judgement:
ivil Appeal Nos.
1192 94 of 1971.
From the judgment and order dated the 20th October, 1976 of the High Court of Madras in Tax Cases Nos.
205 to 207 of 1971.
S.T. Desai, A.K. Verma and J.B. Dadachanji for the Appellant.
A.K. Sen and A.V. Rangam for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH J.
The appellant in these three appeals by special leave is a company engaged in the business of manufacture and sale of art silk yarn.
It has its factory at Sirumughai in the District of Coimbatore in the State of Tamil Nadu.
The appellant is registered as a dealer carrying on business at Coimbatore.
In the course of its business, it sold during the relevant period large quanti 46 ties of art silk yarn to various purchasers some of whom were weavers residing in the States of Maharashtra and Gujarat who had been issued cards under a scheme called 'Export Promotion Scheme ' entitling them to buy specified quantities of art silk yarn from specified manufacturers.
The question involved in these appeals relates to the exigibility of the sales effected in favour of Export Promotion Scheme card holders belonging to the States of Maharashtra and Gujarat to tax under the (hereinafter referred to as 'the Act ').
The assessment years are 1962 63, 1963 64 and 1964 65.
The details of the Export Promotion Scheme for distribution of art silk yarn referred to above were these: There were certain weavers in India who were entitled to an incentive in the form of import licences to import art silk yarn from abroad.
The said import entitlement was cut to a certain extent and indigenous art silk yarn at concessional price was allotted to them.
To regulate the scheme of allotment, a committee called the 'Art Silk Yarn Distribution Committee ' was constituted by the Government of India.
The Committee made allotments to different weavers by issuing allotment cards.
These allotment cards contained details of the quantity of allotment and the rayon yarn manufacturer from whom the allotted quantity of yarn could be drawn.
As per the terms of the card, the yarn manufacturer should offer to the allottee rayon yarn within seven days of the date of the card without waiting for the allottee to approach him.
A firm contract for the supply of yarn should be completed within a period of twenty one days from the date of allocation of the card.
If a firm commitment was not entered into by the allottee with the yarn manufacturer within twenty one days from the date of allocation of the card, the yarn manufacturer should return the allocation card to the Distribution Committee with suitable remarks on the card and a covering letter explaining the reasons for the return of the card.
Even in the case of actual fulfilment of the quota covered by the allocation card, the said card should be returned to the Distribution Committee after the delivery of the yarn was completed.
This in brief was the Scheme.
In the instant case, the appellant had supplied art silk yarn to certain card holders who were residing, as stated earlier, outside the State of Tamil Nadu.
It is stated that the appellant had a selling agent and distributor by the name M/s. Rayonyarns Import Company Ltd. at Bombay and the case of the appellant was that it had 47 supplied art silk yarn to the card holders in the States of Maharashtra and Gujarat through the said agent and the delivery of the goods was effected at Bombay.
In the assessment proceedings before the Joint Commercial Tax Officer, Coimbatore for the year 1964 65, the appellant claimed that the sales of art silk yarn through its agent at Bombay were not inter State sales as defined by section 3(a) of the Act as the movement of the goods in question from the State of Tamil Nadu to the State of Maharashtra or the State of Gujarat was not occasioned by the sales in question and that they were in fact sales which had taken place outside the State of Tamil Nadu.
The Joint Commercial Tax Officer rejected the contention of the appellant and treated the sales effected in favour of the Export Promotion Scheme card holders through the appellant 's agent at Bombay as inter State sales and levied tax under the Act accordingly.
He also revised the orders of assessment for the years 1962 63 and 1963 64 bringing to tax the turnover relating to transactions of similar nature during those years.
In the appeals filed by the appellant against the order of assessment for the year 1964 65 and of revised assessment for the years 1962 63 and 1963 64 before the Appellate Assistant Commissioner, (Commercial Taxes), Coimbatore, the orders passed by the Joint Commercial Tax Officer were affirmed.
The appellant then filed three appeals before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore against the orders passed in appeal by the Appellate Assistant Commissioner.
The Tribunal also held that the sales in favour of the Export Promotion Scheme card holders outside the State of Tamil Nadu were inter State sales and were liable to be taxed under the Act.
Aggrieved by the orders of the Tribunal, the appellant preferred three revision petitions before the High Court of Madras.
These petitions were dismissed.
Thereafter the appellant has come up in appeal to this Court by special leave.
Section 3(a) of the Act provides that a sale or purchase of goods shall be deemed to take place in the course of inter State trade or commerce if the sale or purchase occasions the movement of goods from one State to the other.
In order to substantiate its case, the appellant has placed before us the documents relating to one transaction stating that the decision on the true nature of the said transaction would govern all other transactions of sale in dispute as they were all of a similar kind.
Those documents relate to the supply of art silk yarn to a firm known as M/s. Ramesh Silk Fabrics at Surat in the State of Gujarat made in June, 1964.
The purchaser was issued an allocation card on November 7, 1963 bearing No. 48 3124.
Under the card, M/s. Ramesh Silk Fabrics was entitled to purchase 273 Kgs.
of indigenous art silk yarn from the appellant.
The following were the relevant terms of the card: "1.
The rayon manufacturers and/or our approved dealers shall ensure that the quantity sold is not more than the quantity allocated as indicated in column No. 4(b) on the reverse of the card.
The rayon manufacturer shall offer yarn to the allottee within seven days from the date of allocation card without waiting for the allottee to approach him.
Contract for the supply of yarn shall be concluded within 21 days from the date of the allocation card.
Particulars of the quantity of yarn sold by the rayon yarn manufacturer his approved dealer with the date of or sale shall be entered and signed by the seller in column (5) on the card.
No supply shall be made on allotment card on which corrections have not been attested by the Secretary or the Manager.
If firm commitment is not entered into by the allottee with the yarn manufacturer, the yarn manufacturer shall return the allocation card to the Distribution Committee, with suitable remarks on the card and a covering letter explaining the reasons for returning the card.
Allocation cards shall be returned to the Distribution Committee after the delivery of yarn has been completed.
" At the back of his allocation card, in column 4(a) the appellant is shown as the manufacturer and in column 4(b) the quantity allotted is shown as 273 Kgs.
Column (5) of the allocation card shows that quantity of 268 Kgs. had been supplied as per Invoice No. BC/132.
Then we have the Invoice No. BC/132 prepared in the name of the appellant by its agent, Rayon yarn Import Co. Pvt. Ltd. and signed by the agent for and on behalf of the appellant.
The cases containing goods sold had been marked as 5829, 8479 and 8505.
The Invoice contains a note which reads as follows: 49 "We have charged you 2% Central Sales Tax for which purpose you are required to send us immediately your regular 'C ' form correct in all respects as required by the law in force for the time being in the absence of which you are required to remit us balance sum of Rs . being the difference between the rate charged and the revised rate at 10% applicable in such case.
" But actually 2% tax was added and it was shown in the invoice as local sales tax of Maharashtra at 2% of the price.
A delivery order dated June 3, 1964 prepared by the agent at Bombay on behalf of the appellant also refers to the numbers of the cases containing goods as 5829, 8479 and 8505.
What is of significance is a letter dated May 23, 1964 written by the agent at Bombay to the appellant.
By that letter, the agent requested the appellant to send from the factory 69 cases of yarn bearing specific numbers including case No. 5829, 8479 and 8505.
The said letter further stated that the invoices of sale would be sent after the goods were sold by the agent.
What is attempted to be made out by the appellant is that the appellant was informing its agent at Bombay from time to time as and when goods were manufactured the number of the cases in which the goods had been packed and at the request of its agent it had despatched the goods to Bombay but not as a result of any sale of the said goods in favour of a purchaser.
