TMI Blog1955 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer. In cases, however, where a dealer purchases groundnuts and manufactures groundnut oil and cakes from the ground- nut or kernel purchased by him and who is registered as a manufacturer of groundnut oil under rule 18 of the Turnover and Assessment Rules, the manufacturer "is entitled to a deduction equal to the value of the groundnut or kernel purchased and converted by him into oil and cakes provided the amount for which the oil is sold is included in his turnover". So, generally speaking when a dealer as a manufacturer includes the Sale value of the oil in his turnover, he is entitled to deduct therefrom the purchase price of kernel or the groundnut, which has been utilised for the manufacture of the oil under rule 18(2). Before the Deputy Commercial Tax Officer the assessees claimed exemption from tax in respect of their sale turnover to the extent of Rs. 42,44,102-15-1. This was made up of two items, viz., (1) a claim to a deduction under rule 18(2) mentioned above, that is, the purchase price of the groundnut or kernel obtained by them which amounted to Rs. 22,36,371-13-1, and (2) a sum of Rs. 20,07,731-2-0 in respect of which the claim was based on the sales to that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction was inconsistent with the claim to exemption under Article 286(1)(a) on the turnover of the sales effected by them. The view however which the Appellate Tri- bunal took on this matter was (1) that on a proper construction of the rules framed under the Sales Tax Act in respect of the sales turnover of manufacture of oil, a dealer would not be entitled to exemption both under rule 18(2) and under Article 286(1) affirming the view of the Commercial Tax Officer and (2) that the claim of the assessees to an exemption under Article 286(1)(a) was paramount and the lower authorities had erred in not excluding from the turnover of the assessees their "outside sales". As a result, the basis of the assessment had to be altered inasmuch as the assessees were held entitled to the exclusion from their turnover of the price realised by the sales effected outside the State but that in respect of such turnover the purchase price of the relative groundnut or kernel could not be deducted under rule 18(2). Learned counsel for the assessees also raised before the Tribunal the contention that if they found that the assessees were entitled to exemption under Article 286(1)(a) the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of remand in the form adopted by them. The entire question turns upon the powers of the Sales Tax Appel- late Tribunal under section 12-A of the General Sales Tax Act. The relevant portions of this section run in these terms: "12-A. (1) Any assessee objecting to an order relating to assess- ment passed- (i) by the Commercial Tax Officer whether on appeal under section 11 or suo motu under section 12, sub-section (1), or (ii) by the Deputy Commissioner suo motu under section 12, sub- section (2), may, if the assessee has not preferred an application for revision of the order under section 12, sub-section (2), or under subsection (3) of that section, as the case may be, appeal to the Appellate Tribunal within sixty days from the date on which the order was communicated to the assessee. (4) The Appellate Tribunal shall, after giving both parties to the appeal a reasonable opportunity of being heard, pass such order thereon as it thinks fit. (5) Notwithstanding that an appeal has been preferred under sub- section (1), tax shall be paid in accordance with the assessment made in the case: Provided that the Appellate Tribunal may, in its discretion, per- mit the appellant to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner." The facts of the case were as follows: The assessee, a non-resident company, incorporated in the United Kingdom carried on insurance business in British India in lines other than life insurance. The Income-tax Officer who was the assessing authority proceeded under rule 6 of the schedule and included in its assessment an amount of Rs. 7,615 as interest received by the company. The Appellate Assistant Commissioner on appeal confirmed the assessment and the assessee appealed to the Tribunal. The Tribunal held that the Income-tax Officer was wrong in applying rule 6 of the schedule but should have applied rule 8 with the result that the income earned in the shape of interest was increased to Rs. 49,549. The question was whether the Appellate Tribunal was entitled to so enhance the assessment. Dealing with the scheme of appeals under the Indian Income-tax Act, Kania, J., as he then was, stated: "After the Income-tax Officer has made an order, if the assessee feels aggrieved, he can appeal to the Appellate Assistant Commissioner. (1) [1945] 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion appealed against. In deciding those grounds it can pass appropriate orders. But, in our opinion, it is not open to the Tribunal itself to raise a ground or Permit the party, who has not appealed, to raise a ground, which will work adversely to the appel- lant" (underlining is ours). It will be seen that the construction of the word "thereon" is related to the fact that the department has a right of appeal and that by not availing themselves of such a right, they should be deemed to have acquiesced in or agreed to abide by the decision of the lower authority. In this connection we might refer to a decision of this Court in Gajalakshmi Ginning Factory v. Commissioner