Rajasekhara Murthy, J.
1. In these two petitions the petitioner is the Indian Aluminium Co. Ltd., Belgaum, a public limited company. The petitioner is a manufacturer of aluminium and its alloys in all forms, ingots, aluminium billets and other by-products.
2. The petitioner-company is a registered dealer both under the KST and CST Acts. For the period 1st April, 1973 to 31st March, 1974 the petitioner's turnover was subjected to tax under the KST and CST Acts by assessment order dated 21st July, 1975 by the Assistant Commissioner of Commercial Taxes (Assessment), Dharwar.
3. The petitioner assesses returned a gross turnover of Rs. 12,93,87,969.09 for the period in question. In the assessment completed under the KST Act, the sales effected within the State were subjected to tax at the rate of 6 per cent. The assessee claimed exemption in respect of its inter-State sales of the aggregate value of Rs. 1,03,28,598.74. The assessing officer, on scrutiny of the documents produced by the assessee in support of its claim so far as the inter-State transactions were concerned, exempted the turnover as claimed by the assessee and treated it as inter-State turnover.
4. Correspondingly, assessment was completed for the year ending 31st March, 1974 under the CST Act and this turnover was brought to tax under the CST Act and these assessments have become concluded.
5. It appears, thereafter, the assessing officer issued show cause notices under section 12A of the KST Act and also notices under section 25A proposing to bring to tax the turnover in respect of the inter-State sales of Rs. 7,35,030.42 effected by the petitioners in favour of Mohan Aluminium Co. Ltd., Bangalore, and M/s. Ideal Jawa, Yavagiri, Mysore. These notices were challenged by the petitioner before this Court and on a memo being filed on behalf of the State seeking to withdraw the impugned notices the writ petitions came to be disposed of.
6. What happened thereafter relevant for the purpose of these cases.
7. The Commissioner, in exercise of his powers conferred under section 22A of the Act, issued a notice to the petitioner proposing to revise the assessment order completed under the KST Act, and to direct the assessing officer to bring to tax the turnover of Rs. 7,35,030.42 as local sales effected by the petitioner-company. Simultaneously, the Commissioner also issued a notice under section 22A of the KST Act read with section 9(2) of the CST Act. Under this notice, the Commissioner proposed to delete the same turnover of Rs. 7,35,030.42 from its assessment under the CST Act, and to consider it under the State Act for purposes of assessment. These two notices are challenged by the petitioner in these writ petitions.
8. Notice issued under section 22A of the KST Act by the Commissioner as per exhibit N, is the subject-matter in W.P. No. 13621 of 1978 and the notice issued under section 22A read with section 9 of the CST Act as per exhibit N is the subject-matter in W.P. No. 469 of 1979.
9. Sri Venugopal, the learned Senior Advocate appearing for the petitioner, raised the following grounds challenging the two notices referred to above :
(i) that the Commissioner is seeking to assess a turnover which has escaped assessment under the Act and the notice issued by the Commissioner seeking to bring this escaped turnover to tax is outside the scope of section 22A of the Act; and
(ii) that the Commissioner cannot initiate proceedings under section 22A relying on the material outside the records of assessment, and the notices are, therefore, invalid in law.
10. The main attack is directed against the reasons given by the Commissioner in issuing the notices. What is more relevant for purposes of this case is the notice issued by the Commissioner under section 22A of the KST Act. No doubt, the learned counsel has challenged both the notices issued under the KST and CST Acts. The notice issued under the CST Act is criticised by the learned counsel that it cannot form the subject-matter for a revision under section 22A of the Act, since the purpose of the notice issued under the CST Act is to exclude the turnover which has been subjected to tax under the CST Act. According to the learned counsel the purpose for which section 22A could be invoked can only be a case of an assessment which has resulted in any prejudice to the interests of the Revenue. But according to the notice, the Commissioner is seeking to exclude the inter-State turnover from the assessment completed under the CST Act. Such a notice is without jurisdiction and does not conform to the requirements of section 22A of the KST Act. I will revert to this notice again dealing with the notice issued under section 22A of the State Act.
11. Section 22A is a power vested in the Commissioner under which he can call for the records of any proceedings under the Act and if he is of the opinion, that it is prejudicial to the interests of the Revenue, he may, after such enquiry as he deems necessary, modify the said assessment or cancel the assessment or direct fresh assessment.
