1989 (3) TMI 364 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether an assessee can raise additional grounds regarding a turnover not disputed in the original grounds of appeal under Section 31 of the Tamil Nadu General Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Permissibility of Raising Additional Grounds:
The primary issue was whether an assessee, who did not dispute a particular turnover in the original appeal under Section 31 of the Tamil Nadu General Sales Tax Act, 1959, could later raise additional grounds concerning the same turnover. The provocation for this reference arose from the earlier Division Bench ruling in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company of India Limited, which held that the Appellate Assistant Commissioner had no jurisdiction to permit additional grounds for a turnover not disputed in the original appeal.

2. Tribunal's Refusal to Entertain Additional Grounds:
The Tribunal refused to entertain the assessee's objection regarding an exemption from assessment of purchase turnover of raw hides and skins amounting to Rs. 8,97,014.34, which was not questioned in the original appeal but was raised subsequently. The Tribunal described the additional ground as a supplemental appeal and deemed it incompetent, noting that it was filed out of time and that a single assessment order could only have one appeal.

3. Scope of Appellate Powers under Section 31:
The court examined Section 31 of the Act, which outlines the appellate process and the powers of the Appellate Assistant Commissioner. The provision allows the appellate authority to confirm, reduce, enhance, or annul the assessment or penalty, and to set aside the assessment for a fresh assessment. The court noted that neither Section 31 nor the associated rules explicitly prohibited the raising of additional grounds.

4. Comparison with Income Tax Act Provisions:
The court considered the comparative study made in the Siemens case between the Tamil Nadu General Sales Tax Act and the Income Tax Act, which has specific provisions allowing additional grounds. The court expressed doubt about the correctness of using such a comparative study to limit the appellate powers under the Sales Tax Act.

5. Judicial Precedents and Principles:
The court referenced the Supreme Court decisions in Commissioner of Income-tax, Madras v. Mahalakshmi Textile Mills Limited and Hukumchand Mills Limited v. Commissioner of Income-tax, which held that appellate authorities could consider matters not raised in earlier proceedings. The court also cited the Division Bench ruling in Commissioner of Income-tax v. Indian Express (Madurai) Private Limited, which allowed the raising of additional grounds during the hearing of an appeal.

6. Reconsideration of Siemens Ruling:
The court concluded that the rigid view in the Siemens case needed reconsideration, noting that the primary purpose of tax statutes is to ascertain the correct tax liability. The court emphasized that the appellate process in tax matters should not be equated to civil litigation, where notions of finality and subject-matter constraints are more rigidly applied.

7. Discretion of Appellate Authority:
The court clarified that while the appellate authority has wide powers under Section 31, it also has the discretion to admit or reject additional grounds, which must be exercised judiciously, considering factors such as limitation.

Conclusion:
The court overruled the stringent view in the Siemens case, allowing for the possibility of raising additional grounds in tax appeals. The matter was directed to be decided by a Full Bench for a comprehensive resolution, and the tax case was referred back to the Division Bench for consideration on merits.

Reference Answered Accordingly:
The court concluded that the appellate authority under Section 31 of the Tamil Nadu General Sales Tax Act, 1959, has the jurisdiction to entertain additional grounds, subject to judicial discretion. The reference was answered, and the tax case was directed to proceed on its merits.