M/S N. RANGA RAO AND SONS versus THE STATE OF KARNATAKA AND ORS.

Citation: [2007] 6 S.C.R. 1191 · Decided: 16-05-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed

Judgment (excerpt)

MIS . . L RANGA RAO AND SONS 
A 
v. 
THE STA TE OF KARNATAKA AND ORS. 
MAY 16, 2007 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
B 
Karnataka Tai: on Enuy of Goods Act, 19i9-s. 15 and 15(4)-
Revisional powers of Commissioner, Additional Commissioner. Joint 
Commissioner and Deputy Commissioner-Exercise of-Additional C 
Commissioner calling for the records of case regarding error in the order of 
First Appellate Authority and loss to Revenue within the prescribed period 
of four years from the date of order passed by First Appellate Authority-
Held: Amounts to exercise of power uls I 5(4) and revisional proceedings 
(suo motu) were within limitatirn period-When revisional authority called 
for the records of the case from the First Appellate Authority, initiation of D 
proceeding uls I 5(1) took place thus, jurisdiction exercised within the 
limitation period-Limitation. 
An assessment order was passed levying tax on all the items imported 
into the local area of Mysore. Appellant-manufacturer of agaraba this' 
contended that packing material should not to be taxed as raw material. By E 
order dated 28.3.1992, Appellate Authority excluded the packing material 
from taxation. Additional Commissioner examined the order of First Appellate 
Authority and called for the records on 16.3.1996 regarding error in the 
order of the First Appellate Authority and the loss to the Revenue. Thereafter, 
on 20.5.1996 Additional Commissioner issued show cause notice to the F 
appellant under section 15(1) of the Karnataka Tax on Entry of Goods Act, 
1979 that upon scrutiny of the records he found that the order dated 28.3.1992 
was erroneous and prejudicial to the Revenue since the packing material was 
liable to be taxed @2%. The Additional Commissioner then called upon the 
assessee to show cause. Thereafter, it passed an order under section 15(1) 
around 14/15.10.1996. It was assessee's case that a mere consideration by G 
the Additional Commissioner in his Chamber on 16.3.1996 regarding error 
in the order of the First Appellate Authority and the loss to the revenue cannot 
constitute initiation of proceedings u/s 15(1) ; nor did it constitute exercise 
of power within the meaning of s.15(4) of the said 1979 Act and thus the 
1191 
H 
1192 
SUPREME COURT REPORTS 
[2007] 6 S.C.R. 
A revisional proceedings (suo motu) were time barred; that the proceedings 
\ 
u/s 15(1) could only be initiated by issuan; o' a show cause notice; and that 
the proceedings initiated by Additional Commissioner by way of show cause 
notice on 20.5.1996 was beyond the prescribed period of 4 years from the 
date of the order passed by the First Appellate Authority on 28.3.1992. Division 
Bench of High Court held that the proceedings under section 15(2) was not 
B time barred. Hence the present appeal. 
Dismissing the appeal, the Court 
HELD: I.I. A bare reading ofs.15(1) indicates that the Commissioner, 
Additional Commissioner, Joint Commissioner and Deputy Commissioner 
C could suo motu call for and examine the records of any proceedings under 
this Act The pre-conditions were-an error in the order passed by an officer 
subordinate to the revisional authority and prejudicial to the interest of 
revenue. Once these two conditions stood fulfilled, the revisions! authority 
was authorized to give an opportunity to the assessee of being heard and after 
D making such inquiry as he though fit he could pass appropriate orders as the 
circumstances of the case would justify. This power was essentially a 
supervisory power. However, in order to ascertain whether the officer 
subordinate to him had passed an erroneous order, which was also prejudicial 
to revenue, the Commissioner including the Additional Commissioner etc. 
E 
F 
was required to call for and examine the record of proceedings. Therefore, 
the revisional authority had to call for the records, he had to examine such 
records, he had to be satisfied regarding fulfillment of the above two conditions 
and thereafter give opportunity to the assessee of being heard and on making 
appropriate inquiry the revisional authority was empowered to pass appropriate 
orders. [Para 7) [1197-E, F, G; 1198-A, BJ 
1.2. Under section 15(1) read withs. 15(4), there was no provision for 
issuance of a show cause notice. The reason is obvious. Section 15(4) required 
the revisional authority to exercise its powers within four years from the date 
of passing of the order sought to be revised. The concept of exercising the 

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