G. Sivarajan, J.
1. The matter arises under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as 'the Act'). The scope of Section 35 of the Act arises for consideration in this case.
2. The assessee is the revision petitioner. It is a dealer in provisions. The assessment year concerned is 1988-89. The original assessment of the assessee for the year 1988-89 was completed on November 27, 1990. The assessee took up the matter in first appeal before the Additional Deputy Commissioner, Agricultural Income-tax and Sales Tax, who by his order dated May 6, 1991 (annexure B) modified the assessment. The assessee and the State filed appeal arid cross appeal before the Sales Tax Appellate Tribunal. The Appellate Tribunal disposed of the said appeals by order dated August 5, 1994 (annexure C) whereby the appeal filed by the assessee was partly allowed and the State appeal was dismissed. In the meantime the assessing authority gave effect to the first appellate authority's order by passing a revised order dated June 26, 1993 (annexure D). After the order of the Tribunal the Deputy Commissioner, Agricultural Income-tax and Sales Tax, Ernakulam issued a notice dated June 27, 1995 under Section 35 of the Act proposing to set aside the assessment. Though the assessee had sought for time to file objections and the same was granted as per communication dated July 6, 1995 the assessee did not respond to the notice. In the above circumstances, the Deputy Commissioner by his order dated July 27, 1995 (annexure E) set aside the revised order dated June 26, 1993 passed by the assessing authority and remanded the matter to the assessing authority for doing the assessment afresh in accordance with law. Aggrieved by this order the assessee filed appeal T.A. No. 549 of 1995 before the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam. The Tribunal allowed the said appeal and cancelled the order passed by the Deputy Commissioner holding that the Deputy Commissioner has no power to reopen the assessment based on materials which were not in existence at the time when the original assessment was made. Hence the revenue is in revision before this Court.
3. Sri Raju Joseph, learned Special Government Pleader appearing for the revision petitioner, submits that the Deputy Commissioner in exercise of his power under Section 35 of the Act is exercising a supervisory power as distinct from the original power and that while exercising such power the Deputy Commissioner can look into every material available before him at the time of consideration of the correctness of the order or other proceedings of the subordinate authorities under the Act. He also submits that Section 35 itself gives power to the Deputy Commissioner to conduct such enquiry with reference to the order sought to be interfered with. He further submitted that in the instant case the Deputy Commissioner had before him the order passed by the Intelligence Officer on May 18, 1992 based on the vehicle check conducted by him during the very same assessment year and the assessment order clearly showed that the assessing authority did not consider the said order since the said materials came into existence only after the completion of the assessment. The Special Government Pleader further submitted that though the assessing authority can also invoke the jurisdiction vested under Section 19 of the Act by reopening the assessment with reference to the said materials if it comes to his knowledge before the expiry of the time granted under Section 19 of the Act for such reopening that will not in any way fetter the power of the Deputy Commissioner to invoke the supervisory power under Section 35. He further submitted that the question raised in this case is squarely covered by the decision of the Full Bench of this Court in Madras Rubber Factory Ltd. v. State of Kerala [19791 44 STC 208.
