- (1.) IN this group of appeals the short question which arises for consideration is whether action purported to have been taken under section 22-A of the Karnataka Sales Tax Act, 1957 (hereinafter called "the Act") could be said to have been taken within the period of limitation prescribed thereunder. In order to appreciate the issue it would be advantageous to extract section 22-A in its entirety. " 22-A. Revision by the Commissioner (or Joint Commissioner) of orders prejudicial to revenue.- (1) The Commissioner (or Joint Commissioner) may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer subordinate to him is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. (2) The power under sub-section (1) shall be exercisable only within a period of four years from the date of the order sought to be revised was passed. Explanation.- In computing the period of limitation for the purposes of sub-section (2), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. "
(2.) THE factual matrix may be briefly noticed with reference to one of the appellants. For the assessment year 1970-71 the purchase turnover of paddy effected by the appellant amounting to Rs. 12,69,286. 25 and Rs. 29,93,521. 26 was brought to tax by the Commercial Tax Officer under assessment orders dated September 29, 1973 and April 30, 1974 respectively. The appellant preferred appeals to the Deputy Commissioner of Commercial Taxes (Appeals) contending that the paddy converted into rice could not be said to have undergone a manufacturing process and hence his turnovers were not exigible to tax under section 6 of the Act. The Deputy Commissioner following a Division Bench judgment in State v. B. Raghurama Shetty [1975] 35 STC 360 (Kar) allowed the appeals by his order dated March 14, 1975. The matter was brought to this Court and on March 24, 1981 this Court allowed the State's appeal from the Division Bench judgment on which the decision of the Deputy Commissioner had been based. [vide State of Karnataka v. B. Raghurama Shetty [1981] 47 STC 369 (SC)]. While the proceedings were pending in this Court in respect of the Division Bench judgment, on March 18, 1977 the Deputy Commissioner forwarded the records of his office to the Commissioner of Commercial Taxes, Karnataka, for needful action. The records were received by the Commissioner on March 23, 1977. The office of the Commissioner thereupon prepared a note, paragraph 3 of which read as under : " The above cases may lie over till the Supreme Court's decision in B. R. Shetty's case [1981] 47 STC 369 is received as we cannot initiate action under section 22-A for the present. "
(3.) ON the basis of this note the Commissioner approved the suggestion in paragraph 3 on July 8, 1977. This Court rendered its decision on March 24, 1981 and it was thereafter that the Commissioner issued show cause notice on May 27, 1981 purporting to exercise power under section 22-A of the Act. The assessee contends that the exercise of this power is delayed beyond the period of limitation which had expired and, therefore, notices were issued by the Commissioner illegally and are liable to be quashed. However, the contention of the Revenue was that since the files were placed before the Commissioner and the Commissioner took a decision in paragraph 3 of the note extracted above, he could be said to have initiated action in exercise of the power conferred upon him by that section and, therefore, the notices were not barred by limitation. In the show cause notice issued by the Commissioner it is averred that the notice is not barred by limitation for the reason "in your case the records have been received for examination in this office on March 23, 1977 which date is well within the period of limitation and, therefore, action under section 22-A in your case is not barred by limitation". The question is whether this approach of the Commissioner is correct ? We think not.;