Bhargava, J. - (1.) The Swastik Oil Mills Ltd., appellant, carries on business of manufacturing vegetable oils, soaps and other products and selling them in India as well as exporting them outside India. It was registered as a dealer under the various Sales Tax Acts in force in Bombay. The first of these Acts was the Bombay Sales Tax Act 5 of 1946, which was replaced by the Bombay Sales Tax Act 3 of 1953. The third and the latest Act now in force in Bombay is the Bombay Sales Tax Act 51 of 1959. The appellant was assessed to sales tax on its turnover for the periods from 1st April, 1948 to 31st March, 1950, and from 1st April, 1950 to 31st March, 1951 on the basis of Returns of turnover submitted by it. In these Returns, the appellant claimed exemption from tax in respect of the turnover representing the despatches or transfer of goods from its Head Office Bombay to its various Depots or Branches in other States in India, and also exemption in respect of sales which were alleged to have taken place in the course of inter-State trade after 26th January, 1950. The Sales Tax Officer in his order of assessment dated 2nd January, 1954 rejected both these claims. The appellant went up in appeal before the Assistant Collector of Sales Tax, who, in his appellate order dated 29th October, 1956, accepted the claim of the appellant in respect of the despatches to its various Depots or Branches in other States in India, but disallowed the claim in respect of the alleged inter-State sales. As a result of partially allowing the claim of the appellant, the Assistant Collector reduced the tax imposed by a sum of Rs. 19,240-15-6 for the period between 1st April, 1948 to 31st March, 1950, and Rs. 97,208 for the second period between 1st April, 1950 to 31st March, 1951, and directed refund of these amounts to the appellant. The revisions filed by the appellant against the rejection of its claim in respect of inter-State sales were still pending when, on 7th January, 1963, a notice was issued by the Deputy Commissioner of Sales Tax, Bombay City Division, in Form XXIV under Section 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the appellate orders passed by the Assistant Collector of Sales Tax in so far as he had allowed deduction in respect of the entire goods despatched to its Branches in other States outside Maharashtra, because, in so doing, he had overlooked the provisions contained in proviso (b) to sub-clause (ii) of Rule 1 under sub-section (3) of Section 6 of the Bombay Sales Tax Act, 1946 as amended by the Bombay Sales Tax Amendment Act 48 of 1949. On receipt of this notice, the appellant put in appearance before the Deputy Commissioner, who is the respondent in this appeal, and raised several objections against the proposed revisional proceedings, making a request that the proceedings be dropped. Since the respondent did not accept this request, the appellant filed a petition under Article 226 of the Constitution in the High Court of Bombay challenging the notice dated 7th January, 1963, with the prayer that the notice be quashed and the respondent be restrained from taking any action against the appellant in pursuance thereof. The petition was dismissed by the High Court and, now, on certificate granted by that Court, the appellant has come up in this appeal to this Court.
(2.) In this appeal, Mr. S. T. Desai, appearing on behalf of the appellant, urged the same objections against the notice which were the basis of the prayer for writ in-the High Court, and we proceed to deal with them in the order in which he has put them forward before us in his submissions. The first point urged by learned counsel was that, in exercise of the revisional powers, the Deputy Commissioner of Sales Tax, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material, in order to judge the correctness of the order sought to be revised. In support of this proposition, learned counsel referred us to a decision of the Andhra Pradesh High Court in State of Andhra Pradesh vs. T. G. Lakshmaiah Setty and Sons, l961-12 STC 663 (AP) . In that case, the Deputy Commissioner, in exercising the revisional jurisdiction, was found by the High Court to have based his assessment on guess-work, and the Court held that "this conjecture could not be a justification for seeking to revise the order of the assessing authority. If the Deputy Commissioner could, on the material before him, find data for revising the assessment, it was open to him to do so. It must be made clear that he has no jurisdiction to travel beyond the record that is available to the assessing authority and the basis should be found on the record already in existence." We are unable to accept this principle laid down by that High Court as correct. Whenever a power is conferred on an authority to revise an order, the authority is entitled to examine the correctness, legality and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular case before it. When exercising such powers, there is no reason why the authority should not be entitled to hold an enquiry or direct an enquiry to be held and, for that purpose, admit additional material. The proceedings for revision, if started suo motu, must not of course, be based on a mere conjecture and there should be some ground for invoking the revisional powers. Once those powers are invoked, the actual interference must be based on sufficient grounds, and, if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority. This principle has been clearly recognised by this Court in State of Kerala vs. K. M. Cheria Abdulla and Co., 1965-16 STC 875 at page No. 884 . In that case, sub-s. (2) of Section 12 of the Madras General Sales Tax Act, 1939, which came up for interpretation, empowered the Deputy Commissioner, suo motu, or under certain circumstances on an application, to call for and examine the record of any order passed or proceeding recorded under the provisions of that 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 to pass such order with respect thereto as he thought fit. This Court held:- "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 jurisdiction, if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding, he cannot make or direct any further enquiry." It was further held:- "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." While thus explaining the scope of the revisional power, the Court also indicated the limitations within which such power can be exercised, holding:- "It would not invest the revising 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 those powers. For instance, the power to reassess escaped turnover 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 taxpayer. Similarly, the power to make a best judgment assessment is vested by Section 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." (page No. 887 of STC) .
(3.) In the present case, the notice issued by the Deputy Commissioner of Sales Tax, on the face of it, discloses the reasons which led him to take proceedings for exercising his revisional power suo motu, and it cannot be said on those facts that he was acting merely on conjecture. The Deputy Commissioner has not yet proceeded further under the notice to make the assessment. We have no doubt that, when the Deputy Commissioner does make an enquiry, if any, for the purpose of exercising his revisional powers, he will keep within the limitations indicated by this Court in the case cited above. The notice cannot be quashed or the proceedings restrained merely on the ground that the Deputy Commissioner may have to hold some enquiries in order to properly exercise his revisional jurisdiction. Mr. Desai on behalf of the appellant emphasised the circumstance that in Section 12 (2) of the Madras General Sales Tax Act, which was considered by this Court, the Deputy Commissioner's power was expressed by stating that he may pass such order as he thinks fit, while no such words occur in the corresponding provisions in the Bombay Sales Tax Acts with which we are concerned, but we do not think that this circumstance makes any difference. A revising authority necessarily has the power to make such order as, in the opinion of that authority, the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional powers. In fact, in Sec. 12 (2) of the Madras General Sales Tax Act, the Deputy Commissioner, when exercising his powers, was to call for the record of the order or proceeding before passing any order which he thought fit, so that there was an expression used which could have been interpreted as limiting his powers to the examination of the record only without holding any further enquiry, and, yet, this Court held that the Deputy Commissioner could not be restricted to the record and was empowered to make an enquiry outside that record. In the provisions relating to revisions in the three Bombay Sales tax Acts, there are no such words indicating any limitation; and that would be an additional reason for holding that there can be no bar to an appropriate enquiry being held by the Deputy Commissioner when seeking to exercise his revisional powers suo motu.;