4. Sri S. Sarangan, learned Senior Counsel along with Shri A. Kumar appearing for the assessee has raised the following contentions : (1) The Deputy Commissioner in exercise of his suo motu powers under Section 35 cannot travel beyond the records of the assessment as it obtained before the assessing authority. In other words, the Deputy Commissioner must confine himself to the records based on which the assessing authority has passed the order, for, Section 35 of the Act confers power on the Deputy Commissioner only to call for and examine any order passed or proceedings recorded under this Act by any officer subordinate to him and to make such enquiry or cause such enquiry to be made and subject to the provisions of the Act may pass orders thereon. In other words, according to the Senior Counsel the Deputy Commissioner can go into the question of legality, regularity or propriety of the order passed by the assessing authority only on the basis of the materials available before the assessing authority while making the assessment. (2) Going by the scheme of the Act there is a distinction between the powers of the assessing authority to reopen the assessment under Section 19 of the Act for getting at escaped turnover and the power of the Deputy Commissioner to correct illegalities in the orders passed by certain authorities under the Act. According to him, only the assessing authority, exercising powers under Section 19, has got the power to conduct roving enquiries to find out whether there is any escapement of turnover or under-assessment whereas the Deputy Commissioner has no power to conduct any such roving enquiry for collecting materials to find out whether there is any escapement of turnover under assessment. The counsel submitted that the powers of the assessing authority under Section 19 to assess escaped turnover and the powers of the Deputy Commissioner to correct the illegalities in the orders of the subordinate authorities are distinct and different powers with different conditions and therefore the said powers are mutually exclusive and one authority cannot trench upon the power vested in the other authority. (3) The illegality, if at all, is only in the original assessment order for 1988-89 passed on November 27, 1990 and therefore the order that could be corrected under Section 35 is only that order. In the instant case the Deputy Commissioner had sought to correct only the revised order dated June 26, 1993 passed by the assessing authority pursuant to the order of the first appellate authority dated March 6, 1991. Section 35(2A) of the Act is not attracted in the present case. (4) When two separate procedures are provided for getting at escaped turnover one under Section 19 and the other under Section 35 the stringent procedure must give way to the less stringent provision and in that view of the matter also the Deputy Commissioner cannot be allowed to exercise the powers vested under Section 35 for assessing escaped turnover.
5. The Senior Counsel in support of the aforesaid contentions has particularly relied on the decisions of the Supreme Court in State of Kerala v. K.M. Cheria Abdulla and Company [1965] 16 STC 875, Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax [1968] 21 STC 383, Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Dhanalakshmi Vilas Cashew Co. [1969] 24 STC 491, State of Kerala v. K.E. Nainan [1970] 26 STC 251, State of Kerala v. M. Appukutty [19631 14 STC 242, Ram Kanai Jamini Ranjan Pal Private Ltd. v. Member, Board of Revenue, West Bengal [1976] 38 STC 1 and further submitted that there are decisions of other High Courts taking the view that the revising authority cannot exercise the revisional jurisdiction based on materials gathered subsequent to the passing of the assessment order. In support of the last mentioned contention the Senior Counsel relied on the decision of the Supreme Court in Shree Meenakshi Mills Ltd. v. Sri A.V. Visvanatha Sastri : [1954]26ITR713(SC) and M.CT. Muthiah v. Commissioner of Income-tax : [1956]29ITR390(SC) . The Senior Counsel ultimately submitted that the decision of the Full Bench of this Court in Madras Rubber Factory Ltd. v. State of Kerala [1979] 44 STC 208 requires reconsideration in the light of the principles laid down in the aforementioned decisions and also in view of the fact that six or seven other High Courts on a consideration of the decisions of the Supreme Court had taken a contrary view.
6. As already noted, the Deputy Commissioner had invoked the suo motu powers vested in him under Section 35 of the Act on the ground that on verification of the assessment records it is noticed that a turnover of Rs. 26,71,517 as pointed out by the Intelligence Officer as per his Order No. IEC(E)15/91-92/88-89 dated May 18, 1992 was not considered for the assessment and that the quantum of suppression was re-examined by the assessing authority and fixed at Rs. 25,56,185 as per order dated March 24, 1994. The assessee did not file any reply to the notice issued by the Deputy Commissioner and the Deputy Commissioner had passed an order setting aside the assessment order dated June 26, 1993 (revised order passed pursuant to the order of the first appellate authority) and remitted the matter back to the assessing authority for doing assessment afresh according to law. Before the Tribunal, the assessee contended that it was not granted sufficient time to file objection to the notice under Section 35, that the proceedings under Section 35 is barred by limitation, that Section 35(2A) is not available for getting the extended period of limitation and that since the materials now relied on by the Deputy Commissioner for invoking the provisions of Section 35 were not available before the assessing authority at the time of passing the original assessment order the same cannot be relied on. Though the Tribunal did not accept the first three contentions the Tribunal accepted the contention of the assessee that the materials relied on by the Deputy Commissioner (viz., the order of the intelligence officer dated May 18, 1992) were not available at the time of passing the original assessment order and therefore the assessment cannot be set aside on the basis of the materials which were not in existence at the time of the original assessment.
