TaxTMI 
TaxTMI 
2022 (9) TMI 427
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the Maharashtra Value Added Tax, 2002 ? (b) Whether the Sales Tax Tribunal on the true and proper construction of Section 23(5) of the Maharashtra Value Added Tax, 2002, was justified in allowing the Respondent's appeal ? (c) Whether the Sales Tax Tribunal was justified in interpreting Section 23(5) of the MVAT Act, 2002, with regard considering the claim of the Respondent which was not part of the Assessment Order ? (d) Whether on true and correct interpretation of the Section 23(5) of the MVAT Act, 2002, the Tribunal was justified in liberally interpreting and expanding the scope of the statutory provisions contained in Section 23(5) of the MVAT Act, 2002, when there is no ambiguity in the statute ?" 2. The Respondent-M/s. M.M. Sales Corporation is stated to be a reseller of iron and steel and a dealer registered under the MVAT Act, 2002. 3. The Deputy Commissioner of Sales Tax assessed the Respondent-Dealer for the period from 1st April, 2005 to 31st March, 2006 under the Central Sales Tax Act, 1956 raising a total demand of Rs.6,11,828/- on the Respondent-Dealer. The Respondent-Dealer was served with a notice in Form 603 under Section 64 of the MVAT Act, 2002, but did....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Authority was therefore not justified in rejecting the Appellant's claim in respect of the 'C' forms issued by M/s. Varsha Controls Gear merely on the ground of not being covered under the Assessment Order passed under Section 23(5) of the MVAT Act, 2002. It observed that the Appellate Authority ought to have taken into consideration the said 'C' forms issued by M/s. Varsha Controls Gear. 7. Aggrieved by the said order the Appellant-State of Maharashtra is in Appeal before us under Section 27 of the MVAT Act, 2002 proposing the questions of law as stated above. 8. Mr. Takke, learned AGP for the Appellant-State, refers to the Assessment Order and submits that only 'C' forms issued by M/s. Dynacraft Air Controls were before the Assessing Officer and considered by him and, therefore, the Tribunal could only have considered the same. He submits that since the said order passed under Section 9 of the Central Sales Tax Act, 1956 read with Section 23(5) of the MVAT Act, 2002, is concerned only with transactions covered by 'C' forms issued by M/s. Dynacraft Air Controls, the scope of the Appeal is limited to the extent of transactions covered by the Assessment Order under Section 23(5) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncessional rate of tax with respect to the transactions stated in the 'C' forms issued by M/s. Varsha Controls Gear. 12. The law in this regard has been well settled by the Hon'ble Supreme Court in a number of decisions. This Court in its judgment dated 21st June, 2012 in the case of Commissioner of Income Tax Vs. M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom) (authored by His Lordship Shri Justice S. J. Vazifdar, as His Lordship then was) has recounted the entire line of authorities which establish that an assessee is entitled to raise grounds not only in terms of legal submissions, but also additional claims not made in the return filed by it. After considering the Apex Court decisions in the cases of Jute Corporation of India Limited Vs. Commissioner of Income Tax, 1991 (2) SCC 744, Additional Commissioner of Income-tax Vs. Gurjargravures P. Ltd., 1977 SCC (4) 571; National Thermal Power Company Limited Vs. Commissioner of Income-tax, (1997) 7 SCC 489 as well as Goetze (India) Limited Vs. Commissioner of Income-tax, (2006) 157 Taxman 1 and a decision of the Full Bench of the Gujarat High Court in the case of Ahmedabad Electricity Company Limited Vs. Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder :- "5. In CIT v. Kanpur Coal Syndicate, a three Judge bench of this Court discussed the scope of Section 31(3)(a) of the Income Tax Act, 1922 which is almost identical to Section 251(1)(a). The court held as under: (ITR p. 229) "If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do." (emphasis supplied) 6. The above observations are squarely applicable to the interpretation of Section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminus with that of the Income Tax Officer, if t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose." [emphasis supplied] 13. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read as a whole entitles an assessee to raise new grounds/make additional claims : "if the ground so raised could not have been raised at that partic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ued liberally and not strictly. 15. It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. 16(A). A Full Bench of this Court in Ahmedabad Electricity Limited v. Commissioner of Income-tax, (1993) 199 ITR 351 considered a similar situation. In that case, the appellant/assessee did not claim a deduction in respect of the amounts it was required to transfer to contingencies reserve and dividend and tariff reserve either before the Income Tax Officer or before the Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve. It is important to note that even in this case, therefore, the ground existed when the return was filed. The mere fact that a decision of a court is rendered subsequently does not indicate that the ground did not exist when the law was enacted. Judgments are only a declaration of the law. The assessee could have raised the ground in its return itself. It did not have to await a decision of a court in that regard. Indeed, even if a judgment is against an assessee, it is always open to the assessee to claim the deduction and carry the matter higher. The words "could not have been raised", therefore, cannot be read strictly. Neither the Supreme Court nor the Full Bench of this Court meant them to be read strictly. They include cases where the assessee did not raise the claim for a reason found to be reasonable or valid by the appellate authorities in the facts and circumstances of a case. 17. The next judgment to which our attention was invited by Mr. Mistri is the judgment of a Bench of three learned Judges of the Supreme Court in National Thermal Power Company Limited v. Commissioner of Income-tax, (1997) 7 SCC 489 = (1998) 229 ITR 383. In that case, the assessee had deposited....