G. Sivarajan, J. 1. The matter arises under the Kerala General Sales Tax Act, 1963 (for short, "the Act"). The assessee is the revision-petitioner. He is a dealer in hill produce. His assessment for the year 1989-90 was completed on February 1, 1994 by fixing total and taxable turnover of Rs. 2,42,72,121.10 and Rs. 2,15,52,880 respectively. The assessee took up the assessment in appeal before the Deputy Commissioner (Appeals), Kozhikode. The assessment was set aside by order dated November 11, 1996 and remitted the matter to the assessing authority with certain directions. The assessing authority subsequently passed a fresh assessment order on September 19, 1997. According to the Deputy Commissioner, the assessing authority committed irregularity and illegality in the said assessment order. The Deputy Commissioner noted that the turnover of arecanut, dry ginger and pepper amounting to Rs. 1,97,48,510 escaped from levy of turnover tax. He also noted that to get exemption from the turnover tax under S.R.O. No. 717 of 1988 the dealer has to produce evidence to the effect that the impugned turnover has suffered turnover tax. In the circumstances, the Deputy Commissioner in exercise of the power vested in him under Section 35 of the Act by annexure C order set aside the assessment order dated September 19, 1997 and remanded the case to the assessing authority for fresh disposal according to law. This order was challenged by the assessee in appeal before the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode. The Tribunal agreed with the view taken by the Deputy Commissioner and dismissed the appeal. The revision is filed against the said order.
2. The main contention taken by Sri P. Balachandran, learned counsel for the revision-petitioner, is that the order passed by the Deputy Commissioner under Section 35 of the Act was beyond the period of limitation specified in the said section itself and therefore the order, annexure C, passed by him is barred by limitation and without jurisdiction. According to the revision-petitioner, the period of four years has to be reckoned from the date of the original assessment order passed on February 1, 1994, for, the alleged omission occurred in the original assessment order itself and further the fresh assessment order dated September 19, 1997 which is set aside by the Deputy Commissioner is one passed by the assessing authority on the basis of the directions issued in annexure A appellate order. The counsel also submitted that the appellate order, annexure A, did not set aside the original assessment in toto and same was only for a limited purpose. He submitted that the assessing authority, in such circumstances cannot go beyond the scope of the directions contained in the appellate order. In other words, the contention is that the original assessment order dated February 1, 1994 was not completely effaced. The counsel accordingly submitted that the finding of the Tribunal contrary to the above is erroneous and unsustainable. He also relied on the decision of the Andhra Pradesh High Court in State of A.P. v. Hotel Ganesh [1996] 100 STC 256 in support of the above.
3. Learned Special Government Pleader (Taxes), on the other hand, submitted that the appellate authority has set aside the assessment order in toto with directions and therefore the department was not at all aggrieved by the original assessment order. He submitted that it was open to the assessing authority while passing the fresh order to impose turnover tax on the turnover which has not suffered tax at the hands of the assessee. He submitted that the effect of setting aside the assessment order is that the order in its entirety goes and a fresh order has to be substituted in its place. He further submitted that the Revenue was aggrieved only when the fresh order was passed. So according to the Government Pleader, the four years period referred to in Section 35 runs only from the date of the fresh assessment order.
4. We have considered the rival submissions. Section 35 of the Act gives power to the Deputy Commissioner to initiate proceedings under the said section if the assessment order in his opinion is prejudicial to revenue and pass such orders thereon as he thinks fit after conducting enquiry. However, certain limitations are provided in Subsection (2) thereof. One such limitation is that the Deputy Commissioner shall not pass any order under Sub-section (1), if more than four years have expired after the passing of the order referred to therein. Another limitation is that if the order has been made the subject-matter of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court, he cannot pass an order under Sub-section (1). However, Sub-section (2A) provides that the Deputy Commissioner may pass an order under Sub-section (1) on any point which has not been decided in an appeal or revision referred to in Clause (b) of Sub-section (2), before the expiry of the period of four years referred to in Clause (c) of that sub-section, whichever is later. In view of the aforesaid provisions the first thing to be considered is as to whether there has been an appeal against the original order passed by the assessing authority and if so whether the omission contemplated in Section 35 was the subject-matter of the said appeal. If it was the subject-matter of the said appeal, it was not open to the Deputy Commissioner to invoke Section 35 by virtue of the provisions of Clause (b) of Sub-section (2) of Section 35, for, even Sub-section (2A) does not save the situation. If, on the other hand, it is found that the issue which is sought to be corrected by invoking the provisions of Section 35 was not the subject-matter of the appeal and the omission was there in the original order itself, the order which must be corrected is the original order and the limitation runs from that date. Another situation may also arise where in an appeal filed by the assessee against the original assessment order the appellate authority set aside the original assessment order in toto and directing the assessing authority to complete the assessment afresh. In such a case even if there was an omission in the original assessment which resulted in prejudice to the Revenue the Revenue will not be aggrieved since the said order has become non est in law. In such a case, if the omission comes again in the fresh order, certainly the Revenue will be prejudiced only by the said order and the time specified in Clause (c) of Sub-section (2) of Section 35 runs only from the date of that order.
