TMI Blog2013 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... is between the parties in the said appeal preferred by the assessee nor the Appellate Commissioner had any occasion to consider the issue with respect to quantum of appeal. The doctrine of merger would come into play in a case where in an earlier appeal, the Appellate Authority had considered the issue on merits and/or there was a lis between the parties with respect to a particular issue - Where an OIO may be partly in favour and partly against the party in which event the part that goes in favour of the party can be separately assailed by them in appeal filed before the Appellate Court or authority, but dismissal on merits or otherwise of any such appeal against a part only of the order cannot foreclose the right of the party who was aggrieved by the other part of the order. As the issue with respect to quantum of appeal was not at large before the Commissioner (Appeals) and the appeal preferred by the assessee came to be dismissed with respect to another issue raised, by dismissing the appeal preferred by the assessee answering the issue raised in the appeal i.e. with respect to the liability of the assessee to pay the penalty, it cannot be said that with respect to the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order passed by the adjudicating authority imposing the penalty was dismissed - the appeal preferred by the revenue on enhancement of the penalty would be barred on the ground of merger was concerned - the same cannot be accepted - Merely because such powers were vested with the Appellate Commissioner, the appeal by the revenue for enhancement of the penalty cannot be said to be barred. - Tax Appeal No. 227 of 2013, Tax Appeal No. 228 of 2013, Tax Appeal No. 229 of 2013, Tax Appeal No. 230 of 2013, Tax Appeal No. 294 of 2013, Tax Appeal No. 328 of 2013, Tax Appeal No. 329 of 2013, Tax Appeal No. 330 of 2013, Tax Appeal No. 331 of 201 - - - Dated:- 21-8-2013 - M. R. Shah And Sonia Gokani,JJ. For the Petitioner : Mr. Anand Nainawati, Advocate For the Respondent : Mr. Hriday Buch, Advocate JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) [1.0] As common question of law and facts arise in this group of appeals, all these appeals are disposed of by this common judgment and order. The following short but an interesting questions of law are posed for consideration of this Court in present group of appeals (i) Whether once the Appellate Tribunal reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under the said proviso shall be an amount equal to the duty outstanding at the end of such month and minimum shall be Rs.5000/. However, by observing that considering discretion conferred on the adjudicating authority, by the aforesaid OIO, the Deputy Commissioner imposed the penalty of Rs.6000/only. At this stage it is required to be noted that there were in all number of showcause notices came to be adjudicated by the said Deputy Commissioner with respect to the different amount of duty outstanding at the end of the concerned month, by common Order in Original Nos.207 to 236 of 2004, the Deputy Commissioner imposed the penalty of Rs.6000/only for each of the notices upon the concerned assessee. [2.2] Feeling aggrieved and dissatisfied with the Order in Original passed by the Deputy Commissioner imposing the penalty of Rs.6000/, the assessee preferred appeal before the Appellate Commissioner and the only question which was raised by the assessee before the Appellate Commissioner was that the assessee is not liable for penal action and was not liable to pay the penalty at all. That the Commissioner (Appeals) by common order dated 17.02.2005 dismissed the said appeals holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for enhancement of the penalty, the assessee has preferred the present Tax Appeal raising the aforesaid substantial question of law. [3.0] Shri Nainawati, learned advocate appearing on behalf of the appellants assessee has vehemently submitted that the learned Tribunal has materially erred in holding that despite the fact that Commissioner (Appeals) rejected the assessee s appeal against the order of penalty imposed by the adjudicating authority and consequently confirming the order of penalty imposed by the adjudicating authority, still the appeal preferred by the revenue against the very order of penalty imposed by the adjudicating authority, but for enhancement of penalty is not barred and would be maintainable. It is vehemently submitted by Shri Nainawati, learned advocate appearing on behalf of the appellants that as the order of penalty imposed by the adjudicating authority came to be confirmed by the Appellate Commissioner while rejecting the assessee s appeal challenging the penalty imposed by the adjudicating authority, the revenue s appeal for enhancement of penalty would be barred since the order of adjudicating authority would merge in the order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply and the other appeal will have to be decided on its own merits. It is submitted that therefore, the learned Tribunal has materially erred in relying upon the decision of the Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (Supra). [3.3] Shri Nainawati, learned advocate appearing on behalf of the appellants has heavily and mainly relied upon the following decisions of the Hon ble Supreme Court (i) CIT, Bombay vs. Amritlal Bhogilal Co. AIR 1958 SC 868; (ii) Shankar Ramchandra Abhyankar vs. Krishnaji Dattatreya Bapat (1969)2 SCC 74; (iii) Somnath Sahu vs. State of Orissa (1969)3 SCC 384 (iv) Chandi Prasad Others vs. Jagdish Prasad Others (2004)8 SCC 724 Relying upon aforesaid decisions it is submitted that once the Appellate Commissioner rejected the appeal preferred by the assessee challenging the penalty imposed by the adjudicating authority and consequently confirming the order of penalty imposed by the adjudicating authority, thereafter the revenue s appeal for enhancement would be barred on the ground of merger. No other submissions have been made. Making above submissions and relying upon above decisions, it is requested to answer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the issue with respect to the adequacy and/or the quantum of penalty is merged and thereafter it is not open for the revenue to prefer appeal for enhancement of penalty. It is submitted that if the contention on behalf of the assessee is accepted, in that case, any assessee would prefer appeal, get it dismissed without any further adjudication of the appeal on merits and thereafter would contend that thereafter it is not open for the revenue to prefer appeal. It is submitted that unless and until there is a lis between the parties on particular issue and there is a decision by the Appellate Commissioner on merits on a particular issue then and then only the question with respect to merger will arise. [4.2] It is further submitted by Shri Buch, learned counsel appearing on behalf of the revenue that in the present case as such there is no question of taking the order passed by the Commissioner (Appeals) in revision under section 35E of the Act as contended on behalf of the appellant assessee as, as such the order passed by the Commissioner (Appeals) holding that the assessee liable to pay penalty is in favour of the revenue. [4.3] It is further submitted by Shri Buch, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court has considered in deatail the doctrine of merger in extenso and in detail. [4.6] It is further submitted that the learned Tribunal has rightly relied upon the decision of the Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (Supra). It is further submitted by Shri Buch, learned counsel appearing on behalf of the revenue that on facts the decisions relied upon by the learned counsel for the assessee in the case of Amritlal Bhogilal Co. (Supra); Shankar Ramchandra Abhyankar (Supra) and Somnath Sahu (Supra) and even in the case of Chandi Prasad Others (Supra) would not be applicable to the facts of the present case. It is submitted that all the aforesaid decisions are distinguishable on facts. Making above submissions and relying upon above decision of the Hon ble Supreme Court in the case of Pearl Drinks Ltd. (Supra) and the decision of the Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (Supra), it is requested to dismiss all these appeals and answer the question in favour of the revenue. [5.0] Heard learned advocates appearing on behalf of the respective parties at length. In this group of appeals the question posed for considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the only remedy available would be to take the order passed by the Appellate Commissioner into revision under Section 35E of the Act. The aforesaid has no substance and cannot be accepted. As stated hereinabove, the only issue before the Appellate Commissioner in the appeal preferred by the assessee was whether the assessee was liable for penal action or not i.e. with respect to the liability of the assessee to pay the penalty. The question with respect to quantum of penalty was neither raised by the assessee nor the same was the issue before the Appellate Commissioner. Thus, neither there was any lis between the parties with respect to the quantum of penalty nor the Appellate Commissioner had any occasion to consider the issue with respect to quantum of penalty. Under the circumstances, the revenue cannot be precluded from preferring the appeal before the Appellate Commissioner for enhancement of the penalty. As stated hereinabove, as the issue with respect to quantum of appeal was not at large before the Commissioner (Appeals) and the appeal preferred by the assessee came to be dismissed with respect to another issue raised, by dismissing the appeal preferred by the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise preferred an appeal before the CEGAT under section 35E(4) of the Act which came to be dismissed by the CEGAT holding that the order under challenge had merged in the earlier order passed by the Tribunal in the assessee s appeal whereby disallowance of the two of the eight deductions in dispute had been upheld. Feeling aggrieved and dissatisfied with the order passed by the CEGAT dismissing the appeal, the revenue approached the Hon ble Supreme Court