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Judgment
On the earlier occasion arguments were canvassed and the matter was placed for passing of orders today. On the earlier occasion a leave was sought to place before this Court some material in the form of hierarchy in the department of Sales Tax and to support the submission of the Revenue that it is open for the Commissioner to exercise his revisional powers even if the appellate order is made by the Additional Commissioner.
All submissions of the rival parties revolved around the request of the Revenue as made by the Additional Commissioner of Sales Tax, VAT II, Mumbai, vide this Application, that the Tribunal''s order passed on 29.6.2012 in Reference Application No. 29 of 2012 raises questions of law.
This application, therefore, came to be filed on 16.10.2012 and the Revenue urged that the following two questions are questions of law. They are reproduced accordingly:-
"(i) Whether in view of the facts and circumstances of the case, the Tribunal was justified in holding that the order of Assessment has not merged in the Order of Revision dated 28.08.2006 passed by the Joint Commissioner of Sales Tax (Adm), Pune ?
(ii) Whether in view of the facts and circumstances of the case, the Tribunal was justified in holding that there is no merger of assessment with Revision Order passed by Joint Commissioner of Sales Tax (Adm), Pune and hence, the Revision order passed by the Additional Commissioner of Sales Tax (VAT-1), Mumbai dated 02.07.2011 was barred by limitation ?"
A brief factual background would be necessary so as to appreciate the contentions of Mrs. Anjali Helekar, learned Counsel appearing for the appellant as also Mr.P.V. Surte, learned Counsel appearing for the respondent.
The Respondent before us is a private limited company and manufacturer of barrels (drums) etc. The assessment order for the period 2001-02 was passed in so far as the respondent -dealer is concerned on 12.1.2006. In the assessment, sale against the G-1 form was allowed. This assessment was scrutinized by the Joint Commissioner of Sales Tax (Administration) -I, Pune Division, Pune. He revised the taxable turnover. He disallowed the amount of credit notes and increased the turnover from Rs. 2,28,68,346/- to Rs. 2,29,24,211/-. The revision order passed on 28.8.2006 resulted in increase of demand.
The matter came to be placed before the Additional Commissioner as the Revenue was of the opinion that the sales of packing goods sold against G-1 form to M/s. Gharda Chemicals was not admissible to sales tax exemption under G-5 notification as M/s. Gharda Chemicals was a manufacturer and packing material was not used in the packing of goods purchased for export. The Additional Commissioner, therefore, proposed to withdraw the exemption and issued a notice on 13.7.2009. A notice came to be issued by applying principle of merger inasmuch as the Additional Commissioner was of the opinion that the assessment merges in the revisional order dated 28.8.2006. The respondent appeared before the Additional Commissioner and objected to the revisional exercise on the ground that it is barred by limitation. The Additional Commissioner of Sales Tax (Vat) 1, Mumbai was incharge of this revisional proceeding and therefore, passed an order on 13.7.2011 holding that the assessment merged in the revision order and hence, the notice dated 13.7.2009 is within the limitation of three years. He withdrew the benefit of exemption and levied tax. That revision order a copy of which is at ''Annexure C'' resulted in an appeal being preferred by the respondent to the Tribunal. The appeal of the respondent, thus, was allowed and the Revenue preferred an application before the Tribunal seeking reference of the questions of law formulated above. This application also came to be dismissed by the Tribunal. That is why the applicant has approached this Court.
We have heard Mrs. Helekar, learned Counsel appearing on behalf of the Revenue/Applicant and she submits that the Tribunal''s order dated 13.12.2011 in the appeal and the order on the reference application dated 29.6.2012 would both raise the questions of law. She submits that there is no substance in the contentions of the respondent and which have been accepted by the Tribunal that the principle of merger cannot be invoked. Secondly, she submits that the order of the Joint Commissioner could have been revised and the Additional Commissioner, therefore, has power, authority and jurisdiction to do so. She invites our attention to Section 57 of the Bombay Sales Tax Act, 1959 and the pari materia provisions under the Maharashtra Value Added Tax Act,2002. Lastly, she submits that there is no substance in the contention that the revision notice was barred by limitation. She would submit that the Tribunal has erroneously relied upon the decision of this Court in Sales Tax Reference No. 14 of 2011 decided on 17.11.2011 (Additional Commissioner of Sales Tax Vs. Kirloskar Oil Engines Ltd.).
