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TMI Blog1979 (12) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... seerespondents were taken up for hearing, the revenue had filed petitions for enhancement of the assessment on the basis that in accordance with the judgment of the Supreme Court in V. Guruviah Naidu and Sons v. State of Tamil Nadu[1976] 38 S.T.C. 565 (S.C.). the assessing officer should have proceeded under item 7(a) of the Second Schedule to the Act and assessed the purchase turnover of raw hides and skins, made in the State, instead of assessing the sales turnover of dressed hides and skins sold in the State. The subject-matter of Tax Case No. 449 of 1979 is the order of the Sales Tax Appellate Tribunal, Main Bench, Madras-1, dated 29th August, 1978, rendered in Tribunal Appeal No. 981 of 1977 read with Tribunal Miscellaneous Petition No. 302 of 1978. The appeal itself was preferred by the assessee-respondent. The contention that was put forward by the assesseerespondent in the appeal was against the tax at 3 per cent on closing stock of raw skins. However, the revenue filed Tribunal Miscellaneous Petition No. 302 of 1978 contending that the assessing authority had failed to assess the assessee on the entire local purchases of raw hides and skins which went into the production o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken advantage of the decision of the Supreme Court and fixed the turnover of last purchases at an amount proportionate to the export sales of tanned skins or inter-State sales of tanned skins, we cannot newly bring the unassessed portion of the purchase turnover to tax by invoking the provisions of section 36(3). As laid down in the decisions in State of Madras v. Spencer and Company Ltd.[1974] 34 S.T.C. 249. and State of Tamil Nadu v. K.R. and P. Shanmugavel Nadar[1977] 39 S.T.C. 391., the dispute before the Tribunal can only be in respect of matters agitated in the first appeal before the Appellate Assistant Commissioner. The claim cannot be newly brought forth before the Tribunal against an order of the assessing officer." The subject-matter of Tax Cases Nos. 1082 and 1083 of 1979 is the common order of the Sales Tax Appellate Tribunal, Main Bench, Madras, dated 24th February, 1979, made in Tribunal Appeal No. 322 of 1978 read with Tribunal Miscellaneous Petition No. 443 of 1978 and Tribunal Appeal No. 554 of 1978 read with Tribunal Miscellaneous Petition No. 444 of 1978. That order also dealt with the question of assessing the purchase turnover of raw hides and skins made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 456, 457, 475, 487, 489, 695 and 962 of 1979). Following the judgment of the Supreme Court referred to above we have held in that judgment that the duty of the assessing officer is to tax the purchase turnover under item 7(a) of the Second Schedule to the Act and to tax the sales turnover of the first sale in the State of the dressed hides and skins under item 7(b) at the appropriate rates mentioned in the Act subject to the qualification that when raw hides and skins already subjected to tax had been sold as dressed hides and skins, they would not suffer tax at the point of first sale in the State. If that be the case, the law is that it is the duty of the assessing officer to first assess the purchase turnover under item 7(a) at 3 per cent on the turnover and thereafter to assess the sales turnover under item 7(b) subject to the qualification referred to above. We have also pointed out that before the decision of the Supreme Court in the Guruviah Naidu's case(1) the practice in this State was on the basis of the law laid down by this Court in L.M.S. Sadak Thamby Co., Madras-1 v. Appellate Assistant Commissioner of Commercial Taxes I, Madras-13(3), by which the sales turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Tribunal that the enhancement petitions were not maintainable. For the purpose of considering this question, it is necessary to refer to and set out certain provisions of the Act. Section 12 of the Act deals with the procedure to be followed by the assessing authority. Section 13 deals with the provisional assessment to be made by the assessing authority. Section 14 deals with fresh assessment in certain cases. Section 16 deals with the assessment of escaped turnover. Section 31 is the section dealing with an appeal to the Appellate Assistant Commissioner. Section 31(1) enumerates the orders which could be the subject-matter of an appeal to the Appellate Assistant Commissioner. Sub-section (3) of section 31 deals with the scope of the power of the Appellate Assistant Commissioner in disposing of an appeal. That sub-section says: "In disposing of an appeal, the Appellate Assistant Commissioner may, after giving the appellant a reasonable opportunity of being heard, (a) in the case of an order of assessment (i) confirm, reduce, enhance or annul the assessment or the penalty or both; (ii) set aside the assessment and direct the assessing authority to make a fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessary to repeat the language of sub-section (2) of section 34, because the language is analogous to the language contained in sub-section (2) of section 32, which we have already extracted. Section 36 deals with appeal to the Appellate Tribunal. Subsection (1) of that section states: "Any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31, or an order passed by the Deputy Commissioner under sub-section (1) of section 32 may, within a period of sixty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Tribunal: Provided that the Appellate Tribunal may admit an appeal presented after the expiration of the said period if it is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period." Sub-section (2) deals with the form in which the appeal should be preferred and the fee that should be paid for the appeal. Sub-section (3) of section 36 deals with the scope of the power of the Tribunal in disposing of an appeal. That sub-section states: "In disposing of an appeal, the Appellate Tribunal may, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 36(3)(a)(ii) refers to the setting aside of the assessment and directing the assessing authority to make a fresh assessment. It has been noticed that section 36(3)(a)(ii) does not refer to the setting aside of the order of the Appellate Assistant Commissioner or the order of the Deputy Commissioner, but it contemplates the setting aside of the assessment itself and directing the assessing authority to make a fresh assessment after such further enquiry as may be directed. Consequently, having regard to the wide language contained in section 36(3), which corresponds to section 31(3) of the Act, it is clear that when an assessee prefers an appeal either to the Appellate Assistant Commissioner or to the Tribunal, the entire assessment is set at large, and the Appellate Assistant Commissioner or the Tribunal is given power to redo the entire assessment according to law. If either of the appellate authorities comes to the conclusion that the assessing authority had not assessed the turnover according to law either by way of omitting a turnover liable to tax or assessing a turnover at a rate lower than the rate which is applicable to the same, the appellate authorities have the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l can be preferred before the Tribunal. Section 36(1) opens by saying "any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31, or an order passed by the Deputy Commissioner under sub-section (1) of section 32". From this, this Court drew the inference that the person who prefers an appeal to the Tribunal must be objecting to the order of the Appellate Assistant Commissioner or the Deputy Commissioner, as the case may be, and he can so object only if he had raised a point either before the Appellate Assistant Commissioner or the Deputy Commissioner and that point had been decided against him. The Bench in the first case, namely, State of Madras v. Spencer and Company Limited[1974] 34 S.T.C. 249 at 252. , referred to the contention advanced on behalf of the State and recorded its conclusion as follows: "But he (the learned Assistant Government Pleader) submitted that the Tribunal acted without jurisdiction in giving relief to this turnover which was not disputed before the Appellate Assistant Commissioner. As already stated, the assessees themselves opted to be assessed at 50 per cent of the consolidated receipts for ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner and if it is disputed for the first time before the Tribunal, it amounts to preferring an appeal to the Tribunal directly from the assessment order in so far as that turnover is concerned and that is not permitted by law and the Tribunal also has no inherent power to permit the raising of an additional ground which was not the subject-matter of appeal before the Appellate Assistant Commissioner. In this case also the learned judges relied on the language of section 36(1) of the Act and the earlier decision of this Court in State of Madras v. Spencer and Co. Ltd.[1974] 34 S.T.C. 249. In our opinion, the above two decisions will have no bearing on the present controversy because those two decisions expressly dealt with the scope of the power of the Appellate Tribunal with reference to an appeal preferred by an assessee and that conclusion was reached having regard to the specific language contained in section 36(1) of the Act as to who can prefer an appeal and against what orders. Such a consideration will have no place in considering the scope of the power of the Tribunal while disposing of an appeal with reference to the language contained in section 36(3) of the Act and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for enhancement before the Tribunal was not at all competent. We accept this submission. As the matter had not been raised at the stage of appeal before the Appellate Assistant Commissioner, the Sales Tax Appellate Tribunal could not have considered any objection which arose out of the original order of the assessing authority and not out of the order of the appellate authority." Certainly, the above observation in the judgment of the Bench is in favour of the assessee's contention. However, if it had become necessary we would have referred it to a Full Bench. But it had not become necessary in view of two circumstances. The first circumstance is that there is no discussion in the above extract as to the legal position, and the Bench has simply stated that they accepted the submission made on behalf of the respondent. Secondly, there is already a Bench judgment of this Court dealing with the scope of the power of the Tribunal and taking the view that the Tribunal is competent to entertain such a plea to enhance before it and that decision has not been referred to and considered by the Bench in the case relied on, namely, Deputy Commissioner (C.T.) v. Sivasakthi Spinning MillsPage 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by them suo motu and on application, and certain special powers. The special powers under sections 32 and 34 cannot be exercised by the Deputy Commissioner or the Board of Revenue, if the time for appeal against an order under section 12 has not expired or such order has been made the subject of appeal to the Appellate Assistant Commissioner, the Appellate Tribunal or of revision in the High Court under section 38. An appeal to the High Court is provided by