05 October 1964
Supreme Court


Case number: Appeal (civil) 466 of 1962






DATE OF JUDGMENT: 05/10/1964


CITATION:  1965 AIR 1585            1965 SCR  (1) 601  CITATOR INFO :  RF         1968 SC 843  (2,8,9)  F          1976 SC1115  (7)  R          1976 SC1545  (15,17)  R          1976 SC2136  (12,14)  R          1987 SC 558  (6)  E          1989 SC1829  (21)

ACT: Madras  General  Sales Tax Act (9 of 1939) s.  12(2)(1)  and Madras  General  Sales Tax Rules, 1939, r.  14A-Scope  of-If rule ultra vires the Act.

HEADNOTE: The  respondents submitted return of their  turn-over  under the  Madras  General  Sales  Tax  Act,  1939,  and   claimed exemption  in respect of certain transactions on the  ground that they were commission sales exempted under the Act.  The Deputy  Commercial  Tax Officer granted  the  exemption  and assessed tax only on the rest of the turn-over.  The  Deputy Commissioner  of Commercial Taxes, called for the record  of the case and in exercise of the powers under s. 12(2) (i) of the  Act and r. 14A of the Madras General Sales  Tax  Rules, directed fresh enquiry in respect of the exemption, issued a notice  calling upon the assessee to show cause against  the proposed  revision,  heard objections and on  the  basis  of fresh  evidence came to the conclusion that the  respondents did,  not  act  as  commission agents  but  carried  on  the business  of outright purchase and sale in respect  of  the, entire   turnover.   He  therefore  revised  the  order   of assessment.  The assesses’ appeal to the Sales Tax Appellate Tribunal  was  allowed.  The State  invoked  the  revisional jurisdiction of the High Court.  The High Court held that in dealing  with  a  proceeding under s.  12(2),  the  revising authority  is restricted to the record before the  assessing authority  and the order passed on fresh evidence could  not be sustained.  It also held that r. 14A which authorised the revising  authority  to correct the amount  of  tax  payable after  making  such  enquiry  as  the  authority   considers necessary  was ultra vires the Act.  The State  appealed  to the  Supreme  Court and contended that the  High  Court  had erred in declaring the rule ultra vires



HELD (per Shah and Sikri JJ.) : The order passed by the High Court declaring r. 14A to be ultra vires should be set aside and the proceedings remanded to the High Court for  disposal according to law. [613 A]. Under  s. 12(2) (i) the revising authority may call for  the record  of the order or the proceeding and the record  alone may   be  scrutinised  for  ascertaining  the  legality   or propriety  of an order or the regularity of the  proceeding. If  after perusing the record the authority is  prima  facie satisfied   about   the   illegality   or   impropriety   or irregularity, it may under r. 14A, before passing an  order, direct an additional enquiry.  The validity of the rule even though  it is directed to have effect as if enacted  in  the Act,  is always open to challenge on the ground that  it  is unauthorised But there is nothing in the Act prohibiting the revising  authority  from  making  or  directing  a  further enquiry  before  passing an order in revision,  once  it  is satisfied   on  the  record  about  the  existence  of   the illegality,  impropriety  or irregularity.  The  Act,  while conferring revisional jurisdiction under s. 12, leaves it to the  State  Government  by  rules framed  under  s.  19,  to prescribe the procedure to be followed by the authority.   A provision  authorising  the  revising authority  to  make  a further enquiry for effectively exercising his  jurisdiction must  be  regarded as a provision validly  conferring  power unless it expressly or by clear implication nullifies, or is inconsistent  with  any provision of the  Act.   The  matter should  however  be remanded to the High Court  to  make  an enquiry whether in the circumstances of the 602 case,  the Deputy Commissioner was competent to  proceed  in the  manner he had done and to pass the order  in  revision. For,  while  the revisional jurisdiction is  not  restricted only  to cases of arithmetical errors, it would  not  invest the  authority with power to launch upon enquiries at  large so  as either to trench upon the powers which are  expressly reserved by the Act or by the rules to other authorities, or to  ignore the limitations inherent in the exercise  of  the power. [608 F, H; 609 A, D-E, G-H. 611 G-H. 612 A, D, H]. Per  Subba  Rao J. (dissenting) : Rule 14A in so far  as  it confers  a power on the revising authority to make  a  fresh enquiry  and  to determine on the basis of the  enquiry  the correct  amount of tax payable is void, because,  while  the jurisdiction  under  s.  12(2) is  clearly  limited  to  the scrutiny of the order passed or the proceedings recorded  by the  inferior  authority, and the scope of the  scrutiny  is confined  to  the question of legality or propriety  of  the order  or  the  regularity  of  the  proceedings,  the  rule obviously enlarges the enquiry beyond the limits prescribed. [604 605 A-B].

