SESA GOA LIMITED vs. THE COMMISSIONER OF SALES TAX AND ANR.

The Commissioner of Sales Tax, Government of Goa, Panaji, Goa. 2. The State of Goa, (through the Chief Secretary) to the Government of Goa, having Office at Secretariat, Panaji, Goa.)

The petitioner is a a mining company engaged in operation of extraction, processing and export of mineral ore from its various mines located in Goa. It also deals with resale of scrap, by-products, oils and lubricants and motor vehicles spares including tyres and tubes etc, required for transporting minerals. The petitioner is also a registered small scale industrial unit (SSI unit) engaged in the business of manufacturing barges at Sirsaim, Goa.

The first writ petition being W.P. No.164/2002, is directed against the notice bearing No.CST/ADM/11/Suo-Moto/01-02/02 dated 1.4.2002 issued by the Commissioner of Sales Tax, Government of Goa proposing to revise the assessment orders passed by the Sales Tax Officer on 31.3.2001, 17.8.2001 and 25.3.2002 relating to the sales of barges (manufactured by the petitioner) for the assessment years 1996-97 (under Local and Central Act), 1997-98 (under Local Act) and 1998-99 (under Local Act) respectively on the ground that the petitioner’s claim for exempting the said sale has been wrongly allowed holding it to be covered by Entry No.68

The petitioner, after receipt of show cause notice, by letter dated 2.5.2002, requested the Commissioner to furnish reasons, if any, recorded by him for proposing to revise the assessment orders. The Commissioner by letter dated 10.5.2002, furnished the following reasons :

In the course of assessment of petitioner’s turnover for the year 1986-87, the Sales Tax Officer by his letter dated 7.2.1991 had invited petitioner’s

The petitioner’s appeal from the said assessment order was dismissed by the Assistant Commissioner of Sales Tax by order dated 19th September, 1991. The Assistant Commissioner did not dispute the Sales Tax Officer’s finding that Sales Tax exemption was not in the nature of special assistance under the Government’s SSI Programme. On Second Appeal, the Administrative Tribunal, by order dated 24.7.1995 held that the petitioner was entitled to exemption for sale of barges under the said entry 68 as it stood before its amendment on 1.7.1983 and found that the Government was disabled from depriving the petitioner of the said benefit on the touch stone of doctrine of promissory

The petitioner states that for the assessment years 1987-88 to 1990-91, the Sales Tax Officer disallowed the claim for exemption in respect of sale of barges under the said entry 68 on the same ground on which it was refused for the year 1986-87. The petitioner appealed from the said assessment orders to the Assistant Commissioner, who by his order dated 28.9.1996 dismissed the appeal denying exemption under the said entry 68 holding that the petitioner’s certificate of registration as Small Scale Industry was conditional as such, the petitioner’s barge manufacturing unit could not be considered as a SSI unit under the said entry 68. The petitioner, being aggrieved by the said order, preferred second appeal to the Administrative Tribunal, which is still pending for final adjudication.

For the assessment years 1992-93 to 1995-96 the Sales Tax Officer refused exemption in respect of sale of barges relying on the order of the Assistant Commissioner of Sales Tax dated 28.9.1996. However the

The petitioner seeks to prohibit the continuance of proceedings initiated by the Commissioner of Sales Tax by the impugned notices proposing to revise the orders passed by the Assistant Commissioner of Sales Tax in appeals (WP. No.165/2002) and the assessments made by the Sales Tax Officer relying upon the orders of the Asst. Commissioner of Sales Tax (WP. No.164/2002).

The petitioner contends that in seeking to revise the said orders, the Commissioner has contravened the conditions and transgressed the limits, express and implied, upon which the power to revise is predicated under Section 27(3) of the Goa Sales Tax Act, 1964 which reads as follows :

The learned Counsel for the Petitioner submits that the Commissioner acquires jurisdiction to revise upon "recording of reasons in writing". This requirement is to prevent invocation of revisional power for extraneous or collateral reasons and for a purpose alien to the conferral of power. The recording of reasons in writing ensures that the power is not invoked for wrong reasons or for reasons which do not bear logical or legal scrutiny. In his submission, there is nothing like unfettered discretion in public law. When it is said that something is to be done within discretion of the authorities that something is required to be done in accordance with the rules of reason and justice, not according to private opinion. Exercise of power must not be arbitrary, vague and on fanciful grounds, but according to law. It must be exercised within the limit to which an honest man competent to discharge duties of his office ought to confine himself. He submits that section 27(3) of the Act does not lay down in which circumstances the revisional jurisdiction is to be invoked and therefore, in absence of guidelines it ought

The petitioner contends that on a true and proper construction of the provision of section 27 of the Act the power of revision under sub-section (3) is not available to the Commissioner for the following reasons :

The learned Counsel for the peti- tioner submitted that the High Court while exercising

