The Judgment of the Court was delivered by
Nainar Sundaram, J.:— In this reference, the question that comes up for consideration is as to whether an assessee, who has not raised a dispute over a particular turnover in the original grounds of appeal under section 31 of the Tamil Nadu General Sales Tax Act (1 of 1959), hereinafter referred to as “the Act”, could be permitted to raise additional grounds over the same subsequently. The provocation for the reference by the Division Bench, who heard the tax case, was the pronouncement of the earlier Division Bench in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company of India Limited, [1977] 39 STC 285 (Mad.). There it was expressed “there was no jurisdiction for the Appellate Assistant Commissioner to permit the raising of additional grounds in respect of the turnover which was not disputed in the original appeal, filed in the prescribed form and therefore the Tribunal erred in directing the Appellate Assistant Commissioner to decide the assessability of the additional turnover on merits”.
2. The order of reference in this case reads as follows:
“In this tax case, the point raised by the assessee is that the Tribunal has erroneously refused to entertain its objection regarding an exemption from assessment of purchase turnover of raw hides and skins amounting to Rs. 8,97,014.34. This purchase turnover was included in the assessment, among other amounts, in the total taxable turnover. The assessee appealed against this assessment on 13th June, 1971. In the memorandum of appeal, the assessee did not question the inclusion in the assessment of the purchase turnover of Rs. 8,97,014.34. However, the assessee filed an additional ground before the Appellate Assistant Commissioner on 25th August, 1971, in and by which the assessee put forward its objection to the inclusion of the said turnover in the assessment. The Appellate Assistant Commissioner disposed of the appeal by order dated 31st March, 1975. While doing so, he dealt only with the ground raised in the original memorandum of appeal filed before him by the assessee, and completely overlooked the ground raised by the assessee by way of additional ground in respect of the turnover of Rs. 8,97,014.34. The assessee carried the matter in further appeal before the Sales Tax Appellate Tribunal. Before the Tribunal, the assessee raised its objection to the inclusion of the turnover of Rs. 8,97,014.34. The Tribunal, however, refused to entertain this ground. Describing the additional ground as a supplemental appeal, the Tribunal said it was incompetent. The Tribunal observed that the additional ground filed on 25th August, 1971 was also out of time. They further observed that if this additional ground was regarded as a substantive appeal in itself, that again would be incompetent since against a single assessment order there could be only one appeal. Holding that the additional ground could not be entertained on any account, the Tribunal did not proceed to enter into the merits of the objection raised by the assessee.
In this revision, the assessee questions the legality of the order of the Tribunal.
Under the Tamil Nadu General Sales Tax Act, 1959, an assessment can be carried in appeal by an aggrieved assessee under section 31 of the Act. Section 31(2) provides for the form in which the memorandum of appeal should be filed. Section 31(3) lays down that in disposing of an appeal, the Appellate Assistant Commissioner may confirm, reduce, enhance or annul the assessment where what is carried in appeal is an assessment. The Tamil Nadu General Sales Tax Rules, 1959 prescribe not only the form in which the memorandum of appeal should be filed before the Appellate Assistant Commissioner, but also certain other matters connected with the appeal proceedings. Neither section 31 nor the rules make specific provision for an additional ground to be urged by an assessee before the Appellate Assistant Commissioner.
However, as a matter of first impression, it might be a reasonable construction of the scope of the powers of the Appellate Assistant Commissioner to hold that an additional ground of appeal filed subsequent to the presentation of the memorandum of appeal is not beyond the powers of the Appellate Assistant Commissioner to entertain, although whether to admit it or not may be regarded as falling purely within the discretion of that authority. Having regard to the scheme of the Act and the role of the Appellate Assistant Commissioner in the statutory hierarchy as well as the wide scope of the powers exercisable by the Appellate Assistant Commissioner while disposing of an appeal against an assessment, it would be implicit in the provisions that an additional ground of appeal cannot be regarded as something quite apart from the appeal itself. The question whether the statute allows scope for an additional ground would not seem to pose any problem of construction.
