STATE OF KERALA versus K. M. CHARIA ABDULLAH & CO.

Citation: [1965] 1 S.C.R. 601 · Decided: 05-10-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
GO! 
STATE OF KERALA 
v. 
K. M. CHARIA ABDULLAH & CO. 
October 5, 1964 
(K. SUBBA RAo, J. C. SHAH ANDS. M. SIKRI JJ.) 
Madras General Sales Tax Act (9 of 1939) s. 12(2) (i) and Madras 
General Sales Tax Rules, 1939, r. 14A-Scope of-If rule ultra vires the 
Act. 
The respondents subn1itted 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 tum-over. The Deputy Commissioner 
of Commercial Taxes, called for the record of the case and b 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 exemp-
tion, issued a notice calling upon the assessee to sbo\v cause against the 
proposed revision, heard objections and on the basis of fresh evidence 
came to the conclusion that the respondents did not act 33 commission 
agents but carried on the business of outright purchase and sale in respect 
of the entire turn-over. He therefore revised the order of assessment. The 
asscSsees' appeUI to the Sales Tax: Appellate Tribunal was allov . .'ed. 
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 autho-
rity 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. J 4A 
which authorised the re\ising authority to correct the amount of tax payable 
after ma.king such enquiry as the authority considers necessary was ultra vircs 
the Act. The State appealed to the Supreme Court and contended that the 
High Court had erred in decl:iring 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 ascer-
taining the legality or propriety of an order or the regularity of the proceed-
ing. If after perusing the record the authority is prima foci• satisfied about 
the illegality or impropriety or irregularity, it may under r. 14A, before 
passing an order, direct an additional enquiry. Tue 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 direct-
ing 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 autho-
rising the re\ising authority to make a further enquiry for effectively exer-
cising 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 
SUPREME 
COURT 
REPORTS 
[1965] l S.C.R. 
case, the Deputy Commissioner was competent to proceed in the manner 
he bad done and to pass the order io revision. For, while the reviaiooal 
jurisdiction is not restricted only to cases of arithmetical errors, it would 
not iov...i the authority with power to launch upon enquiries at large ao as 
either to trench upon the powers which are expressly reaerved 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, HJ. 
Per Subba Rao J. (dissenting) : Ruic 14A in so far as it confer. a 
power oo the revising authority to make a fresh enquiry and to determine 
oo 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 inf

Excerpt shown. Read the full judgment & AI analysis in Lexace.