Doctrine of merger bars fresh demand on the same issue after Supreme Court relief, with exemption benefits sustained.

Earlier adjudication on the same subject-matter, followed by a final Supreme Court decision in favour of the assessee, barred the later demand. The original adjudication was held to have merged in the appellate order, so fresh proceedings for the same period and controversy could not be sustained. On that basis, the exemption notifications relied upon by the appellant were available, and the demand was held to be not sustainable.

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Issues: Whether the demand could survive in view of the earlier adjudication and subsequent final decision of the Supreme Court, and whether the appellant was entitled to the claimed exemption.

Analysis: The dispute turned on the effect of the earlier order passed on the same subject-matter, which had travelled through appeal and had ultimately been decided in favour of the assessee by the Supreme Court. In that situation, the later proceedings could not be sustained on the same controversy. The order also records the principle that an original adjudication merges in the appellate order, and fresh proceedings for the same period are not permissible. On that basis, the appellant became entitled to the benefit of the exemption notifications relied upon.

Conclusion: The demand was not sustainable and the issue was decided in favour of the assessee.

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