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TMI Blog1990 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... les in the course of inter-State trade and commerce under the provisions of the Central Sales Tax Act, 1956 ("the Central Act"), vide order dated February 12, 1973, as rectified on April 25, 1973. This order was challenged by the assessee in an appeal under section 55(1)(a) of the Act before the Assistant Commissioner of Sales Tax (Appeals), Nagpur, on two grounds about incorrect inclusion in the turnover of sales of (i) railway freight charges to the tune of Rs. 9,85,352 and (ii) trade discount to the tune of Rs. 8,19,750. The Assistant Commissioner by order dated February 21, 1975, partly allowed the appeal upholding the ground about the wrongful inclusion of railway freight and repelling the ground relating to discount; as a result the assessable turnover was reduced by a sum of Rs. 9,85,352. Not fully satisfied by the relief granted in appeal, the assessee preferred a second appeal before the Tribunal under section 55(2) of the Act for the relief of exclusion of discount from the turnover. The said appeal was allowed and the matter remanded to reconsider the question of discount afresh in the light of the observations made by the Tribunal (S.A. No. 543 of 1975 decided on Februa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority, unless such appeal is accompanied by satisfactory proof of the payment of the tax with or without penalty, or, as the case may be, of the payment of the penalty, or the amount forfeited, in respect of which the appeal has been preferred: Provided that, an appellate authority may if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order- (a) without payment of the tax with penalty (if any), or as the case may be, of the penalty or of the sum forfeited, on the appellant furnishing in the prescribed manner security for such amount as it may direct, or (b) on proof of payment of such smaller sum, with or without security for such amount of tax, penalty or sum forfeited which remains unpaid, as it may direct. (6) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first appeal and the second appeal) shall have the following powers: (a) in an appeal against an order of assessment, it may confirm, reduce, enhance or annul the assessment; or it may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment in accordance with the direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection, the Tribunal shall record the reasons for such rejection." 5.. Perusal of the above provisions reveals that (i) the Tribunal is the appellate as well as the revisional authority over the Commissioner and hence in quasi-judicial matters the Commissioner is subordinate to the Tribunal; (ii) only an appellant is given a right of second appeal; (iii) the appellate authority has power even to "enhance" the assessment; (iv) the Commissioner can only revise an order passed by a subordinate authority. August 9, 1990: 6.. Basic controversy is whether the revisional jurisdiction of the Commissioner can be exercised with relation to an issue which could have been dealt with by the Tribunal, but has not been dealt with as a matter of fact. We do not seem to be operating upon a totally virgin field in the matter of the extent of revisional powers of the Commissioner in the context of the second appellate powers of the Tribunal under the Act. These very provisions fell for consideration before the Supreme Court in the case of Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax [1981] 48 STC 248. Since both the parties are heavily relying on the ratio of said decision, it is necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased upon absence of such provisions in the Act that Legislature did not intend to create such a bar in the Act. The Supreme Court held: "En passant, it will be noticed that sub-section (6) of section 55 of the Bombay Sales Tax Act is in pari materia with sub-section (1) of section 251 of the Income-tax Act, 1961. The language is almost identical. Sub-section (1) of section 251 sets forth the same three categories and the power to enhance is confined to an order of assessment and an order imposing a penalty. But in the case of a second appeal under the Income-tax Act, there is a distinct departure from the scheme under the Bombay Sales Tax Act. Section 253 does not expressly speak of the 'power to enhance' and makes no distinction in regard to the extent of the appellate power between any of the cases in which a second appeal lies from an order under section 251. It is evident then that in a second appeal under sub-section (2) of section 55 of the Bombay Sales Tax Act, the Tribunal has power to enhance the assessment. That being so, plainly it is open to the Revenue to invoke that power in a pending second appeal filed by the dealer before the Tribunal. The High Court is in error ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice issued by the Commissioner (deduction of railway freight) was neither raised by the department nor actually dealt with by the Tribunal. That the department could have raised the question at the time of hearing of second appeal and prayed for enhancement of assessment on that ground and the Tribunal could have considered it is not disputed before us. The gist of the submission is that bar would operate only where there is actual decision on the issue and not otherwise. In our judgment, such a view would militate not only against the ratio of the above Supreme Court decision but also the principle of merger-so vehemently pressed into service on behalf of the assessee. 9.. There are two leading cases of the Supreme Court dealing with the question of merger of order of inferior court in the order of superior court. First is the case of Commissioner of Income-tax v. Amritlal Bhogilal Co. [1958] 34 ITR 130 (SC); AIR 1958 SC 868. A combined order of assessment and grant of registration was passed by the Income-tax Officer under the IT Act. The assessment order is appealable but order of registration is not. There was appeal against the said order. The assessment order was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to revise the original assessment order. Four years limitation is prescribed under that Act for exercise of such suo motu power. Objection was raised by the assessee that notice was barred by time. It was overruled by the Board on the ground that the original assessment order had merged in the revisional order dated August 21, 1954 and hence notice given within four years from that date was in time. The Madras High Court in appeal set aside the order of the Board holding that the said question was not at all before the revising authority, the only subject-matter of revision proceedings was the order of revised assessment dated November 28, 1952 and hence there was no merger. Consequently it was held that the notice was barred by time. The Supreme Court upheld the decision of the High Court. 10.. Thus the legal position with regards to merger boils down to this. If a decision is appealable and is appealed against, the original decision merges in the appellate decision and it is the appellate decision alone which is operative and enforceable-be it reversing, modifying or confirming. But the principle is not of universal application. All depends upon the subject-matter of the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late order in the second appellate order irrespective of the points urged by the parties and decided by the appellate authority. 11.. We may at this stage notice that both the parties relied upon a long line of judgments of various High Courts mainly in the context of section 263 of the IT Act taking divergent views on the question as to whether there is merger of the order on the issues which could have been dealt with by the appellate authority but have not in fact been dealt with. Suffice to say that almost all of them have been referred by the Full Bench of the Karnataka High Court in the case of Commissioner of Income-tax v. Hindustan Aeronautics Ltd. [1986] 157 ITR 315. The Full Bench affirmed the view of the Division Bench taken earlier that in such cases entire order merges irrespective of the points urged and decided, and the Commissioner is precluded from exercising revisional jurisdiction even on the point not urged and/or not decided. It is also observed that such a view is neither unreasonable nor erroneous; it held the field in the State for a long time and hence it should be upheld. Detailed reference to all these decisions is not necessary in view of the case of Te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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