7. Section 35 of the Act as it stood prior to July 29, 1993 reads as follows :
'35. Powers of revision of the Deputy Commissioner suo motu.--(1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit.
(2) The Deputy Commissioner shall not pass any order under Sub-section (1) 'if,--
(a) the time for appeal against the order has not expired ;
(b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court ; or
(c) more than four years have expired after the passing of the order referred to therein.
(2A) Notwithstanding anything contained in Sub-section (2), the Deputy Commissioner may pass an order under Sub-section (1) on any point which has not been decided in an appeal or revision referred to in Clause (b) of Sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or revision or before the expiry of the period of four years referred to in Clause (c) of that sub-section, whichever is later.
(3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard.'
8. By an amendment made by the Finance Act, 1993 published in the Kerala Gazette Extraordinary No. 767 dated July 29, 1993 an amendment was made to Sub-section (1) thereof. After the said amendment Sub-section (1) of Section 35 reads as follows :
'35. Powers of revision of the Deputy Commissioner suo motu.--(1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner which in his opinion is prejudicial to revenue and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit.'
9. The scope of the provisions of Section 35 of the Act was considered by a Full Bench of this Court in Madras Rubber Factory Ltd. v. State of Kerala [1979] 44 STC 208 in view of the conflicting views expressed by two division Benches of this Court in O. Kassim Kannu v. State of Kerala [1970J 26 STC 530 and in C.C. Transport Company v. State of Kerala [1977] 40 STC 444. In Kassim Kannu's case [1970] 26 STC 530 mentioned above, the division Bench held that the revisional power of the Deputy Commissioner including the power of further investigation under Section 35 of the Act is to be used only to correct the illegality, irregularity or impropriety of the order sought to be revised and is not to be used in another field or jurisdiction, viz., the jurisdiction of the Sales Tax Officer to assess the escaped turnover under Section 19 of the Act. The said decision was rendered after considering the principles laid down in five decisions of the Supreme Court in State of Kerala v. M. Appukutty [1963] 14 STC 242, State of Kerala v. K.M. Cheria Abdulla and Company [1965] 16 STC 875, Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax [1968] 21 STC 383, Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quion v. Dhanalakshmi Vilas Cashew Co. [1969] 24 STC 491 and State of Kerala v. K.E. Nainan [1970] 26 STC 251. The division Bench observed thus :
'On a consideration of these five decisions of the Supreme Court, what emerges on the question before us is that the revisional power of the Deputy Commissioner is a separate and distinct power; an independent jurisdiction ; and that the two powers operate in two fields, so that they cannot overlap and the revisional power of the Deputy Commissioner cannot trench upon the power of the Sales Tax Officer to assess escaped turnover. If it does, it oversteps its field and is thus beyond the Deputy Commissioner's jurisdiction.'
10. The division Bench in C.C. Transport Company's case [1977] 40 STC 444 mentioned above also considered the scope of the provisions of Sections 19 and 35 of the Act and observed as follows :
'While the revisional power is restricted to the examination of the records for determining whether the order of assessment was according to law, the power to assess escaped turnover can be exercised in matters de hors the record of assessment proceedings. These two sections therefore relate to different jurisdictions and different matters. A valid order under the one is not an infringement of the power under the other : see State of Kerala v. M. Appukutty [1963] 14 STC 242, Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Dhanalakshmi Vilas Cashew Co. : (1970)3SCC273 and State of Kerala v. K.E. Nainan : (1970)3SCC353 .'