12. In this case, the Commissioner has stated in his notice dated 21st October, 1978 that on a perusal of the assessment order passed by the Assistant Commissioner of Commercial Taxes, Dharwar, for the year 1973-74 under the KST Act, he was of the opinion that the assessing officer had erroneously considered the turnover of Rs. 7,35,030.42, which represented the sales of aluminium ingots made to M/s. Ideal Jawa, Yavagiri, Mysore, and Mohan Aluminium Co. Ltd., as inter-State sales. As a result, the turnover, which according to the Commissioner represented sales to local dealers, had suffered a concessional tax at 3 per cent. instead of 6 per cent.
13. The Commissioner before issuing the said notice examined the 'C' forms and other relevant material covering the said turnover. He was of the opinion that mere production of 'C' forms obtained from the buyers of this State alone would not determine the nature of transactions for the purpose of treating the said turnover as inter-State sale. In this view of the matter, the Commissioner proposed to direct the assessing officer to bring to tax, the turnover of Rs. 7,35,030.42 under the State Act. Agreeing with the reasons recorded in the relevant file in which the action was initiated under section 22A and recording his own reasons, the Commissioner issued the impugned notices.
14. These reasons are contained in the show cause notices. The break-up of the turnover in respect of the two purchasers is also given in the show cause notice and the further reason contained in the show cause notice reads :
'Though the above-mentioned sales were pure local sales, the assessing authority accepted your pleas that they related to inter-Sales on the ground that the buyers of this State had issued 'C' declaration forms covering the said transaction. Except issue of 'C' forms, there was nothing on record to show that the goods had crossed the State border as an incident of contract of sale. Hence mere issue of 'C' forms by the local State buyers would not change the characteristics of local sales in the absence of documentary evidence to prove that the movement of goods had preceded the sale in pursuance of the contract of sale. The assessing authority's orders granting the exemption erroneously under the local law and assessing the turnovers to tax at 3 per cent. under the Central Sales Tax Act, 1956 had resulted in the loss of revenue to the State Exchequer since if the turnover in question had been considered under the local law, as it ought to have been, then the same would have been assessed to tax at 6 per cent. It is, therefore, proposed to set aside the assessment order under the KST Act, 1957 and to remand the case to the assessing officer concerned for making fresh assessment with a direction to consider the turnover of Rs. 7,35,030.42 as local sales assessable to tax at 6 per cent. in addition to the local sales already considered in the assessment order dated 21st July, 1985. In this connection it is also proposed to cancel the two notices purported to be issued under section 12A on 3rd September, 1976 and under section 25A on 6th September, 1976 by the assessing authority concerned with a view to subject the turnover of Rs. 7,35,030.42 to tax at 6 per cent. under the local law.'
15. The questions that arise for consideration therefore are :
(i) whether the Commissioner's action in initiating action to revise the assessment orders for the assessment year 1973-74 is justified in law ?; and
(ii) what is the true ambit and scope of the revisional power of the Commissioner under section 22A of the KST Act
16. Sri Venugopal has relied upon the decision of the Supreme Court in State of Kerala v. Cheria Abdulla & Co. : [1965]1SCR601 in support of his contention that the Commissioner cannot rely upon any information which is collected after the assessment and outside the record of assessment.
17. Sri Venugopal has drawn my attention to paragraph 19 in Cheria Abdulla's case : [1965]1SCR601 wherein, the Supreme Court has dealt with the limitation while exercising the power under section 12 of the Madras General Sales Tax Act. The particular passage to which he has drawn my attention is at paragraph 19, page 886, extracted below :
'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. The revisional power has to be exercised for ascertaining whether the order passed is illegal or improper or the proceeding recorded is irregular and it is in aid of that power that such orders may be passed as the authority may think fit. One of the inquiries in considering the legality or propriety of the orders passed by the subordinate officer which the revising or the appellate authority may make is about the correctness of the tax levied and if after perusing the record the authority is prima facie satisfied about the illegality or impropriety of the order or about the irregularity of the proceeding, it may in passing its order direct an additional enquiry. Neither section 12 nor rule 14A authorises the revising authority to enter generally upon enquiries which may properly be made by the assessing authorities and to reopen assessments.'
18. Relying upon these observations Sri Venugopal criticised the notice issued under section 22A, that it is based on the material gathered by the Commissioner after the assessments were completed, viz., the information collected from the records maintained at the police out-post at the State border.
19. Sri Venugopal has quoted the later decision of the Supreme Court in Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue, West Bengal : AIR1976SC1545 which explains the scope of position under the West Bengal Act and another decision of this Court in Bidar Sahakar Sakkare Karkhane Ltd. v. State of Karnataka [1985] 58 STC 65; ILR (1984) 2 Kar 973 wherein the decision of the Supreme Court in Cheria Abdulla : [1965]1SCR601 is referred to. This Court held that the revisional power under the Act cannot be exercised to reassess an escaped turnover.
