1961 (3) TMI 80 - HC - VAT and Sales Tax

Tribunal's Broad Powers Upheld in Tax Appeals under Orissa Sales Tax Act

Commissioner of Sales Tax, Orissa Versus Chunilal Parameswar Lal

The Court answered the reference question in the negative, affirming the Tribunal's authority to address the matter under the Orissa Sales Tax Act, 1947. ... - ISSUES PRESENTED AND CONSIDERED 1. Whether, in the absence of a memorandum of cross-objections filed by the State under clause (b) of sub-section (3) of section 23 of the Act, the Tribunal is empowered and obliged to correct an illegal omission by the first appellate authority (Assistant Collector) by directing that purchase-values be added back to taxable turnover under the proviso to section 5(2)(a)(ii) for the quarters in question. 2. Scope and effect of the appellate and second-appellate powers conferred on the Tribunal by the amending statutes and rules (notably sections 3 and 23 as amended and rule 52 of the Rules) vis-à-vis the procedural right of the State to file cross-objections under section 23(3)(b), and whether the failure of the State to file such a cross-objection deprives the Tribunal of power to finally determine the matter. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Tribunal's power in absence of State cross-objection to order addition back of purchase-values Legal framework: The relevant statutory scheme comprises the amended section 23 (sub-sections (2) and (3)) conferring on the appellate authority and, specifically by later amendment, the Tribunal, powers to 'confirm, reduce, enhance, or annul the assessment or penalty, if any, or both and direct the assessing authority to pass a fresh order after such further enquiry as may be directed'; clause (b) of sub-section (3) permits either the dealer or the State to file a memorandum of cross-objections within thirty days of notice of an appeal; rule 52(3) provides that where no cross-objection is filed, 'the appeal shall be disposed of on its merits by the Sales Tax Tribunal'. Precedent Treatment: The Tribunal relied on an earlier decision of this Court (referred to in the judgment) for the substantive tax point (that purchase-values must be added back). The Tribunal, however, refused to give relief to the State on procedural grounds because no cross-objection had been filed. The Court considered the Tribunal's approach in light of statutory amendments and rules without overruling or displacing the substantive precedent as to how the proviso to section 5(2)(a)(ii) operates. Interpretation and reasoning: The Court construed the combined effect of the amending Acts and rule 52(3) as enlarging and specifying the Tribunal's powers: the Tribunal was expressly given the same powers as the appellate authority under sub-section (2), and rule 52(3) makes disposal 'on its merits' mandatory where no cross-objection is filed. The Court rejected the Tribunal's comparison to section 107 of the Code of Civil Procedure and the notion that the Tribunal's powers are constrained in the absence of a cross-objection. The Court held that 'to dispose of the case on its merits' entails passing such orders as ought to be passed for full and complete adjudication and that the Tribunal is not thereby barred from correcting illegalities committed by the first appellate authority merely because the State did not file a cross-objection. Ratio vs. Obiter: Ratio - The Tribunal has jurisdiction and duty to determine matters fully on their merits and to correct illegal acts of the first appellate authority even if the State has not filed a cross-objection under section 23(3)(b), as supported by the express statutory powers conferred and rule 52(3). Obiter - Observations distinguishing the powers under the Act from those under section 107 of the Code of Civil Procedure and explanatory remarks about what would have been discretionary conduct by the Tribunal are ancillary but support the ratio. Conclusions: The Tribunal was empowered to add back purchase-values to the taxable turnover for the quarters in question despite absence of a State cross-objection, and the Tribunal's refusal to give relief to the State on the ground of non-filing was legally incorrect. The reference on this point is answered in the negative (i.e., the Tribunal's order declining to interfere was not proper). Issue 2 - Construction of statutory amendments and interaction of cross-objection right with Tribunal's adjudicatory powers Legal framework: The amending Acts (substitution of new section 3 and new section 23 and later amendment expressly extending enumerated powers to the Tribunal) created two features: (a) the Tribunal was vested with the same powers as the appellate authority under subsection (2); and (b) the State was given express procedural rights: to prefer an appeal under sub-section (3)(a) and to file a memorandum of cross-objections under sub-section (3)(b). Rule 52(3) implements the disposal mechanism where cross-objections are not filed. Precedent Treatment: The Tribunal's approach treated the procedural right to file cross-objections as a limitation on the Tribunal's power to grant relief not sought by the State. The Court rejected that treatment as inconsistent with the express statutory grant of power and the implementing rule. Interpretation and reasoning: The Court interpreted clause (b) of sub-section (3) as conferring an optional right on either party to file cross-objections but not as creating a jurisdictional bar to the Tribunal's power to decide all matters necessary for complete adjudication. The legislative scheme gives the State a right to participate by cross-objection but does not render the Tribunal powerless where the State abstains; rule 52(3) confirms the Tribunal's duty to dispose on merits. The Court emphasized that the powers under the Act are 'much wider' than the general powers of an appellate court under section 107 CPC and therefore that analogies to CPC procedure cannot curtail the statutory powers conferred. Ratio vs. Obiter: Ratio - Clause (b) is optional and permissive; the Tribunal's broad statutory powers and rule 52(3) require merits determination and permit the Tribunal to grant relief that could have been sought by cross-objection. Obiter - The Court's commentary contrasting section 107 CPC powers and the Act's powers is illustrative but not essential to the holding. Conclusions: The right granted to the State to file cross-objections is procedural and optional; its non-exercise does not negate the Tribunal's jurisdiction or duty to dispose of the appeal on its merits and to correct errors of law or jurisdiction committed by the first appellate authority. The Tribunal should now exercise its remedial powers in accordance with law and the circumstances of the case. Ancillary procedural disposition Although the Court answered the reference in the negative and found the Tribunal's reasoning on the absence of cross-objection to be incorrect, the Court did not itself re-determine the substantive calculation for the quarters but left the matter to the Tribunal to exercise its powers in accordance with law, keeping in view the circumstances of the case; no order as to costs.