of Income-tax(1), where it has pointed out the relevancy of this feature in considering the powers of the Income-tax Appellate Tribunal. The decision of the Patna High Court in Jagarnath Therani v. Commissioner of Income-tax, Bihar Orissa(2), was next referred to. There the assessee was carrying on business in the district of Purnea and had also branches at Calcutta and Jalpaiguri. In the assessment order in question the Income-tax Officer at Purnea who was the assessing authority reserved for future consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee preferred an appeal to the Com- missioner of Income-tax under the repealed section 32. The Commis- sioner of Income-tax partially accepted the appeal and allowed a portion of the deductions which had been granted by the Income-tax Officer, and the appeal was otherwise dismissed on 3rd September, 1934. On the same day the Commissioner of Income-tax issued a notice to the assessee to show cause why enhancement of the income from the sales of jewellery should not be made and after receiving the explanation of the assessee passed an order in October, 1934, in the purported exercise of his powers of review under section 33 and enhanced the income from the sales from Rs. 26,000 and odd to Rs. 50,000. The ques- tion canvassed before the High Court was whether this order of enhance- ment by the Commissioner was within his jurisdiction. If the income of Rs. 23,000 and odd which was added to the assessee was treated as income which had escaped assessment the same was not liable to be included in the assessment because no notice was served on the assessee within one year of the end of the assessment year under section 34 of the Act as it then stood. The learned judges held that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant to pay the tax in instalments or in such other manner as the Tribunal might order. Up to this stage the enact- ment is dealing with the assessment order appealed against and the limitations subject to which an order could be enforced. The second proviso deals with the stage subsequent to the disposal of the appeal and enacts the consequences which might follow the order of the Appel- late Tribunal. There are two limbs to this proviso. The first is con- cerned with cases where the Tribunal accept any of the grounds urged by the appellant and this results in a reduction of his tax liability and in those cases, if, as a result of the enforcement of the assessment order either under the main part of sub-section (5) or in the manner contem- plated by the first proviso, a larger amount has been collected from the assessee than is warranted by the assessment as modified by the Appel- late Tribunal, provision is made for the refund of the excess so collect- ed. The second limb is concerned with the other possibility namely the effect of the Tribunal's order necessitating the payment of a larger sum than was originally assessed and provision is made for the collec- tion of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be construed without reference to the provisos. "The proper course is to apply the broad general rule of construction, which is, that a section or an enactment must be construed as a whole, each portion throwing light, if need be, on the rest" (per Lord Wright at page 229). The expression "thereon" in sub-section (4) has no fixed or rigid meaning. It takes colour from the context, and the terms of the pro- viso referred to afford some light as to what the Legislature had in mind when enacting sub-section (4) in the form in which it is found. This proviso undoubtedly enacts that an order by the Appellate Tri- bunal on appeal might in certain cases conceivably result in the assess- ment being enhanced. Before leaving this part of the case we might also refer to the terms of section 12 which confers revisional powers on the Commercial Tax Officer, Deputy Commissioner and the Board of Revenue. Each of these authorities is empowered to call for and examine the record of any order passed or proceeding recorded by the (1) [1940] A.C. 206. subordinate authority and after satisfying itself as to the legality or pro- priety of such order or proceeding to pass such order with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authorities. (3) Where the basis of an assessment is challenged by an assessee and this is accepted by the Tribunal and the matter is remitted to the assessing authorities, there has to be a reassessment in conformity with their order. In the normal cases this would result in the decrease of the tax liability of the appellant. The second proviso to sub-section (5) enables the refund to be obtained by the assessee as a consequence of the reassessment in accordance with the orders of the Appellate Tribunal. But on the facts of a particular case the giving effect to the order of the Tribunal might result in an enhancement of the tax. The point raised by the petitioners in its ultimate analysis amounts to a denial to the Tribunal of the power to pass an order which if given effect to would result in an enhancement of the assessment. We are clearly of the opinion that this contention cannot be accepted not merely because of the second proviso to sub-section (5) but also as such a view does not accord with any logical or intelligible construction of the relevant pro- visions of the Act. To take the present case as an illustration, the petitioners as appellants before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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