, however, that no sales-tax bad  been collected  was  placed  by  s. 10(2)  on  the  dealer.   The Ordinance was replaced by the Central Sales Tax  (Amendment) Act,  1969.   After the Amendment Act came  into  force  the sales-tax  authorities sought to reopen under r. 38  of  the Mysore Sales Tax Rules 1957 the assessments made on  certain dealers  on the ground that these assessments suffered  from mistakes apparent on the record.  In writ petitions filed by the  dealers,  the  High  Court  of  Mysore  accepted  their contention 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 turnover in question and consequently he could not  take any  assistance  from  rule 38.   Allowing  the  appeals  by special leave filed by the Revenue. HELD  : it is well settled that if a subsequent  legislation is given retrospective effect and is deemed to have been  in

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force  at the time when the order to be rectified was  made, then  the  law to be applied is the amended law.   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. [748H] Rule  38 of the Mysore Sales Tax Rules must be read with  s. 10  of  the Amendment Act. if so read it is clear  that  the assessing authorities before reassessing the dealers  should afford  them the opportunity to satisfy them that they  have not  collected the tax.  If the impact of s. 10 is  ignored, as the High Court had done, then the assessments in question are  liable  to  be  reopened  whether  the  assessees   had collected 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). [746E] Yadalam  Lakshminarasimhiah  Setty  and  Sons  v.  State  of Mysore,   13  S.T.C.  583:  State  of  Mysore   v.   Yadalam Lakshminarasimhiah Setty and Sons, 16, S.T.C. 231 (S.C.)  M. K.  Venkatachalam,  Income-tax Officer and  Anr.  v.  Bombay Dying and Manufacturing Co. Ltd., 34 I.T.R. 143 and 743 Malnad  Arecanut  Syndicate  (P)  Ltd.  represented  by  its Manager   K.  Rama  Rao,  Arecanut  Merchants,  Shimoga   v. Commercial Tax Officer, Shimoga and Ors.  Writ Petition  No. 5223 of 1969-Civil Appeal No. 2632 of 1972, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil  Appeals  Nos.  2593, 2594-2596,  2599,  2601-2605, 2609-2614, 2615,  2016,  2618, 2619-2627, 2628, 2629-2631, 2632 and 2634 of 1972. Appeals  by special leave from the judgment and order  dated October 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, 3347/70,  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. Veerappa, 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 Chowdhary 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). The Judgment of the Court was delivered by HEGDE,  J.-In  these  appeals by  special  leave,  a  common question  of  law  arises for  decision  and  that  question relates  to  the scope and effect of the Central  Sales  Tax (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  Tax Act, 1956, prior to its amendment by Act 31 of 1958 a "sale"

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in the course of interState trade or commerce is to be taxed at  the  same rate and in the same manner as it  would  have been taxed, under the appropriate State law, if it had  been an intra State transaction, but (1) 13 S.T.C. 583. 744 without taking into consideration the minimum turnover fixed by  the  State  law  for  the  purpose  of  determining  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.  Yaddalam  Lakshminarasimhiah  Setty  and   Sons. (1),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 Yaddalam Lakshminarasimhiah Setty’s case and  to bring to tax sales effected by every dealer in the course of intra 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. 10(1) 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 effecting such sale  has               not collected any tax under the principal  Act               on the ground that no such tax could have been               levied or collected in respect of such sale or               any  portion of the turnover 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  the  said  withstanding   anything               contained  in  section 9  or  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  by  the  Central  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   Yadalam Lakshinarasimhiah  Setty’s  case  issued  notices  to  those assessees proposing to rectify (1) S.T.C. 231 745 their assessments on the ground that the earlier assessments suffered   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 rejected that contention.  Thereafter the respondents in these appeals challenged the orders  made

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by the Sales-tax Officers before the High Court of Mysore by means  of petitions under Art. 226, of the  Constitution  on two  grounds  viz.  (1) that the Sales-tax  Officer  had  no jurisdiction  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 aforementioned 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 turnovers in question and consequently he could not take any assistance 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 except 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   Officers  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,  it there  is  merely  a  mistake in  the  order  sought  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  been  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. Venkatachaalam, 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 (1) 34 I,T.R. 143. 746 High  Court had accepted this principle but it 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 logical nor sound in law.  Section 10 of the  Amend- ment  Act mitigates the rigor of the amendment made to s.  6 of  the Principal Act.  But for s. 10 of the Amendment  Act, every  dealer would have had to pay tax on the turnovers  in question whether he had collected tax or not.  If the impact of  s. 10 is ignored, as the High Court has done,  then  the assessments  in question 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

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the High Court is correct then it is the assessees who  will be deprived of the benefit of 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 further opportunity  to  the assessees  whose  assessments are sought to be  reopened  to satisfy   the  assessing  authorities  that  they  had   not collected tax in respect of the turnovers in question., Rule 38 of the Mysore Sales Tax Rules must be read with s. 10  of the  Amendment  Act.   If  so read, it  is  clear  that  the assessing authorities before re-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 appeals, 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  Marchants,  Shimoga  v.  Commercial  Tax  Officer, Shimoga  and  Ors.  (Writ Petition No.  5223  of  1969-Civil Appeal No. 2632 of 1972) we are informed that  rectification 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 respondents  shall pay the costs of the appellant  in  these appeals one hearing fee. G.C.                          Appeals allowed. 747