1978 (9) TMI 2 - SC - VAT and Sales Tax

Tribunal have no jurisdiction and have no power to enhance assessment where no appeal or cross objections by Department against the AAC s order

Summary

Issues:
1. Interpretation of the power of the Appellate Tribunal under s. 39(4) of the Kerala General Sales Tax Act, 1963 to enhance assessment in the absence of appeal or cross-objections by the revenue.

Detailed Analysis:

The case involved a question of whether the Appellate Tribunal had the authority to enhance an assessment under s. 39(4) of the Kerala General Sales Tax Act, 1963 without any appeal or cross-objections filed by the revenue. The respondent-firm, a dealer in stationery, had its assessment challenged by the Appellate Tribunal, which sought to add a significant amount to the taxable turnover based on discrepancies found in the assessee's records. The Kerala High Court initially ruled in favor of the respondent-firm, stating that the Tribunal lacked jurisdiction to enhance the assessment without an appeal or cross-objections by the department, citing precedents from the Bombay High Court. The State of Kerala appealed this decision to the Supreme Court.

In the Supreme Court, the appellant's counsel argued that the Appellate Tribunal had the power to enhance the assessment even without an appeal or cross-objections by the department, as long as a reasonable opportunity for hearing was provided. The counsel also contended that the provisions of s. 39(4) of the Kerala Act should not be equated with those of the Income Tax Act, 1922, and cited a contrary view from the Orissa High Court. However, the Supreme Court rejected these arguments.

The Supreme Court emphasized the importance of the scheme outlined in s. 39 of the Act. It highlighted that while s. 39(4)(a)(i) granted the Tribunal the power to enhance an assessment, this power was contingent upon an appeal or cross-objections being filed by the department. The Court reasoned that allowing the Tribunal to enhance an assessment in the absence of departmental appeal or cross-objections would render the provision for cross-objections redundant. Therefore, the Court held that the Tribunal lacked jurisdiction to enhance the assessment without such appeals or cross-objections.

Regarding the precedents cited by the High Court from the Bombay High Court, the Supreme Court found them applicable to the present case despite being related to the Income Tax Act, 1922. The Court agreed with the principle that a party not appealing must be deemed satisfied with the decision and cannot seek relief against a rival party in an appeal filed by the latter. The Court also dismissed the relevance of the Orissa High Court decision, noting that it was based on a concession made by the assessee's counsel.

In conclusion, the Supreme Court upheld the decision of the High Court, ruling that the Appellate Tribunal did not have the authority to enhance the assessment in the absence of an appeal or cross-objections by the department. The appeal was dismissed, and no costs were awarded since the respondent did not appear.