JUDGMENT
M. Rama Jois, J.
1. This sales tax appeal is presented under section 24 of the Karnataka Sales Tax Act, 1957, against the order of the Commissioner of Commercial Taxes dated June 3, 1985, made in exercise of his power under section 22-A of the said Act.
2. The brief facts of the case are these : The appellant was a partner of a partnership firm under the name and style “M/s. Shashi Wine Centre”, Kadur. The firm was registered and started its business in January, 1975. There were in all 13 partners. In July, 1976 the firm was dissolved and a new firm came into existence comprising of 5 erstwhile partners and 7 new partners and they continued the business under the same firm name. An order of assessment had been passed for the year 1975-76 by the assessing authority. Subsequently on coming to know that there had been suppression of turnover and consequently that turnover of the assessee had escaped turnover, proceedings were initiated under section 12-A of the Act and a revised order was made on March 7, 1979. By the time the revised order was passed, the firm which was in existence during the relevant assessment period had been dissolved and a new firm had come into existence. However, before passing 12A order, a notice was issued to the managing partner and the order of reassessment was made on March 7, 1979. According to the department, it was not aware of the change in the constitution of the firm as also the dissolution of the old firm and coming into existence of the new firm. Aggrieved by the order dated March 7, 1979, the managing partner preferred an appeal before the Deputy Commissioner (Appeals). The appeal was allowed on June 29, 1979. Thereafter, the Commissioner being of the opinion that the order of the appellate authority was prejudicial to the Revenue and was also erroneous, initiated action under section 22-A of the Act. Show cause notice was served on the managing partner. He filed objections and after giving an opportunity of hearing, the Commissioner passed the order. The operative portion of the order reads :
“I hereby set aside the appeal order bearing No. AP.6&7/79-80 passed by the Deputy Commissioner of Commercial Taxes (Appeals), Mysore in common order dated June 29, 1979, vide Nos. 6, 7, 8 & 9/79-80 dated June 29, 1979 so far it relates to the assessment period 1975-76 and the assessment order dated March 7, 1979 passed by the Commercial Tax Officer (Intelligence) IV, Bangalore, under section 12-A for the year 1975-76 is restored.”
Aggrieved by the said order, the managing partner, who had replied to the show cause notice, had not preferred any appeal. However, the appellant, who was a partner of the firm when it started business and continued to be a partner until the dissolution of the firm in July, 1976, has presented this appeal.
3. There has been 1,633 days delay in presenting the appeal. In the application for condonation of delay, the plea taken by the appellant has been that the order has been passed without notice and it is only now the appellant came to know of the order of the Commissioner and immediately thereafter this appeal has been presented. In the circumstances, when the matter came up earlier, we directed the Government Advocate to take notice and produce the entire records concerning the case. Accordingly, Sri H. L. Dattu, High Court Government Pleader, appeared for the respondent and has placed the entire records before us.
4. Regarding the delay in presentation of the appeal, Smt. A. Rama, learned counsel for the appellant, contended that as there was no notice to the appellant and the appellant could not be expected to know the order of the Commissioner passed on June 3, 1985, and therefore when the appellant came to know that the liability was likely to be enforced against him, he has presented this appeal.
5. It is also the contention of the learned counsel for the appellant that it was the duty of the Commissioner to have issued notice to all the erstwhile partners and if the notices were issued, the appellant would have been served with the notice, in which event there would have been no occasion for the delay.
6. As far as making of assessment on dissolved firms are concerned, there is a specific provision incorporated in the Sales Tax Act, namely, sub-section (2) of section 15. The said section authorises the authorities under the Act to make an assessment on a dissolved firm, as if the firm had not been dissolved. Therefore, there can be no doubt that in respect of a dissolved firm before making an assessment, it is not necessary for the authorities to serve notice on all the partners of a dissolved firm and it is sufficient to serve notice on the person who had been authoiised by the firm to represent the firm in the assessment proceedings. In the present case, the notice had been served on the managing partner, whose name had been furnished by the firm during the period when the firm was doing its business. Therefore, neither in respect of 12-A proceedings nor in respect of revisional proceedings under section 22-A of the Act, was there any necessity on the part of the authorities of the department to issue any notice to the appellant, who is an erstwhile partner of the firm.
7. The learned counsel for the appellant, however, submitted that even on the basis that before making an order of reassessment under section 12-A or the revisional order under section 22-A of the Act, no notice was required to be issued to every one of the partners and it was sufficient to issue notice to the managing partner, the fact remains that the appellant had no notice of the order and that is the ground urged for condonation of delay.