In the submission of the petitioner, under Section 27(3), the Commissioner can invoke revisional power only for good reasons which can bear legal and logical scrutiny. If the reasons given are bad, the Commissioner cannot clutch at the jurisdiction. The next submission is that upon request to furnish reasons recorded, the Commissioner disclosed vide his reply dated 10.5.2002 that his conclusion was based on two grounds, namely;

The petitioner while challenging the constitutionality of Section 27(3), submitted that if the interpretation and construction of Section 27 as

The learned Addl. Advocate General Shri V.P. Thali has raised a preliminary objection to the maintainability of the writ petitions on the ground that show cause notices are not open to challenge in the suit

In his submission, the jurisdiction of the Commissioner is no where circumscribed by any other limitation or by the fact that the second appeal is available to the tribunal against such an order under Section (2A). According to him, Section 27(3) does not say that the revisional powers are subject to other provisions of Section 27 and, more particularly, Section 27(2A). He, therefore, submits that the contention of the petitioner that an appellate order is not open to revision as there is second appeal provided under Section 27(2A) can not be accepted. Relying upon the case of State of Maharashtra v. Nanded Parbhani Z.L.B.M.V. Operator Sangh (2000) 2 SCC 69, he submitted that it is well settled that when language of the provision is clear, it has to be given effect to instead of resorting to a construction which requires for its support any addition or rejection of words.

The learned Addl. Advocate General next submitted that similarly, the Supreme Court in Union of India v. Deovki Nandan Agarwal, (1992 Supp. (1) SCC

Learned Addl. Advocate General then submitted that in the case of S.B. Gubaksh Singh v. U.O.I. ((1976) 2 SCC 181, one of the orders challenged was the revisional order of the Commissioner by which the Commissioner had revised the appellate orders. Therefore, he contends that there is nothing in the Act which bars the revision of an appellate order.

As regards W.P.No.164/2002, he submitted that the orders sought to be revised are passed by the Sales Tax Officer which are the assessment orders made under Section 17 of the Goa Sales Tax Act. The Sales Tax Officer is a person who assist the Commissioner as appointed under Section 3(2) (aa) of the Act, as such the contention advanced in this behalf needs rejection.

He further submitted that the next requirement for exercising jurisdiction under Section 27(3) is that the order of the Commissioner revising the

Learned Addl. Advocate General while replying to the submission advanced by the petitioner that the requirement of "recording and communicating reasons in writing, has to be followed while issuing notice to revise, he submitted that such requirement cannot be read in the section. Alternatively, he submitted looking to the text of the impugned notices, the said requirement has been fulfilled, the Commissioner in the notices dated 1.4.2002 (both the writ petitions) has given reasons in writing by stating :

Learned Addl. Advocate General also sought to answer the contentions raised by the petitioner on merits and tried to justify the impugned action. He contended that even on merits, the facts would justify that petitioner is not entitled for exemption under entry 68 of Second Schedule of the Act. He took us through the assessment orders and entry 68 as amended from time to time including the amendment introduced with effect from 1.4.1992. He contended that as per said entry 68, following are the requirements :

Learned Addl. Advocate General submitted

As regards the validity of Section 27(3) is concerned, he tried to meet the first argument of the petitioner that as there is no time limit prescribed for exercising revisional jurisdiction, as such, the same is arbitrary and violative of Article 14 of the Constitution of India. He made two submissions to meet this argument:

He submitted that the Supreme Court while analysing Section 31 (Revisional Jurisdiction) of Bombay Sales Tax Act 1953, in the case of Swastik Oil Mills Ltd., v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay, A.I.R. 1968 S.C. 843, has held that when no time limit for suo motu revision is prescribed it cannot be said that limitation of reasonable time within which the revisional powers are to be exercised must be implied in the statute.

He further submitted that in the Sales Tax legislations of various States; where similar power of revision is provided for, the time limit of either 3 to 4 years is found to be prescribed. In case of Bombay Sales Tax Act, 1959, itself under Section 57 a similar and identical provision of revision is provided for and the time limit of three years has been prescribed under the proviso to Section 57. Relying upon the case of State of Orissa and ors. v. Brundaban Sharma (1995 Suppl.(3) SCC (pr.15 and 16), he submitted that in the said case the supreme Court has held that whenever the power is given under the statute, but no time limit is prescribed, the power has to be exercised within reasonable time. What

On the basis of the foregoing submissions, the crucial questions which arise in these petitions are petitions are:

The first challenge relates to the constitutional validity of sub-Section (3) of Section 27 of the said Act on the touchstone of Article 14 of the Constitution. It is well settled law that there is a presumption of constitutionality of the provision in the statute. The Courts ought not to interpret the statutory provision, unless compelled by their language, in such a manner as would involve its unconstitutionality, since the legislature is presumed to enact law which does not violate constitutional provisions. In B. Banerjee v. Anita Pan, [(1975) 2 SCR 774, 787:(1975) 1 SCC 166, 174, 175, 179], the Supreme Court, speaking through V.R. Krishna Iyer, J. reiterated the ratio of Ram Krishna Dalmia v. Tendolkar, A.I.R. 1958 SC. 358, as under :