According to the appellant, the sale had taken place at Bombay and the movement of goods to Bombay from the State of Tamil Nadu was not connected with the sale in question.
In order to constitute an inter State sale as defined in section 3(a) of the Act, two factors should co exist (i) a sale of goods and (ii) movement of goods from one State to another under the contract of sale.
If there is a conceivable link between a contract of sale and the movement of goods from one State to the other in order to discharge the obligation under the contract of sale, the inter position of an agent of the seller who may temporarily intercept the movement ought not to alter the inter State character of the sale.
The facts which are glaring in this case are: (1) the allotment of a certain quantity of art silk yarn produced by the appellant in favour of the allocation card holder; (2) the requirement that the appellant should offer to sell the quantity of goods allotted to the card holder within seven days; 50 (3) the requirement that contract of sale should be completed within twenty one days of the date of the allocation card; (4) the requirement that the card should be returned to the Committee if no contract of sale was concluded as stated above; and (5) the fact that the goods have been supplied expressly against the quota allotted under the allocation card.
Admittedly the allocation card bearing No. 3124 was issued on November 7, 1963 and it required the appellant to offer to sell the quantity of art silk yarn mentioned in it to the purchaser within seven days without even waiting for the purchaser approaching the appellant with a request to supply the goods in question.
The card contemplated a contract of sale to be completed within twenty one days of the date of its issue.
The invoice in question contained the number of the allocation card.
In the letter dated May 23, 1964 the agent requested the appellant to send the cases bearing Nos.
5829, 8479 and 8505 by lorry from Sirumughai and the said boxes were later on admittedly delivered to the purchaser on June 3, 1964.
These facts cumulatively suggest that the goods in question had been transported from the factory site of the appellant to Bombay for delivery to the purchaser as a result of the contract of sale established in accordance with the terms of the allocation card.
It is, however, argued on behalf of the appellant relying upon the decision of this Court in Tata Engineering and Locomotive Co. Ltd. vs Commissioner of Commercial Taxes, Jamshedpur and Anr.
that the sale effected by the appellant 's agent at Bombay could not be treated as the immediate case of movement of goods from the State of Tamil Nadu to the State of Maharashtra or the State of Gujarat, as the case be may.
The facts in the aforesaid case are distinguishable from the facts in the present case since it was held in that case that the procedure followed by the manufacturer, the appellant in that case together with the absence of any firm orders placed by the purchasers indicated that there were no transactions of sale within the meaning of section 2(g) of the Act and assuming that any firm orders had been received by the appellant therein, they could not be regarded as anything but mere offers.
This Court further held in that case that the appropriation of goods was done 51 at the appellant 's stockyard situated in the State where the vehicles were delivered to purchasers and it was open to the appellant till then to allot any vehicle to any purchaser or to transfer a vehicle from one stockyard to another.
One strong circumstance which existed in that case was the absence of the firm orders which occasioned the movement of goods from the State of Bihar to other States as can be seen from the following passage in that decision: "As regards the so called firm orders it has already been pointed out that none have been shown to have existed in respect of the relevant periods of assessment.
Even on the assumption that any such orders had been received by the appellant they could not be regarded as anything but mere offers in view of the specific terms in Exhibit 1 (the dealership agreement) according to which it was open to the appellant to supply or not to supply the dealer with any vehicle in response to such order.
" In the instant case there is clear evidence of the existence of a prior contract of sale as per terms of the allocation card.
The fact that actual sale pursuant to the said contract of sale had taken place subsequently does not militate against the transaction being treated an inter State sale under Section 3 (a) of the Act, since the movement of the goods delivered to the buyer was occasioned by the contract of sale brought into existence under the terms of the allocation card.
It was, however, faintly suggested that the evidence of what took place between the appellant and the allottee within twenty one days of the issue of the allocation card was lacking in this case.
Evidence about these facts was within the knowledge of the appellant and the appellant had not placed it before the assessing authority.
It is likely that if such evidence had been produced it would have gone against the appellant.
Even apart from that the finding recorded by the assessing authority the appellate authority, the Tribunal and the High Court on the basis of the terms of the allocation card and other material on record that there was a contract of sale within the stipulated time between the appellant and the allottee of art silk yarn is unassailable.
In the circumstances no assistance can be derived by the appellant from the case of Tata Engineering and Locomotive Co. Ltd. (supra).
The decision of this Court in Kelvinator of India Ltd. vs The 52 State of Haryana relied on by the appellant has also no bearing on this case.
The assessee in that case had its factory where it manufactured refrigerators at Faridabad in the State of Haryana and it moved the goods manufactured by it to its godown at Delhi.
The excise pass utilised for such movement was always in favour of self.
During the transport of goods, the assessee paid octroi payable for bringing goods into Delhi.
At Delhi, the assessee sold the goods to its distributors.
The Court on a consideration of the material before it held that even though there were prior distribution agreements entered into between the assessee and its distributors, the goods in question had not been moved pursuant to the said agreements from Faridabad to Delhi, and hence there was no inter state sale.
The facts of this case are, however, close to the facts in English Electric Company of India Ltd. vs The Deputy Commercial Tax officer & Ors.
Here also the assessee had its factory in the State of Tamil Nadu.
Its registered office was at Calcutta but it had branch offices at Madras, Bombay and other places.
A Bombay buyer wrote to the Bombay branch of the appellant in that case asking for lowest quotation in respect of the goods which were being manufactured in the factory in Tamil Nadu.
After some correspondence between the Bombay branch and the Madras branch, the Bombay branch, wrote to the Bombay buyer giving all the required particulars.
The Bombay buyer thereafter placed an order with the Bombay branch for certain goods.
The Bombay branch informed the Madras branch about the order placed by the Bombay buyer.
On receipt of the invoice from the Madras branch the Bombay branch wrote to the Bombay buyer that some of the goods indented by him were ready for despatch and asked for despatch instructions.
On receipt of such instructions, the Bombay branch asked the Madras Branch to send goods to Bombay.
The railway receipts were sent through the Bombay branch.
The goods were delivered to the Bombay buyer through clearing agents and the insurance charges were collected from the Bombay buyer.
The assessee claimed in the assessment proceedings that the sale was not an inter State sale but one which had taken place at Bombay between the Bombay branch and the Bombay buyer, The said contention was rejected by this Court with the following observations: "The appellant in the present case sent the goods direct from the Madras branch factory to the Bombay buyer 53 at Bhandup, Bombay.
The railway receipt was in the name of the Bombay branch to secure payment against delivery.
There was no question of diverting the goods which were sent to the Bombay buyer.
When the movement of goods from one State to another is an incident of the contract it is a sale in the course of inter State sale.
It does not matter in which State the property in the goods passes.
What is decisive is whether the sale is one which occasions the movement of goods from one State to another.
The inter State movement must be the result of a covenant, express or implied, in the contract of sale or an incident of the contract.
It is not necessary that the sale must precede the inter State movement in order that the sale may be deemed to have occasioned such movement.
It is also not necessary for a sale to be deemed to have taken place in the course of inter State trade or commerce, that the covenant regarding inter State movement must be specified in the contract itself.
It will be enough if the movement is in pursuance of and incidental to the contract of sale.
When a branch of a company forwards a buyer 's order to the principal factory of the company and instructs them to despatch the goods direct to the buyer and the goods are sent to the buyer under those instructions it would not be a sale between the factory and its branch.