8. On this aspect of the matter no contra material is placed on behalf of the respondent to show that the appellant had notice of the order of the Commissioner dated June 3, 1985, made under section 22-A of the Act much earlier than stated in the affidavit in support of the application for condonation of delay. In the circumstances, in our opinion, sufficient ground has been made out for the delay in presenting this appeal. Accordingly, we condone the delay.
9. Now coming to the merits of the case, the learned counsel submitted that in the present case, the Commissioner had passed the order under section 22-A of the Act after nearly six years after the date of the appellate order which was made on June 29, 1979. The learned counsel submitted that under section 22-A, the Commissioner should exercise the power only within a period of four years from the date of the order against which he exercises his power of suo motu revision under section 22-A of the Act. In the present case, more than four years had elapsed and therefore the order of the Commissioner is liable to be set aside. There can be no doubt that if the Commissioner can be said to have exercised power under section 22-A of the Act only on June 3, 1985, the contention urged by the learned counsel for the appellant would be unexceptionable. But the position in law is not so. The question as to when the suo motu revisional power conferred under section 21, in terms similar to section 22-A, as also under section 22-A of the Act can be regarded as having been exercised has been the subject-matter of consideration in two Division Bench decisions of this Court. The earlier one is in the case of Subba Rao v. Commissioner of Commercial Taxes [1967] 19 STC 257 (Mys). That was a case which arose regarding the exercise of suo motu revisional power under section 21 of the Act by the Deputy Commissioner, which provision is similar to section 22-A of the Act. Section 21 confers power of suo motu revision on the Deputy Commissioner concerned, against an orders passed by his subordinate officers, whereas section 22-A of the Act confers suo motu power of revision on the Commissioner as against orders passed by officers subordinate to him. Interpreting the provision under section 21 of the Act the Division Bench held thus :
“Is the exercise of that power merely means passing of an order which he thinks fit ? The power conferred on the Commissioner under section 21(2) as could be gathered from its language includes three different facets, viz., (1) calling for the records mentioned therein, (2) examination of those records, and (3) passing such orders, with respect thereto as he thinks fit. The Commissioner begins to exercise his power under section 21(2) as soon as he calls for the records in question and the exercise of that power comes to an end when he passes an order in respect thereto. All that section 21(3) says is that the power conferred under section 21(2) is exercisable within four years from the date of the order of assessment, that is proposed to be revised. As mentioned earlier, the exercise of the power under section 21(2) commences as soon as the records mentioned therein are called for. If that act is done within the peiiod mentioned in section 21(3), then no question of limitation arises. Mr. Srinivasan is not right in his contention that the powers of the Commissioner to call for the records, to examine them and to pass such orders as he thinks fit are three independent powers and all those powers should be exercised within the time fixed in section 21(3). They are all facets of one single power, namely, the power to revise and that power is exercisable within the time mentioned in section 21(3).
We are also unable to agree with Mr. Srinivasan that the power to call for records under section 21(2) is not a part of the quasi-judicial power of the Commissioner to revise the orders of his subordinates. The power to call for records is a part of the revisional power of the Commissioner.
The expression ‘shall be exercisable’ found in section 21(3) refers to the commencement of the exercise of the power referred to, and not the completion of the exercise of that power. Like all periods of limitation, section 21(3) also refers to initiation of the proceedings and not its completion.”
As can be seen from the above provision, the act of calling for records has been considered as part and parcel of the exercise of power under section 21 of the Act and it was held that if that action was taken within the period of limitation prescribed under section 21 of the Act, even if any subsequent step or passing of the final order was beyond the period mentioned in section 21, it could not be said that the exercise of power was beyond the period prescribed under section 21 of the Act.
