(1.) THIS is a revision application filed u/sec. 14 of the Rajasthan Sales Tax Act, 1954, on behalf of M/s. Banshidhar & Co. , by Prabhu Dayal, partner, against the order of the Assistant Commercial Taxes Officer, Jaipur dated 4. 11. 1966, fixing the liability on the applicant for registration.
(2.) THE facts in brief are that on 6. 10. 1965 the said Assistant Commercial Taxes Officer agreed with the contention of the applicant and held that he was not liable for registration. According to the counsel for the applicant, he (R. C. T. O.) consulted the Sales Tax Officer and re-opened the case and decided on 4. 11. 1966 that the applicant, who deals in the business of excavating stones is liable to registration. He also imposed a penalty of Rs. 20/ -. It is against this order that the present revision is being considered.
A preliminary objection was taken on behalf of the counsel for the State that since an appeal lay against the order imposing penalty, the applicant could not file a revision. The learned counsel for the applicant replied that as the order of imposing the penalty and the order creating liability for registration are two separate and separable orders, and as he did not want to contest the imposition of penalty, he was within his rights to file a revision against an order creating liability for registration, which is not appealable. We think there is sufficient force in the argument advanced by the learned counsel for the applicant, and the objection was over-ruled.
The main point urged before us by the counsel for the applicant was that the Assistant Commercial Taxes Officer was not competent to reopen the matter once he had decided on 16. 10. 1965 that the firm was not liable for registration. There were only two ways in which the matter could be reopened ; one. , by moving the Board of Revenue under sec. 14 (1) of the Rajasthan Sales Tax Act for revision of the order, and (2) under sec. 12 of the Rajasthan Sales Tax Act provided the conditions laid down therein are satisfied. No application was made moving the Board of Revenue for revision of this order, and it appears that the Assistant Commercial Taxes Officer was proceeding only under sec. 12 of the Act. The learned counsel for the applicant also argued that the Assistant Commercial Taxes Officer has committed a material irregularity in consulting the Sales Tax Officer. There is no doubt that if in quasi-judicial proceedings subordinate officer consults his superior officer during the pendency of the case the action cannot but be highly deprecated, and in such a case the officer consulting his superior may be deemed to have failed to exercise the jurisdiction vested in him. But when a particular case has been decided, we see no reason if a superior officer is consulted in general about the point involved. In the present case, what happened was that the Sales Tax Officer called a meeting on the 3rd September, 1966 and discussed the scope of the definition "manufacture" given in sec. 2 (k) of the Rajasthan Sales Tax Act. It was decided in that meeting that the excavation of minerals would be covered under this definition and those whose turnover exceeded Rs. 5,000/- would be liable to get themselves registered. The Assistant Commercial Taxes Officer, in accordance with this decision, issued a notice to the parties. From the order dated 3. 9. 1966, it appears that the Assistant Commercial Taxes Officer was acting in accordance with the decision of the meeting. It does not say that he applied his own mind in issuing the notice to the assessee. Issuing a notice to the assessee or making an assessment pre-supposes that the assessing officer has applied his own mind and was not acting under any directions (may be the result of a decision in a meeting ). His order issuing the notice, therefore, cannot be held proper in as much as it lacked the foundation for his assuming jurisdiction. It has therefore to be quashed.
Sec. 12 under which the Assistant Commercial Taxes Officer seems to have reopened the case reads as under - "if for any reason the whole or any part of the business of a dealer has escaped assessment to the tax, or if the registration or exemption fee has escaped or has been assessed at the too low a rate in any year, the assessing authority, at any time within a period of eight years next succeeding that to which the tax or the registration fee or the exemption fee relates, or if such assessment has been a subject matter of proceedings in appeal or revision under this Act, within a period of three years next succeeding the date of termination of such proceedings may serve the dealer liable to pay the tax in respect of such business or such registration fee or exemption fee a notice in the prescribed form and may proceed to assess or re-assess the amount of the tax or levy the correct amount of registration fee or exemption fee from such dealer. " The main point for consideration is whether the Assistant Commercial Taxes Officer's order of 16. 10. 1965 that the applicant was not liable for registration, if erroneous, be said to constitute a reason for which the applicant escaped assessment. There was a difference of opinion among the various High Courts in interpretation of the meaning of the word 'escape' used in sec. 12 of the Rajasthan Sales Tax Act and in the corresponding Rules where the same language has been used. The Madras High Court in the State of Madras vs. Louis Dreyfus & Co. Ltd. (S. T. C. 1955 p. 318) in a case decided by the Full Bench interpreted the word 'escape' as follows - "the "escape" that serves to the foundation of the jurisdiction to re-open an assessment is that of "turnover" and not an assessment. "turnover" escapes when it is noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer the turnover though in the books has not been taken notice of. This would be the natural and normal meaning of the expression "turnover which has escaped" in R. 17 (1 ). "
Their Lordships have further observed that there was no real analogy between R. 17 (1) of the Madras General Sales Tax Rules, 1939, and the provisions of sec. 34 of the Indian Income-tax Act, 1922. This view was followed in Kondapalli Virarju vs. The State of A. P. in 1958 S. T. C. at p. 42. The Kerala High Court, however, in R. S. Narayana Shenoi vs. State of Kerala (S. T. C. 1961 p. 665) took a different view. They observed "the jurisdiction of an officer to make a reassessment under R. 33 (1) of the Travancore-Cochin General Sales Tax Rules, 1950, is not confined to cases where the turnover has escaped assessment, because it is not before the officer by reason of inadvertence, omission, or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer. That rule also authorises the officer to re-open an assessment if a legal error has been committed in the original assessment.