If there is a conceivable link between the movement of the goods and the buyer 's contract, and if in the course of inter state movement the goods move only to reach the buyer in satisfaction of his contract of purchase and such a nexus is otherwise inexplicable, then the sale or purchase of the specific or ascertained goods ought to be deemed to have taken place in the course of inter State or commerce as such a sale or purchase occasioned the movement of the goods from one State to another, The presence of all intermediary such as the seller 's own representative or branch office, who initiated the contract may not make the matter different.
Such an interception by a known person on behalf of the seller in the delivery State and such person 's activities prior to or after the implementation of the contract may not alter the position.
" In the instant case, the allocation card was first sent in November, 1963 asking the appellant directly to make an offer of the 54 goods to the allottee.
The allottee was expected to communicate his desire to purchase the goods within twenty one days of the date of the allocation card.
Such communication brought into existence a contract sale directly between the appellant and the buyer.
The goods were admittedly sent pursuant to the said contract of sale.
The interposition at a later stage of the selling agent who acted on behalf of the appellant in the preparation of the invoice and the delivery of the goods would not alter the true character of the sale as the selling agent was just a conduit pipe.
The goods having been despatched from one State to another State pursuant to a contract of sale which came into existence directly between the appellant and the buyer within a few days after the date of the allocation card, the sale was an inter State sale.
The Tribunal and the High Court were, therefore, right in upholding the orders of the assessing authority levying tax under the Act on all sales which had taken place in favour of the Export Promotion Scheme card holders in Gujarat and Maharashtra even though the selling agent of the appellant at Bombay had on behalf of the appellant also dealt with such card holders at Bombay, as the transactions in question satisfied the tests laid down in the case of English Electric Company of India Ltd. (supra).
In the result the appeals fail and are dismissed with costs.
P.B.R. Appeals dismissed.

summary/full:
To regulate the allotment of indigenous art silk yarn, the Government of India constituted the Art Silk Yarn Distribution Committee which issued allotment cards to individual weavers.
Under the terms of the card without waiting for the allottee to approach the manufacturer the manufacturer had to offer the allottee art silk yarn within seven days of the date of allocation of the card and within a period of 21 days from the date of allocation of the card, a firm contract for the supply of yarn was to be completed.
The appellant, a manufacturer of art silk yarn with its factory in the State of Tamil Nadu, supplied yarn to cardholders in the States of Maharshtra and Gujarat by delivering the goods at Bombay through its selling agent at that place.
On the question of exigibility of the goods to Central Sales tax the appellant claimed that since the goods were despatched to Bombay at the request of the agent and not as a result of any sale in favour of the purchaser the sale had taken place at Bombay, and secondly since the movement of goods from the State of Tamil Nadu to Bombay was not connected with the sales the sales were not inter State sales within the meaning of section 3 (a) of the Central Sales Tax Act.
This claim was rejected by the Joint Commercial Tax Officer and his order was upheld at the different stages of appeal.
The High Court dismissed the appellant 's revision petitions.
On the question whether the sales were inter State sales, the Court ^ HELD: The goods having been despatched from one State to another pursuant to a contract of sale that came into existence directly between the buyer and seller within a few days after the date of the allocation card, the sale was an inter State sale.
To constitute an inter State sale within the meaning of section 3(a) of the Central Sales Tax Act there must co exist a sale of the goods and movement of 45 goods from one State to another under the contract of sale.
Where there is a link between a contract of sale and movement of goods from one State to another pursuant to the contract of sale, interposition of an agent ought not to alter the inter State character of the sale.
[49 F] In the instant case the card contemplated a contract of sale to be completed within 21 days of the date of its issue.
The agent requested the appellant to despatch certain number of cases to a purchaser and that was done.
These facts cumulatively suggest that the goods had been 'transported from the factory in Tamil Nadu to Bombay for being delivered to the purchaser as a result of contract of sale established in accordance with the terms of the allocation card.
[49 G 50 B;E] The fact that actual sale pursuant to the said contract had taken place subsequently does not militate against the transaction being treated as an inter State sale under section 3(a) because the movement of goods delivered to the buyer was occasioned by the contract of sale brought into existence under the terms of the allocation card.
[51 E] The authorities below have found, on the basis of the terms of the allocation card and other material on record, that there was a contract of sale within the stipulated time between the parties.
[51 G] English Electric Company of India Ltd. vs The Deputy Commercial Tax Officer & Ors., (1976) 38 S.T.C. 475, followed.
Tata Engineering and Locomotive Co. Ltd. vs Assistant Commissioner of Commercial Taxes.
Jamshedpur & Anr.
(1970) 26 S.T.C. 354 and Kelvinator of India Ltd. vs State of Haryana (1973) 32 S.T.C. 629, held inapplicable.


judgement:
Civil Appeal No. 1759 of 1981 Appeal by special leave from the judgment and order dated 3rd December, 1980 of the Allahabad High Court in Civil Revision No. 525 of 1980 F.S. Nariman and K.K. Mohan, for the Appellant.
R.K. Garg, Pramod Swarup and Sunil Kumar Jain, for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
In a suit for ejectment of a lessee and for recovery of arrears of rent, does the court enjoy any discretion not to strike off the defence in case the defendant has defaulted in depositing the rent and has also failed to make any representation within the terms of Rule 5 of Order XV, Code of Civil Procedure? That question is raised in this defendant 's appeal by special leave against an order of the Allahabad High Court maintaining in revision that the trial court has no discretion in the circumstances but must strike off the defence.
The respondent as lessor filed a suit against the appellant as lessee for his ejectment and for recovery of arrears of rent.
The appellant filed a written statement and resisted the suit.
During the pendency of the suit the respondent filed an application praying that the appellant 's defence be struck off in view of Rule 5 of Order XV, Code of Civil Procedure, inasmuch as the appellant had committed default in depositing the rent regularly.
The appellant opposed the application and attempted to show that he had been depositing the rent as required by the law.
The trial court held that while the rental arrears admitted by the appellant to be due had been deposited in accordance with the relevant provision of sub rule (1) of Rule 5 of Order XV, he had failed to make regular deposits of the monthly rent accruing during the pendency of the suit as required by the other provision of the said Rule.
The trial court also noted that the appellant had failed to make any representation permitted him by sub rule (2) of Rule 5 of Order XV within the time prescribed in that provision.
Following a ruling of the Allahabad High Court 126 that in those circumstances the court was obliged to strike off the defence, that trial court did exactly that.
The appellant applied in revision to the High Court, and the High Court, in view of the view taken by a Division Bench in Puran Chand vs Pravin Gupta, affirmed the order of the trial court.
Rule 5 of Order XV, Code of Civil Procedure, was enacted by the U.P. Civil Laws (Amendment) Act 1972.
It provided that unless the defendant deposited the admitted rent or compensation at or before the first hearing of the suit and also deposited the monthly rent regularly, his defence was liable to be struck off.
There was a further provision entitling a defendant to make a representation and obtain further time to make the deposit.
The Rule was repealed by U.P. Act No. 57 of 1976 and was re enacted as follows: "Striking off defence an failure to deposit admitted rent, etc. (1) In any suit by a lessor for the eviction of a lessee after the determination of his lease and for the recovery from him of rent or compensation for use and occupation, the defendant shall, at or before the first hearing of the suit, deposit the entire amount admitted by him to be due together with interest thereon at the rate of nine per cent per annum and whether or not he admits any amount to be due, he shall throughout the continuation of the suit deposit the monthly amount due within a week from the date of its accrual and in the event of any default in making the deposit of the entire amount admitted by him to be due or the monthly amount due as aforesaid the court may subject to the provisions of sub rule (2) strike off his defence.
Explanation 1 . .
Explanation 2 . .