In the course of arguments before us, reference was made to the decision of a Bench of this Court in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company, [1977] 39 STC 285. The pertinent question for decision in that case was whether an assessee, who failed to. raise a dispute in the memorandum of appeal filed by him before the Appellate Assistant Commissioner, could put forward his objection by way of an additional ground subsequent to the filing of the appeal and at the hearing of the appeal. This Court expressed the view that the provisions of the Act do not contemplate the acceptance by the Appellate Assistant Commissioner of an additional ground raising the dispute with reference to a turnover which does not figure in the original grounds of appeal. For coming to this conclusion, the learned Judges made a comparative study of the appeal provisions found enacted in the Income-tax Act, 1961. They observed that a specific power was granted under the Income-tax Act enabling the Appellate Assistant Commissioner to entertain additional grounds which did not figure in the first instance in the memorandum of appeal originally filed. For want of a similar express provision in the Tamil Nadu General Sales Tax Act, the learned Judges held that a similar power was lacking in the appellate authority under this Act.
We have considerable doubt as to the correctness of the view expressed in the judgment above quoted. In the first place, it is a matter for consideration how far the comparative study of other statutes can really be regarded as an aid to the construction of the statutory provision on hand, even if the enactments taken up for comparison broadly fall under the category of ‘taxing statutes’. The learned Judges, in the judgment cited, were also inclined to think that an additional ground is nothing but another appeal from the same order to the same forum. We do not think that additional grounds are regarded in this light either in the other taxing enactments or under the Procedure Code. An ‘additional’ ground as its name suggests is only an addition to a pre-existing appeal.
The trend of decisions as to the scope of the appellate power in taxation matters is not to read limitations to the ambit of the power of the appellate authority: vide Commissioner of Income-tax, Madras v. Mahalakshmi Textile Mills Limited, [1967] 66 ITR 710 and Hukumchand Mills Limited v. Commissioner of Income-tax, Central Bombay, [1967] 63 ITR 232, both decided by the Supreme Court. In both the cases, matters which were not raised at any time in the earlier proceedings, but which were raised for the first time in second appeal before the Appellate Tribunal were held to be within the competence of the Tribunal to hear and determine.
In view of all these considerations, we think that the decision of this Court in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company, [1977] 39 STC 285 requires reconsideration. This matter is of constant recurrence in sales tax appeals and revisions. Accordingly, we desire that the matter should be decided by a Full Bench.
The papers may, therefore, be placed before the learned Chief Justice for appropriate orders.”
3. Section 31 of the Act, as it stood at the relevant point of time, before the amendments introduced in 1986, read as follows:
“31. (1) Any person objecting to an order passed by the appropriate authority under section 12, section 14, section 15, sub-sections (1) and (2) of section 16, section 18, section 23, section 27, sub-section (4) of section 41, or sub-section (3) of section 42, may, within a period of thirty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Assistant Commissioner:
Provided that the Appellate Assistant Commissioner may admit an appeal presented after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period:
Provided further that in the case of an order under section 12, section 14, section 15 or sub-sections (1) and (2) of section 16, no appeal shall be entertained under this sub-section unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be.
(2) The appeal shall be in the prescribed form and shall be verified in the prescribed manner.
(3) In disposing of an appeal, the Appellate Assistant Commissioner may, after giving the appellant a reasonable opportunity of being heard,
(a) in the case of an order of assessment—
(i) confirm, reduce, enhance or annul the assessment or the penalty or both;
(ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed; or
(iii) pass such other orders as he may think fit; or
(b) in the case of any other order, confirm, cancel, or vary such order:
Provided that at the hearing of any appeal against an order of the assessing authority, the assessing authority shall have the right to be heard either in person or by a representative.”
4. The prescription, as contemplated in sub-section (2), is set out in rule 27 of the Rules framed under the Act and the rule reads as follows:
“27. (1) Subject to the provisions of section 31 any person aggrieved by any original order of an appropriate authority may appeal to the Appellate Assistant Commissioner having jurisdiction.
(2) Every such appeal shall be in form I and shall be verified in the manner specified therein. It shall be in duplicate and shall be accompanied by two copies (one of which shall be the original or certified copy) of the order appealed against in original or by a certified copy thereof unless the omission to produce such order or copy is explained to the satisfaction of the appellate authority.
(3) The appeal may be sent to the appellate authority by post or may be presented to that authority or to such officer as the appellate authority may appoint in this behalf, by the appellant or by any person authorised to represent him in accordance with the provisions of section 52.
