The Additional Commissioner of Sale Tax vs Ashok Leyland Ltd.

Heard Mr. Sonpal, learned counsel, appearing for the Applicant and Mr. Patkar, learned counsel, appearing for the Respondent. By consent of parties, we dispose of the application finally by this order.

An order was passed on 2nd May, 2014 by the Maharashtra Sales Tax Tribunal in Reference Application No. 138/2013 refusing to refer the question of law raised by the Revenue to this Court for this Court''s opinion and answer. That is why the Revenue invokes this Court''s power under section 61 of the Bombay Sales Tax Act, 1959.

Very few facts are necessary for the purpose of disposal of this application. The Respondent Assessee/dealer M/s. Ashok Leyland Ltd. was assessed to tax by the then Senior Assistant Commissioner of Sales Tax (Assessment), A22, Pune Division, Pune, on 31st March, 2004 for period 1st April, 2000 to 31st March, 2001. The order of assessment was passed by the said officer on 31st March, 2004 and which resulted in a refund of Rs. 37,58,558/-. Aggrieved and dissatisfied with such an order, the Assessee dealer preferred an Appeal before the First Appellate Authority, namely, the Deputy Commissioner of Sales Tax (Appeal). That was made over to the Nasik Division and that Deputy Commissioner acting as a First Appellate Authority decided this Appeal on 29th November, 2006.

The Revenue was of the opinion that this First Appellate Authority has erroneously and wrongly not levied turnover tax under section 9 of the Bombay Sales Tax Act and sales of Rs. 43,25,22,390/- effected by the dealer against declaration in Form-14. He has also not levied surcharge under section 15-I-A on sales tax levied at Rs. 1,73,00,896/- on sales effected against declaration in same Form.

It is in these circumstances that the Additional Commissioner of Sales Tax exercised his powers under section 57 of the Bombay Sales Tax Act, 1959 to revise the order passed by the First Appellate Authority. On 23rd June, 2009, the Additional Commissioner of Sales Tax, Pune, passed the following order:

Hence the order:

ORDER

In view of the above discussion, in order to remove impropriety and illegality from the Appeal Order and to pass just and proper order as per the provisions of section 57 of the B.S.T. Act, 1959, I, H.B. Nawab, Additional Commissioner of Sale Tax, Pune Zone, Pune, hereby revise the impugned appeal order as under, as per the powers vested with me.

Turnover Tax u/s. 9 @ 1% on sales of Rs. 43,35,22,390/- effected against declaration in Form 14 u/s. 11 of the B.S.T. Act, 1959 is levied at Rs. 43,25,224/-. Surcharge u/s. 15IA @ 10% on S.T. levied at Rs. 1,73,00,896/- on sales effected against declaration in Form 14 is levied at Rs. 17,30,089/-. Thus the final figure under revision proceeding are determined as under:-

Therefore, Assessing Authority is hereby directed to issue Demand Notice accordingly and recover the above dues as per provisions of law.

(H.B. NAWAB) Additional Commissioner of Sales Tax, Pune Zone, Pune.

Aggrieved and dissatisfied with such an order, an Appeal was preferred and styled as Second Appeal before the Maharashtra Sales Tax Tribunal. The Maharashtra Sales Tax Tribunal dealt with the Assessee''s/dealer''s Appeal No. 33/09 and passed the order on 1st October, 2012 allowing it. In allowing the same, the Tribunal recorded the following conclusion.

Conclusion The assessment order so far as it relates to the allowing the benefit of turnover tax and additional tax as per the notification entry No. A96(33) was not merged in first appeal order. As such, revising the said assessment by issuing a notice dated 22/05/2008 is beyond the period of limitation of three years from 12/04/2004, on which date the assessment order was communicated to the appellant. As such, the issue of notice of revision on 22/05/2008 is beyond the period of limitation and initiation of revision is beyond the period of limitation. The issue of limitation goes at the root of jurisdiction of the revising authority to initiate the revision proceeding. He could not have initiated revision, as such; the order of revision is illegal. Since order in revision is beyond jurisdiction and liable to be set aside on this ground alone, it is not necessary to consider the second ground urged on merit in this appeal. Hence, the following order:-

ORDER

Appeal No. 33 of 2009 is allowed. The order of revising authority levying turnover tax and surcharge u/s. 9 and 15-I-A of B.S.T. Act respectively is set aside. The order of assessing authority is restored.