JUDGMENT: CIVIL   APPELLATE  JURISDICTION  :  Civil  Appeal  No.   466 of 1962. Appeal by special leave from the judgment dated December  2, 1959 of the Kerala High Court in Tax Revision Case No. 1  of 1957. V.   P. Gopalan Nambyar, Advocate-General, Kerala and V.  A. Seyid Muhammed, for the appellant. A.   V.  Viswanatha  Sastri and R. Gopalakrishnan,  for  the respondent. SUBBA RAO J., delivered a dissenting Opinion.  The  Judgment Of SHAH and SIKRI JJ. was delivered by SHAH J.



Subba Rao J. I regret my inability to agree.  The facts  are fully  stated in the judgment of my learned brother Shah  J. It  would, therefore, be enough if only the  relevant  facts were  stated.   The respondents are dealers  in  pepper  and other condiments.  For the year 1950-51 they submitted their return under the Madras General Sales Tax Act, 1939, wherein they claimed exemption in respect of certain transactions on the ground that they were commission sales exempted under s. 8  of  the  said Act.  The Deputy  Commercial  Tax  Officer, Cannanore  (Rural) gave the exemption claimed  and  assessed the tax on the turn-over relating to transactions other than those  exempted.   The  Deputy  Commissioner  of  Commercial Taxes,  Coimbatore  Division, called for the record  of  the case of the respondents for the said assessment year, and in exercise  of  the  powers  under s. 12(2)  (i)  of  the  Act directed  a fresh enquiry in respect of the said  exemption. He  issued  a notice on February 9, 1956, calling  upon  the respondents  to show cause against the proposed revision  of assessment.   On  the basis of fresh  evidence,  the  Deputy Commissioner of Commercial Taxes came to the conclusion that the respondents did not act as commission agents 603 but carried on the business of "outright purchase and We" in respect of the entire turnover.  On that finding, he revised the order of the Deputy Commercial Tax Officer and  assessed the respondents on a larger turnover. The  short  question is whether the Deputy  Commissioner  of Commercial Taxes has jurisdiction under s. 12 (2) (i) of the Act, read with the relevant rule, r, 14-A, to make the order he did. It  is  well  settled  that  a  subordinate  provision,   if inconsistent with the Act, must give way to the Act.  Though there  is an apparent conflict between a section of the  Act and  a  rule made thereunder, an attempt should be  made  to reconcile them; that is to say, the rule may be so  construe d,  if the phraseology permits it, as to make it  consistent with  the  Act.   If it is not possible, the  rule  must  be struck down. It  is  obvious that the rule cannot override s. 12  of  the Act.  If s. 12 does not give jurisdiction to the  revisional authority  to  make a fresh enquiry and decide the  case  on merits, r. 14-A cannot confer on him such power, for r.’14-A in that event comes into conflict with S. 12 of the Act  and must, therefore, yield to it. This  leads  us  to  the  question  whether  the  revisional jurisdiction  conferred under s. 12 of the Act  enables  the authority  concerned to make a fresh enquiry  after  issuing notice to the dealer concerned and determine the question of assessment on merits.  The Act provides for appeals in  some cases and revisions in other cases.  Under s. 11 (1) of  the Act any assessee objecting to an assessment made on him may, within 30 days from the date on which he was served with the notice  of  assessment, appeal to such authority as  may  be prescribed;  under  s. 11(3), the appellate  authority  may, after  giving the appellant an opportunity of  being  heard, pass  such orders on the appeal as such authority may  think fit.  Under s. 12(2)  of the Act, the  revisional  authority may  suo motu "call for and examine the record of any  order passed  or proceeding recorded under the provisions  of  the Act  by any officer subordinate to him, for the  purpose  of satisfying  himself as to the legality or propriety of  such order,  or as to the regularity of such proceeding, and  may pass such order with respect thereto as he thinks fit." When the Legislature confers a right of appeal in one case and  a discretionary  remedy  of revision in another,  it  must  be