(4) If the Appellate Assistant Commissioner finds any defects or omissions in the appeal, he shall return the appeal for rectification of the defects or for supplying the omissions and representation within ten days from the date of receipt by the appellant:
Provided that where the appeal is re-presented after the expiry of the period of ten days, the Appellate Assistant Commissioner may admit such appeal, if he is satisfied that the appellant had sufficient cause for not re-presenting the appeal within the said period.
(5) The appellate authority shall, after giving the appellant reasonable opportunity of being heard, pass such orders on the appeal as such authority thinks fit subject to the provisions of sub-section (3) of section 31.
(6) The order of transfer of appeals issued by the Chairman of the Appellate Tribunal under section 34-A shall be communicated to the appellant, to every other party affected by the order, to the authority against whose order the appeal was preferred and also to the Appellate Assistant Commissioner having jurisdiction.”
5. *Form I, spoken to in the rule, is annexed to this order. Clause 6 of form I speaks about “relief claimed in appeal”. It has got four sub-clauses. Sub-clause (a) refers to “turnover determined by the assessing authority”. Sub-clause (b) speaks about “if turnover is disputed— (i) disputed turnover; (ii) tax due on the disputed turnover”. Sub-clause (c) refers to “if rate of tax is disputed—(i) turnover involved; (ii) amount of tax disputed”. Sub-clause (d) refers to “any other relief claimed”.
6. From a bare reading of either section 31 or rule 27 or form I, we do not find any express embargo put on the appellate authority in entertaining subsequently any additional ground with reference to a particular turnover, over which he did not raise a dispute in the grounds of appeal, originally filed. Clause (a) of sub-section (3) of section 31, in the case of an order of assessment, empowers the appellate authority to confirm, reduce and enhance or annul the assessment or the penalty or both or set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed or pass such other order as he may think fit. Clause (b) of sub-section (3) of section 31 empowers the appellate authority, in the case of any other order, to confirm, cancel, or vary such order and the proviso contemplates that at the hearing of any appeal against an order of the assessing authority, the assessing authority shall have the right to be heard either in person or by a representative. The provisions give a clear indication that when an appeal is preferred by the aggrieved assessee against an order of assessment, the question of assessment as a whole is left open for consideration by the appellate authority, since his powers are very wide in this behalf as we could see from the provisions. We can take guidance from the provisions themselves as to the amplitude of the powers of the appellate authority to deal with the question of assessment. He has got powers to confirm, reduce, enhance or annul the assessment or the penalty or both, or set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed or pass such other orders as he may think fit. These powers are not in any manner curtailed by what has to be urged under clause 6 of form I. The powers having been conferred on such wide terms, we do not find any justification to curtail them, on the simple ground, the aggrieved assessee omitted to canvass a dispute over a particular turnover in his original grounds of appeal. When the power is there, it would be a misnomer to say that it could not be exercised at the behest of the aggrieved assessee, for the fault of his not expressing a grievance over a particular turnover. The exercise of the power would be more facilitated, if the voice of the aggrieved assessee is also heard over the aspect, by permitting him to raise additional grounds. We should not equate the proceedings under section 31, to an ordinary civil litigation to bring in a notion of prejudice to the other side. The hearing of the assessing authority is only for the purposes of deciding the tax-payer's liability and it is not a case of one litigant being pitted against another with regard to any private rights involved. Ultimately, the decision should be with regard to the taxpayer's liability. We could not uphold the stringent view of the Division Bench in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company of India Limited, [1977] 39 STC 285 (Mad.) that “when an assessee goes up in appeal though he exposes the assessment order in its entirety to the scrutiny and enhancement by the Appellate Assistant Commissioner, so far as the assessee is concerned, the Appellate Assistant Commissioner could not give any relief apart from the one, which he had claimed in clause 6 of form I set out above”. Of course, the Division Bench refers to an earlier pronouncement of this Court in State Of Madras v. Voltas Limited, Madras: No. 2. No. 2, [1963] 14 STC 861. The Division Bench also distinguishes the cases arising under the provisions of the Income-tax Act. But there are recent pronouncements of this Court, taking views contrary to the earlier view; and taking a generous and at the same time the appropriate and reasonable view on the question.