10. The next decision is Busunur Industries v. State of Karnataka [1986] 61 STC 123 (Kar); ILR (1985) 1 Kar 1322. In this decision, the provision came up for interpretation is section 22-A of the Act itself. The ratio of the decision in Subba Rao’s case [1967] 19 STC 257 (Mys) was followed and it was held that without calling for records and examining them, the power of revision under section 22-A of the Act cannot at all be exercised and that if the records had been called for within the period of four years from the date of the order against which the Commissioner exercised the power of revision, it would be within the period of limitation. The relevant portion of the judgment reads :
“10. The power of revision conferred by the section is judicial and in any event quasi-judicial power. The section empowers the Commissioner to call for the records, examine them and then initiate proceedings in conformity with that provision which incorporates the principles of natural justice to revise or not to revise the order of his subordinate. Without calling for the records and examining them, the power of revision cannot at all be exercised. When once the Commissioner calls for the records for purposes of section 22-A of the Act, the one and the only way that can be understood and interpreted is that he has initiated the proceedings for revision under section 22-A(!) of the Act. Section 22-A(2) of the Act does not stipulate that the power initiated by calling for the records should also be peremptorily completed within 4 years from the date of the order sought to be revised. All that the section requires is that the power of revision shall be exercisable within four years from the date of the order. If the power of revision can only be exercised only by calling for records and not in a vacuum, then the very first step of calling for records must be of necessity construed as falling within the meaning of the term ‘shall be exercisable’. In many a case as in the very case for a variety of good reasons, which cannot be catalogued and stated exhaustively, it will be impossible for the Commissioner to complete the proceedings within four years from the date of the order though he had initiated proceedings by calling for records within that period. We are of the view that on this construction of section 22-A which carries out the purposes and object of that provision, we cannot uphold the contention of Sri Srinivasan.
…………….
13. We have carefully read the language of section 21(3) of the Act that is analogous to section 22-A(2) of the Act and the above ruling. We are of the view that the said ruling is in accord with the language of section 22-A(2) of the Act. We are of the view that the explanation added to section 22-A(2) of the Act to exclude the period occupied by injunctions and stay orders on which reliance is placed by Sri Srinivasan to urge as additional ground for reconsideration of Subba Rao’s case [1967] 19 STC 257 (Mys) does not shed any light on the construction of section 22-A(2) of the Act at all. We do not find any good ground to doubt the correctness of the ruling in Subba Rao’s case [1967] 19 STC 257 (Mys) and refer the same to a larger Bench.”
11. The learned counsel, however, strenuously contended that the interpretation placed on section 21 as well as section 22-A of the Act in Subba Rao’s case [1967] 19 STC 257 (Mys) and Busunur’s case [1986] 61 STC 123 (Kar); ILR (1985) 1 Kar 1322 is erroneous and requires reconsideration. She submitted that by the mere calling for records relating to an order, even without knowing as to whether the order was erroneous or prejudicial to Revenue, it can hardly be said that there has been commencement of the exercise of power. She maintained that the earliest action taken which could be regarded as indicative of the exercise of power would be the issue of show cause notice after formation of the opinion by the Commissioner, that the order concerned requires to be reviewed, which he can only do after calling for the order and the records and after examining them.
12. After reconsidering the matter, in the light of the submission made by the learned counsel, we are not persuaded to say that there is any infirmity in the view taken in the earlier two decisions. Having regard to the object and purpose of the provision, which is to safeguard the interest of the Revenue, the construction of the provision, as has been done in the decisions, in our view, is correct. The act of the Commissioner calling for records relating to an order for the purpose of exercising his jurisdiction under section 22-A, marks the commencement of the exercise of the power. If this act itself is after four years from the date of the concerned order, every further step would be beyond time, and therefore, would be without jurisdiction. If on the other hand, the act of calling for the records, is within four years from the date of the concerned order, every further step would be within time and with jurisdiction. For these reasons, we reiterate the view taken in the two earlier decisions.
12A. Now coming to the facts of the case, it is seen from the records that on February 2, 1982, the Commissioner having noticed that heavy sales tax amount was due from M/s. Shashi Wine Centre he addressed a letter to the Commercial Tax Officer, Arsikere, who is the recovering authority. The said letter reads :
“No. MSA.CR.155/81-82
Office of the Commissioner of
Commercial Taxes, Karnataka,
“Vanijya Tehrige Karyalaya”
Bangalore-9.
Dated : February 2, 1982.
To The Commercial Tax Officer, Arsikere.
Sir,
Sub : M/s. Shashi Wine Centre, wholesale wine merchants, Kadur – Recovery of tax in respect of assessments/reassessments finalised on the basis of the suppression of turnover detected – Regarding.
Based upon shop inspection and suppression of turnover detected therefrom, assessments of M/s. Shashi Wine Centre, Kadur, for 2 years as under were finalised by the Commercial Tax Officer (Intelligence) IV, Bangalore, levying tax and penalty as mentioned against each year.
Tax levied
(1) 1-7-1975 to 30-6-1976 Rs. 1,93,339 tax
Rs. 19,333 additional tax
under section 68
Rs. 2,90,009 penalty under
section 12(4)
(2) 1-7-1976 to 30-6-1977 Rs. 1,62,653 tax
Rs. 1,800 additional
tax under section 68
Rs. 2,33,501 penalty under
section 12(4)
You are requested to intimate details regarding recovery of taxes and penalty as above and also details of appeal, if any, preferred by the dealer, the results thereof and the further action taken at your level.