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appea1/ cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier." 18. In the case before us, the CIT(A) and the Tribunal have held the omission to claim the deduction of Rs.40,00,000/- to be inadvertent. Both the appellate authorities held, after considering all the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case the assessment should be made on the members of the association individually. The Income Tax Officer may reject its contention and may assess the total income of the association as such and impose the tax on it. Under Section 30 an assessee objecting to the amount of income assessed under Section 23 or the amount of tax determined under the said section or denying his liability to be assessed under the Act can prefer an appeal against the order of the Income Tax Officer to the Appellate Assistant Commissioner. It is said that an order made by the Income Tax Officer rejecting the plea of an association of persons that the members thereof shall be assessed individually does not fall under one or other of the three heads mentioned above. What is the substance of the objection of the assessee? The assessee denies his liability to be assessed under the Act in the circumstances of the case and pleads that the members of the association shall be assessed only individually. The expression "denial of liability" is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. In either case the denial is a denial ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment made on the association of persons and direct the Income Tax Officer to assess the individuals or to direct the amendment of the assessment already made on the members. The comprehensive phraseology used both in Section 31 and Section 33 of the Act does not countenance the attempt of the Revenue to restrict the powers of the Appellate Assistant Commissioner or of the Appellate Tribunal; both of them have power to direct the appropriate authority to assess the members individually instead of the association of persons as a unit." 14. A Full Bench of Madras High Court in State of Tamil Nadu Vs. Arulmurugan and Company (supra) had the occasion to consider a similar issue with respect to 'C' forms declaration. It was observed therein that though the expression 'appeal' and 'assessment' may be different, but the difference lies only in the particular stage of the proceeding and in the particular authority having jurisdiction in the two stages. The Court observed that basically an Appeal does not differ from an assessment. Just as is the case with any other appeal under our legal system, an appeal from a sales tax assessment is only a rehearing or a retrial and in the ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r and to the same extent, as the assessing authority has, in the first instance. If this were not the position, no appellate authority can effectively function while hearing and determining an appeal from an assessment. Under the scheme of section 9 of the Central Sales Tax Act, appeals from Central sales tax assessments will have to be dealt with in the same manner and under the same procedure as provided for under the general sales tax law of the concerned State. The jurisdiction of an appellate authority under the Tamil Nadu General Sales Tax Act, 1959, includes the power to confirm, reduce, enhance, or annual, the assessment. It also includes the power to set aside the assessment with a direction to the assessing authority to make a fresh assessment, and also to pass any other order which the appellate authority may think fit. These powers, which are of the widest amplitude, are expressly conferred both on the Appellate Assistant Commissioner and on the Appellate Tribunal, vide sections 31 and 36 of the Tamil Nadu General Sales Tax Act, 1959. The provisions show clearly that the power of the appellate authority concerning an assessment under appeal is no different, and not less....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... individual references before us. In both the cases, the assessee concerned did not file C forms with the assessing authority before the completion of the assessments. Naturally, therefore, the turnovers in question were charged to tax at the rate of 10 per cent, instead of at the concessional rate of 4 per cent. Both the assessees appealed against their respective assessments. In both the cases, leave to file the relevant C forms was asked for, at the appellate stage. The Appellate Assistant Commissioner, however, declined to receive the C forms, and confirmed the assessments. On further appeal before the Tribunal, the assessees produced the C forms once again. At this stage, the Tribunal entertained them. While doing so, the Tribunal felt satisfied that there was sufficient cause for not filing the C forms before the assessments were over. The final orders of the Tribunal, however, were different in the two cases. In one case, the Tribunal set aside the assessment and directed the assessing authority to make the assessment afresh on the basis of the C forms received at the appellate stage. In the other case, without setting aside the assessment, the Tribunal forwarded the C forms....