20. The other decisions quoted and relied upon by Sri Venugopal are, Mewa Lal Kewal Kishore v. Commissioner of Sales Tax [1974] 34 STC 110 of the Allahabad High Court for the proposition that there can be an inter-State sale between two persons belonging to the same State if the goods move from one State to another as a result of a contract of sale or the goods are sold while they are in transit by transfer of documents and in such a case, it is immaterial where the property in goods passes from the seller to the purchaser.
21. In this case also, both the seller and purchaser are in the same State, but the question the Commissioner wants to probe into is, whether that turnover in dispute relates to a local sale or an inter-State sale. The Commissioner is yet to decide this question and he had jurisdiction to initiate proceedings on the basis of the material on record. It is, therefore, premature to interfere at this stage.
22. G. K. Chikanarasimhiah v. Assistant Commissioner of Commercial Taxes, Bangalore City Division, Bangalore [1971] 28 STC 98.
23. This was a case where the turnover of the assessee had been accepted by the assessing authority and exempted it from tax. It was held by this Court that if the assessing authority had exempted the turnover, on a wrong view of the law, that order has to be corrected under section 21 of the Act which provides for revision and not under section 12A which provides for assessment of escaped turnover.
24. We are not faced with such a situation in this case and this decision also does not support the case of the petitioner. Same is the view expressed by this Court in Nagaraja Overseas Traders v. State of Mysore [1974] 33 STC 315.
25. So also the decision of the Madras High Court in Yercaud Coffee Curing Works Ltd. v. State of Tamil Nadu [1977] 40 STC 531 dealt with the validity of reassessment under the Madras General Sales Tax Act and did not deal with a case of revision.
26. In Cotmac Private Ltd. v. Commercial Tax Officer, 1st Circle, Hubli [1967] 20 STC 20, it was held that the assessments done under the State Act and the Central Act are different and adjustment of tax refundable under one Act for the tax due under the other Act, is not permissible.
27. There can be no dispute about this proposition and has no bearing on the issue involved in this case.
28. The decision of this Court in R. R. Kashappanavar v. State of Mysore [1974] 34 STC 334 was next relied upon by the petitioner. This Court has held that the power of Court under section 22A(1) of the Mysore Sales Tax Act should be restricted to the revisional power conferred on him and it does not empower him to bring an escaped turnover to assessment.
29. We are not concerned with any escaped turnover in this case, hence this case is also not helpful to the petitioner.
30. Sri Rajerdra Babu, learned Government Advocate, argued supporting the notice issued by the Commissioner and that the reasons given by the Commissioner in the said notices are sufficient to justify the said notices and the Commissioner was competent to issue the said notices for the reasons stated therein.
31. In support of his arguments on this point, he has relied upon the decision of the Supreme Court in Cheria Abdulla : [1965]1SCR601 and the later decision in Ram Kanai Jamini Ranjan Pal Pvt. Ltd. : AIR1976SC1545 .
32. In Cheria Abdulla's case : [1965]1SCR601 the Supreme Court was dealing with the powers of the revising authority, viz., the Deputy Commissioner under section 12 of the Act read with rule 14A framed under the Madras General Sales Tax Act. Though the Supreme Court was mainly concerned with the interpretation of rule 14A, under which the revising authority could take further evidence, the Supreme Court also dealt with the scope of the revisional power under section 12(2) of the Act. The Supreme Court's observations made in para 15 are extracted below :
'Turning then to the jurisdiction which the revising authority may exercise under section 12(2), attention must first be directed to the phraseology used by the Legislature. The Deputy Commissioner is thereby invested with power to satisfy himself about the legality or propriety of any order passed or proceeding recorded by any officer subordinate to him, or the regularity of any proceeding of such officer, and to pass such orders with respect thereto as he thinks fit. For exercising this power, he may suo motu or on application call for and examine the record of any proceeding or order. 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. The words of sub-section (2) of section 12 that Deputy Commissioner 'may pass such order with respect thereto as he thinks fit' mean such order as may in the circumstances of the case for rectifying the defect be regarded by him as just. Power to pass such order as the revising authority thinks fit may in some cases include power to make or direct such further enquiry as the Deputy Commissioner may find necessary for rectifying the illegality or impropriety of the order, or irregularity in the proceeding. 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.'
33. Sri Rajendra Babu does not dispute as contended by Sri Venugopal, that the power of revision by the Commissioner is restricted to calling for records and to initiate proceedings if he is of the opinion, that the order of assessment suffers from an error apparent on the record.