and considering various decisions of the Hon ble Supreme Court, it is held that as the appeal preferred by the assessee was only against disallowance of the deduction under the two heads and the said appeal being dismissed on merit with respect to the aforesaid two heads only, the subsequent appeal filed by the revenue against the order of adjudicating authority in respect of remaining six heads, is maintainable. It is held that the order of adjudicating authority did not merge with the order in appeal preferred by the assessee as there was finality only with regard to the issues adjudicated in appeal. While holding so, in paras 13 to 21, the Hon ble Supreme Court has observed and held as under: 13. The doctrine of merger has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subjectmatter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgmentdecree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter." 17. There is in the light of the above pronouncements no gainsaying that the doctrine of merger will depend largely on the nature of the jurisdiction exercised by the superior court and the content or the subject matter of challenge laid or capable of being laid before it. 18. Applying the above test to the case at hand the doctrine would have no application for the plain and simple reason that the subject matter of the appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no matter the appeal earlier disposed of by the Court or authority had not examined the correctness of that part of the order. Considering the aforesaid decision of the Hon ble Supreme Court, it can be said that the doctrine of merger would come into play in a case where in an earlier appeal, the Appellate Authority has considered the issue on merits and/or there was a lis between the parties with respect to a particular issue. Where an OIO may be partly in favour and partly against the party in which event the part that goes in favour of the party can be separately assailed by them in appeal filed before the Appellate Court or authority, but dismissal on merits or otherwise of any such appeal against a part only of the order cannot foreclose the right of the party who is aggrieved by the other part of the order. [6.1] Considering the facts of the case on hand and as stated herein above the only issue before the Appellate Commissioner in an appeal preferred by the assessee which came to be dismissed by the Appellate Commissioner was, whether the assessee was liable for penal action under erstwhile Rule 96ZP(3) of the Rules or not. Therefore, neither any other issue was at la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s appeal, doctrine of merger not applicable and consequently the Bombay High Court set aside the order passed by the CESTAT dismissing the appeal and remanded the matter back to the CESTAT for fresh decision. [6.3] Now, so far as the decision of the Hon ble Supreme Court in the case of Amritlal Bhogilal Co. (Supra) relied upon by the learned counsel appearing on behalf of the assessee is concerned, at the outset it is required to be noted that the said decision came to be considered by the Hon ble Supreme Court in the subsequent decision in the case of Pearl Drinks Ltd. (Supra). Even otherwise on facts also the said decision would not be applicable to the facts of the present case. In the case before the Hon ble Supreme Court the question was whether the Income Tax Officer s order granting registration of a firm can be challenged by the department during the hearing of the firm s appeal against the final order of assessment made by the Income Tax Officer. Under the circumstances, the said decision would not be applicable to the facts of the case on hand. [6.4] Similarly, even the decision of the Hon ble Supreme Court in the case of Shankar Ramchandra Abhyankar (Supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No.4 no longer subsists as it has merged in the appellate decision of the State Government and unless the appellant is able to establish that the order of the State Government is defective in law, the appellant would not be entitled to the grant of any relief. Thus, on facts the said decision would not be applicable to the facts of the case on hand. [7.0] Now, so far as the contention on behalf of the assessee that it was open for the CIT(A) to suo moto enhance the amount of penalty while exercising the power under section 35A of the Act and therefore, when such power is not exercised by the Appellate Commissioner and the appeal preferred by the assessee against the order passed by the adjudicating authority imposing the penalty is dismissed, the appeal preferred by the revenue on enhancement of the penalty would be barred on the ground of merger is concerned, the same cannot be accepted. Merely because such powers are vested with the Appellate Commissioner, the appeal by the revenue for enhancement of the penalty cannot be said to be barred. As stated hereinabove and as it is not disputed by the learned Counsel for the assessee that the appeal by the revenue for enhancemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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