7. In Commissioner of Income-tax v. Indian Express (Madurai) Private Limited, [1983] 140 ITR 705 (Mad.) a matter arising under the Income-tax Act, a claim for deduction for gratuity was not raised before the assessing authority or before the first appellate authority, or even in the grounds of appeal before the Tribunal; and during the hearing of the appeal, an additional ground was allowed to be raised relating to this issue and the question arose before this Court as to whether the Tribunal had the jurisdiction to permit the raising of such an additional ground with reference to a matter not raised earlier. This Court opined that the Tribunal did have jurisdiction and the reasoning expressed by this Court runs as follows:
“The primary purpose of the statute is to levy and collect the income-tax. This is based on the cardinal principle, which has been incorporated ‘as a veritable constitutional provision, that no tax can be levied or collected save under authority of law. The task of an appellate authority under the taxing statute, especially a non-departmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provisions governing his assessment. Since the be-all and end-all of the statutory provisions, especially those relating to the administration and management of income-tax, is to ascertain the taxpayer's liability correctly, to the last pie, if it were possible, the various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a Us or dispute as arises between the two parties in a civil litigation. Although the income-tax statute makes the department or its officers figure as parties in appeal proceedings, they are not in the strict sense what are called by American writers as parties to adversary proceedings. This is so, because the very object of the appeal is not to decide a point raised as a dispute, but any point which goes into the adjustment of the taxpayer's liability. In that sense, a view prevails, even in England, that the authorities sitting in appeal in a tax case, cannot be regarded as deciding a Its, but they are only engaged in an administrative act of adjusting the taxpayer's liability. Under our fiscal jurisprudence, we may regard the appellate authorities as exercising quasijudicial functions in the same sense as a taxing officer does. But, even so, the proceedings before them lack the basic elements of adversary proceedings. It, therefore, follows that the discussion and the scope of the appellate jurisdiction of the Tribunal and other authorities under the tax code cannot be pursued by drawing a parallel to civil litigation with particular reference to appeals from decrees, and the like. The insistence on one party to the appeal being entitled to the fruits of finality, as it is called, and the appellate authority being confined to the subject-matter of the appeal are all ideas which might have relevance if the discussion centres on purely civil litigation and such like adversary proceedings as in an industrial dispute. But in a case where the Revenue is all the while a party, in a manner of speaking, and is also at the same time, an authority vested with the responsibilities of drawing up the assessment and laying down the correct liability, it would not be in accord with the scheme of the Act to impose restrictions on the ambit and the power of the Tribunal by such like notions as finality, subject-matter of the appeal, and the like.”
8. This pronouncement of the Division Bench of this Court, though arose under a different taxing statute, in our view, sets out the cardinal principles behind taxing statutes in general on the question of assessment of tax liability, and the scope of the powers of the authorities exercising appellate powers in finding out the correct factual and legal bases for the assessment, without the same being in any way scuttled down by notions of civil litigation. The ratio has not to be omitted to be taken note of on the ground it came to be expressed while dealing with another taxing statute. In fact, the pronouncement of the Division Bench of this Court in Commissioner of Income-tax v. Indian Express (Madurai), [1983] 140 ITR 705 has been followed by another Division Bench in Associated Cement Companies Limited v. State of Tamil Nadu, [1986] 63 STC 63 (Mad.), which was a case which arose under the Act and the court observed that the view taken by the Tribunal that in the appeals preferred by the assessee-company, it is not open to it to raise a dispute with reference to a subject-matter, which did not figure either before the assessing authority or before the first appellate authority is plainly erroneous. We are told that the pronouncement of the Division Bench of this Court in Associated Cement Companies Limited v. State of Tamil Nadu, [1986] 63 STC 63 was taken up to the Supreme Court and the Special Leave Petition preferred by the State was dismissed.
9. Our analysis of the principles behind taxation law, as one above, dissuades us from curtailing the power of the appellate authority under section 31 of the Act in a rigid and an inflexible manner to entertain additional grounds, canvassing a particular turnover, over which the assessee did not raise a dispute in the original grounds of appeal. At the same time, we make it clear that there is always a discretion in the appellate authority, which, of course, must be exercised in a sound and a judicial manner, to admit or not to admit additional grounds, taking note of very many relevant factors, including that of limitation, if any. This being our view, we could not approve the rigid view of the Division Bench of this Court in State of Tamil Nadu v. Siemens Engineering and Manufacturing Company of India Limited, [1977] 39 STC 285 and the same stands overruled. We answer this reference as above and we direct the tax case to go before the Division Bench to be dealt with on merits. We make no order as to costs.
10. Reference answered accordingly.