deemed to have created two jurisdictions different in  scope and  content.  When it introduced the familiar  concepts  of appeal  and revision, it is also reasonable to  assume  that the  well-known distinction between these two  jurisdictions was also accepted by the 604 legislature.   There is an essential distinction between  an appeal  and  a  revision.   The  distinction  is  based   on differences implicit in the said two expressions.  An appeal is  a continuation of the proceedings; in effect the  entire proceedings  are before the appellate authority and  it  has power  to  review  the evidence  subject  to  the  statutory limitations  prescribed.   But in the case  of  a  revision, whatever  powers  the revisional authority may  or  may  not have, it has not the power to review the evidence unless the statute expressly confers on it that power.  That limitation is  implicit in the concept of revision.  Section 12 (2)  is no  doubt  wider in scope than s. 115 of the Code  of  Civil Procedure.  Even so the revisional authority’s  jurisdiction is confined to the question of legality or propriety of  the order  or  the regularity of the proceedings.   The  further limitation on that jurisdiction is that it can only exercise the  same  on  the examination of the record  of  any  order passed or proceedings taken by any authority.  The  section, therefore, not only limits the scope of its jurisdiction but also  defines  the material on the basis of which  the  said jurisdiction.is exercised.  The general expression that  the authority  "may  pass  such order as  he  thinks  fit"  must necessarily  be confined to the scope of  the  jurisdiction. The  revisional authority, therefore, cannot  travel  beyond the  order  passed or proceedings recorded by  the  inferior authority  and make fresh enquiry and pass orders on  merits on the basis of the said enquiry.  If it is not construed in this  manner,  the distinction between appeal  and  revision would be effaced. Bearing  this  distinction in mind let me look at  r.  14-A. Rule 14-A of the rules does not make any distinction between an  appellate and a revisional authority.  It  empowers  the revisional  authority  to  issue a notice to  a  dealer  and determine  the  correct  amount of  tax  after  making  such enquiry   as  it  considers  necessary.   The   said   rule, therefore,  confers a power larger than that conferred  upon the revising authority under s. 12(2) of the Act.  While the jurisdiction under s. 12(2) of the Act is clearly limited to the scrutiny of the order passed or the proceedings recorded by  the inferior authority and the scope of the scrutiny  is confined  to  the question of legality or  propriety  of  an order  or  the  regularity  of  such  proceedings,  r.  14-A obviously enlarges the enquiry beyond the limits  prescribed and  permits the revising authority to make a fresh  enquiry and  pass fresh assessment orders on the basis of  the  said enquiry.  It is not necessary to particularize what kind  of orders  the  revising authority can make and  what  are  the defects that are comprehended by the expression  "legality", "propriety" and .’regularity", They are well-known concepts. But the said defects 605 can only be discovered from the said record and  proceedings and not by a fresh enquiry.  If so, it follows that r . 14-A insofar  as it confers a power on the revising authority  to make  a fresh enquiry and to determine on the basis  of  the enquiry the correct amount of tax payable by an assessee  is void.  Therefore, the order of the High Court is correct. In the result, the appeal fails and is dismissed with costs. Shah  J.  The respondents are dealers in  pepper  and  other



