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2011 DIGILAW 635 (KER)

P. A. Abdul Majeed v. State Of Kerala

2011-06-24

BHABANI PRASAD RAY, C.N.RAMACHANDRAN NAIR

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JUDGMENT :- Ramachandran Nair, J. – Revision is filed by the assessee challenging the order of the Sales Tax Appellate Tribunal confirming revised assessment issued against the assessee under the Central Sales Tax Act, for the assessment year 1997-98. We have heard Sri.E.P.Govindan, counsel appearing for the petitioner and Government Pleader for the respondent. 2. Assessee, a dealer in old gunny bags, was engaged in purchase and local as well as interstate sale of gunny bags during the year 1997-98. The assessee made interstate sales of gunny bags at an average sale price of Rs.4.68. The CST assessment was originally completed without any contest. However, in the KGST assessment, the Assessing Officer estimated the sale price at the rate of Rs.6/- per gunny bag. When the assessee filed appeal against the KGST assessment, the first appellate authority reduced the price to Rs.5.5 per gunny bag. On further appeal by the assessee, the Tribunal not only confirmed the first appellate authority's order, but issued a direction to the Assessing Officer to refix the turnover, both under KGST and CST Acts. Even though Tribunal's order to revise the CST assessment is not tenable as the matter was not before them, the assessee did not choose to challenge the order which became final. Consequent upon the order issued by the Tribunal, the Assessing Officer revised CST assessment vide Annexure B order dated 12.12.2002 which was challenged by the assessee in appeal before the first appellate authority as well as before the Tribunal, but without success. It is against this order of the Tribunal assessee has come up with this revision raising several grounds. 3. Counsel for the petitioner contended that Annexure C order issued by the Tribunal in the appeal filed by the assessee against the KGST assessment is illegal and unauthorised because the Tribunal has no jurisdiction to direct revision of CST assessment which had become final and against which no appeal was filed even before the first appellate authority. Government Pleader contended that since the Tribunal enjoys the power to enhance assessment under Section 39(4) of the KGST Act, the Tribunal enjoys the power to order revision of CST assessment on higher value. Counsel for the assessee contended that Tribunal's power to enhance assessment is limited to the subject matter of appeal and not beyond. Government Pleader contended that since the Tribunal enjoys the power to enhance assessment under Section 39(4) of the KGST Act, the Tribunal enjoys the power to order revision of CST assessment on higher value. Counsel for the assessee contended that Tribunal's power to enhance assessment is limited to the subject matter of appeal and not beyond. Section 39(4) of the Act reads as follows: "In disposing of an appeal, the Appellate Tribunal may, after giving the parties a reasonable opportunity of being heard either in person or by a representative- (a) In the case of an order of assessment or penalty,- i) confirm, reduce, enhance or annul the assessment or penalty or both; ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further enquiry as may be directed; or iii) pass such other orders as it may think fit; or (b) in the case of any other order, confirm, cancel or vary such order." From the above provision what we notice is that the Tribunal enjoysthe power to confirm, reduce, enhance or annul demand of tax orpenalty or both in the course of disposal of an appeal. This obviouslymeans that enhancement should be with reference to demand i.e.subject matter of appeal. When KGST assessment alone is subjectmatter of appeal, the Tribunal cannot go into the question of valueadopted or the turnover assessed under the CST Act, though for thesame year. Of course when the commodity sold both within the Stateand outside the State as interstate sales is one and the same and whenthe question raised is estimation of value after rejection of the valuedeclared by the assessee, it is open to the Tribunal to make theirobservations pertaining to CST assessment also. At the maximum suchobservation will constitute information for the Assessing Officer toreopen the CST assessment under Rule 6(8) of the CST (Kerala) Rulesor enable the Deputy Commissioner to exercise suo moto revisionalpower under Section 35 of the KGST Act to bring to tax escapedturnover. In this case the Tribunal directed revision of CST assessmentin the course of disposal of an appeal filed against the KGSTassessment, which in our view is impermissible. However, since theearlier order issued by the Tribunal was not challenged and had becomefinal, we cannot interfere with the said order. The next question to be considered is whether the assessment inthis case is tenable. However, since theearlier order issued by the Tribunal was not challenged and had becomefinal, we cannot interfere with the said order. The next question to be considered is whether the assessment inthis case is tenable. The Tribunal could not have directed revision ofCST assessment while disposing of an appeal filed against KGSTassessment, though for the very same year. Therefore, the observationof the Tribunal on valuation could be considered as a ground forreopening of the CST assessment under Rule 6(8) of the CST (Kerala)Rules referred above, by the officer. The time available to the officerfor revision of assessment under the above provision is only four yearsfrom the expiry of the year to which the tax relates. In this caseadmittedly the CST assessment for the year 1997-98 was revised onlyon 12.2.2002 which is clearly outside the period of limitation providedtherein. Moreover, on facts also, we do not find any justification forthe officer to revise the assessment. We, therefore, allow the revisionby vacating the order of the Tribunal and by cancelling the revised CSTassessment issued against the assessee for the year 1997-98.