11. In view of the conflict between these two division Benches the very same question, viz., the scope of revisional jurisdiction under the Act and as to whether in exercising the same it is open to the revisional authority to trench upon the powers and jurisdiction of getting at the escaped turnover and bringing the same to tax or assessment arose, the matter was referred to the Full Bench. The Full Bench after referring to the relevant provisions of the Act particularly Sections 19 and 35 as also the analogus provision in the General Sales Tax Act 1125 and Rule 33 of the Rules in paragraph 3 of the judgment observed as follows :
'In the face of these statutory provisions sketching the ambit of the respective powers and, as a matter of first impression, there appears to be no bar or inhibition against getting at escaped income in exercise of the revisional power, so long as the grounds for exercise of that power are made out, viz., that the order is vitiated by illegality, irregularity or impropriety. This is the view that has been taken in more than one decision of the Supreme Court arid of this and other High Courts. We are of the opinion that the contrary view which is reflected in at least one of the division Bench rulings of this Court and in some of the other decisions cannot be sustained.'
11. Regarding the decision of the division Bench in Kassim Kannu's case the Full Bench observed that the division Bench misunderstood the scope and effect of the five decisions of the Supreme Court referred to by it and the pronouncement cannot be accepted as correct. Regarding the decision in C.C. Transport Company's case the Full Bench observed that the statement of the law expressed in the said decision is correct in so far as it laid down that a valid exercise of the revisional power is not an infringement of the power of assessing escaped turnover, that it requires qualification in so far as it stated that the revisional power is restricted to the examination of the records ; vide the decisions in the Cheria Abdulla's case : [1965]1SCR601 and Swastik Oil Mills's case [1968] 21 STC 383 (SO and the Bombay Ammonia case : [1976]3SCR856 . The Full Bench considered the decision of the Supreme Court in State of Orissa v. Debaki Debi [1964] 15 STC 153, State of Kerala v. K.M. Cheria Abdulla and Company [1965] 16 STC 875, Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax [1968] 21 STC 383, Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Dhanalakshmi Vilas Cashew Co. [1969] 24 STC 491, State of Kerala v. M. Appukutty [1963] 14 STC 242, State of Kerala v. K.E. Nainan [1970] 26 STC 251, Bombay Ammonia Pvt. Ltd. v. State of Tamil Nadu [1976] 37 STC 517, S.B. Gurbaksh Singh v. Union of India [1976] 37 STC 425, Ram Kanai Jamini Rajan Pal Pvt. Ltd. v. Member, Board of Revenue, West Bengal [1976] 38 STC 1, East Asiatic Company (India) Ltd. v. State of Madras [1956] 7 STC 299 (Mad.) and the decision of the division Bench of the Mysore High Court in Rallis India Limited v. State of Mysore [1965] 16 STC 130. The Full Bench also referred to the dissenting judgment of Raman Nair, C.J., in Smt. Lucy Kochuvareed v. Commissioner of Agricultural Income-tax : [1971]82ITR845(Ker) where it was observed that every case of income escaping assessment is necessarily a case of error in the original assessment, whether this be due to the assessing authority, namely, the Income-tax Officer, not having all the materials before him or to his reaching a wrong conclusion on the materials and that this error in the assessment proceeding, Section 34 authorises the Commissioner to correct without any limitation as to time and after making such enquiry as he thinks fit which means that he can gather fresh material and is not confined to the record of the proceeding. The majority decision in the above case was reversed by the Supreme Court in Commissioner of Agricultural Income-tax v. Lucy Kochuvareed : [1976]103ITR799(SC) . The Full Bench again considered the decision of the division Bench of the Madras High Court in F.K. Hasheeb & Co. v. State of Madras [1966] 17 STC 38. Ultimately the Full Bench in paragraph 17 of the judgment held as follows :
'We began the discussion of the question by recording our first impression on the statutory provision. The power of assessing escaped turnover and of revision are two distinct and separate powers. They have been conferred on two different authorities under Sections 19 and 35, the latter power being conferred on a superior authority. An examination of the authorities has only confirmed our first impression.'