Their Lordships of the Kerala High Court in taking the contrary view to that which was taken by the Madras High Court relied on the following observations made in Maharaj Kumar vs. Income-tax Commissioner (A. I. R. 1959 8. C. 257) by the Supreme Court - "we see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. " Following these observations, their Lordships of the Kerala High Court observed : "the aforesaid conclusion cannot be confined to assessments under the Income Tax Act alone, because it has been rested on the dictionary meaning of the word "escape", which is held also to mean "to get clear away from (pursuit or pursuer) ; to succeed in avoiding (anything painful or unwelcome)". The learned judge has, therefore, observed that, judging by the dictionary meaning alone, it would be difficult to confine the meaning of the word "escape" only to cases, where no return has been submitted by the assessee, or even where the assessee had submitted a return of his income and the whole of the income has not been assessed. As there is nothing in the context of R. 33 to suggest the use of the words "escaped assessment" having been given limited meaning, the reasons, on which "escaped assessment of income been construed not to be limited, would equally apply to not limiting escaped assessment of turnover to cases of inadvertence, oversight, or failure to submit the return. " In our opinion because of the observations made by the Supreme Court in Maharaj Kumar vs. The Income-tax Commissioner, there is no reason why the word 'escape' should be given a limited meaning. The phrase 'for any reason' used in sec. 12 of the Rajasthan Sales Tax Act, further lends support to the view that the Legislature had not intended that 'escape' used in sec. 12 should be limited in its meaning and should not be made to cover an assessment where originally a legal error has been committed.
The learned counsel for the applicant brought to our notice seven cases decided by a learned Member of the Board of Revenue, which were covered by a single judgment, in revision No. 22/65 of Ajmer (M/s. Bhikhi Lal Chhotey Lal) decided on 9. 9. 1966, in which it was held that a mere change of opinion from the previous officer is not covered by provision of sec. 12 of the Act. This decision followed the rule laid down in M/s National Clinic vs. The Assistant Commercial Taxes Officer Ganganagar (1966 RLW p. 257) wherein it was held that taking of X-ray photo and charging fees by the Doctors was only rendering professional service and did not contain an element of sale in it. In the circumstance of that case it was held that the reasons recorded in the notice were patently wrong as there was no rational connection with the escapement of business from sales tax.
These authorities, in our opinion, do not affect the proposition laid down above that even a legal error committed by the assessing officer originally would be covered within the meaning of 'escape' under sec. 12 of the Rajasthan Sales-tax Act.
We have now to examine whether the Assistant Commercial Taxes Officer was right in including excavation of stones within the definition of 'manufacture' as given in sec. 2 (k) of the Sales Tax Act, which reads as under - "manufacture includes any process or manner of producing, collecting, extracting, preparing or making any goods. "
Though the use of the word 'includes' makes the definition comprehensive, yet any other process to come within the definition of manufacture must be analogous to those of the processes given thereunder. Obviously, excavation of stones from the mines is not production of stones. Stones have already been produced by nature by process of geological formation. The obvious connotation of the word 'production' is to have something new which did not exist before may be by a process of change in physical or chemical properties of the article produced. Excavation is similarly neither collecting, nor can it be covered with the definition 'prepared' or making of the goods. The only question is whether excavation and extracting can be held as synonyms as contended by the Asst. Commercial T. O. in deference to a decision in a meeting held by the S. T. O. The word 'extract' has been used in many senses. The dictionary meaning of the word 'extract' in this context of manufacture, would be to take from something of which the thing taken was a part. For instance, juices are extracted from fruits, and oil from the oil-seeds ; whereas 'excavation' has dictionary meaning as "to make hollow by removing the inside; to dig out leaving a hollow". The very derivation of the word 'excavate' itself is from cave. The difference between extracting and excavating would be somewhat analogous to drawing out and taking out. Both are not synonymous. No dictionary has put them as synonyms. In our opinion, therefore, excavation of stones is not covered within the definition of 'manufacture' given in sec. 2 (k) of the Rajasthan Sales Tax Act. The Assistant Commercial Taxes Officer erred therefore in creating liability for registration of the applicant, when his turnover was less than Rs. 15,000/ -.
We, therefore, accept this revision and set aside the order of the Assistant Commercial Taxes Officer, dated 4. 11. 1966. .