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TMI Blog2005 (4) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant was liable to pay tax on the impugned sales of discarded materials connected with the appellant's transport activity, when in fact, qua this transport activity, the appellant is admittedly not a dealer as per section 2(11) read with section 2(5A) of the Bombay Sales Tax Act, 1959? 2.. At the instance of the CST in R.A. No. 47 of 2004. Whether on the facts and circumstances of the case and on true and correct interpretation of section 55(6) of the Bombay Sales Tax Act, 1959 the Tribunal was justified in holding that in an appeal under section 55(6)(c), the point involved in the order appealed against but not agitated by the appellant in appeal could not be legally dealt with by the appellate authority? 2.. Facts having bearing on the subject-matter of the present reference, are as follows: 3.. The assessee is an organisation owned by the Municipal Corporation of Greater Bombay. It carries on two major activities in Bombay, namely: (a) distribution of electricity supply in the city of Bombay and (b) public transport service, i.e., operation of buses within the Greater Bombay area. In the year 1926 the assessee opened a showroom (known as "Consumer's Advisory Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of aluminium cuttings and brass borings would be liable to tax. As regards the sale of buses and jeeps, the Deputy CST held that the same being capital assets, no tax is leviable in the light of the decision of this Court in the case of Famous Cine Laboratory [1975] 36 STC 104. 7.. Being aggrieved by the aforesaid order, the assessee filed an appeal bearing No. 53 of 1976 before the Maharashtra Sales Tax Tribunal, in so far as it pertains to taxing the sale of scrap aluminium cuttings and brass borings. During the pendency of the said appeal, the Sales Tax Department filed a Miscellaneous Application bearing No. 44 of 1982 stating therein that the decision of the Deputy CST in holding that the sale of buses and jeeps are not liable to tax is improper in the light of the special bench decision of the Tribunal in the case of M/s. Ravindra Heracus Pvt. Ltd. (Appeal No. 2 of 1976 decided on November 22, 1978). By its judgment and order dated March 14, 1986 the Sales Tax Tribunal while disposing of the said appeal as well as the miscellaneous application, held that the assessee was a dealer qua both the activities, i.e., providing transport and distribution of electricity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or electricity activity. With reference to the Miscellaneous Application filed by the department, the Tribunal relying upon the decision of this Court in the case of Amar Dye Chem Limited [1983] 53 STC 14 held that in an appeal filed under section 55(6)(c) of the BST Act, the powers of the appellate authority are restricted to the points agitated by the assessee in the appeal and it was not legally open to the appellate authority to touch on any point which is not agitated by the assessee in the appeal. Accordingly, the Tribunal dismissed the miscellaneous application filed by the CST. Thereupon, the assessee as well as the CST filed Reference Application bearing No. 37 of 2004 and 47 of 2004 respectively seeking reference on the issues decided against them. The Maharashtra Sales Tax Tribunal allowed both the Reference Applications and referred the aforesaid two questions for the decision of this Court. 11.. Dealing with the first question which is raised at the instance of the assessee, Mr. Joshi, learned counsel appearing on behalf of the assessee submitted that the Tribunal having held that the transport activity carried on by the assessee was not a "business" within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the Tribunal was in error in applying the provisions of section 22(5A) of the Act. Accordingly, Mr. Joshi submitted that in the light of the aforesaid decisions, the first question be answered in favour of the assessee. 13.. On the other hand, Mrs. Kejale, learned AGP appearing on behalf of the CST submitted that once a person is classified as a "dealer", he is liable to pay tax in respect of any transaction effected by him, unless specifically exempted. She submitted that there is no provision under the BST Act to suggest that a transaction can be said to be immuned from the payment of tax only on the ground that the main business is held not liable to tax. According to the Counsel for the CST it is not the requirement of law that the assessee should be a dealer qua every single transaction. Therefore, once a person is identified as a dealer in respect of any activity, then, so long as the registration continues, he becomes liable for all transactions effected by him. 14.. The learned AGP further submitted that by amending the definition of "business" retrospectively with effect from January 15, 1975 by Maharashtra Act No. 21 of 1998, the Legislature has made it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that, if the CST has determined two issues under section 52, one in favour of the assessee and another against the assessee, then, even though the appeal filed by the assessee is only in respect of the issue which is decided against the assessee, the Tribunal is empowered to deal with the other issue which is not the subjectmatter of the appeal. According to the learned AGP, the words "pass such orders in the appeal as it deems just and proper" in section 55 (6)(c) are very wide and extend to all issues decided in the order impugned in the appeal, even though the appeal itself is filed only on some issues decided in the original order. In this connection, the learned counsel relied upon three decisions of this Court in the case of Indoswe Engineering (P) Ltd. v. State of Maharashtra [1996] 101 STC 177, Ranchhoddas Bhaichand v. Commissioner of Sales Tax, Maharastra State [1996] 101 STC 218 and Khandelwal Ferro Alloys Limited v. State of Maharashtra [1991] 80 STC 42. The learned counsel has also relied upon the decision of the apex Court in the case of Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax [1981] 48 STC 248 and submitted that during the pendecny of the appeal fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of such fresh assessment; (b) in an appeal against an order imposing a penalty, the appellate authority may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, the appellate authority may pass such orders in the appeal as it deems just and proper: Provided that, the appellate authority shall not enhance an assessment or a penalty or reduce the amount of draw-back, set-off or refund of the tax, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction". According to Mr. Joshi, the substituted section 55(6) confers the appellate authority with wide powers including the power to enhance only in respect of appeals filed against the assessment order and the penalty order. No such wide powers are conferred on the appellate authority in respect of other appeals. In other words, the submission is that in respect appeals filed against orders other than the assessment order and penalty order, the powers of the appellate authority are restricted as in the past to the issues raised in the appeal. In support of the above submission, Mr. Joshi relied upon the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty order. Mr. Joshi submitted that the aforesaid observations of the apex Court support the case of the assessee that in an appeal filed under section 55(6)(c) of the BST Act, the powers of the appellate authority are restricted to the issues raised in the appeal only and, therefore, the Tribunal was justified in rejecting the miscellaneous application filed by the CST. 20.. We have carefully considered the rival submissions as also the authorities placed before us. 21.. The first question relates to the decision of the Tribunal in holding that the sale of aluminium cuttings and brass borings effected by the assessee are taxable under section 22(5A) of the BST Act. In the present case, by an order dated May 31, 1976 the Deputy CST to whom the powers under section 52 of the BST Act were conferred had ruled that the sale of aluminum cuttings and brass borings effected by the assessee are taxable, because, the assessee has voluntarily got registered for that activity. On appeal filed by the assessee, the Tribunal held that the transport activity carried on by the assessee is not a "business" within the meaning of section 2(5A) of the Act and consequently, if the sale of alumi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on account of their turnover exceeding the limits prescribed under section 3 of the Act. If the turnover of a person who carries on business as a dealer is less than the limit prescribed under section 3, then, such a dealer is not taxable and consequently such a dealer is not required to be registered. 24.. Section 22(5A) as it stood at the relevant time (from July 15, 1962 to June 30, 1981) reads as follows: "(5A) If any person upon an application made by him has been registered as a dealer under this section, and thereafter it is found that he ought not to have been so registered under the provisions of this section, he shall be liable to pay tax on his sales or purchases made from the date on which his registration certificate took effect until it is cancelled notwithstanding that he may not be liable to pay tax under section 3." 25.. Thus, for invoking section 22(5A) two conditions are required to be fulfilled, (1), a person must have applied for and obtained registration as a dealer under section 22 of the BST Act and (2), thereafter it must be found that he ought not to have been so registered under section 22 of the Bombay Sales Tax Act. If the above conditions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d brass borings. 27.. Reliance was placed by the counsel for the CST on various decisions of the apex Court wherein it is held that a person engaged in the sale of unserviceable material and scrap is liable to tax. In our opinion, none of the aforesaid decisions are relevant for the purpose of answering the question raised in the present reference. As stated earlier, whether the sale of aluminium cuttings and brass borings is a business activity taxable under the BST Act is not the question raised in this reference. Therefore, the decisions relied upon by the counsel for the CST holding that the sale of unserviceable material and scrap is a business liable to tax has no relevance for deciding the question raised in this reference. As held by the Gujarat High Court in the case of Anil Credit Co-operative Society [1969] 24 STC 180 to invoke section 22(5A) the precondition is that there must be a finding given by some authority under the BST Act that the person who has been registered as a dealer on his own application ought not to have been so registered. In the present case, no such finding has been recorded by the authorities and, therefore, the assessee could not be held liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appeal and it was not open to the appellate authority to touch on any point which is not agitated by the assessee in the appeal. In this reference, we are not called upon to decide the correctness of the order passed by the Deputy CST holding that the sale of scrap buses and jeeps are not taxable. The question that falls for consideration in the present reference is, whether, the powers of the appellate authority in an appeal filed under section 55(6)(c) is restricted to the issues raised in the appeal or it extends to all the issues determined in the order impugned in the appeal? 30.. Section 55(6) of the BST Act as originally enacted (from January 1, 1960) empowered the appellate authority, subject to the prescribed rules of procedure to pass such order on appeal as it deems just and proper. There was no categorisation of appeals and in all appeals the appellate authority was required to pass just and proper order. By Maharashtra Act No. 42 of 1971, section 55(6) was substituted with effect from December 1, 1971 and under the substituted section, the powers of the appellate authority in an appeal against the order of assessment, against the penalty order and in other cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed section 55(6) has categorised the appeals into three categories and has conferred specific powers in respect of appeals filed against the assessment orders and penalty orders clearly shows that the powers conferred on the appellate authority under section 55(6)(c) cannot be said to be on par with the powers of the appellate authority in respect of appeals filed under section 55(6)(a) or section 55(6)(b) of the BST Act. In other words, the powers of the appellate authority to pass just and proper order in the appeal filed under section 55(6)(c) cannot be said to be wider than the powers that were conferred upon the appellate authority under the old section 55(6) of the BST Act. 33.. This Court in the case of Amar Dye Chem Limited [1983] 53 STC 14 has considered the scope and ambit of the powers of the appellate authority under the original section 55(6) as well as the substituted section and has held at page 29 as follows: "The old sub-section (6) of section 55 of the Act uses the phrase 'pass such orders on appeal as it deems just and proper' while the relevant provisions in the old as also the new Income-Tax Acts with reference to the powers of the Appellate Tribunal use th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues raised herein. Similarly, the decision of the apex Court in the case of Tel Utpadak Kendra [1981] 48 STC 248 does not support the case of the CST as the ratio laid down therein does not touch upon the powers of the appellate authority in an appeal filed under section 55(6)(c) of the BST Act. Here italicised. 35.. It may not be out of place to mention that though the substituted section 55(6) of the BST Act is on the lines of section 251 of the Income-tax Act, the Legislature has consciously omitted to incorporate the explanation appended to section 251 of the Income-tax Act into section 55(6) of the BST Act. The explanation appended to section 251 of the Income-tax Act expressly provides that in disposing of an appeal the appellate authority may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised in the appeal. In other words, under section 251 of the Income-tax Act, the Legislature even after empowering the appellate authority to enhance the assessment or penalty order has chosen to append an explanation to the section, with a view to explain that the power of en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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