condiments  and have their place of business at  Baliapatam, Malabar  (North)  District which formerly was  part  of  the State  of  Madras, but since the  reorganisation  of  States under the States Reorganisation Act, 1956, forms part of the State  of  Kerala.   For the year  1950-51  the  respondents submitted  their return under the Madras General  Sales  Tax Act, 1939 showing a gross turnover of Rs. 67,38,710-10-11 in respect of their business, and claimed exemption in  respect of  turnover of the value of Rs. 50,83,441-14-4 on the  plea that it represented commission sales which were exempt  from tax by s. 8 of the Act.  The Deputy Commercial Tax  Officer, Cannanore (Rural) by order, dated February 19, 1952  granted exemption  from tax on the commission sales covered by s.  8 and computed the net taxable turnover of the respondents  at Rs.  16,84,060-11-9.  By order, dated February 26, 1952  the Deputy Commercial Tax Officer assessed Rs. 26,313-7-3 as the tax  payable  on the taxable turn-over of  the  respondents. Some  time before February 1956 the Deputy  Commissioner  of Commercial  ’Taxes,  Coimbatore  Division,  called  for  the record  of  the case Of the respondents for  the  assessment year  in question in exercise of the powers under  s.  12(2) (i) of the Act and directed an enquiry into the validity  of the claim about exemption in respect of the commission sales under s. 8 of the Act. The Deputy Commissioner then issued a notice on February  9, 1956 calling upon the respondents to show cause against  the proposed  revision  of  assessment  which  would  result  in enhancement of tax.  After hearing the objections raised  by the  respondents, by order, dated March 4, 1956, the  Deputy Commissioner  held  that  the respondents  did  not  act  as commission  agents  but  "carried on  business  of  outright purchase  and  sale"  in  respect of  the  turnover  of  Rs. 50,83,355-13-4 and on that view in purported exercise of the powers vested in him by S. 12 (2) (i) of the Act revoked the exemption  granted  by the assessing officer by  his  order, dated  February 19, 1952, revised the order, dated  February 26, 1952 and assessed the respondents to pay tax on a  total net turn-over of 606 Rs. 67 ,67,4.16-9-1 for 1950-51.  He directed the  assessing officer to take further action in the matter and to  recover the tax due. Against  that  order, the respondents moved  the  Sales  Tax Appellate  Tribunal, Madras.  The appeal of the  respondents was  heard by the Tribunal and by order, dated  October  10, 1956  the  Tribunal held that the assessing officer  had  in assessing  the  respondents in respect of  transactions  for which  they  had previously ,obtained  exemption,  acted  in excess of his jurisdiction under s.     12  (2) (i)  of  the Act and his order was liable to be set aside. In  coming  to that conclusion the Tribunal held that rule 14-A of    the Rules  framed under the Act which was brought into force  on January 1, 1948 could be applied only when the amount of tax payable is found to be less than the correct amount, thereby indicating  that in rule 14-A the "emphasis is more  on  the arithmetical  aspect  rather"  than  on  the  merits  of  an assessment.   In  the view of the Tribunal,  rule  14-A  was "much  more restricted in scope than s. 12 of the  Act,  and where  a  case  is  taken up  under  the  general  power  of revision, one has to look at the scope of s. 12 to find  out the extent of the general power, and not rule 14-A." Against  the  order  passed by the Tribunal,  the  State  of Kerala  which  had acquired jurisdiction in respect  of  the sales  tax  assessment of the respondents by virtue  of  the States  Reorganisation Act, 1956, applied to the High  Court