No order as to costs.

It is from this Appeal/Appellate order of the Tribunal dated 1st October, 2012 that certain questions of law arise according to the Revenue. It made an application styled as Reference Application No. 138/2010 requesting the Tribunal to refer the following questions of law for opinion and answer by this Court:-

"(1) Whether the Tribunal was justified in holding that the rest of assessment order was not merged in first appeal order, and hence the initiation of revision is beyond period of limitation, where in fact the appellate authority had touched the tax assessment part i.e. the disallowance of the claim of discount?

(2) Whether the Tribunal was correct and justified in not applying the principle laid down in the case of M/s. Khandelwal Ferro Alloys Ltd. [1991(080)-STC-0042 BOM-ST reference no. 1 of 1985 decided on August 8, 9 and 10/1990] that if the tax part is challenged in appeal, then the original decision merges in the appellate decision?

(3) Whether the Tribunal was correct in interpreting the ratio contained in the case of The Additional Commissioner of Sales Tax VATI, Mumbai Vs. Kirloskar Oil Engine Ltd., that when the assessment was challenged only on the ground of penalty and interest and the rest of the order was not challenged before the 1st Appellate Authority, hence in such situation there would be no occasion to apply the doctrine of merger where the order of assessment authority was subjected to only limited challenge at the behest of registered dealer in the context of present case which is just reverse to the fact contained in said judgment?

(4) Whether in view of the fact as observed by the Tribunal, that the appeal against the said assessment was on limited ground of disallowing deduction of certain amount (i.e. tax part), the Tribunal was still correct and justified in holding that the rest of order was not merged in the first appeal order?

(5) Whether the Tribunal was justified in impliedly holding that under B.S.T. Act there would be no merger at all, though the first appeal was against the assessment on limited ground of disallowing deduction of certain amount?

This application has been dismissed on 2nd May, 2014 and in dismissing it, the Tribunal has held that its order dated 1st October, 2012 does not raise any question of law. We have perused this order and particularly para 7 and 8 thereof. As reproduced above, the order dated 1st October, 2012 allows the Appeal styled as Second Appeal of the Assessee against the revisional order only on the ground of limitation. The argument of merger has not been accepted by the Tribunal. However, in holding that the original order passed by the Assessing Officer on 31st March, 2004 is sought to be revised after the period prescribed in law that the issue of limitation was answered in favour of the Assessee and against the Revenue.

After having perused section 57 subsection (1) clause (a) and the proviso, we are of the opinion that once the Tribunal holds that the original assessment order is not merged with the Appellate order, then, it was duty bound to consider as to how the proceedings could be said to be barred by limitation. What was purported to be revised is the order of the First Appellate Authority and which was dated 19th November, 2006. That could have been revised within the period prescribed and if that is sought to be revised on 22nd May, 2008 by a notice in that behalf, then, prima facie, the Tribunal could not have refused to refer the question of law which was squarely arising for this Court''s opinion. That question is, if the doctrine of merger is inapplicable, the order of assessment is not sought to be revised but the order of the First Appellate Authority, then, whether the Tribunal could have upheld the objection of limitation raised by the Assessee? This is the question of law and which could have been referred for opinion of this Court.

Accordingly, we allow this application and set aside the order passed on 2nd May, 2014 and direct the Tribunal to refer the following question of law for this Court''s opinion:-

(1) Whether the Tribunal was justified in holding that the rest of assessment order was not merged in first appeal order, and hence the initiation of revision is beyond period of limitation, where in fact the appellate authority had touched the tax assessment part i.e. the disallowance of the claim of discount?

(2) Whether the Tribunal was justified in impliedly holding that under B.S.T. Act there would be no merger at all, though the first appeal was against the assessment on limited ground of disallowing deduction of certain amount?