TMI Blog2010 (2) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case and on true and correct interpretation of the provisions in section 55 of the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding the appeal against penalty levied for the first time by the Appellate Deputy Commissioner, as a third appeal and in dismissing it on the ground of its being not maintainable? Held that:- In the present case, admittedly, penalty was not levied initially at the time of passing the assessment order but the same was levied by the Deputy Commissioner of Sales Tax (Appeals) in the second appeal. Plain reading of section 55(6)(b) of the BST Act, 1959 shows that the appellate authority may confirm or cancel the order against which the appeal is preferred or vary it so as to either enhance or to reduce the penalty. Thus the Deputy Commissioner of Sales Tax (Appeals) erred in levying the penalty for the first time in appeal. The order passed by the Deputy Commissioner of Sales Tax (Appeals) dated December 4, 1999 imposing penalty on the applicant for the first time in exercise of appellate powers is erroneous and without authority of law. In favour of assesse. - 7 of 2003 - - - Dated:- 25-2-2010 - DAGA V.C. AND TATED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with section 36(3)(b) of the BST Act, 1959 at Rs. 4,60,774. Disputing, inter alia, levy of interest, the applicant filed an appeal against the said assessment order before the Assistant Commissioner of Sales Tax (Appeals). On the basis of the C forms produced in the first appeal proceedings, the first appellate authority, i.e., Assistant Commissioner of Sales Tax, reduced the tax liability, as also the quantum of interest. Accordingly, the interest amount was reduced from Rs. 4,60,774 to Rs. 87,151. Against the said interest amount retained at Rs. 87,151, the applicant filed second appeal before the Deputy Commissioner (Appeals), Mumbai. It was contended before the Deputy Commissioner that the said interest is not legally leviable in view of the apex court's judgment in the case of India Carbon Ltd. v. State of Assam reported in [1997] 106 STC 460; [1997] 6 SCC 479. This contention was accepted by the Deputy Commissioner. However, while deleting the interest, the Deputy Commissioner replaced it with equivalent amount of penalty under section 9(2A) of the CST Act, 1956 read with section 36(3)(d) of the BST Act, 1959. The applicant, against this order levying penalty by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submitted that the applicant-assessee filed a second appeal before the Deputy Commissioner of Sales Tax against the levy of interest on the Central sales tax in view of the judgment in the matter of India Carbon [1997] 106 STC 460 (SC); [1997] 6 SCC 479. The second appellate authority upheld the assessee's contention that interest cannot be levied on the Central sales tax in view of the judgment in India Carbon Ltd. v. State of Assam reported in [1997] 106 STC 460 (SC); [1997] 6 SCC 479. The learned Additional Government Pleader further submitted that for want of permission in the Central Act, during the pendency of the applicant's second appeal before the Deputy Commissioner of Sales Tax, the BST Act, 1959 was amended by an Ordinance No. 11 of 1999 promulgated on February 6, 1999 and section 36(3)(d) was inserted with effect from April 21, 1987. The said Ordinance was converted into the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 1999 (Act No. 17 of 1999) dated March 30, 1999. By this amendment for the first time substantive penalty is levied with retrospective effect. He submitted that although the word interest was not expressly appearing in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clauses (a), (b) and (c). The learned Additional Government Pleader further submitted that the Commissioner's powers in appeal are plenary in nature and are co-terminus with the assessing officer. Once an order is in appeal before the appellate authority, it is the entire order that is open to scrutiny in appeal irrespective of the fact that the appellant therein may have appealed only in respect of a part of the order. He submitted that the Commissioner's power in appeal are not determined by or restricted to only those aspect of the order against which the assessee has chosen to file appeal. The appellate authority is competent to look into the entire order and if it finds that the order suffers from any illegality/infirmity it can correct the same even if the assessee may not have appealed against such illegality. He submitted that the nature of tax appeal is different than an appeal in a civil suit. In support of this submission, he placed reliance on the judgment in case of State of Tamil Nadu v. Arulmurugan and Company [1982] 51 STC 381 (Mad), wherein the Full Bench of the Madras High Court observed as under (at page 392 of STC): Appellate authority under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him as provided in the Act. In support of his contentions about the powers of the appellate authority, the learned Additional Government Pleader placed reliance on the judgment of this court in the case of Indoswe Engineers (P.) Ltd. v. State of Maharashtra reported in [1996] 101 STC 177. He also pressed into service another judgment in the case of Ranchhoddas Bhaichand v. Commissioner of Sales Tax, Maharashtra State reported in [1996] 101 STC 218 (Bom) in support of his submission. The learned Additional Government Pleader strongly relied upon the judgment of the apex court in the case of Sree Balaji Rice Mill v. State of Karnataka reported in [2005] 140 STC 267; [2005] 4 SCC 21. Having heard both the parties in the present case, it is an admitted position that section 36(3)(d) was inserted in the BST Act, 1959 by an Ordinance No. 11 of 1999 dated February 6, 1999 with effect from April 21, 1987 and the said Ordinance was converted into the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 1999. It is an admitted fact that initially the applicant/assessee was assessed under the CST Act, 1956 for the financial year 1992-93 by the Sales Tax Officer. In the said ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty has already been imposed by the assessing authority. Section 43 gives an additional power to the Commissioner or the appellate authority. It is to impose a penalty for the first time in the course of proceedings under the said Act, if satisfied that a dealer has deliberately concealed his turnover or furnished a false return, and he is obliged to give the dealer a reasonable opportunity of being heard before imposing it. In the above judgment it has been held by the apex court that while exercising the appellate powers, the appellate authority has no jurisdiction to impose penalty for the first time unless there is a specific power conferred on the appellate authority in that behalf. In the case in hand and the enactment with which we are dealing, no such specific power in favour of the appellate authority exists. On the above factual as well as legal scenario, we are of the opinion that the Deputy Commissioner of Sales Tax (Appeals) erred in levying the penalty for the first time in appeal. The order passed by the Deputy Commissioner of Sales Tax (Appeals) dated December 4, 1999 imposing penalty on the applicant for the first time in exercise of appellate powers is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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