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion thereof. It does not matter whether such power is conferred by any specific provision or statute or rules or the said statute or rules are silent about the same. All the authorities till the Tribunal are fact finding authorities and, therefore, have the same powers as that of the Assessing Officer. 16. The Appellate Authority including the Tribunal have discretion to consider fresh grounds on law as well as on facts. There is no reason why the Appellate Authority cannot modify the assessment order on an additional ground even if it is not raised before the assessing authority. The raising of an additional ground before the Appellate Authority is permissible even if the ground so raised was not raised when the return was filed or an assessment order was made or that the ground became available on account of change of circumstances or law. The Appellate Authority has jurisdiction to deal not merely with additional grounds which became available on account of change of circumstances or law but with additional grounds which were available when the return was filed. It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce with the direction given by it and after making such further inquiry as may be necessary; the assessing authority shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment; Provided further that, in respect of any appeal against an order of assessment, wherein dealer was not able to attend or remain present before the assessing authority at the time of hearing when the assessment order had been passed, then the appellate authority in first appeal may set-aside the said assessment order,- (i) within nine months from the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017, if the appeal is filed prior to the date of commencement of the said Act, (ii) within six-months from the date on which the said appeal has been filed, if the appeal is filed on or after the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017, and refer the case back to the assessing authority for making a fresh assessment under sub-section (7) of section 23. (b) in an appeal against an order imposing a penalty, the appellate authority may confirm or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authority or that the same did not arise out of the proceedings. Moreover, in view of the unanimity of judicial opinion expressed above, there is no doubt in our mind that an appellate authority as well as the Tribunal can always consider a new or additional claim with respect to an assessment year which was not raised by the assessee before the assessing authority. The Tribunal, in our view, has rightly directed the Appellate Authority to consider the 'C' forms issued by M/s. Varsha Controls Gear. 21. The Tribunal has referred to the decision of this Court in the case of M/s Ranchhoddas Bhaichand Vs. Commissioner of Sales Tax, Maharashtra State, Bombay [1996] 101 STC 218 (Bom). In that case the scope and powers of the Appellate Authority under Section 55 of the Bombay Sales Tax Act, 1959 was discussed and it was observed that these powers are very wide and not confined to considering only the points raised by the assessee in the ground of appeal or urged at the time of hearing of the appeal. It is open to the Appellate Authority to correct the Sales Tax Officer not only with regard to the matter raised in the memorandum of appeal, but also with regard to the matters which have b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ited to the extent of transactions covered by the assessment order. Section 23 is quoted as under :- "23. Assessment - (1) ................. (2) ................... (3) ................... (4) ................... (5) (a) Where the prescribed authority has reason to believe that the tax has been evaded or sought to be evaded or the tax liability has not been disclosed correctly or excess set-off has been claimed by any dealer or person in respect of any period or periods by not recording or recording in an incorrect manner, any transaction of sale or purchase, or that any claim has been incorrectly made, then in such a case notwithstanding that any notice for assessment has been issued under other provisions of this section or any other section of this Act, the prescribed authority may, after giving such dealer or person a notice in the prescribed form and a reasonable opportunity of being heard, initiate assessment of the dealer or person in respect of such transaction or claim. Provided that, where, - (i) a registered dealer has claimed refund in his last return or a revised return containing last day of the year, or (ii) an auditor has mentioned about eligibility ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vided that, once the dealer or person is assessed under this subsection, no tax from such transaction or claim and penalty and interest, if any, consequent upon such tax shall be levied or demanded from such dealer or person, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such transaction or claim. Provided further that, in case a notice is issued under this sub-section on or after the 1st April 2015, no order of assessment under this subsection shall be made after the expiry of six years from the end of the year, containing the transaction or, as the case may be, claim. Explanation.- For the purposes of this sub-section, "prescribed authority", "the said authority", "such authority" and "any authority" shall mean the Commissioner or, as the case may be, the authorities appointed under section 10 and other officers or persons to whom the Commissioner has delegated his powers in this behalf. ........................................................................................................................ .........................................................................................