section 37 from an order of the Board of Revenue under section 34 which is objected to. In the light of these provisions, it is contended for the assessee in this Court that as its appeals to the Appellate Assistant Commissioner were confined to that part of the order of the assessing authority in relation to certain amounts collected by way of tax under section 8-B(2) of the Madras General Sales Tax Act, 1939, and in one of the appeals, a further question as to the character of the transaction, which had been brought to tax, was alone raised, the Appellate Assistant Commissioner in dealing with those appeals has no power to travel beyond their scope, reopen the assessment order relating to bus-body-building contracts which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he intention of the legislature is to confine the power of enhancing the assessment in disposing of appeals to only that part of the order under section 12 that is objected to by the assessee, the limitation to the special powers of the Deputy Commissioner and the Board of Revenue under sections 32 and 34 would have been differently worded in subsection (2) of each of those sections. The language of sections 32(2)(a) and (b) and 34(2)(a) and (b) is consistent with the view that the power of enhancing the assessment under section 31 extends to the entire range of assessment. Though the Income-tax Act, 1922, adopts a different scheme, and decisions thereunder may not always be apposite to the construction of other fiscal enactments like the Madras General Sales Tax Act, 1959, yet it appears that the phraseology of subsection (3)(a)(i) of section 31 of the Madras General Sales Tax Act, 1959, has been reproduced word for word from sub-section (3)(a) of section 31 of the Income-tax Act, 1922. Sections 32(2)(a) and (b) and 34(2)(a) and (b) of the Madras General Sales Tax Act, 1959, substantially follow the pattern of clauses (a) and (b) to the proviso to section 33-A of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Assistant Commissioner or the Deputy Commissioner, as the case may be, to pass a fresh order after such further inquiry as may be directed". That is not the language of the statute and as the language in the statute has been couched in the widest possible terms, there is no scope for interpreting that language narrowly so as to bring in only the order of the Appellate Assistant Commissioner or the order of the Deputy Commissioner to be interfered with by the Tribunal and not the order of assessment passed by the original authority. As a matter of fact, if one illustration is taken, we will see that this argument falls to the ground. Supposing an assessee prefers an appeal against the order of the assessing authority to the Appellate Assistant Commissioner and that appeal is dismissed by the Appellate Assistant Commissioner and thereafter the assessee prefers a further appeal to the Tribunal; in such a case, the Tribunal's power of enhancement can only be with reference to the order of the assessing authority and cannot be with reference to the order of the Appellate Assistant Commissioner, because, the Appellate Assistant Commissioner merely dismissed the appeal preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with section 21(1). All that section 21(4) means is that if the appeal relates to the whole of the assessment, then the Tribunal has powers to confirm, reduce, enhance or annul the assessment. If it relates to a part of the assessment, then its power to confirm, reduce, enhance or annul the assessment is confined to that part. The wide language used is only intended to cover all cases of appeal including cases of appeal against the entire assessment. We do not see anything in the section which justifies the contention that even if any part of the assessment is not the subject-matter of of appeal, the Tribunal may pass orders with respect to that part also. " The above decision of the Andhra Pradesh High Court runs directly contrary to the decision of this Court in T.V. Sundaram Iyengar Sons (P.) Ltd. v. State of Madras[1970] 25 S.T.C. 160., already referred to. In the passage from the judgment of this Court in T.V. Sundaram Iyengar Sons (P.) Ltd. v. State of Madras[1970] 25 S.T.C. 160., extracted already, there are two significant sentences, namely, "It is difficult to conceive of cases of enhancement of assessment confined to the limits of that part of the order whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. The Appellate Assistant Commissioner on appeal held that there was no proof to show that the tax had been paid at an earlier stage in respect of the cotton waste which emerged as a by-product and therefore the assessee as the first seller of such cotton was liable to tax. The assessee thereafter appealed to the Sales Tax Appellate Tribunal. The Tribunal held that the assessee had used only cotton waste purchased from other dealers within the State and that the waste cotton obtained in the process of spinning and sold by them were only the rejects of such waste cotton used by it for spinning. The sales of the cotton waste were therefore held to be not taxable, because they were not the first sales in the State. This conclusion of the Tribunal is challenged by the State. As far as the assessability of the turnover of cotton waste is concerned, it is clear from the finding of the Tribunal that the waste was obtained only in the process of spinning and that the waste formed part of the cotton waste which had originally been purchased by the assessee in the State. In view of this finding of the Tribunal, it cannot be held that there was any error in the order of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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