Interpretation of a provision or statute is not a mere exercise in semantics but an attempt to find

The interpretation, which is an interpretation according to the intent, departs from the letter of the law and goes behind the language used in the statute for the ascertainment of its meaning and is only adhered to when grammatical interpretation leads to some absurdity or inconsistency. In such cases, it is the duty of the Court to discover and give effect to the true intention of the legislature.

In order to ascertain the exact meaning of what the Legislature has actually said, Denning, L.J. went so far as to observe that "we sit here to find out the intention of Parliament and of Ministers and carry it out and we do this better by filling in the gaps and making sense of the enactment than by opening it up to destructive analysis." [Magor & St. Mellous Rural District Council v. Newport Corporation, (1950) 2 All E.R. 1226, 1236]

The golden rule of interpretation is that a construction which creates anomalous situations, should, if possible, be avoided. Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the legislature, the Court might modify the language used by the legislature so as to achieve the intention of the legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meaning as observed by the Supreme Court in Commissioner of Income-tax Bangalore v. J.H. Gotla, A.I.R. 1985 SC 1698.

The next question which arises for consideration is whether, as urged by learned Addl. Advocate General, in absence of the words "reasonable time" can we read down the said words to mean that the said section prescribes limitation of reasonable time within which revisional powers are to be exercised. In the case of M/s. Girdhari Lal & Sons v. Balbir Nath Mathur and ors. (A.I.R. 1986 S.C. 1499), the Apex Court ruled that in order to save the provision from being declared unconstitutional, the section can be read down. The principle of interpretation of statutes are discussed and considered at length in para (38) of Michael D’Souza v. Ganesh Gaonkar [(1995(2) G.L.T.367). The Apex Court in another Judgment in the case of Sunil Batra v. Delhi Administration (A.I.R. 1980 SC 1579)

In appreciating the rival contentions on the question whether sub-Section (3) of Section 27 can be read down so as to save it being invalidated on the ground of unconstitutionality, it would be useful to notice some of the judgments of the Supreme Court, so as to have an idea in which category of cases or which expressions have been read in order to give force and life to the intention of the Legislature or in order to save the provision from being rendered invalid.

In R.M.D. Chamarbaugwalla & Ors. v. Union of India (AIR 1957 SC 628), the question of interpretation of the definition of the expression ‘prize Competition’ defined in Section 2(d) of the Prize Competition Act was under consideration of the Supreme Court. The said definition as worded in wide terms and there was nothing in its wording to limit it to a competition in which success does not depend to any substantial extent on skill but on chance. The Supreme Court has, however, held that looking to the object of the said Act, the definition of the expression ‘prize

In Kedar Nath Singh v. State of Bihar (A.I.R. 1962 SC 955), the validity of Section 124-A of IPC which was defines an offence of what is known as sedition was under challenge on the ground that it infringed the fundamental right of freedom of expression guaranteed under Article 19(1)(a) of the Constitution. The words used in Section 124-A IPC were wider and unqualified. However, looking to the object of punishment for offence of sedition, Section 124-A was read down and was construed to mean that the words, spoken or written are seditions within the meaning of Section 124-A of IPC. When they are pernicious or have a tendency to harm public order.

In case of Sunil Batra v. Delhi Administration (AIR 1978 SC 1675) the question was whether a prisoner under sentence of death should be confined in a cell part from the other prisoners. The submissions made was that he should be confined in solitary confinement but it was read down to mean that he should be kept in a separate cell but one which is not away from the other cell.

In the case of Bangalore Water Supply v.

The case of the Supreme Court which is, however, closer to case in hand and which can throw more light is the case of Chief Justice of Andhra Pradesh V. L.V.A. Dikshittulu (A.I.R. 1979 S.C. 193). The question in that case was whether the cases of High Court staff and the subordinate Judiciary can be referred to the Administrative Tribunal constituted by the State of Andhra Pradesh as per the provision of Article 371-D of the Constitution. In construing the said Article 371-D of the Constitution, the Supreme Court held that the words ‘Civil Service of the State’ would not include the High Court staff and the subordinate Judiciary although the same words used in Article 311 of the Constitution would include them. The narrow construction was adopted by the Supreme Court because the wider construction would have encroached upon the independence of the Judiciary

As we have pointed out hereinbefore the intention behind the exercise of revisional power can not be read to bestow uncanalized arbitrary power in favour of the revising authority. There does not appear to be any difficulty in reading down the said sub-Section. It is, therefore, necessary to save the provision in sub-Section (3) of Section 27 from being rendered invalid, they should be read down so as to read the words ‘reasonable time’ in the said sub-Section. Reading down of the said section would then be in keeping with the object of the act, and also would save the impugned provisions from being rendered invalid.