Explanation 3 . . (2) Before making an order for striking off defence, the court may consider any representation made by the defendant in that behalf provided such representation is made within ten days of the first hearing or of the 127 expiry of the week referred to in sub section (1) as the case may be.
(3) The amount deposited under this rule may at any time be withdrawn by the plaintiff; Provided that such withdrawal shall not have the effect of prejudicing any claim by the plaintiff disputing the correctness of the amount deposited; Provided further that if the amount deposited includes any sums claimed by the depositor to be deductable on any account the court may require the plaintiff to furnish security for such sum before he is allowed to withdraw the same".
The High Court held in Puran Chand (supra) that if the representation contemplated by sub rule (2) was not made within the time prescribed therein the court had no jurisdiction to entertain a representation made beyond time and to condone the delay in making it.
It held further that where no representation was made, or if made was filed beyond time, the court was bound to strike off the defence and enjoyed no discretion in the matter.
It appears on the facts in this case that no representation under sub rule (2) was made by the appellant.
The only question raised before us is whether, in the absence of such representation, the court was obliged to strike off the defence of the appellant.
It seems to us on a comprehensive understanding of Rule 5 of Order XV that the true construction of the Rule should be thus.
Sub rule (1) obliges the defendant to deposit, at or before the first hearing of the suit, the entire amount admitted by him to be due together with interest thereon at the rate of nine per cent per annum and further, whether or not he admits any amount to be due, to deposit regularly throughout the continuation of the suit the monthly amount due within a week from the date of its accrual.
In the event of any default in making any deposit, "the court may subject to the provisions of sub rule (2) strike off his defence".
We shall presently come to what this means.
Sub rule (2) obliges the court, before making an order for striking off the defence to consider any representation made by the defendant in that behalf.
In other words, 128 the defendant has been vested with a statutory right to make a representation to the court against his defence being struck off.
If a representation is made the court must consider it on its merits, and then decide whether the defence should or should not be struck off.
This is a right expressly vested in the defendant and enables him to show by bringing material on the record that he has not been guilty of the default alleged or if the default has occurred, there is good reason for it.
Now, it is not impossible that the record may contain such material already.
In that event, can it be said that sub rule (1) obliges the court to strike off the defence? We must remember that an order under sub rule (1) striking off the defence is in the nature of a penalty.
A serious responsibility rests on the court in the matter and the power is not to be exercised mechanically.
There is a reserve of discretion vested in the court entitling it not to strike off the defence if on the facts and circumstances already existing on the record it finds good reason for not doing so.
It will always be a matter for the judgment of the court to decide whether on the material before it, notwithstanding the absence of a representation under sub rule (2), the defence should or should not be struck off.
The word "may" in sub rule (1) merely vests power in the court to strike off the defence.
It does not oblige it to do so in every case of default.
To that extent, we are unable to agree with the view taken by the High Court in Puran Chand (supra).
We are of opinion that the High Court has placed an unduly narrow construction on the provisions of clause (1) of Rule 5 of Order XV.
In the circumstances, the appeal is allowed, the order dated December 3, 1980 of the High Court is set aside and the case is remanded to the High Court for fresh consideration.
In the circumstances, there is no order as to costs.
N.K.A. Appeal allowed.

dataset_name: IN-Abs

summary/full:
Rule 5 of Order XV C.P.C. was re enacted by the U.P. Act 1976 and it provided that the defendant shall deposit the entire amount of rent due from him together with interest at or before the first hearing of the suit for eviction and also continue to deposit the monthly amount regularly and that on failure to do so, his defence was liable to be struck off.
Another rule provided that before striking off the defence, the Court may consider any representation made in that behalf.
The respondent filed a suit against the appellant for ejectment and recovery of arrears of rent.
The appellant filed written statement and resisted the suit.
The appellant during the pendency of the suit committed default in depositing the rent regularly and the respondent filed application under Rule 5 Order XV C.P.C. for striking off the appellant 's defence.
The appellant attempted to show that he had been depositing the rent as required by law.
The trial court accepted the application and held that the appellant had failed to make any representation permitted by him under sub rule (2) of Rule 5 of Order XV within time.
The trial court accordingly struck off the defence and the High Court affirmed the order of the trial court on the ground that where no representation was made or if made was filed beyond time, the Court was bound to strike off the defence and enjoyed no discretion in the matter.
Allowing the Special Leave Petition, ^ HELD: An order under sub rule (1) striking off the defence is in the nature of a penalty.
A serious responsibility rests on the court in the matter and the power is not to be exercised mechanically.
There is a reserve of discretion vested in the court entitling it not to strike off the defence if on the facts and circumstances already existing on the record, it finds good reason for not doing so.
It will always be a matter for the judgment of the court to decide whether on the material before it, notwithstanding the absence of a representation under sub rule (2), the defence should or should not be struck off.
The word "may" in sub rule (1) merely vests power in the court to strike off the defence.
It does not oblige it to do so in every case of default.
[128 C D] 125 Puran Chand vs Pravin Gupta, Civil Revision No. 356 of 1978 decided on October 30, 1980 All.
H.C. overruled.


judgement:
Civil Appeal No. 1223 of 1977.
Appeal by special leave from the judgment and order dated the 22nd April, 1976 of the Andhra Pradesh High Court in W.A. No. 581 of 1971.
K.K.Venugopal and A. Subba Rao for the Appellant.
P. Ram Reddy, G.S. Narayana and G.N. Rao for Respondent No. 1.
H.S. Gururaj Rao and section Markandeya for Respondents Nos. 2, 5, 8, 14 and 21.
71 The Judgment of the Court was delivered by GUPTA J.
The vires of rule 3(d) of the Andhra Pradesh Police Service Rules, 1966 is in question in this appeal preferred by special leave.
The rule was challenged as invalid by respondent Nos. 1 to 23 by filing a writ petition in the Andhra Pradesh High Court.
A single Judge of the High Court dismissed the petition, his decision was reversed by a Division Bench on appeal declaring "rule 3(d) is discriminatory and violative of the principles of equality in article 16 of the Constitution of India." Rule 5(1) of the Andhra Pradesh Civil Services (Classification, Control and Appeal) Rules, 1963, framed in exercise of the powers conferred by the proviso to article 309 of the Constitution of India, classifies the civil services of the State into (a) the State Services, and (b) the Subordinate Services.
The State services are the superior class.
The Andhra Pradesh Police Service is one of the State services.
The subordinate services include, among others, the Andhra Pradesh Police Subordinate Service.
The Andhra Pradesh Police Service Rules, 1966, described as Special Rules for Andhra Pradesh Police were also made in exercise of the powers conferred by the proviso to article 309 of the Constitution.
Rule 2 of the 1966 Police Service Rules sets out the three categories of officers constituting the service, namely: category I composed of Commandants, Andhra Pradesh Special Police; category 2 which includes Deputy Superintendents of Police and Assistant Commissioners of Police, other than those in category 3; and category 3 comprising Deputy Superintendents of Police in various capacities including Assistant Commandants, Andhra Pradesh Special Police.
Rule 3 of the Andhra Pradesh Police Service Rules, 1966 lays down the method and conditions for appointment to posts in the different categories.
We are concerned in this appeal with Deputy Superintendents of Police belonging to categories 2 and 3 of the rules.
Appointment as Deputy Superintendent of Police in category 2 is made by (a) direct recruitment, or (b) 'recruitment by transfer ' from Andhra Pradesh Police Subordinate Service, or (c) appointment from category 3 of this service with the concurrence of the Public Service Commission provided that the number of such appointments does not exceed two in a calendar year.
Rule 3 (15) of the Andhra Pradesh State and Subordinate Services Rules, 1962, also framed under proviso to article 309 of the constitution, defines the expression "recruited by transfer"; from the definition it is clear that such recruitments are really by way of promotion.
