1992 (11) TMI 269 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of the Gujarat Sales Tax Act, 1969 regarding the nature of transactions involving tea, soda lemon, cold drinks, ice cream, etc.
- Validity of allowing new grounds affecting the jurisdiction of sales tax authorities to be raised before the Gujarat Sales Tax Tribunal during second appeals.

Analysis:
1. The Gujarat Sales Tax Tribunal referred a question under section 69 of the Gujarat Sales Tax Act, 1969, regarding the nature of transactions involving tea, soda lemon, cold drinks, ice cream, etc., and whether they should be considered as services to customers or sales, based on the judgment in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212.

2. M/s. Gandhi Cold Drink House, a registered dealer, was reassessed by the Sales Tax Officer for the period from April 1, 1967, to July 24, 1974, and penalties were levied under relevant sections of the Bombay Sales Tax Act, 1959, and the Gujarat Sales Tax Act, 1969. The opponent appealed these orders to the Assistant Commissioner of Sales Tax, who partially allowed the appeals leading to second appeals before the Gujarat Sales Tax Tribunal.

3. The opponent-dealer raised a new ground during the second appeals, arguing that certain transactions were in the nature of services, not sales, citing the judgment in the Northern India Caterers case. The Revenue objected to this new ground, stating that it was not raised at lower levels and could not be entertained at the second appeal stage.

4. The Tribunal, after considering the arguments, permitted the opponent-dealer to raise the new ground and set aside the orders of the Assistant Commissioner, remanding the matters for further consideration. The State of Gujarat then made a reference to the Tribunal under section 69 of the Act, leading to the current question before the High Court.

5. The High Court analyzed the powers of the Tribunal under the Act, emphasizing that the Tribunal has the authority to decide questions of facts and law, including new grounds affecting the jurisdiction of sales tax authorities. The Court referred to a previous judgment and a Full Bench decision to support the allowance of new grounds if they pertain to the same subject-matter of the appeal.

6. Ultimately, the High Court answered the reference in favor of the assessee, stating that the new ground raised by the opponent-dealer did not change the subject-matter of the appeals before the Tribunal and affected the jurisdiction of the sales tax authority in levying tax. The Court agreed with the Tribunal's reasoning for allowing the new ground and disposed of the reference with no order as to costs.