1983 (2) TMI 265 - HC - VAT and Sales Tax

Issues Involved:
1. Competence of the Tribunal to refuse enhancement of turnover.
2. Interpretation of Section 38(5) of the M.P. General Sales Tax Act, 1958.
3. Applicability of Section 19(1) and Section 39(2) for reopening assessments.
4. Examination of relevant case law and judicial precedents.

Detailed Analysis:

1. Competence of the Tribunal to Refuse Enhancement of Turnover:
The primary issue was whether the Tribunal was competent in refusing to consider the question of enhancement of turnover by Rs. 95,795 under Section 38(5) of the M.P. General Sales Tax Act on the application made by the Commissioner, Sales Tax. The Tribunal had rejected the revenue's application without addressing its merits, citing that provisions in Section 19(1) and Section 39(2) allowed the revenue to reopen the assessment, and considering the application would deprive the assessee of the remedy of appeal.

2. Interpretation of Section 38(5) of the M.P. General Sales Tax Act, 1958:
The court examined Section 38(5) which grants the appellate authority the power to "confirm, reduce, enhance or annul the assessment or the penalty or both" in an appeal filed by the assessee. The court emphasized that this power is unrestricted and subject only to the prescribed procedure and further inquiry as deemed necessary. Rule 60 of the M.P. General Sales Tax Rules, 1959, requires a notice in Form XXVIII to the person likely to be affected adversely before passing any order enhancing the assessment.

3. Applicability of Section 19(1) and Section 39(2) for Reopening Assessments:
The court acknowledged that the Commissioner of Sales Tax has the power to reopen assessments under Section 19(1) and to initiate suo motu revision under Section 39(2). However, the court held that the availability of these powers does not exclude the additional remedy of invoking the appellate authority's power under Section 38(5) to enhance the assessment in an appeal filed by the assessee.

4. Examination of Relevant Case Law and Judicial Precedents:
The court referred to several decisions to support its interpretation:
- State of Kerala v. Vijaya Stores: Distinguished on the basis that the Kerala Act provided for appeals and cross-objections by the revenue, which was not the case under the M.P. Act.
- Madras High Court Decisions: In *V. Krishnappa Chettiar v. State of Tamil Nadu* and *Deputy Commissioner of Commercial Taxes v. Panayappan Leather Industries*, the Madras High Court upheld the power of the appellate authority to enhance assessments in the absence of a right of appeal or cross-objection by the revenue.
- Mohanlal Hargovinddas (Firm) v. State of Madhya Pradesh: Supported the view that the appellate authority has the power to enhance assessments in the assessee's appeal.
- Commissioner of Sales Tax, Madhya Pradesh v. Mohanlal Harprasad: Reiterated that the appellate authority must decide on the enhancement of tax even if the assessee withdraws the appeal.

Conclusion:
The court concluded that the Tribunal was not justified in refusing to consider the question of enhancement of tax under Section 38(5) of the Act. It held that the appellate authority has the power to enhance the assessment in an appeal filed by the assessee, subject to the prescribed procedure and reasonable opportunity for the assessee to be heard. The question referred was answered in the negative, in favor of the revenue and against the assessee, indicating that the Tribunal should have considered the application for enhancement. No order as to costs was made.

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