TMI Blog2020 (7) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 memorandum of appeal and additional grounds are sought to be added to substantiate the main ground. Thus, this additional ground can also be permitted to be urged. Whether the Tribunal should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions 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 rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble; and viii) Penalties could not be imposed. 7. The applicant also sought leave to take the following documents on record: i) work order issued by M/s. Bajaj Hindustan Limited on the appellant in 26 June, 2004 in respect of 7000 TCD Sugar plant for Bijnaur and Muzaffarnagar Sugar Mill Products; ii) Bills issued by the Appellant on M/s. Bajaj Hindustan Limited under the said work order; iii) Other contracts of the Appellant; iv) VAT assessment order of the Appellant for the period 2005-2006; and v) other work assessment orders of the Appellant. 8. It has been submitted by learned Counsel for the Applicant that the activity carried out by the appellant was in the nature of works contract , on which no service tax could be levied prior to 01 June, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 86 of the Finance Act deals with appeal to the Appellate Tribunal. Sub-section (7) of section 86 provides that in hearing the appeals and making orders under this section, the Appellate Tribunal shall exercise the same powers and follow the same procedure as it exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944[The Excise Act]. 14. Section 35D of the Excise Act deals with the procedure of Appellate Tribunal. It provides that the provisions of sub-sections (1),(2), (5) and (6) of section 129 C of the Customs Act, 1962[ The Customs Act] , shall apply to the Appellate Tribunal in discharge of its functions under the Act as they apply to it in the discharge of its functions under the Customs Act. 15. It would, therefore, be necessary to examine the provisions of section 129 C of the Customs Act and 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be a Civil Court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974). 16. It will be also appropriate to reproduce section 35 C of the Customs Act and it is as follows: SECTION 35C Orders of Appellate Tribunal (1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision of order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision as the case may be, after taking additional evidence, if necessary. 17. The 1982 Rules have been framed in exercise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Rules. The first part of this rule restricts the power of the appellant to urge any ground not set forth in the memorandum of appeal, while the second part deals with the power of the Tribunal in deciding the appeal even on grounds not set forth in the memorandum of appeal. The proviso, however, stipulates that the Tribunal shall not rest its decision on any other ground, unless the party who may be affected thereby has had sufficient opportunity of being heard on that ground. 20. It, therefore, follows that if the appellant has to urge any ground that has not been set forth in the memorandum of appeal, the appellant has to take leave of the Tribunal to urge or be heard on such additional ground. However, 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to set aside the assessment and remit the case back to the Assessing Officer for making a fresh assessment in accordance with its directions, after making such further inquiry as may be necessary. If a direction is issued by the Appellate Authority, the Assessing Officer is required to proceed to make such fresh assessment and determine the amount of tax, if any, payable on the basis of fresh assessment. The Appellate Assistant Commissioner is thus invested with wide powers under S. 251 (1) (a) of the Act while hearing an appeal against the order of assessment made by the Income Tax Officer. The amplitude of the power includes power to set aside the assessment order or modify the same. The question is whether the Appellate Asstistant Commissioner while hearing an appeal under S. 251 (1) (a) has jurisdiction to allow the assessee to raise an additional ground in assailing the order of the assessment before it. The Act does not contain any express provision debarring an assessee from raising an additional ground in appeal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer. 23. The Supreme Court distinguished its judgement rendered in Additional Commissioner of Income Tax, Gujarat vs. Gurjargravures P Ltd. [ 1978 (111) ITR 1 ] and observed as follows:- .The above observations do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made, or that the ground became available on account of change of circumstances or law. There may be several factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If the Appellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the true nature of the alterations made by the introduction of the Casablanca conversion system came to the conclusion that it did not amount to installation of new machinery, or plant, but it amounted in substance to current repairs to the existing machinery. 25. Learned Counsel for the appellant has also placed reliance upon a decision of this Tribunal in Nandi Metal Rolling Mills vs. Collector of Central Excise [1992 (60) ELT 322 (Tri-Del)] to contend that the Tribunal, in view of the provisions of the 1982 Rules, can also permit additional grounds to be raised for questioning the jurisdiction of the authorities. It has been pointed out, after referring to the decision of the Supreme Court in Mahalakshmi Textile Mills, that a legal ground can be raised before the Tribunal. The observations are as follows: 16. The abovesaid decision of the Supreme Court is applicable to this Tribunal also. Section 33 of the Income-tax Act and Section 129B of the Customs Act, 1962 are pari materia with each other. Even under Section 129B of the Customs Act, 1962, this Tribunal after hearing the parties may pass such orders as the Appellate Tribunal may think fit as state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was it argued before the Commissioner, and so the Tribunal could not have allowed the appeal on that ground. The Supreme Court, therefore, set aside the order of the Tribunal and remitted the matter to the Tribunal to decide the issue of classification by passing a speaking order. 27. The learned Authorized Representative of the Department has laid emphasis on that part of the order of Supreme Court that dealt with the order of the Tribunal allowing the appeal on a ground that the product was not marketable. The Supreme Court had observed that it was not open to the appellant to raise the issue before the Tribunal when it was not raised in reply to the show cause notice or before the Commissioner. 28. The learned Authorised Representative of the Department has also placed reliance upon a decision of the Tribunal in Control Touch Electronics, wherein the decision of the Supreme Court in Dempo Engineering Works was followed and the application filed for permission to add new grounds was rejected. The observations of the Tribunal are as follows:- 5.1 We find that the judgment of the Hon ble Supreme Court cited above is applicable in the facts of the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power has to be exercised in accordance with law and that the Appellate Authority should be satisfied that the new grounds raised were bonafide and the same could not be raised earlier for good reasons. 31. Learned Authorized Representative of the Department has contended that the aforesaid decision of the Supreme Court in Jute Corporation deals with the power of Appellate Assistant Commissioner and does not deal with the power of the Income Tax Appellate Tribunal. It is not possible to accept this contention. Section 35 C of the Excise Act deals with orders of Appellate Tribunal. This would also be applicable to the Tribunal constituted under the Finance Act in view of the provisions of sub-section (7) of section 86 of the Finance Act. Section 35 C provides that the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved transfer of property in goods. It is for this reason that it has been submitted that service tax could not be levied in any category other than works contract which became taxable only with effect from 01 June, 2007. This position was clarified by the Supreme Court in Larsen Toubro Ltd. which was rendered in the 2015 after the present appeal was filed in 2014. 37. It is in the context of works contract that the appellant has also sought permission to file additional evidence under Rule 23 of the Rules. Rule 23 of the Rules provides that 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 document should be produced or any witness should be examined or any affidavit should be filed to enable it to pass orders or for any sufficient cause, the Tribunal may, for reasons to be recorded, allow such documents to be produced. In fact, under the second paragraph of Rule 23, the Tribunal can, of its own motion, call for any document or summon any witnesses on points at issue, if it considers necessary to meet the ends of justice. 38. The issue, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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