1983 (11) TMI 259 - HC - VAT and Sales Tax

Court clarifies limits on tax rate enhancement in appeal proceedings under sections 5(1) and 6B

Deshpande Sholapurkar & Co. Versus State of Karnataka

Deshpande Sholapurkar & Co. Versus State of Karnataka - [1984] 57 STC 93 (Kar) Issues: Jurisdiction of Deputy Commissioner to enhance tax rate during appeal against levy under section 6B.In this case, the petitioner, a jeweler firm, declared its taxable sales and purchase turnovers for the assessment year 1974-75. The assessing authority accepted the declared turnovers and levied a tax at 1 per cent on the turnover, along with a surcharge under section 613 of the K.S.T. Act 1957. The petitioner, aggrieved by the surcharge, appealed to the Deputy Commissioner of Commercial Taxes, who proposed to enhance the tax rate to 31 per cent under section 5(1) of the Act. The Deputy Commissioner affirmed the proposed tax rate and canceled the additional tax imposed under section 613. The petitioner then appealed to the Appellate Tribunal, arguing that the Deputy Commissioner had no jurisdiction to enhance the assessment while disposing of the appeal against the levy under section 6B. The Tribunal dismissed the appeal, leading to the current revision petition.The main issue for consideration was whether the Deputy Commissioner had the authority to enhance the tax rate while disposing of the appeal against the levy under section 6B. Section 20(5) of the Act provides the appellate authority with the power to confirm, reduce, enhance, or annul the assessment or penalty, but it must relate to the subject matter of the appeal. The Court held that the levy under section 6B, being distinct from the levy under section 5(1), could not be enhanced by the Deputy Commissioner during the appeal process. The Court emphasized the importance of giving the assessee an opportunity to be heard before any enhancement is made, and that the appellate authority cannot enhance an assessment that is not the subject matter of the appeal.The Court referred to a previous case to highlight the distinction between the tax under section 6B and other imposts under the Act, emphasizing that the levy under section 6B is separate and different from the levy under section 5(1). Consequently, the Court allowed the revision petition, setting aside the order of the Deputy Commissioner regarding the enhanced tax rate while keeping the other aspects undisturbed. The petitioner was awarded costs and advocate's fee.