Learned Addl. Advocate General brought to our notice that the judgment of the Orissa High Court in Laxminarayan Sahu v. State of Orissa, A.I.R. 1991 Ori. 139, wherein Full Bench of the said High Court held that

In State of Gujarat V. Patel Raghav Natha, (1969 2 SCC 187: (1970) 1 SCR 335, 343, Apex Court held that Section 65 itself did not indicate any length of reasonable time within which the Commissioner ought to have acted under Section 211. Under Section 65 if the Collector does not inform the applicant of his own decision on the application within a period of three months the permission applied for can be deemed to have been granted. Power under Section 211 of the Code must be exercised within reasonable time and the length of the reasonable time must be determined by the facts of the case and the nature of the order which is being revised. On the facts in that case it was held that the Commissioner also should exercise revisional power under Section 211 within three months as the owner would spend money to construct house and hardship would ensue if belated orders were to be passed. The same ratio was reiterated in State of Orissa V. Pyrimohan Samantaray

We therefore read down the words "within a reasonable period" and conclude that power is required to be exercised within the reasonable period. What should be the ‘reasonable period’, would depend upon the facts and circumstances of the each case.

Having read down sub-Section (3) of Section 27 of the Goa Sales Tax Act, another question which needs consideration is whether the power to revise in these cases have been exercised by the Commissioner of Sales-tax within a reasonable time ?

In order to answer this question let us turn to the Sales-tax Legislation of various States; wherein the time limit of either three or four years is found to be prescribed while providing for exercising similar power of revision. In the case of Bombay Sales Tax Act, 1959 itself, under Section 57, a similar and identical provision of revision is provided for and the time limit of three years has been prescribed under

Now turning to the submissions advanced by

In the decision of State of Kerala v. M.G. Abdulla and Co. (supra) relied upon by the petitioner in their arguments, does not at all support the petitioner’s case inasmuch as the facts in that case were totally different and the question which arose for determination was as regards to the amplitude of the revisional power. The majority decision in that case was of Shah J. and Sikri J. who held that while exercising the revisional jurisdiction the Commissioner is not expected to restrict himself only to the record maintained by the subordinate officer but an even make an inquiry out side that record. In para 17 of its Judgment in Ram Kanai Pal’s case, A.I.R. 1976 S.C. 1545, the Apex Court has affirmed the observations made in the earlier case of Swastik Oil

The submission thus cannot be accepted that power given under Section 27(3) is arbitrary and that it is not controlled by any considerations or that it is unfettered or uncanalised.

Now turning to the second issue with respect to the exercise of power and legality thereof, one has to turn to Section 27(3) of the Act which prescribes only two requirements, namely :- (i) the Commissioner can revise any orders of assessment made or any order passed under the Act or the Rules; (ii) the order to be revised must have been passed by a person appointed under Section 3 to assist him. Under Section 3(2)(a) of the Act, the Assistant Commissioner of Sales-tax is one of such persons appointed to assist the

It is well settled that when language of the provision is clear, it has to be given effect to instead of resorting to a construction which requires for its support any addition or rejection of words. In this behalf, one may turn to the Judgment of the Apex Court in the case of State of Maharashtra and ors. v. Nanded Parbhani Z.L.B.M.V. Operator Sangh (cited supra). In para 14 of the said Judgment, the Apex Court has held :

At this juncture, it is useful to make a mention that in one of the Judgments of the Supreme Court, in the case of S.B. Gurbaksh Singh v. Union of India and ors. (1976) 2 S.C.C. 181, one of the orders challenged was the revisional order of Commissioner, by which the Commissioner had revised the appellate orders. As such the contention raised in this behalf is devoid of any substance.

The next basic requirement for exercising jurisdiction under Section 27(3) is that the order of the Commissioner revising the assessment should be "for reasons to be recorded in writing". The reasons to be recorded in writing are required to be mentioned by the Commissioner in his order to be passed under Section 27(3). This is not the requirement for issuing notice. In this case, as already extracted in the opening part of

The parties to these petitions no doubt addressed to us on the question of legality of the reasons and sought to develop rival contentions. However, we do not feel it necessary to dwell on the merits of the reasons, as that would not be within the province of this Court to examine reasons and the legality thereof on merits. It would be well within the jurisdiction of the authorities to consider the legality or the validity of the reasons on its own merits if they are challenged by the assesses. Since we are restricting ourselves to the legality of the notices impugned, we keep this question open for being raised before the Revisional Authority. At any rate, prima facie we do not think that the reasons sought to be recorded can be branded as perverse and arbitrary. However our observations are prima facie.