12. Based on the principles laid down as above, the Full Bench considered T.R.C. No. 75 of 1978 in page 223. In that case, subsequent to the assessment order, there was a search by the Intelligence Officer, which disclosed that turnover from certain transactions had not been assessed. The Deputy Commissioner cancelled the assessment and directed the Sales Tax Officer to make a fresh assessment after taking into consideration the transactions and turnover disclosed on search by the Intelligence Officer. The Full Bench observed that the power exercised by the revisional authority was strictly within the scope of Section 35 of the Act ; that no question of trenching upon the assessment of escaped turnover arises in this tax revision and that the Sales Tax Appellate Tribunal was right in affirming the order of the Deputy Commissioner and sustaining his power. Thus from the decision of the Full Bench, it is clear that the Deputy Commissioner in exercise of the jurisdiction vested in him under Section 35 of the Act has got power to set aside an assessment based on materials gathered subsequent to the assessment order even to rope in the escaped turnover provided the order is vitiated by illegality; irregularity or impropriety. The attempt of Sri S. Sarangan, learned Senior Counsel appearing for the respondent-assessee was only to persuade us for a reconsideration of the decision of the Full Bench in the light of the decisions of the Supreme Court, particularly the decision in State of Kerala v. K.M. Cheria Abdulla and Company [1965] 16 STC 875, Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax [1968] 21 STC 383, Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Dhanalakshmi Vilas Cashew Co. [1969] 24 STC 491, State of Kerala v. K.E. Nainan [1970] 26 STC 251, State of Kerala v. M. Appukutty [1963] 14 STC 242, Ram Kanai Jamini Ranjan Pal Private Ltd. v. Member, Board of Revenue [1976] 38 STC 1. All these decisions of the Supreme Court, it must be noted, were considered by the Full Bench. The principles laid down in the Full Bench decision were being followed by the statutory authorities under the Act for the last more than 22 years. This Court also in Roy Jacob v. State of Kerala [1998] 109 STC 51 following the Full Bench decision held that the Deputy Commissioner was justified in invoking the suo motu power under Section 35 of the Act when escapement was detected after the completion of the assessment. In these circumstances, inspite of the persuasive submissions made by the Senior Counsel based on subsequent decisions of other courts also we are not inclined to throw the Full Bench decision which held the field for over 22 years for reconsideration by a larger Bench on the ground that other High Courts have taken a contrary view. Thus we dispose of the first two contentions taken by the Senior Counsel appearing for the respondent. The third contention raised by the Senior Counsel is that the illegality, if at all, is only in the original assessment order for 1988-89 passed on November 27, 1990 and therefore the order that could be corrected under Section 35 is only that order. The Senior Counsel pointed out that in the instant case the Deputy Commissioner had not set aside the original order which has merged in the first appellate authority's order and that only the order passed by the revising authority giving effect to the first appellate order was set aside. We are unable to accept this contention also for the reason that when the original assessment order was modified by the first appellate authority and the assessing authority had given effect to the appellate order the only order which stands is the revised order. The purpose of assessment is the determination of the liability of the assessee under the Act. The said liability is determined only by the revised order giving effect to the first appellate authority's order. It is only that order which has to be set aside. The last contention of the Senior Counsel was that when two separate procedures are provided for getting at escaped turnover one under Section 19 and the other under Section 35 the stringent procedure must give way to the less stringent also is without any substance in view of the legal position that the powers conferred on the assessing authority under Section 19 for reopening the assessment and the powers conferred on the Deputy Commissioner under Section 35 of the Act are distinct and different and a valid exercise of the revisional power is not an infringement of the power, of assessing escaped turnover.
For the reasons state above, the order of the Sales Tax Tribunal cannot be sustained. We accordingly set aside the said order and sustain the order of the Deputy Commissioner. The tax revision case is allowed as above.