1993 (2) TMI 314 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the legality of the order directing restoration of enhancement reduced by the Assistant Commissioner of Sales Tax.

Analysis:
The petitioner contested the order of the Accounts Member of the Orissa Sales Tax Tribunal, which directed the restoration of an enhancement that was initially reduced by the Assistant Commissioner of Sales Tax. The petitioner's turnover was assessed resulting in an extra demand, which was later reduced by the ACST. However, the Tribunal directed the restoration of the enhancement made by the assessing officer, stating that the ACST erred in interfering with the assessment.

The main argument raised by the petitioner was that without any appeal or cross-objection, there was no scope for enhancement as it would amount to enhancement of the turnover. On the other hand, the Revenue's counsel supported the order, citing the Tribunal's power of enhancement under section 23(3)(c) of the Orissa Sales Tax Act.

Section 23(3)(c) grants the Tribunal the power to enhance assessments while disposing of an appeal, subject to conditions enumerated in subsection (2). Both the first appellate and second appellate authorities have the power of enhancement, but this power is contingent upon an appeal or cross-objection filed by the Revenue. The Tribunal cannot enhance assessments in the absence of such filings.

Referring to a similar provision in the Kerala General Sales Tax Act, the Supreme Court held that the Tribunal can only enhance assessments when disposing of an appeal after giving parties a reasonable opportunity to be heard. The Tribunal cannot enhance assessments without an appeal or cross-objection by the Revenue, as this would ignore the scheme of appellate powers.

Rule 50(3) of the Orissa Sales Tax Rules mandates that the appellate authority cannot enhance assessments or penalties without providing the appellant with a reasonable opportunity to contest the enhancement. In this case, the Tribunal failed to grant the petitioner such an opportunity, but this oversight is inconsequential given the conclusion that the Tribunal lacked the power to enhance assessments without a Revenue appeal or cross-objection.

The Court nullified the restoration of the enhancement directed by the Tribunal, emphasizing that the Tribunal acted contrary to the law established by the apex Court. While the parties could have pursued remedies through a reference application under section 24 of the Act, the Court entertained the writ application due to the Tribunal's erroneous decision. The writ petition was allowed, with no costs incurred.

Justice B.N. Dash concurred with the decision to allow the writ petition.