of  Judicature, Kerala.  It may suffice to observe  that  no question  about  the vires of rule 14-A was  raised  by  the assessees  before the Taxing authorities, and the State  was not  interested in raising such a contention.  But the  High Court held that in dealing with a proceeding under s.  12(2) of  the Madras General Sales Tax Act the revising  authority is  restricted to the record before the assessing  authority and  his  order  passed  on  fresh  evidence  could  not  be sustained.   In  the view of the High Court  the  expression "the  record  of any order passed  or  proceeding  recorded" under  s.  12(2) restricted the revising  authority  to  the examination  of the legality or propriety of the order of  a subordinate  officer  or as to the regularity  of  the  pro- ceeding  of such authority and prohibited  consideration  of any  other  evidence,  and  rule  14-A  made  by  the  State Government in exercise of the power under s. 19 of the  Act, which  authorises  the revising authority or  the  appellate authority to correct the amount of tax payable by the dealer after  issuing a notice to the dealer and after making  such enquiry  as such appellate or revising  authority  considers necessary was ultra vires the Art. The  State of Kerala in this appeal contends that  the  High Court  has erred in declaring rule 14-A ultra vires  and  in the disposing of 607 its  petition  invoking the revisional jurisdiction  of  the High  Court on that footing.  To appreciate the argument  it is  necessary  in the first instance to  read  the  relevant provisions of the Act and rules framed thereunder.   Section 9  of  the  Act deals with the procedure  of  the  assessing authority  and S. 10 deals with the payment and recovery  of tax.  Against an order of assessment an appeal lies under s. 11  to  such authority as may be prescribed.  By  S.  12  as amended by the first sub-section, the Commercial Tax Officer is authorised either suo motu or on application in cases  in which an appeal does not lie to him under s. 11, to exercise revisional jurisdiction.  Sub-section (2) with which we  are directly concerned in this appeal provides               (2)   The Deputy Commissioner may-               (i)   suo motu, or               (ii)  in   respect  of  an  order  passed   or               proceeding  recorded  by  the  Commercial  Tax               Officer  under  subsection (1)  or  any  other               provision  of  this Act and against  which  no               appeal  has  been preferred to  the  Appellate               Tribunal  under section 12-A, on  application,               call  for and examine the record of any  order               passed   or  proceeding  recorded  under   the               provisions   of  this  Act  by   any   officer               subordinate   to  him,  for  the  purpose   of               satisfying  himself  as  to  the  legality  or               propriety   of  such  order,  or  as  to   the               regularity  of such proceeding, and  may  pass               such  order with respect thereto as he  thinks               fit." Sub-section (4), insofar as it is material, provides that in relation to an order of assessment passed under the Act, the power of the Deputy Commissioner under cl. (1) of sub-s. (2) shall be exercisable only within a period of four years from the  date  on  which  the  order  was  communicated  to  the assessee.   Sub-section  (6) provides that no order  may  be passed   under  sub-ss.  (1),  (2)  or  (3)  enhancing   the assessment, without giving an opportunity to the assessee to show cause against the proposed enhancement. Sub-section (1) of S. 19 authorises the State Government  to



