1988 (2) TMI 437 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the appellate authority under the Orissa Sales Tax Act can reject an application by the assessee to withdraw an appeal.
2. Whether the appellate authority can initiate a proceeding for enhancement of assessment after the assessee files for withdrawal of the appeal.

Detailed Analysis:

1. Right to Withdraw an Appeal:

The primary issue in this case is whether the appellate authority under the Orissa Sales Tax Act has the jurisdiction to reject an application for withdrawal of an appeal filed by the assessee. The petitioner, Orissa Cement Limited, filed an appeal against an assessment order but later sought to withdraw it. The appellate authority rejected the withdrawal request, citing prima facie grounds for enhancement of the assessment.

The petitioner's counsel argued that the right to file an appeal inherently includes the right to withdraw it, especially in the absence of any statutory prohibition. The Orissa Sales Tax Act does not explicitly restrict the withdrawal of an appeal. The counsel cited the Gujarat High Court's decision in *State of Gujarat v. Premier Auto Electricals Ltd.* and the Supreme Court's decision in *Bijayananda Patnaik v. Satrughna Sahu*, which support the notion that an appellant has the right to withdraw an appeal before it is heard.

The court examined relevant provisions of the Orissa Sales Tax Act and Rules, particularly Section 23 and Rule 50, which deal with the procedure for appeals and the powers of the appellate authority. It was noted that the appellate authority has the power to confirm, reduce, enhance, or annul an assessment during the disposal of an appeal, but this power is contingent upon giving the appellant a reasonable opportunity to show cause against such enhancement.

2. Enhancement of Assessment:

The appellate authority's power to enhance an assessment while disposing of an appeal is granted under Section 23(2)(a) of the Orissa Sales Tax Act. However, this power can only be exercised during the disposal of an appeal and after providing the appellant an opportunity to show cause against the enhancement, as mandated by Rule 50(3) of the Orissa Sales Tax Rules.

The court found that the appellate authority's rejection of the withdrawal application and subsequent issuance of a notice for enhancement was premature. At the time of the withdrawal application, the appellate authority had not yet exercised its power under Rule 50(3) to issue a notice for enhancement. Therefore, the appellate authority had no jurisdiction to reject the withdrawal request before the hearing of the appeal and before issuing any notice for enhancement.

Conclusion:

The court concluded that under the Orissa Sales Tax Act, an appellant has the right to withdraw an appeal before it is heard, and the appellate authority cannot reject such a withdrawal request merely because it perceives grounds for enhancement. The impugned order rejecting the withdrawal application and issuing a notice for enhancement was quashed. The appeal was held to have been withdrawn, and the writ application was allowed without any order as to costs.