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TMI Blog1983 (2) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... r is annexure A dated 23rd October, 1972. The assessee preferred a first appeal under section 38(1) of the Act to the Deputy Commissioner which was rejected by order annexure B dated 17th November, 1973. The assessee then preferred a second appeal under section 38(2) of the Act to the Sales Tax Appellate Tribunal (Board of Revenue), which has been allowed by the Order annexure C dated 7th February, 1976. At the time of hearing of the second appeal on 22nd January, 1976, the revenue made an application for enhancement of the tax assailing the correctness of the exemption granted by the assessing authority on the sale of "ruskat gur" worth Rs. 95,795 on the ground that it was covered by the term "fodder". This application was rejected by the Tribunal while disposing of the appeal by its order annexure C dated 7th February, 1976. The reasons given by the Tribunal for rejecting the application are that provisions exist in section 19(1) as well as section 39(2) of the Act enabling the revenue to initiate appropriate action for reopening the assessment in such a situation; and in case the Tribunal entertained the revenue's request the assessee would be deprived of the remedy of appeal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en admittedly the department has no right of appeal or the right to file a cross-objection in the assessee's appeal. The question is which of the two contentions should be accepted as correct. 6.. There is no dispute that there is power under section 19(1) to reopen an assessment within the prescribed period in case any part of the turnover has escaped assessment and similarly under section 39(2) there is power of suo Motu revision available to the Commissioner to interfere in case the assessment made is prejudicial to the interests of the revenue. It is also not in dispute that there is no provision for an appeal by the revenue or a cross-objection by it in the assessee's appeal under the M.P. General Sales Tax Act, 1958, and the right of appeal is given in section 38 only to the assessee. It is in this background that the revenue's contention that it has right to apply for enhancement in the assessee's appeal by virtue of sub-section (5) of section 38 which enables the appellate authority even to enhance the assessment in an appeal filed by the assessee has to be examined. 7.. The relevant provisions may now be quoted. Sub-section (5) of section 38 of the M.P. General Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's appeal which alone is provided in sub-sections (1) and (2) of section 38. The procedure prescribed in rule 60 requires a notice in the prescribed form XXVIII to the person likely to be affected adversely, viz., the assessee, before exercising the power of enhancement. The prescribed form of the notice as well as rule 60 to which it relates show that the power of enhancement under section 38(5)(a) can be exercised in the same manner as in the revision by the Commissioner under section 39 of the Act inasmuch as the prescribed procedure is the same. Reference to an "appeal" in addition to "revision" in rule 60 and to section 38 of the Act expressly in form XXVIII would be meaningless, unless the power to enhance the assessment in the assessee's appeal was available to the appellate authority as mentioned specifically in section 38(5)(a). Reading these provisions separately as well as collectively the clear indication is that the statute expressly confers on the appellate authority the power to enhance the assessment in an assessee's appeal subject only to a reasonable opportunity to the assessee to show cause against the same in the manner prescribed. The appellate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hirapalli Division, Tiruchirapalli v. Panayappan Leather Industries [1981] 47 STC 88 taking the same view. The corresponding provisions of the Tamil Nadu Act, as stated earlier, were similar to the provisions of the M.P. Act. Ismail, C.J., speaking for the court held as follows: "The question that arises now for consideration is what exactly is the scope of this power of the Tribunal. Clearly, the power of the Tribunal has been couched in the widest possible terms. Section 36(3)(a)(i) clearly contemplates not only the reduction of assessment and penalty which will be in favour of the appellant, but also confirmation of assessment or penalty and even enhancement of the assessment or penalty. The enhancement of the assessment or penalty will be one adverse to the appellant, who had preferred the appeal. It is the common case that under section 36 the revenue has no right to prefer an appeal against the order of the Appellate Assistant Commissioner or the Deputy Commissioner and it is only the assessee who is entitled to prefer an appeal. Consequently, the scope of section 36(3)(a)(i) will indicate that even in an appeal preferred by the assessee, the Tribunal has got a power to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a case will be that since the revenue has requested the Tribunal to pass an order adversely or prejudicial to the assessee, the assessee should be given a reasonable opportunity to put forward his case with reference to the proposed enhancement. (underlining by us*) * * *" *Here italicised. 12.. The Madras view is taken on the basis that there being no provision for an appeal or cross-objection by the revenue the power of enhancement given to the appellate authority must necessarily be available in the assessee's appeal and there being nothing to limit its exercise the expression has to be given full effect. Accordingly, the view taken is that even in the assessee's appeal the entire assessment is reopened and the power of enhancement available to the appellate authority can be exercised without any limitation for enhancing the assessment if the assessment is found prejudicial to the revenue, and if necessary, even a remand can be ordered. This view taken by the Madras High Court clearly supports the revenue. 13.. Reference may now be made to a Full Bench decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. Sri Venkata Rama Lingeshwara Rice Mill [1977] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench of this Court. It was held that "when the assessee goes up in appeal, he exposes the assessment as a whole to scrutiny of the appellate authority". It was also held relying on the leading authority in Rex v. Special Commissioners of Income-tax [1937] 20 TC 381 that the assessee cannot be permitted to withdraw the appeal after it has been entertained to thwart the true assessment on the facts found, including the enhancement. This decision clearly supports the revenue's contention in the present case of there being a power of enhancement available to the appellate authority in the assessee's appeal by virtue of the provisions contained in section 38(5)(a) of the M.P. General Sales Tax Act, 1958, and there being no provision for appeal or a cross-objection by the revenue under the Act. 15.. Another relevant decision is Commissioner of Sales Tax, Madhya Pradesh v. Mohanlal Harprasad [1966] 17 STC 1. In that case, the revenue filed an application in the assessee's appeal before the Tribunal under section 38(5) of the M.P. General Sales Tax Act, 1958, for enhancement of the assessment. When the appeal along with the application made by the revenue for enhancement came up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority has no power to enhance the assessment at the instance of the revenue in an appeal filed by the assessee, so as to limit the scope of the ordinary meaning of section 38(5)(a). The aforesaid Andhra Pradesh decision is distinguishable. as already pointed out. 18.. The result, therefore, is that the true import and meaning of section 38(5)(a) of the Act summarised by us earlier, particularly in paragraphs 8 and 16 above, is not only in consonance with the direct decision on the point of the Madras High Court but also finds support from the two decisions of this Court which throw light on the question. We are, accordingly, of the opinion that this is the correct construction of section 38(5), and with respect, we are in agreement with the view taken by the Madras High Court while construing a similar provision in the Tamil Nadu General Sales Tax Act. 19.. Consequently, the question referred to us, as we have reframed, is answered in the negative in favour of the revenue and against the assessee. It was incumbent upon the Tribunal to consider the question of enhancement of tax under section 38(5) of the Act on the application made by the revenue and it was not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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