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TMI Blog2020 (7) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Assistant Commissioner, while hearing an appeal against the order of assessment has the power to confirm, reduce, enhance or annual the assessment, the Supreme Court noticed that the Appellate Assistant Commissioner has further been empowered to remit the case to the Assessing officer for making a fresh assessment. Thus, the Supreme Court observed that the Appellate Assistant Commissioner is entrusted with wide powers. It is in this context, that the Supreme Court examined whether the Appellate Assistant Commissioner had jurisdiction to permit raising of additional grounds for assailing the order of the assessment. The Supreme Court observed that there is no reason as to why the appellate authority cannot modify the assessment order on an additional ground not taken before the Income Tax Officer in the absence of any provision in the Act placing restrictions on the powers of the Appellate Authority in entertaining additional grounds - There is no difficulty in permitting the appellant to urge additional legal grounds relating to exemption notification and vagueness of the show cause notice. So far as the limitation is concerned, a ground had already been taken in the mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the submissions advanced by the learned Counsel for the applicant in support of the prayers made in the application, it would be relevant to state what was the demand made in the show cause notice and what was actually confirmed by the Commissioner in the impugned order. 3. The show cause notice issued to the appellant mentions that the appellant had received advances of ₹ 8,88,75,470/- prior to 09 September, 2004 for providing construction services after 09 September, 2004. The service became taxable from 10 September, 2004. Thus, the appellant was liable to pay service tax of ₹ 90,65,298/- upto 05 October, 2004 on the amount taken or received as advances but the appellant had not paid any service tax on this advance amount. This had resulted in short payment of service tax. 4. The demands that were confirmed and the CENVAT Credit that was disallowed in the impugned order passed by the Commissioner are as follows : S. No Description Period Amount 1 Advances of ₹ 8,88,75,470/- received prior to 10.09.2004 in respect of construction services rendered from 10.09.2004 Received prior to 10.09.2004 ₹ 90,65,298/- 2 CENVAT credit on invoices addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, 2007 for the reason that the activity involved transfer of property coupled with the provisions of services. In support of this contention, reliance has been placed on the decision of the Supreme Court in Commissioner of Central Excise and Customs, Kerala vs. Larsen and Toubro Ltd.[ 2015 (39) STR 913 (SC)]. It has, therefore, been submitted that not only the applicant should be permitted to raise this issue during the course of hearing of the appeal but the additional documents filed by the appellant to support this contention should also be taken on record. 9. Learned Counsel for the applicant has also submitted: (i) the Department failed to discharge its burden of proving that the appellant was liable to pay tax and the fact that the appellant was entitled to the benefit of the exemption notification dated 10 September, 2004 relating to any demand of tax prior to 10 September, 2004 is a pure question of law and can be urged by the appellant at the time of hearing if permission is granted by the Tribunal; (ii) the additional grounds relating to non-payment or short payment of service tax during the period September, 2004 to March, 2007 and that the appellant had correctl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they are as follows: "SECTION 129C. Procedure of Appellate Tribunal. - (1) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President from amongst the members thereof. (2) Subject to the provisions contained in sub-section (4), a Bench shall consist of one judicial member and one technical member. [(3) * * * * *] (4) The President or any other member of the Appellate Tribunal authorised in this behalf by the President may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member where - (a) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under section 125; or (b) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (c) the amount of fine or penalty involved, does not exceed fifty lakh rupees. (5) If the members of a Bench differ in opinion on any poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise of the powers conferred by sub-section (6) of section 129C of the Customs Act read with the provisions of section 35D of the Excise Act. Rule 10 deals with the grounds which may be taken in the appeal and it is reproduced below: " Rule 10. Grounds which may be taken in appeal. - The appellant shall not, except by leave of the Tribunal urge or be heard in support of any grounds not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules: Provided that the Tribunal shall not rest its decision on any other grounds unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground." 18. Rule 23 deals with the production of additional evidence and it is as follows: "RULE 23. Production of additional evidence. - (1) The parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal, but if the Tribunal is of opinion that any documents should be produced or any witness should be examined or any affidavit should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... memorandum of appeal or those taken by leave of the Tribunal but it would be necessary for the Tribunal, in such a situation, to afford an opportunity to the party who may be affected, to be heard on that ground. 21. In the present case, the appellant has sought leave of the Tribunal to urge or to be heard in support of certain additional grounds. The additional grounds on which the appellant intends to be heard broadly fall in three categories and they are :- (i) grounds not taken in the appeal at all; (ii) grounds have taken in the appeal but additional grounds have been taken to elaborate them; and (iii) purely legal grounds. 