1987 (1) TMI 479 - HC - VAT and Sales Tax

Summary

Issues: Reassessment under section 19(1) of the M.P. General Sales Tax Act, 1958 based on the legality of the second appeal decision.

The judgment of the High Court of Madhya Pradesh pertained to the reassessment of a dealer under section 19(1) of the M.P. General Sales Tax Act, 1958. The case involved a dealer dealing in cotton bales who was initially assessed to tax under the Central Sales Tax Act for certain years. The issue arose when the assessing authority reopened the assessment under section 19(1) on the ground that certain items were not taxed correctly in the original assessment. The dealer's first appeal was rejected, leading to a second appeal before the Tribunal. The Tribunal held that the reassessment under section 19(1) was not legal as the matter in question had already been finalized in the earlier second appeal, citing section 38(6) of the Act which states that orders passed in second appeal shall be final. The High Court concurred with the Tribunal's decision, emphasizing the principle that the appellate decision supersedes the original decision, and in this case, the assessment of tax on packing material had already been decided in the second appeal.

The High Court referenced the Supreme Court's decisions in Commissioner of Income-tax v. Amritlal Bhogilal & Co. and State of Madras v. Madurai Mills Co. Ltd. to support its conclusion. It highlighted the doctrine of merger, explaining that when an appellate decision confirms or modifies the original decision, the appellate decision becomes the operative decision in law. In this case, the Tribunal's decision in the second appeal regarding the assessment of tax on packing material at specific rates had merged with the original assessment, making it final and not subject to reassessment under section 19(1). The Court also noted the amendment to the M.P. General Sales Tax Act in 1983, introducing section 19A allowing reassessment in certain cases, but clarified that this amendment did not apply retroactively to the present case, as the reassessment had occurred before the amendment came into force.

Ultimately, the High Court upheld the Tribunal's decision, ruling in favor of the dealer and affirming that the reassessment under section 19(1) was not legal due to the finality of the earlier second appeal decision on the assessment of tax on packing material. The Court concluded by stating that there would be no order as to costs in the circumstances of the case, and the reference was answered in the affirmative.