5. So the question to be decided is as to whether the appellate order, annexure A, makes an open remand as held by the authorities and by the Tribunal or only a remand for a limited purpose as contended by the assessee. The petitioner, being aggrieved by the assessment order dated February 1, 1994 as rectified by order dated May 7, 1994, filed appeal before the Deputy Commissioner (Appeals), Kozhikode. In the said appeal, the assessee challenged the assessment order in its entirety. One of the disputes in the appeal was regarding the levy of tax on the turnover of purchase of arecanut, black pepper and dry ginger effected by the assessee in pursuance of buying agency agreements, entered into with non-resident principals and transferred them to their outside State place of business. According to the assessee, this claim was specifically made in the objection to the pre-assessment notice and that this was not considered by the assessing authority while completing the assessment. The assessing authority did not make even a casual reference to the said claim. In that view of the matter, the appellate authority thought that the matter must go back to the assessing authority for considering the said issue. In the said circumstances, the appellate authority did not consider the other questions raised in the appeal. All those questions were left open. The assessment order was set aside and the matter remitted to the assessing authority for de novo disposal in the light of the observations and directions.
6. The relevant portion of the appellate order is extracted below :
"I find that the appellant had tersely raised this issue before the assessing authority through the reply dated August 24, 1993 to the pre-assessment notice. But, strangely enough, the assessing authority has not made in the assessment order even a casual reference to this important disputed issue. This stand of the assessing authority is neither reasonable nor justifiable. As the original authority he has to examine the issue in the light of the decision relied on by the appellant and take a decision thereon. For this purpose, the case has to go back to the assessing authority. As such, I leave open the other issues raised in the appeal.
Accordingly, I do hereby set aside the assessment and remit the case to the assessing authority for de novo disposal in the light of the above observations and directions."
7. The contention of the assessee, as already noted, is that the remand by the appellate authority is only for the limited purpose of considering the question regarding the inclusion of the turnover of purchase of arecanut, black pepper and dry ginger effected by the appellant in pursuance of the buying agency agreements and that the assessing authority was not justified in going beyond the said directions. In other words, the contention of the assessee is that the assessment order dated February 1, 1994 as rectified by order dated May 7, 1994 is intact in respect of all other matters. We are unable to agree with the said contention. The appellate authority did not go into the merits of the various contentions taken in the appeal. He had only noted that one of the claims specifically made by the assessee in the reply to the pre-assessment notice has not been considered by the assessing authority and therefore the said matter must be directed to be considered. He has not dealt with the other issues involved in the appeal. In other words, the appellate authority has not expressed any opinion regarding the merits of the various contentions taken in the appeal. The entire matter was left open. In the above circumstances, when the assessment was set aside by the appellate authority and the matter remitted to the assessing authority, the assessing authority was free to pass a fresh assessment order. While passing such a fresh assessment order, it was also open to the assessing authority to consider any other matters, which were not considered in the original assessment. It must be noted that the appellate authority did not restrict the powers of the assessing authority in the matter of making fresh assessment. Once an assessment order is set aside by a competent authority, the entire matter is at large before the assessing authority unless the appellate authority restricts the scope by specific directions in that regard. In the instant case, as already noted, the appellate authority has left open the entire matter to be considered by the assessing authority. Of course there is a direction to consider the question regarding the inclusion of the turnover of purchases of arecanut, black pepper and dry ginger effected by the assessee in pursuance of the buying agency agreements entered into with non-resident principal.
8. In the above circumstances, we are of the view that the remand by the appellate authority is an open remand and therefore the assessing authority was free to consider all the issues afresh in accordance with law. The effect is that the original assessment order goes in its entirety. Since the original order was set aside the Revenue was not aggrieved by the said order. It is only when the assessing authority passed the fresh order dated September 19, 1997 where the turnover tax has not been levied on a turnover of Rs. 1,97,48,510 the Revenue was aggrieved. In the above view of the matter, the Deputy Commissioner had acted well within his jurisdiction in invoking the provisions of Section 35 of the Act. The Appellate Tribunal considered the matter and came to the conclusion that the appellate order setting aside the assessment resulted in an open remand and therefore the only order in force for the assessment year 1989-90 was the order dated September 19, 1997.
9. The Supreme Court in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu [1977] 39 STC 177 had occasion to consider the question whether in the event of an order having been made under Section 12A of the Mysore Sales Tax Act, 1957, what is the starting point for computing the period of four years mentioned in Section 21(3) of the said Act for the exercise of powers under Section 21(2). The question was as to whether the period of four years is to be calculated from the date of order under Section 12A. Section 12A of the said Act gave power to the assessing authority to re-open the original assessment and to make the escaped assessment. Section 21 of the Act deals with the revisional power of the Deputy Commissioner. The said section is by and large similar to Section 35 of the present Act. The Supreme Court in that case held that the period of four years should be calculated from the date of the order passed under Section 12A of the said Act. The reason is stated as follows :
".....................once an assessment is reopened, the initial order for assessment ceases to be operative. The effect of reopening the assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment. The initial order for reassessment cannot be said to survive, even partially, although the justification for reassessment arises because of turnover escaping assessment in a limited field or only with respect to a part of the matter covered by the initial assessment order. The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment. As it is, we find that in the present case the assessment orders made under Section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier. In the circumstances, the only orders which could be the subject-matter of revision by the appellant were the orders made under Section 12A of the Act and not the initial assessment orders."
10. According to us, the principles laid down in the above decision will equally apply to a case where the original assessment is set aside by the appellate authority unless the appellate authority specifically limits the scope of the remand. The decision of the Andhra Pradesh High Court in State of A.P. v. Hotel Ganesh [1996] 100 STC 256 is inconsistent with the decision mentioned above. That apart, it is not clear from the said decision as to what are all matters which were dealt with by the appellate authority while setting aside the assessment order.
We do not find any illegality in the finding of the Appellate Tribunal. There is no merit in this revision. It is accordingly dismissed.