Appellate tribunal may admit a new tax-liability ground on unchanged subject-matter, even if not raised earlier.

The Tribunal's appellate power under the Act extends to questions of fact and law arising in the appeal, and it may permit a new ground if the subject-matter remains unchanged. Here, the assessee was allowed to argue for the first time in second appeal that the transactions were services, not sales, so no tax was payable. Because the plea went to tax liability and the taxing authority's jurisdiction, its earlier omission did not bar consideration at the appellate stage. The Tribunal was therefore justified in admitting the ground and remanding the matter for fresh disposal.

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Issues: Whether the Tribunal was right in permitting the assessee to raise, for the first time in second appeal, a new ground that certain transactions were in the nature of service and not sale, and therefore not exigible to tax.

Analysis: The appellate power of the Tribunal under the Act is wide enough to deal with questions of fact and law arising in the appeal. A new ground may be permitted where it does not alter the subject-matter of the appeal, and the subject-matter of the second appeal in this case remained the assessment and reassessment orders as challenged before the Tribunal. The additional plea went to the very liability to tax and the jurisdiction of the taxing authority, and the fact that it had not been urged before the lower authority did not bar its consideration at the appellate stage. The Tribunal therefore acted within its discretion in allowing the plea and remanding the matters for fresh disposal.

Conclusion: The Tribunal was right in law in allowing the assessee to raise the new ground, and the answer to the reference was in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the subject-matter of an appeal remains unchanged, a new ground affecting tax liability or jurisdiction may be permitted at the appellate stage even if it was not raised before the lower authority.

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