It is further prescribed by the 1966 72 rules that officers appointed as Deputy Superintendents of Police from Category 3 to category 2 must pass certain tests and undergo further training and probation.
It is also required that they must complete 8 years of service as Deputy Superintendent of Police in category 3 and shall be below 40 years of age.
The impugned rule 3(d) of the Andhra Pradesh Police Service Rules, 1966 states: "The seniority of the Deputy Superintendents of Police, Category 2 appointed from the posts of Deputy Superintendents of Police, Category 3 shall be fixed in that category giving them credit for their entire service in the posts of the Deputy Superintendents of Police, Category 3".
Rules 3(d) thus gives a Deputy Superintendent of Police appointed to category 2 from category 3 the benefit of past service in the State Service for the purpose of seniority as against a member of the Subordinate Service appointed Deputy Superintendent of Police in category 2 by promotion, or a new recruit appointed to the same post directly.
The writ petition out of which this appeal arises was made by some of the Deputy Superintendents of Police in category 2 who were either recruited directly or "recruited by transfer" to the said posts before the 1966 Andhra Pradesh Police Service Rules came into force Respondents Nos. 2, 3 and 4 in the writ petition are Deputy Superintendents of Police appointed from category 3 to category 2 under the 1966 rules; they were working as Assistant Commandants in category 3 before appointment to Category 2.
The appellant before us was impleaded as the third respondent in the writ petition.
The validity of rule 3(d) of the Andhra Pradesh Police Service Rules is questioned on the ground that the appointment of a Deputy Superintendent of Police from category 3 to category 2 is really by way of promotion and validly the seniority in category 2 of an officer so promoted can be reckoned only from the date of his appointment to that category.
To support the contention that such an appointment is by way of promotion the following features are pointed out from the 1966 rules: (ii) not more than two persons can be appointed Deputy Superintendents of Police from category 3 to category 2 every year; (ii) the officers have to complete 8 years of service in category 3 before they can be appointed to category 2; (iii) these officers have to undergo training and probation for two years.
According to the writ petitioners who are respondents Nos. 1 to 23 in this Court these features conclusively prove that the appointment of a Deputy Superintendent of Police to category 2 from category 3 is by way of promotion.
These are also 73 the features that weighed with the Division Bench of the High Court in holding that rule 3(d) was invalid.
This is what the Division Bench observed: "Having regard to the rule of eligibility and qualifications of service of eight years in the category 3, the tests prescribed, the probation of two years. the training. are all indicative and, in our view, decisive that category 3 personnel are not equivalent to category 2 personnel.
We are further of the view, category 3 personnel attain the same status only on appointment to category 2.
" There appears to be no dispute on the following points: (1) categories 2 and 3 carry equal pay; (2) qualifications for direct recruits to both categories are the same; (3) promotion to either category is from the post of Inspector of Police which is a subordinate service, and the Inspectors of Police in the respective branches from whom promotions to the two categories are made also enjoy the same scale of pay.
The duties of the Deputy Superintendents of Police of category 2 and category 3 are however of a different nature.
The Deputy Superintendents of Police of Category 2 are normally concerned with the prevention, detection and investigation of crime and maintenance of law and order.
They constitute the principal police service of the State.
Assistant Commandants, Andhra Pradesh Special Police, are also designated as Deputy Superintendents of Police in category 3.
They are primarily a striking force employed also for maintaining law and order, but they are not concerned with the routine duties of the principal police service.
The promotional avenues for the officers of the two categories are also not the same.
Officers belonging to category 2 of the Andhra Pradesh Police Service are eligible to be promoted as Commandants, Home Guards, and Assistant Superintendent of Police.
They are also eligible to be considered for appointment to the Indian Police Service.
Officers of category 3 are eligible to be promoted as Commandants, Home Guards, but not as Assistant Superintendents of Police, nor are they eligible to be considered for appointment to the Indian Police Service.
It appears from the counter affidavit filed on behalf of the 74 State of Andhra Pradesh in the High Court which is based on Government Order No. 1513 dated November 28, 1961 that the limited chances of promotion open before officers of category 3 gave rise to discontent among them, and to prevent stagnation and avoid frustration among officers belonging to that category, government decided to throw open avenues of promotion of the officers of category 3 which were available to the officers belonging to category 2; however, the opportunity made available was a limited one in the sense that only to Deputy Superintendents of Police from category 3 were to be appointed as Deputy Superintendents of Police, category 2, in a year.
Rule 3 (a) of the Andhra Pradesh Police Service Rules, 1966 provides that Deputy Superintendents of Police in category 2 may be appointed by (a) direct recruitment, or (b) recruitment by transfer from Inspectors of Police, class I, in the Andhra Pradesh Police Subordinate Service, which is really a promotion for them, or (c) appointment from category 3 which is a State service.
The validity of the rule 3 (a) has not been challenged.
It is to be noted that rule 3 (a) itself treats appointment from category 3 as distinct from either direct recruitment or promotion.
It was contended on behalf of the appellant that if appointment to category 2 from category 3 was not direct recruitment or promotion, it could only be by way of transfer.
The point was urged also in the High Court.
On behalf of the appellant reference was made to fundamental rule 15 which authorises the transfer of a government servant from one post to another provided that the post to which he is transferred does not carry less pay.
Rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules, 1962 says: "The transfer of a person from one class or category of a service to another class or category carrying the same pay scale of pay shall not be treated as first appointment to the latter for purposes of seniority; and the seniority of a person so transferred shall be determined with reference to the date of his first appointment to the class or category from which he was transferred.
" The rule adds: Where any difficultly or doubt arises in applying this Sub rule, seniority shall be determined by the appointing authority." 75 Of course rule 3 of the Andhra Pradesh Police Service Rules not states specifically that appointments to category 2 from category 3 shall be considered as transfer making rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules applicable.
The answer of the respondents is that such appointments could not be treated as transfer because category 2 and category 3 are not of equal status.
There is however no rule saying that services in category 3 are inferior to those in category 2; both are State Services.
The learned single Judge of the High Court explains in his judgment why the fact that the Deputy Superintendents of Police in category 3 have to pass tests and undergo training and probation for appointment to category 2 does not warrant the conclusion that such appointment are by way of promotion: "Since the higher posts of Additional Superintendents of Police, Posts in the Indian Police Service etc., involve what may be called the ordinary police duties with which the members of the Andhra Pradesh Special Police are not likely to be familiar, the Government has further prescribed that officers appointed from category 3 to category 2 must pass certain tests and undergo further training and probation.
It is important to realise that the appointment of some outstanding officers from category 3 to category 2 is designed to achieve the two fold object of providing avenues of promotion for such outstanding officers and injecting new but proven blood, as it were, into category 2.
If this twin object is realised it becomes evident that appointment to category 2 from category 3 cannot be considered to be a promotion.
" In our view the explanation given by the single Judge is sound.
We find no basis for the claim that category 3 is inferior to category 2 in status.
We do not however think it necessary to decide whatever appointments to category 2 from category 3 amount to transfer attracting rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules.
Under Rule 3 (a) of the Andhra Pradesh Police Service Rules, 1966 appointment from category 3 is one method of recruitment to category 2 and the only question is whether giving credit to such appointees for past service in another category in the State Service is justified.
We have mentioned above the points of similarity in matters of recruitment and promotion to the two respective categories.
It has been noticed also that they carry the same scale of 76 pay.
Whether or not some credit should be given for past service in such circumstances is a matter of policy resting with government.