make rules to carry out the purposes of the Act.  By  sub-s. (2) it is provided :               "In  particular and without prejudice  to  the               generality of the foregoing power, such  rules               may provide for-               (j)   the   duties  and  powers  of   officers               appointed  for  the purpose of  enforcing  the               provisions of this Act;               608               (k)   generally regulating the procedure to be               followed  and  the  forms  to  be  adopted  in               proceedings under this Act; and               (1)   any  other matter for which there is  no               provision  or no sufficient provision in  this               Act and for which provision is, in the opinion               of the State Government, necessary for  giving               effect to the purposes of this Act." Sub-section (5) of S. 19 provides that all rules made  under this  section  shall  be published in the  Fort  St.  George Gazette,  and upon such publication shall have effect as  if enacted in the Act. The  Advocate-General for the State of Kerala contends  that rule  14-A was validly made in exercise of the powers  under s. 19 and that in any event the rule having by sub-s. (5) of s.  19 the effect as if it is enacted in the Act it  is  not liable  to  be  declared invalid.   The  alternative  ground advanced by the Advocate-General may be easily disposed  of. The  rules made under S. 19 and published in the  Government Gazette  have by the express provision to have effect as  if enacted  in  the Act : but thereby  no  additional  sanctity attaches to the rules.  Power to frame rules is conferred by the  Act  upon the State Government and that  power  may  be exercised   within  the  strict  limits  of  the   authority conferred.   If in making a rule, the State  transcends  its authority,  the  rule will be invalid, for  statutory  rules made  in  exercise  of delegated  authority  are  valid  and binding  only  if  made  within  the  limits  of   authority conferred.   Validity  of a rule whether it is  declared  to have effect as if enacted in the Act or otherwise is  always open to challenge on the ground that it is unauthorised. Turning   then  to  the  jurisdiction  which  the   revising authority may exercise under S. 12(2), attention must  first be directed to the phraseology used by the Legislature.  The Deputy  Commissioner  is  thereby  invested  with  power  to satisfy himself about the legality or propriety of any order passed or proceeding recorded by any officer subordinate  to him,  or the regularity of any proceeding of  such  officer, and  to pass such orders with respect thereto as  he  thinks fit.   For  exercising  this power, he may suo  motu  or  on application   call  for  and  examine  the  record  of   any proceeding  or order.  There is no doubt that  the  revising authority  may only call for the record of the order or  the proceeding,  and  the record alone may  be  scrutinised  for ascertaining  the  legality  or propriety  of  an  order  or regularity  of the proceeding.  But there is nothing in  the Act that for passing an order in exercise of his revisional 609 jurisdiction,  if the revising authority is  satisfied  that the  subordinate  officer  has committed  an  illegality  or impropriety in the order or irregularity in the proceedings, he cannot make or direct any further enquiry.  The words  of sub-s. (2) of s. 12 that Deputy Commissioner "may pass  such order with respect thereto as be thinks fit" mean such order as  may in the circumstances of the case for rectifying  the defect be regarded by him as just.  Power to pass such order



as  the  revising  authority thinks fit may  in  some  cases include power to make or direct such further enquiry as  the Deputy  Commissioner may find necessary for  rectifying  the illegality  or impropriety of the order or  irregularity  in the  proceeding.   It  is  therefore  not  right  baldly  to propound  that  in passing an order in the exercise  of  his revisional jurisdiction, the Deputy Commissioner must in all cases be restricted to the record maintained by the  Officer subordinate to him, and can never make enquiry outside  that record. It  must be noticed that the Act while conferring  upon  the prescribed  authority power to entertain an appeal under  s. 11,  and  a  petition  in revision  under  s.  12  does  not prescribe  the procedure to be followed by the  authorities. It is left to the State Government by rules framed under  s. 19  to  prescribe  the procedure of the  appellate  and  the revising authorities and a provision authorising the  making of   a  further  enquiry  for  effectively  exercising   the appellate or revisional power, would in the case of a taxing statute fall within the scope of the rules.  Jurisdiction to revise the order or proceeding of a subordinate officer  has to be exercised for the purpose of rectifying any illegality or   impropriety  of  the  order  or  irregularity  in   the proceeding.   But in taking that course the procedure to  be followed  is prescribed by the rules, framed under s.  19(1) to  carry  out  the  purposes of  the  Act  and  as  further illustrated by the head (1), (k) and (j) of sub-s. (2). In  our view the amplitude of the power conferred by  sub-s. (1)  and  illustrated by sub-s. (2) of s. 19  takes  in  the power  to  provide for making further enquiry  enabling  the revising  authority  to exercise his powers and  unless  the power  so  conferred  expressly  or  by  clear   implication nullifies or is inconsistent with any provision of the  Act, it  must  be regarded as validly exercised.   Conferment  of power  to  make further enquiry in cases where  after  being satisfied  about the illegality or impropriety of the  order or  irregularity in the proceeding, the  revising  authority thinks  it just for rectifying the defect to do so does  not amount to enlarging the jurisdiction conferred by s. 12 (2). It is in this light that the 610 provisions  of rule 14-A may be examined.  That  Rule  which was added with effect from January 1, 1948, provides :               "Where  the tax as determined by  the  initial               assessing  authority appears to the  appellate               authority   under  section  11   or   revising               authority under section 12 to be less than the               correct  amount  of  the tax  payable  by  the               dealer,  the appellate or  revising  authority               shall,  before passing orders,  determine  the               correct  amount of tax payable by  the  dealer               after issuing a notice to the dealer and after               making  such  enquiry  as  such  appellate  or               revising authority considers necessary." It  must be noticed that the power to determine the  correct amount  ,of  tax after issuing a notice to  the  dealer  and after  making  such  enquiry  as  the  authority   considers necessary is vested by this rule in the appellate  authority as  well as the revising authority.  It is usual  in  taxing statutes  to  confer  such  power  upon  the  appellate  and revising authorities.  Under the Income-tax Act, 1922, by s. 31(2)  the  Appellate Assistant Commissioner was  given  the power  before disposing of any appeal, to make such  further inquiry  as he thought fit, or cause further inquiry  to  be made by the Income-tax Officer.  By s. 33 (4) the  Appellate



