1987 (4) TMI 454 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Appellate Authority to Vary Assessment Not Challenged in Appeal
2. Application of Amended Section 9(3) of the U.P. Sales Tax Act, 1948
3. Powers of the Tribunal in Enhancing Tax Rate

Detailed Analysis:

1. Jurisdiction of the Appellate Authority to Vary Assessment Not Challenged in Appeal

The primary issue was whether the Assistant Commissioner (Judicial) [A.C. (J.)] had the jurisdiction to enhance the tax rate on the turnover of cashmilon from 2% to 7%, despite the fact that the imposition of tax at 2% was not contested in the appeal by the assessee. The contention of the assessee was that only the part of the assessment order that was appealed against could be reviewed by the A.C. (J.), and the part that was not appealed had become final. The court referred to the precedent set in Madan Studio v. Assistant Commissioner (Judicial) IV, Sales Tax, which established that the appellate authority is confined to the subject matter of the appeal and cannot go beyond it to alter parts of the assessment that were not contested.

2. Application of Amended Section 9(3) of the U.P. Sales Tax Act, 1948

The Revenue argued that the amended sub-section (3) of section 9 of the Act, 1948, which includes sub-clause (ii) allowing the appellate authority to "vary such order by reducing or enhancing the amount of assessment or penalty, as the case may be, whether such reduction or enhancement arises from a point raised in the grounds of appeal or otherwise," gave the A.C. (J.) the power to alter the assessment even on points not raised in the appeal. The court rejected this argument, stating that the part of the assessment order not appealed against becomes final and cannot be interfered with by the appellate authority. The court emphasized that allowing such power to the appellate authority would indirectly grant the department a right to appeal, which is not permitted under the Act.

3. Powers of the Tribunal in Enhancing Tax Rate

The Tribunal's decision to enhance the tax rate on the turnover of cashmilon from 2% to 7% was also scrutinized. The court noted that the Tribunal relied on previous case law to justify its decision but concluded that the Tribunal did not have the power to enhance the tax rate, as its powers are not co-extensive and co-terminous with those of the assessing officer. The court stated that the assessing officer could only reopen an assessment under section 21 of the Act if there was a reason to believe that the turnover was under-assessed or assessed at a lower rate. Since the A.C. (J.) did not make the enhancement himself but directed reassessment, and the Tribunal ultimately made the enhancement, the court found this action beyond the Tribunal's jurisdiction.

Conclusion:

The revision was allowed, and the Tribunal's order dated 7th May, 1986, enhancing the tax rate on the turnover of cashmilon was set aside. The order of the Sales Tax Officer (S.T.O.) imposing tax at the rate of 2% was restored. The court directed that a copy of the order be sent to the Tribunal to pass a conforming order under section 11(8) of the Act, 1948. The petition was allowed.