We do not find anything arbitrary or absurd in what rule 3 (d) prescribes, and that being so, the court cannot examine the matter and come to its own conclusion about what should be the length of past service for which credit should be given.
In Tamil Nadu Education Department Ministerial and General Subordinate Service Association vs State of Tamil Nadu and another.(1) this Court considering a similar contention that the length of service taken into consideration for fixing seniority had worked hardship on some of the employees, took the view that in such matters the court can only take an "overall view and should not attempt "a meticulous dissection" of the matter.
Once the principle is found to be rational", it was observed, a few "instances of hardship cannot be a ground to invalidate the order or the policy. this is an area where, absent arbitrariness and irrationality, the court has to adopt a hands off policy".
There is nothing irrational in giving the Deputy Superintendents of Police appointed to category 2 from category 3 credit for past services rendered by them in category 2 from 3 which is also a State Service as category 2.
The main ground on which the length of the past service for which credit has been given is questioned in this case is not that it was not rational but that category 3 being inferior in status to category 2, no credit could at all be given for past service in category 3.
We found no basis to support the claim of superiority for category 2 and in the facts of the case we do not think that the length of past service for which credit has been given is improper.
Accordingly we allow this appeal, set aside the decision of the Division Bench and restore that of the learned single Judge dismissing the writ petition.
The parties will bear their respective costs.
S.R. Appeal allowed.

summary/full:
Rule 5 (1) of the Andhra Pradesh Civil Services (Classification, Control and Appeal) Rules, 1963 classifies the Civil Services of the State into (a) State Services, and (b) Subordinate Services.
The Andhra Pradesh Police Service is one of the State services.
Rule 2 of the Andhra Pradesh Police Service Rules, 1966 framed under Article 309 of the Constitution sets out three categories of officers constituting the State Service, namely; category l composed of commandants, Andhra Pradesh Special Police; category II which includes Deputy Superintendents of police and Assistant Commissioners of Police other than in category III and category III comprising Deputy Superintendents of Police in various capacities including Assistant Commandants, Andhra Pradesh Special Police.
Rule 3 lays down the method and conditions for appointment to posts in the different categories.
Appointment as Deputy Superintendent of Police in category II is made by (a) direct recruitment, or (b) recruitment by transfer from Andhra Pradesh Police Subordinate Service, or (c) appointment from category III of this service with the concurrence of the Public Service Commission provided that the number of such appointments does not exceed two in a calendar year.
Under Rule 3 (d), "the seniority of the Deputy Superintendents of Police, category II appointed from the posts of Deputy Superintendents of the Police, category III shall be fixed in that category giving them credit for their entire service in the post of the Deputy Superintendents of Police.
" Rule 3 (d) thus gives a Deputy Superintendent of Police appointed to category II from category III the benefit of past service in the State Service for the purpose of seniority as against the Subordinate Service appointed Deputy Superintendent of Police in category II by promotion or a new recruit appointed to the same post directly.
Some of the Deputy Superintendents of Police in category II who were either recruited directly or "recruited by transfer" to the said posts before the 1966 Andhra Pradesh Police Service Rules came into force challenged the validity of the vires of Rules 3 (d) on the ground that the appointment of a Deputy Superintendent of Police from category III to category II is really by way of promotion and validly the seniority in category II of an officer so promoted can be reckoned only from the date of his appointment to that category II.
The writ petition was dismissed by learned Single Judge.
In appeal the Division Bench of the High 70 Court held Rule 3 (d) invalid, taking the view that category III personnel are not equivalent to category II personnel and that the former attains the same status only on appointment to category II.
Hence this appeal by respondent No. 3 in the writ petition who is a Deputy Superintendent of Police appointed from category III to category II under the 1966 rules.
Allowing the appeal, the Court ^ HELD: 1.
Rule 3 (d) of the Andhra Pradesh Police Service Rules, 1966 is valid.
There is nothing arbitrary or absurd in what Rule 3(d) prescribes as regards the credit regarding the length of the past service for which credit is to be given for the purpose of seniority.
Whether or not some credit should be given for past service in such circumstances is a matter of policy resting with Government.
That being so, in the absence of anything arbitrary or absurd in the provision, the Court cannot examine the matter and come to its own conclusion about what should be the length of past service in which credit should be given.
[75G 76B] Tamil Nadu Education Department Ministerial and General Subordinate Service Association vs State of Tamil Nadu and another.
; , followed.
There is no basis to support a claim of superiority for category II in the facts of the case.
Rule 3 (a) itself which has not been challenged, treats appointment from category III as distinct from either direct recruitment or promotion.
There is no dispute on the following points: (i) categories II and III carry equal pay; (ii) qualifications for direct recruits to both categories are the same; (iii) promotion to either category is from the post of Inspector of Police which is a Subordinate Service and the Inspectors of Police in their respective branches from whom promotions to the two categories are made also enjoy the same scale of pay.
The mere fact that there are some differences regarding the duties of the Deputy Superintendents of Police of category II and category III and their promotional avenues do not alter the position.
[76E, 74D, 73C G]


judgement:
Civil Appeal No. 1968 of 1978.
Appeal by special leave from the judgment and order dated 22nd/23rd June/5th July 1978 of the High Court of Bombay (Nagpur Bench) in Special Civil Application No. 238 of 1978.
V.S. Desai, P.H. Parekh, C.B. Singh, B.L. Verma & Miss V. Caprihan for the Appellant.
R.H. Dhebar & M.N. Shroff for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
This appeal by special leave raises the important question whether the Commissioner of Sales Tax can revise under cl.
(a) of sub section
(1) of section 57 of the Bombay Sales Tax Act, 1959, an appellate order passed by the Assistant Commissioner when the assessee 's second appeal against that order is pending before the Maharashtra Sales Tax Tribunal.
The appellant is a partnership firm, carrying on the business of manufacturing and selling vegetable The Sales Tax Officer estimated the turnover for the calendar year 1971 and made an order dated 26th March, 1973 levying Sales Tax at Rs. 73,198.62 and a penalty of Rs. 36,197.64.
On the same date, another assessment order was made for the first six months of the year 1972, where again on the basis of an estimate the Sales Tax Officer computed the tax Rs. 81,745.71 and levied a penalty of Rs. 37,572.26.
The two assessment orders were apparently made under s.33 of the Bombay Sales Tax Act, 1959.
Against the assessment and penalty orders for 100 the two periods, the appellant appealed under cl.
(a) of sub section
(1) of section 55 of the Act to the Assistant Commissioner.
By a common order dated 29th September, 1973 the Assistant Commissioner reduced the quantum of the turnover and, consequently, the tax liability to Rs. 30,494.67 and the penalty to Rs. 11,745.71 for the first period and a tax liability of Rs. 16,447.33 and penalty of Rs. 5,572.26 for the second period.
Not fully satisfied by the relief granted, the appellant proceeded in second appeal to the Maharashtra Sales Tax Tribunal on 8th December, 1973.
During the pendency of the appeals before the Tribunal, the Deputy Commissioner, Nagpur issued two notices to the appellant on 24th April, 1974 requiring it to show cause why the appellate orders dated 29th September, 1973 passed by the Assistant Commissioner should not be revised under section 57 of the Act.
The appellant objected to the exercise of revisional power by the Deputy Commissioner during the pendency of the appeals before the Tribunal.
On 12th September, 1975 the Deputy Commissioner rejected the objection.
Against the order of rejection the appellant filed two appeals before the Tribunal, and by its order dated 27th October, 1977 the Tribunal dismissed the appeals.
At the same time, the Tribunal adjourned the two second appeals filed by the appellant against the appellate orders dated 29th September, 1973 passed by the Assistant Commissioner.