Tribunal was given power to pass such order in the appeal as it  thought fit and that power included the power to  direct additional evidence to be taken or to take evidence itself : M.  L.  Tewary  v. Commissioner  of  Income-tax,  Bihar  and Orissa(1).   By  s. 33-A the Commissioner could on  his  own motion or an application presented within one year from  the date of the order sought to be revised, call for the  record of  any proceeding under the Act in which an order had  been passed  by any authority subordinate to him and  could  make such inquiry or cause such inquiry to be made and subject to the provisions of the Act to pass such order thereon, as  he thought fit.  Similar provisions are now incorporated in the Income-tax  Act, Act 43 of 1961.  By s. 250(4)  of-that  Act the  Appellate Assistant Commissioner is  authorised  before disposing  of an appeal to make such further inquiry  as  he thinks  fit  or  to direct the Income-tax  Officer  to  make further  inquiry and report the result of the same  to  him. Powers  of  the  Income  Tax  Appellate  Tribunal  and   the Commissioner are couched in the same terms as under the  Act of  1922  :  [see  s. 254(1)  and  s.  263(1)].   It  cannot therefore  be said that a provision which confers  upon  the appellate  or revising authority power to make such  inquiry as such appellate or revising authority considers  necessary in itself amounts to enlarging the (1)  (1955) 27 I.T.R. 630. 611 revisional  or appellate jurisdiction.  The only  difference between the Income-tax Acts and the Madras General Sales Tax Act  is  that whereas the power to entertain the  appeal  or revision application and to make orders for further  enquiry in  the  hearing of the appeal or revision is  wholly  dealt with  by  the provisions of the Income-tax Acts,  under  the Madras General Sales Tax Act the revisional jurisdiction and appellate  jurisdiction  are conferred by the Act,  but  the power  of the appropriate authority in the exercise  of  the jurisdiction  when it appears to the appellate  or  revising authority  that  the correct amount of tax  payable  by  the dealer  has not been paid to make a further inquiry  as  the authority  considers  necessary is conferred by  the  rules. But that is no ground for regarding the conferment of  power to  travel  outside  the record of  the  subordinate  taxing authorities  as unauthorised.  Investment of powers to  make such  inquiry  as the appellate or  the  revising  authority considers  necessary can manifestly be invested by cls.  (k) and  (1) of s. 19 sub-s. (2) and if such power  is  invested the  rule  authorising the making of inquiry  is  not  ultra vires. The  Madras High Court in the State of Madras v. The  Madura Knitting  Company Ltd.(1) has held that the powers given  to the  revising authority under s. 12(2) are not  confined  to errors patent on the face of the record, but would extend to probing  further into the records like calling for  despatch registers and other evidence. But  this is not sufficient to dispose of the appeal  before us.  The objection that rule 14-A was ultra vires was raised for the first time before the High Court.  The Tribunal  had merely  held that rule 14-A must be so read as to deal  with "the  arithmetical aspect rather than on the aspect  of  the merits  of  an  assessment."  There  is,  however,  no  such restriction  in either rule 14-A or in s. 12(2) of the  Act. The power to hold an enquiry to take additional evidence  is a procedural power in aid of the exercise of the  revisional jurisdiction  and  if  the revisional  jurisdiction  is  not restricted  only to cases of arithmetical errors or  as  the Tribunal called it "arithmetical aspect", there is no reason