34. The question as to the real ambit and scope of revision was dealt with again by the Supreme Court in Ram Kanai's case : AIR1976SC1545 . It was held by the Supreme Court in that decision that the Commissioner is not necessarily confined to the record of the proceedings of the assessing officer and can travel outside the same and can reassess the turnover. The word 'revise' was construed to mean re-examine, to review, to correct or to amend the fault and that it is not hedged or qualified by any condition or limitation.
35. The Court further observed that the Commissioner while exercising the revisional power can travel outside the record of assessment and reassess the gross turnover by taking additional material into consideration. They approved the following observations made by the Madras High Court in State of Madras v. Madura Knitting Co. Ltd. [1959] 10 STC 155 :
'The powers given to the revising authorities under section 12(2) are not confined to errors patent on the face of the records but would extend to probing further into the records like calling for despatch registers and other evidence.'
36. The decisions of the Supreme Court in Cheria Abdulla : [1965]1SCR601 and in Ram Kanai's case : AIR1976SC1545 support the case of the Department. The learned Government Advocate has also relied upon two decisions of the Supreme Court, viz., (i) Balabhagas Hulaschand v. State of Orissa : [1976]2SCR939 and (ii) Manganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax, Jabalpur : [1976]3SCR99 . Their Lordships interpreted section 3(a) of the Central Sales Tax Act in both the cases and laid down the tests that are to be applied for determining an inter-State sale. It is unnecessary to go into the details of discussion as to what is an inter-State sale and when a sale becomes an inter-State sale.
37. Since the Commissioner has only proposed to revise the assessment for the reason that the turnover in question was erroneously treated as an inter-State sale by the assessing officer, it is sufficient to observe that the decisions laid down by the Supreme Court in the two decisions referred to above have to be borne in mind in making further orders pursuant to the impugned notices. It is, therefore, premature to deal with the question at this stage whether the turnover in dispute was the result of inter-State sale or sale effected within the State
38. In the light of these principles laid down by the Supreme Court, the question that arises is : whether the notices issued by the Commissioner are justified in law
39. It is not a case of escapement of assessment, as contended by the learned counsel for the petitioner. The turnover in dispute formed part of the gross turnover returned by the assessee, and it was the subject-matter of assessment under the KST Act. The Commissioner would undoubtedly be competent in proposing to revise such an assessment under the KST Act, if he found that a part of the turnover was not an inter-State sale.
40. The contention advanced is that the Commissioner cannot make use of the information collected from the police out-post at the State border and collected after the assessment. The Supreme Court upheld the validity of rule 14A of the Madras General Sales Tax Rules under which the Commissioner is empowered to take further evidence while exercising his revisional powers under section 12 of the Madras Act. In this view of the matter, reliance placed on the information collected from the records maintained at the police out-post is also within his jurisdiction. The powers of the Commissioner while exercising revisional jurisdiction are treated on per with the powers of an appellate authority under the Act.
41. So far as the jurisdiction of this Court under article 226 of the Constitution is concerned, the scope of enquiry is very much limited. It is no doubt true, as held by the Supreme Court that the proceedings for revision must not be based on a mere conjecture and there should be some prima facie ground for invoking the revisional jurisdiction.
42. Whether there was a prima facie ground for the Commissioner to invoke his revisional jurisdiction on the facts of the case is the only question that can be gone into by this Court under article 226 of the Constitution.
43. I have observed earlier that there was adequate material before the Commissioner for forming an opinion that the order of assessment was erroneous and was, therefore, prejudicial to the interests of the Revenue. The notice issued by the Commissioner under section 22A of the KST Act is, therefore, upheld.
44. Coming back to the notice issued under section 22A of the Act read with section 9 of the CST Act impugned in W.P. No. 469 of 1979, the Commissioner has proposed to exclude the turnover of Rs. 7,35,030.42 from the Central sales tax assessment for being considered separately under the local law for purposes of assessment.
45. Sri Venugopal's attack against this notice is, that the revisional power of the Commissioner is not meant for excluding a turnover but for inclusion. This notice, in his submission, is a misconceived notice and should be set aside.
46. In my opinion, this notice is only consequential. If the assessment under the KST Act undergoes a modification as proposed, the same turnover cannot be assessed under the CST Act also. Deletion of this turnover from the assessment under the CST Act has to follow if the said turnover is treated as a local sale. It is, therefore, unnecessary to quash the said notice.
47. In the result, both the writ petitions are dismissed and the rule issued is discharged.