This matter may please be treated as urgent.
Yours faithfully,
Sd/- (G. Rabinathan)
for Commissioner of Commercial Taxes”
To the said letter, the Commercial Tax Officer gave a reply on February 8, 1982. It reads :-
“No. T-2136/81-82
Office of the Commercial Tax Officer,
Arsikere,
Dated : February 8, 1982.
To The Commissioner of Commercial Taxes in Karnataka, Bangalore.
Sir,
Sub : M/s. Shashi Wine Centre, wholesale wine merchant, Kadur – Recovery of tax in respect of assessments/reassessments finalised on the basis of the suppression of turnover detected – Report submitted.
Ref : 1. Your kind letter No. MSA.CR155/81-82 dated February 2, 1982.
2. Appeal order Nos. 6, 7, 8 and 9 of 1979-80 dated June 20, 1979 of Deputy Commissioner of Commercial Taxes (Appeals), Mysore.
I write to submit that M/s. Shashi Wine Centre, Kadur, preferred appeals before the Deputy Commissioner of Commercial Taxes (Appeals), Mysore, against the orders passed by the Commercial Tax Officer (Intelligence) IV, Bangalore, for the years 1975-76 and 1976-77. The Deputy Commissioner of Commercial Taxes (Appeals), Mysore, allowed the appeal petition in full for the year 1975-76 and he set aside the assessment order and remanded back with certain directions for fresh disposal for the year 1976-77. Hence the tax and penalty levied for the year 1975-76 by the Commercial Tax Officer (Intelligence) IV is automatically reduced.
In the meanwhile the Commissioner of Commercial Taxes was requested to retransfer the file for 1976-77 to the Commercial Tax Officer (Intelligence) IV, Bangalore for reassessment. The Commissioner of Commercial Taxes in turn issued instructions to finalise the assessment in this office only. But since the tax liability was more than Rs. 75,000 the assessment records for 1976-77 are submitted to Assistant Commissioner of Commercial Taxes (Assessments), Mysore Division, Mysore, for taking necessary action.
This is for your kind information.
Yours faithfully,
Sd/- (O. N. Lingaiah)
Commercial Tax Officer, Arsikere.”
The contents of these letters are self-explanatory. The heavy amount of tax and penalty for the assessment years July 1, 1975 to June 30, 1976 and July 1, 1976 to June 30, 1977, in respect of Shashi Wine Centre, Kadur, had remained unrecovered. When the Commercial Tax Officer was asked to make a report in the matter, he reported, inter alia, that the entire assessment order for 1975-76 made under section 12-A of the Act had been set aside by the appellate authority. Immediately after receipt of the letter dated February 8, 1982, the Commissioner called for the records through his letter dated May 12, 1982. It reads :
“RUM. No. 17/82-83
Office of the Commissioner of
Commercial Taxes,
Karnataka, Bangalore.
Dated : May 12, 1982.
To The Deputy Commissioner (C.T.) (Appeals), Mysore.
Sir,
Sub : Review of appeal order in the case of M/s. Shashi Wine Centre, Kadur – Connected records called for.
Ref : Your appeal order bearing Nos. 6, 7, 8 & 9/79-80 dated June 20, 1979.
With reference to the above appeal order, I am to request you to send the connected appeal records of M/s. Shashi Wine Centre, Kadur, for the period 1975-76 and 1976-77 for examination. The records should be properly stitched, indexed and then sent to this office.
Yours faithfully,
Sd/-
for Commissioner of Commercial Taxes.”
It is in the above letter, the Commissioner called for the records of the order in appeal by the Deputy Commissioner for review and after the receipt of the records and examining the order of the Deputy Commissioner, the Commissioner having been convinced that the order was erroneous and prejudicial to the Revenue, directed issue of show cause notice and the final order dated June 3, 1985, was thereafter passed. As the appellate order is dated June 29, 1979 and the records were called for on May 12, 1982, it was within a period of four years and therefore it has to be held that the exercise of power under section 22-A of the Act had been done within a period of four years, i.e., within the maximum period prescribed under section 22-A of the Act.
13. As far as the merits of the order is concerned, it is not pleaded by the appellant that the order of the Commissioner is erroneous.
14. In the result, we make the following order :
The appeal is dismissed.
15. Appeal dismissed.