to  assume  that  the power under rule  14-A  to  make  such enquiry as the appellate or the revising authority considers it just to order or to make would be so restricted.  But the power  conferred by rule 14-A by the use of  the  expression "making such enquiry as such appellate or revising authority considers  necessary" must be read subject to the scheme  of the  Act.  It would not invest the revising  authority  with power  to  launch upon enquiries at large so  as  either  to trench (1)  (1959) 10 S.T.C. 155. 612 upon  the powers which are expressly reserved by the Act  or by  the  Rules  to  other  authorities  or  to  ignore   the limitations  inherent in the exercise of those powers.   For instance,  the  power  to  reassess  escaped  turn-over   is primarily vested by rule 17 in the assessing officer and  is to  be  exercised subject to certain  limitations,  and  the revising authority will not be competent to make an  enquiry for reassessing a tax-payer.  Similarly the power to make  a best  judgment  assessment is vested by S.  9(2)(b)  in  the assessing  authority and has to be exercised in  the  manner provided.  It would not be open to the revising authority to assume that power.  The revisional power has to be exercised for  ascertaining  whether the order passed  is  illegal  or improper  or the proceeding recorded is irregular and it  is in  aid of that power that such orders may be passed as  the authority   may  think  fit.   One  of  the   inquiries   in considering  the legality or propriety of the orders  passed by  the  subordinate  officer  which  the  revising  or  the appellate authority may make is about the correctness of the tax levied and if after perusing the record the authority is prima facie satisfied about the illegality or impropriety of the  order or about the irregularity of the  proceeding,  it may  in  passing  its order direct  an  additional  enquiry. Neither  s.  12  nor  rule  14-A  authorises  the   revising authority  to  enter  generally  upon  enquiries  which  may properly be made by the assessing authorities and to  reopen assessments. We are at this stage not called upon to express any  opinion about  the  correctness of the order passed  by  the  Deputy Commissioner  on  the  merits.   The  High  Court  has   not investigated that question, and we have no materials  before us which would justify us in launching upon an enquiry  into this  unexplored  field.   We  have,  however,  thought   it necessary  to  explain  the  restrictions  inherent  in  the exercise  of  power  under S. 12(2)  read  with  Rule  14-A, because counsel for the respondents has urged before us that the enquiry made by the Deputy Commissioner is  inconsistent with  the  scheme of the Act, in violation of the  rules  of natural justice, and in circumvention of the restrictions on the  power to reassess.  That is a matter which will  demand investigation  before  the High Court.  We  desire  only  to impress  that  the view taken by us that rule  14-A  is  not ultra  vires  is not sufficient to dispose of  the  revision application  filed  before the High Court.  The  High  Court will  have to make enquiry whether in the  circumstances  of the case the Deputy Commissioner, Coimbatore Division,,  was competent  to proceed in the manner he has done and to  pass the order which was impugned before the Sales Tax  Appellate Tribunal.   The  border passed by the High  Court  declaring rule 14-A to be 613 ultra  vires is set aside, and the proceedings are  remanded to the High Court to be dealt with according to law. There will be no order as to costs.



                      ORDER BY COURT In accordance with the opinion of the majority, the order of the High Court declaring rule 14-A to be ultra vires is  set aside and the proceedings are remanded to the High Court  to be  dealt with according to law.  There will be no order  as to costs. Appeal allowed and proceedings remanded. 614