1989 (8) TMI 331 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Competence of the appellate authority to examine matters not raised in the appeal.
2. Authority of the appellate authority to direct the examination of fresh issues by the Assessing Authority without recourse to section 40 of the Haryana General Sales Tax Act, 1973.

Issue-wise Detailed Analysis:

1. Competence of the appellate authority to examine matters not raised in the appeal:

The core question referred to the High Court was whether the appellate authority is competent to address matters not raised in the appeal and direct the examination of fresh issues by the Assessing Authority, without invoking section 40 of the Haryana General Sales Tax Act, 1973.

The facts of the case involved M/s. Frick India Limited, which was assessed for the year 1968-69 by the Assessing Authority. The assessee appealed against the assessment on specific grounds, including the non-adjustment of credit notes, rejection of C forms, and imposition of tax on insurance charges. The appellate authority rejected these contentions but suo motu raised issues regarding deductions for sales in the course of exports and transfers of goods to Delhi, which were not challenged by the assessee in the appeal.

The Sales Tax Tribunal, Haryana, held that the appellate authority acted illegally by addressing issues not raised by the assessee. The Tribunal quashed the remand order, stating that the appellate authority could not take up issues on merit not raised by the appellant.

The High Court examined sections 39 and 40 of the Act. Section 39 provides for appeals and confers wide powers on the appellate authority to pass orders deemed just and proper. However, it does not authorize the appellate authority to raise suo motu issues not taken up in the grounds of appeal. Section 40 pertains to revision and allows the Commissioner to act on his own motion, which is distinct from the appellate authority's powers.

The High Court referred to the precedent set in State of Kerala v. Vijaya Stores, where the Supreme Court held that in the absence of an appeal or cross-objections by the department, the appellate authority could not enhance the assessment. The principle established was that a party not appealing from a decision is deemed to have acquiesced to it and cannot seek relief in an appeal preferred by the opposite party.

Applying this principle, the High Court concluded that the Deputy Excise and Taxation Commissioner could not, on the appeal of the assessee and in the absence of any appeal or revision by the department, set aside the orders of the Assessing Authority relating to exemptions granted and remand the case for fresh decision.

2. Authority of the appellate authority to direct the examination of fresh issues by the Assessing Authority without recourse to section 40 of the Act:

The High Court clarified that the appellate authority's jurisdiction is invoked only on an appeal filed by a party. The Deputy Excise and Taxation Commissioner does not have the power to act on his own motion, unlike the Commissioner under section 40. The appellate authority can adjudicate only upon specific issues raised in the grounds of appeal or those urged at the time of hearing.

The High Court emphasized that if the department is dissatisfied with any decision or findings of the Assessing Authority, it must prefer an appeal or revision against that order. The appellate authority cannot take up new issues on merit which have not been raised by the appellant. This limitation ensures that the appellate process is confined to the grievances and pleas specifically brought before it by the aggrieved party.

In conclusion, the High Court held that the appellate authority was not competent to go into matters not raised in the appeal and direct the examination of fresh issues by the Assessing Authority. The answer to the referred question was in the negative, and no costs were awarded.

Reference answered in the negative.