22. Learned Counsel for the appellant has placed reliance on the decision of Supreme Court in Jute Corporation of India Ltd. vs. Commissioner of Income Tax [1991 (51) ELT 176 (SC)] to contend that the additional grounds can be urged. In this case the assessee had preferred an appeal against the order of the Income Tax Officer before the Appellate Assistant Commissioner and during the course of hearing of the appeal, the assessee raised additional grounds claiming certain deductions. The Appellate Assistant Commissioner permitted the assessee to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal and there is no provision in the Act placing restriction on the power of the Appellate Authority in entertaining an additional ground in appeal. In the absence of any statutory provision, general principle relating to the amplitude of appellate authority's power being co-terminus with that of the initial authority should normally be applicable. But this question for the purposes of the Income Tax Act has been an intricate and vexed one. There is no uniformity in the judicial opinion on this question. 5. In Commissioner of Income Tax, U.P. v. Kanpur Coal Syndicate -1964 (53) I.T.R. 225 a three Judge Bench of this Court discussed the scope of Section 31(3) (a) of the Income Tax Act, 1922 which is almost identical to Section 251(1) (a). The Court held as under: "If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3) (a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose." 24. Learned Counsel for the appellant has also placed reliance upon a decision of the Supreme Court in Commissioner of Income Tax, Madras vs. Mahalakshmi Textiles Mills Ltd. [AIR 1968 SC 101] to contend that the Appellate Tribunal is competent to pass such orders in the appeal 'as it thinks fit'. The observations are as follows: "6. By the first question the jurisdiction of the Tribunal. to allow a plea inconsistent with the plea raised before the departmental authorities is canvassed. Under sub-s. (4) of s. 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal "as it thinks fit". There is nothing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 129B of the Customs Act, 1962, this Tribunal after hearing the parties may pass such orders "as the Appellate Tribunal may think fit" as stated in the above section. In such circumstances, even if the parties have not raised a point if the Tribunal thinks that such a relief can be granted to the party it becomes the duty of the Tribunal to grant such relief. Hence, the appellant is entitled to raise this point and accordingly, we hold that the Chogyal of Sikkim at the relevant point of time, i.e. during 1973 was entitled to immunity from Customs laws if it is shown that the Nataraja idol with pedestal was his property and that he was exporting it to New York. Hence, it takes us to the second point for determination as to whether it was His Highness the Chogyal of Sikkim who was the owner of goods at the relevant time of its seizure and if so whether the immunity can be extended to him even though the adjudication proceedings were even at a time when he became an ordinary citizen of India by virtue of Sikkim's cession with India. 17. In view of the case laws noted above, the grounds taken up by the appellants are legal in nature questioning the jurisdiction of the authorities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1 We find that the judgment of the Hon'ble Supreme Court cited above is applicable in the facts of the present case and in our considered opinion, the new ground which the applicant is seeking to raise cannot be raised at this stage as the ground is not purely legal in nature. Consequently, we do not find any merit in the applications moved by the applicant/appellant and we dismiss the same. " 29. The learned Authorized Representative of the Department has also placed reliance upon a decision of a learned Member of the Tribunal in Hindustan Organic Chem. Ltd. A perusal of the order indicates that application for additional grounds was allowed but the Tribunal did not find merit in the additional ground. 30. The issue that arises for consideration in this Appeal is regarding the scope of Rule 10 of the 1982 Rules which deals with grounds which may be taken in appeal. If the appellant has not taken a ground, he cannot be permitted to urge or be heard in support of the ground not taken unless leave is granted by the Tribunal. The Supreme Court in Jute Corporation examined the powers of Appellate Assistant Commissioner under section 251 of the Income Tax Act. After noticing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. This is the power given to the Appellate Assistant Commissioner as was noticed by the Supreme Court in Jute Corporation. The only limitation contemplated under Rule 10 of the Rules is that the ground not set forth in the memorandum of appeal shall not be permitted to be urged unless leave of the Tribunal is taken. The Tribunal can, therefore, grant leave to urge a ground that has not been taken in the memorandum of appeal to be urged or to be heard. 32. This is what also observed by the Division Bench of the Tribunal in Nandi Metal Rolling Mills, after relying upon the judgement of the Supreme Court in Mahalakshmi Textile Mills. 33. The judgement of the Supreme Court in Dempo Engineering Works Ltd. would not come to the aid of Revenue. A perusal of the aforesaid judgement indicates that leave of the Tribunal had not been taken for urging the ground not taken in the memorandum of appeal. The Division Bench of the Tribunal in Control Touch Electronics had relied upon the aforesaid decision of the Supreme Court in Dempo Engineering Works. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary to meet the ends of justice. 38. The issue, therefore, is whether the Tribunal should permit the appellant to adduce documents/evidence in support of its plea that the activity carried out by the appellant would fall under the category of 'works contract', which was not leviable to service tax before 01 June, 2007. 39. It is a fact that there were conflicting decisions, even of Larger Benches, as to whether the activity of the nature contemplated under 'works contract' would be leviable to service tax prior to 01 June, 2007 and it is only in the year 2015 that the Supreme Court in Larsen and Toubro determined that it would not be leviable to service tax prior to 01 June, 2007. 40. It would, therefore, be appropriate to permit the appellant to raise this issue by way of additional ground and also permit the appellant to produce document / evidence in support thereof, more particularly when there is no restriction in law and indeed none has been pointed out, in raising this plea at this stage. 41. Thus, leave can be granted to the appellant to raise an additional ground on the issue relating to 'works contract' and also to permit the appellant to produce the evidence / do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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