1973 (2) TMI 116 - SC - VAT and Sales Tax

Appellate Commissioner Empowered to Enhance Tax under Sales Tax Laws

The State of Tamil Nadu Versus KA Ramudu Chettiar & Co.  

The Supreme Court held that the Appellate Assistant Commissioner had the authority to enhance the tax levied by the Sales Tax Officer under the Madras ... Whether the Appellate Assistant Commissioner had powers to enhance the tax levied on the assessee-respondent by the Sales Tax Officer? Held that:- Appeal allowed. The enhancement made by the Appellate Assistant Commissioner was well within his powers. Issues:- Whether the Appellate Assistant Commissioner had powers to enhance the tax levied on the assessee by the Sales Tax Officer.Analysis:The case involved a dispute regarding the power of the Appellate Assistant Commissioner to enhance the tax levied on the assessee by the Sales Tax Officer. The respondent-assessee, a registered dealer, claimed that certain transactions were intra-State sales, while the Sales Tax Officer determined some as inter-State sales. The Appellate Assistant Commissioner concluded that all transactions were inter-State sales but rejected the assessee's exemption claim and enhanced the tax on three transactions due to the absence of 'C' certificates. The assessee appealed to the Tribunal, arguing that the Appellate Assistant Commissioner lacked the authority to increase the tax. The High Court agreed with the assessee, stating that the Appellate Assistant Commissioner did not have the power to enhance the tax levied by the Sales Tax Officer under the Madras General Sales Tax Act, 1939.The Supreme Court analyzed the amended section 9(2) of the Central Sales Tax Act, 1956, introduced by Central Act 28 of 1969. The amended section clarified that authorities assessing under the Act could utilize the powers granted to them under the general sales tax law of the relevant State. Therefore, the Appellate Assistant Commissioner had the authority to enhance the assessment under the Madras General Sales Tax Act, 1959, as per the amended section 9(2), even though such power was not available under the 1939 Act in force when the Central Sales Tax Act was enacted in 1956. The Court emphasized that the powers of authorities in Madras under the Central Sales Tax Act were based on the applicable sales tax law during the relevant assessment year. Consequently, the enhancement by the Appellate Assistant Commissioner was deemed valid within his powers.In conclusion, the Supreme Court allowed the appeal, overturning the High Court's decision and reinstating that of the Tribunal. The Court directed each party to bear its costs in both the Supreme Court and the High Court.