Retrospective sales tax amendments cannot tax pre-effective-date scrap sales, and tribunals cannot decide unraised issues.

An appellate tribunal cannot decide a question that was not raised or decided in the assessment proceedings or was outside the controversy before it; on that basis, the finding that telecommunication activity constituted 'business' was unsustainable. The text also states that deemed-dealer and retrospective amendments under the Bombay Sales Tax Act could not be applied to scrap and discarded material sales made before 16 August 1985, because the relevant deeming fiction and taxing amendment operated only from that date. Sales of scrap for the earlier period were therefore not liable to tax.

---

---

Issues: (i) Whether the assessee's activity of providing telecommunication services could be treated as 'business' under section 2(5A) of the Bombay Sales Tax Act, 1959 for the relevant period. (ii) Whether sales of scrap and discarded materials made prior to 16 August 1985 were taxable as sales by a 'dealer' under the Bombay Sales Tax Act, 1959 in view of the later deeming and retrospective amendments.

Issue (i): Whether the assessee's activity of providing telecommunication services could be treated as 'business' under section 2(5A) of the Bombay Sales Tax Act, 1959 for the relevant period.

Analysis: The question whether the assessee's principal telecommunication activity constituted business had not been raised or decided in the assessment proceedings or in the orders of the authorities below. The Tribunal, therefore, could not travel beyond the scope of the appeal and decide an issue that was not the subject-matter of the controversy before it. The matter was kept open, but on the facts of the case the Tribunal's finding that the main activity itself amounted to business was unsustainable.

Conclusion: The finding that the telecommunication activity constituted 'business' was not justified.

Issue (ii): Whether sales of scrap and discarded materials made prior to 16 August 1985 were taxable as sales by a 'dealer' under the Bombay Sales Tax Act, 1959 in view of the later deeming and retrospective amendments.

Analysis: The statutory scheme showed that the Explanation to section 2(11) creating deemed dealers came into force from 16 August 1985, and the retrospective amendment to section 2(5A) by the 1989 amending Act also operated from that date. Section 30(4) of the 1989 Act denied immunity only to the covered deemed dealers and only in relation to the post-16 August 1985 regime. The assessee's scrap sales during the period April 1976 to March 1984 fell before the effective date of the deeming fiction and before the retrospective taxing amendment could be applied to that period. The earlier authorities relied upon by the Revenue were distinguishable and did not address the effect of section 30(4).

Conclusion: Sales of scrap and discarded materials effected prior to 16 August 1985 were not liable to tax.

Final Conclusion: The references were answered in favour of the assessee, and the tax demand on pre-16 August 1985 scrap sales could not be sustained.

Ratio Decidendi: A deeming provision and a retrospective amendment cannot be applied to tax transactions occurring before their effective date, and an appellate tribunal cannot decide an unraised issue beyond the scope of the appeal.

---