The Tribunal took the view that its deciding those appeals would result in nullifying the revisional power vested in the Deputy Commissioner.
The appellant filed a writ petition in the High Court of Bombay against the order of the Deputy Commissioner dated 12th September 1975 rejecting its preliminary objection and also against the order passed by the Tribunal on 27th October, 1977 dismissing his appeals, as well as the notices issued by the Deputy Commissioner on 24th April, 1974 in the purported exercise of his revisional power.
The only point pressed by the appellant before the High Court was that the Commissioner of Sales Tax could not exercise his revisional power against the appellate order of the Assistant Commissioner when a second appeal against that order was pending before the Tribunal.
The High Court turned down the plea by its order dated 5th July, 1978, observing that it was always open to the Commissioner to interfere in revision with an order prejudicial to the Revenue notwithstanding that such order may be already under appeal before the Tribunal.
The High Court felt compelled to take this view because, in its opinion, the statute did not provide any 101 other forum or jurisdiction for protecting the interests of the Revenue.
It relied on its earlier judgment in Commissioner of Sales Tax vs Motor and Machinery Manufactures Ltd., and also sought support from the observations of this Court in Commissioner of Income Tax vs Amritlal Bhogilal.
It spoke further of "the anomaly of overlapping jurisdiction" between the Commissioner and the Tribunal, and referred with approval to an earlier decision of the High Court in H. B. Munshi vs Oriental Rubber Industries Pvt.
Ltd. An assessment order under the Bombay Sales Tax Act is appealable under s.55 of the Act, and we may mention only that when the order is made by the Sales Tax Officer an appeal lies to the Assistant Commissioner, if the order is made by the Assistant Commissioner an appeal goes to the Commissioner and if it has been made by the Commissioner (or Deputy Commissioner or Additional Commissioner) an appeal lies before the Tribunal.
Sub section
(2) of s.55 provides for a second appeal against the appellate order of the Assistant Commissioner.
The second appeal lies at the option of the appellant, to the Commissioner or the Tribunal.
The Tribunal, it will be noticed, exercises appellate jurisdiction by way of second appeal in respect of an assessment order made by the Sales Tax Officer.
It also exercises, by way of first appeal, appellate jurisdiction over an assessment order made by the Commissioner.
It is at the apex of the appellate hierarchy, the Sales Tax Officer, the Assistant Commissioner and the Commissioner all of them being, therefore, subordinate to it.
S.57 of the Act provides for revisional jurisdiction.
"57 (1) Subject to the provisions of section 56 and to any rules which may be made in this behalf.
(a) the Commissioner may, of his own motion, call for and examine the record of any order passed (including an order passed in appeal) under this Act or the rules made thereunder by any officer or person subordinate to him, and pass such order thereon as he thinks just and proper; 102 Provided that, no notice in the prescribed form shall be served by the Commissioner under this clause after the expiry of three years from the date of the communication of the order sought to be revised, and no order in revision shall be made by him hereunder after the expiry of five years from such date; (b) the Tribunal, on application made to it against an order of the Commissioner (not being an order passed under sub section (2) of s.55 in second appeal) within four months from the date of the communication of the order, may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper.
It will be noticed that while the Commissioner exercises revisional jurisdiction over an order passed by any officer or person subordinate to him, the Tribunal is the revisional authority over an order of the Commissioner (not being an order passed by the Commissioner disposing of a second appeal).
The Act thus constitutes the Tribunal an appellate as well as a revisional authority over the Commissioner.
Plainly, therefore, in quasi judicial matters the Commissioner is subordinate to the Tribunal.
Now it seems to us past question that when the appellate jurisdiction of superior authority is invoked against an order and that authority is seized of the case, it is inconceivable for a sub ordinate authority to claim to exercise jurisdiction to revise that very order.
The Tribunal is the supreme appellate and revisional authority under the statute.
It cannot be divested of its jurisdiction to decide on the correctness of an order, it cannot be frustrated in the exercise of that jurisdiction, merely because a subordinate authority, the Commissioner, has also been vested with jurisdiction over that order.
Unless the statute plainly provides to the contrary, that appears to us to be incontrovertible.
It is not open to the Commissioner to invoke his power under cl.
(a) of sub section
(1) of section 57 and summon the record of an order over which the Tribunal has already assumed appellate jurisdiction.
The subordinate status of the Commissioner precludes that.
The High Court felt burdened by the compulsion that unless a contemporaneous exercise of concurrent jurisdiction was read into sub section
(1) of s.57, so that both the Tribunal and the Commissioner 103 could be regarded as simultaneously enjoying "overlapping jurisdiction" in respect of the same order, it would be impossible to safeguard the interests of the Revenue; for, says the High Court, a second appeal is available only to a dealer and not to the Revenue, and an enterprising dealer could, by expeditiously filing a second appeal before the Tribunal effectively shut out the Commissioner from interfering with the order in the interests of the Revenue.
The High Court found itself driven to the conclusion that the Commissioner was entitled to revise an order at any stage, otherwise there could be cases where the assessment could not be enhanced.
The High Court, we think, has overlooked an important provision of the Act.
In our opinion, the appellate powers elaborated in sub section
(6) of s.55 take account of such a need.
Their comprehensive sweep can be judged from the terms of the sub section.
"(6) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first appeal and the second appeal) shall have the following powers: (a) in an appeal against an order of assessment, it may confirm, reduce, enhance or annul the assessment; or it may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment in accordance with the direction given by it and after making such further inquiry as may be necessary; and the assessing authority shall thereupon proceed to make such fresh assessment and determine where necessary, the amount of tax, payable on the basis of such fresh assessment; (b) in an appeal against an order imposing a penalty, the appellate authority may confirm or cancel such order or vary it so as either to enhance or reduce the penalty.
(c) In any other case, the appellate authority may pass such orders in the appeal as it deems just and proper; Provided that, the appellate authority shall not enhance an assessment or a penalty or reduce the amount 104 of draw back, set off or refund of the tax, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction".
Three distinct categories of cases are enumerated An appeal against an assessment order, an appeal against a penalty order and an appeal in any other case.
The power to enhance the liability is given to the appellate authority in the first two categories only.
We are concerned with one of them, an appeal against an order of assessment.
Now the sub section speaks of an "appellate authority both in the first appeal and the second appeal".
It is quite clear, therefore, that the appellate powers detailed in cl.
(a) have the same amplitude in a second appeal as in a first appeal.
An appellate authority disposing of a first appeal has power to enhance the assessment.
So has appellate authority in a second appeal.
We may also point out that when an appellate authority is considering a second appeal a "first appellate" order, it is examining an order which can be broadly described as an order of assessment.
It is a final order disposing of an appeal which, in a sense, is a continuation of the assessment.
A second appeal against such an order is an appeal against an order of assessment.
En passant, it will be noticed that sub section
(6) of s.55 of the Bombay Sales Tax Act is in pari materia with sub section
(1) of section 251 of the Income Tax Act, 1961.
The language is almost identical.
Sub section
(1) of section 251 sets forth the same three categories and the power to enhance is confined to an order of assessment and an order imposing a penalty.
But in the case of a second appeal under the Income tax Act, there is a distinct departure from the scheme under the Bombay Sales Tax Act.
S.253 does not expressly speak of the "power to enhance", and makes no distinction in regard to the extent of the appellate power between any of the cases in which a second appeal lies from an order under s.251.
It is evident then that in a second appeal under sub section
(2) of s.55 of the Bombay Sales Tax Act, the Tribunal has power to enhance the assessment.
That being so, plainly it is open to the Revenue to invoke that power in a pending second appeal filed by the dealer before the Tribunal.
The High Court is in error in concluding that the power to enhance an assessment can be discovered only in the 105 revisional jurisdiction of the Commissioner and nowhere else.
The compulsion which drove the High Court to the construction placed by it on sub section
(1) of s.57 of the Act does not have substance, and the entire sub stratum underlying the High Court judgment must give way.
On the view which finds favour with us we cannot approve of the law laid down on the point in Motor and Manufacturers Ltd. (supra) nor do we see any overlapping of, or conflict in, the powers of the Commissioner and the Tribunal inferred in Oriental Rubber Industries Pvt.
Ltd. (supra).
As regards the observation of this Court in Amritlal Bhogila (supra), that was not a case where a subordinate authority sought to exercise its revisional jurisdiction over an order pending in appeal before a superior authority.
No support can be derived by the respondent from that case.
For the same reason, Ramlal Onkarmal vs Commissioner of Income tax, Assam decided by the Assam High Court Kelpunj Enterprises vs Commissioner of Income tax, Kerala, decided by the Kerala High Court and Russell Properties (P) Ltd. vs A. Chowdhury, decided by the Calcutta High Court, placed before us by the respondent have no relevance.
Our attention has been invited to s.34 of the Maharashtra Agriculture Income Tax Act, 1962 where when defining the revisional power of the Commissioner the Legislature has expressly incorporated a provision prohibiting the Commissioner from exercising his revisional power against an order pending in appeal before the Assistant Commissioner or Tribunal.
It is urged that if a similar prohibition was intended against the Commissioner under the Bombay Sales Tax Act, an express provision to that effect would have been made.
Reference has also been made to the provisions in the conferring revisional jurisdiction.
We are not impressed by the contention.
The absence of an express provision cannot detract from the conclusion reached by us a conclusion flowing from the necessary intendment of the statute that the Commissioner being a subordinate authority to the Tribunal, cannot interfere with an order pending in appeal before the Tribunal, and further that the interest of the Revenue is protected by the power of enhancement vested in the Tribunal while disposing of a second appeal filed by a dealer.
106 In the result, the appeal is allowed, the judgment dated 5th July, 1978 of the High Court is set aside, and the order dated 29th October, 1977 of the Tribunal and the revisional proceedings before the Deputy Commissioner, including the orders made by him, are squared.
The appellant is entitled to its costs.
N.V.K. Appeal allowed.

summary/full:
The appellant, a partnership firm, was assessed by the Sales Tax Officer, who estimated the turnover for the Calendar year 1971, and for the first six months of the year 1972 and made two orders of assessment dated 26 March 1973 under section 33 of the Bombay Sales Tax Act, 1959 levying Sales Tax and penalty.
Against the assessment and penalty orders for the two periods, the appellant appealed under clause (a) of sub section (1) of section 55 of the Act to the Assistant Commissioner.
By a common order dated 29th September, 1973 the Assistant Commissioner reduced the quantum of the turnover and, consequently, the tax liability for each of the periods.
Not fully satisfied by the relief granted, the appellant proceeded in second appeal to the Sales Tax Tribunal on 8th December, 1973.
During the pendency of the appeals before the Tribunal, the Deputy Commissioner, issued two notices to the appellant on 24th April, 1974 requiring it to show cause why the appellate orders dated 29th September, 1973 passed by the Assistant Commissioner should not be revised under section 57 of the Act.
The appellant objected to the exercise of revisional power by the Deputy Commissioner during the pendency of the appeals before the Tribunal.
On 12th September 1975 the Deputy Commissioner rejected the objection.
Against the order of rejection the appellant filed two appeals before the Tribunal, and by its order dated 27th October, 1977 the Tribunal dismissed the appeals.
The Tribunal took the view that its deciding those appeals would result in nullifying the revisional power vested in the Deputy Commissioner.
The two second appeals filed by the appellant against the appellate orders dated 19th September, 1973 passed by the Assistant Commissioner were adjourned.
The appellant filed a writ petition in the High Court against the order of the Deputy Commissioner dated 12th September, 1975 rejecting its preliminary objection and also against the order passed by the Tribunal on 27th October, 1977 dismissing his appeals as well as the notices issued by the Deputy Commissioner on 24th April, 1974 in the purported exercise of his revisional power, contending that the Commissioner of Sales Tax could not exercise his revisional power against the appellate order of the Assistant Commissioner when a second appeal against that order was pending before the Tribunal.
98 The High Court rejected the appellant 's contention observing that as the statute did not provide any other forum or jurisdiction for protecting the interests of the Revenue, it was always open to the Commissioner to interfere in revision with an order prejudicial to the Revenue notwithstanding that such order may be already under appeal before the Tribunal.
Allowing the appeal to this Court, ^ HELD: 1.
It is not open to the Commissioner to invoke his power under clause (a) of sub section (1) of section 57 and summon the record of an order over which the Tribunal has already assumed appellate jurisdiction.
The subordinate status of the Commissioner precludes that.
[102 G] 2.
An assessment order under the Bombay Sales Tax Act is appealable under section 55 of the Act.
When the order is made by the Sales Tax Officer an appeal goes to the Assistant Commissioner.
If the order is made by the Assistant Commissioner an appeal goes to the Commissioner and if it has been made by the Commissioner or Deputy Commissioner or Additional Commissioner an appeal lies before the Tribunal.
Sub section (2) of section 55 provides for a second appeal against the appellate order of the Assistant Commissioner.
The second appeal lies at the option of the appellant to the Commissioner or the Tribunal.
The Tribunal exercises appellate jurisdiction by way of second appeal in respect of an assessment order made by the Sales Tax Officer.
It also exercises by way of first appeal, appellate jurisdiction over an assessment order made by the Commissioner.
It is at the apex of the appellate hierarchy, the Sales Tax Officer, the Assistant Commissioner and the Commissioner all of them being, subordinate to it.
[101 C E] 3.
While the Commissioner exercises revisional jurisdiction over an order passed by any officer or person subordinate to him, the Tribunal is the revisional authority over an order of the Commissioner.
The Act constitutes the Tribunal an appellate as well as a revisional authority over the Commissioner.
In quasi judicial matters the Commissioner is therefore subordinate to the Tribunal.
[102 D] 4.
The Tribunal is the supreme appellate and revisional authority under the statute.
It cannot be divested of its jurisdiction to decide on the correctness of an order, it cannot be frustrated in the exercise of that jurisdiction, merely, because a subordinate authority, the Commissioner, has also been vested with jurisdiction over that order.
Unless the statute plainly provides to the contrary that appears to be incontrovertible.
[102 F] 5.
The High Court was in error in concluding that the power to enhance an assessment can be discovered only in the revisional jurisdiction of the Commissioner and nowhere else.
[104 H 105 A] 6.
In a second appeal under sub section (2) of section 55 of the Bombay Sales Tax Act, the Tribunal has power to enhance the assessment.
That being so, it is open to the Revenue to invoke that power in a pending second appeal filed by the dealer before the Tribunal.
[104 G] 7.
The Commissioner being a subordinate authority to the Tribunal cannot interfere with an order pending in appeal before the Tribunal, especially when 99 the interest of the Revenue is protected by the power of enhancement vested in the Tribunal while disposing of a second appeal filed by a dealer.
[105 G] Commissioner of Sales Tax vs Motor and Machinery Manufacturers Ltd., (1976) 38 STC 78 over ruled.
Commissioner of Income Tax vs Amritlal Bhogilal distinguished.
Ramlal Onkarmal vs Commissioner of Income Tax, Assam , Kelpunj Enterprises vs Commissioner of Income Tax Kerala.
, Russell Properties (P.) Ltd. vs A. Chowdhury, inapplicable.