On the other hand, Mr. Surte, learned Counsel appearing on behalf of the respondent would submit that the concurrent orders do not raise any questions of law. In that regard, he would submit that the substantive order on the appeal of the Tribunal is clear. The Tribunal has held that the Assessment for the year 2001-02 is completed on 12.1.2006. The order of Assessment is communicated to the appellant on 22.2.2006. Initially the Joint Commissioner of Sales Tax revisited the admissibility of the credit notes and revised the assessment on 28.8.2006. However, the notice of the Additional Commissioner of Sales Tax issued on 13.7.2009 is regarding withdrawing the benefit of exemption of sales tax against G-1 form particularly in the transaction with M/s. Gharda Chemicals. The argument of Mr. Surte was that the finding of the Additional Commissioner that revision notice is within time is erroneous. The issue of limitation was, thus, a mixed question. As far as the merger is concerned, this Court''s Judgment in the case of "Kirloskar Oil Engines Ltd." (supra) is clear. The Tribunal concluded that the principle of merger has no application and secondly, what is proposed to be withdrawn by the revision notice is the exemption of sales tax on sale against G-1 form. That is beyond three years from the date of communication of assessment order. In the circumstances and when the decision of the Additional Commissioner of Sales Tax is beyond the period of five years from the date of communication of the assessment order and the proceedings are barred by limitation, is the ground on which the appeal has been allowed by the Tribunal. Mr. Surte would submit that such findings do not raise any question of law. He would, therefore, submit that the application be dismissed.
We have with the assistance of the learned Counsel appearing on behalf of both sides, perused the application and all annexures thereto. The whole object of conferring revisional power is that there are certain non appealable orders under Section 56 of the Bombay Sales Tax Act, 1959. These matters and orders are set out in Section 56. By Section 57 power of revision is conferred and it is subject to the provisions of Section 56 and to any Rules which may be made in this behalf. The relevant part of the provisions read as under:-
"S.57. Revision -(1) Subject to the provisions of section 56 and to any rules which may be made in this behalf,--
(a) the Commissioner may, of his own motion, call for and examine the record of any order passed (including an order passed in appeal) under this Act or the rules made thereunder by an officer or person subordinate to him and pass such order thereon as he thinks just and proper:
Provided that, no notice in the prescribed form shall be served by the Commissioner under this clause after the expiry of three years from the date of the communication of the order sought to be revised and no order in revision shall be made by him hereunder after the expiry of five years from such date.
(Provided further that, the period of limitation of five years shall not apply in a case where the point or points involved in the revision proceedings is the subject matter of any proceedings pending before the Tribunal, High Court or Supreme Court; and in such a case it shall be competent for the Commissioner to decide the revision proceedings within eighteen months from the date of notice of hearing served on the assessee after the conclusion of the proceedings in the Tribunal, High Court or, as the case may be, Supreme Court.
(1A) Notwithstanding anything contained in this section or any other provisions of this Act, where the State Government of the Commissioner has initiated any proceedings before an appropriate forum, against a point which is decided against the State by judgment of the Tribunal, then the Commissioner may pass an order in revision or may issue a notice as provided in this section and pass an order in revision, as he thinks fit, as if the point was not so decided against the State, but shall stay the recovery of the dues including interest and penalty, if any, in so far as they relate to such point until the decision by the appropriate forum."
A perusal of this provision would indicate that the Commissioner may on his own motion, call for and examine the record of any order (including an order passed in appeal) under this Act or the Rules made thereunder by an Officer or person subordinate to him and pass such order thereon as he thinks just and proper. The Proviso mandates that no notice in the prescribed form shall be served by the Commissioner under this clause namely clause (a) of sub-section (1) of section 57 after expiry of three years from the date of communication of order which is sought to be revised and no order in revision shall be made by him after expiry of five years of the said date.
We are of the view that in this case the matter has been decided by the Tribunal throughout on the issue of applicability of principle of merger and period of limitation within which the power has to be exercised by the Commissioner. We, therefore, refrain from expressing any opinion on the issue as to whether the orders passed by the Joint Commissioner of Sales Tax are capable of being revised on a notice addressed by the Additional Commissioner and whether that satisfies the requirement of the suo motu exercise of power of revision by the Commissioner when an order is made in an appeal or revision by the officer subordinate to him. In other words, whether the Additional Commissioner could have invoked this power and revised the order of a Joint Commissioner and whether the Joint Commissioner can be said to be subordinate to him, are questions which need not be decided in the facts of the present application. They are kept open for being decided in an appropriate case. We merely take on record the table setting out the hierarchy of the officers in the Department but express no opinion thereon.
As far as the principle of merger is concerned, that was clearly inapplicable in this case. It was concurrently observed that the assessment order was made and the Joint Commissioner passed an revisional order which was brought to the notice of the Additional Commissioner. The Joint Commissioner scrutinized the assessment made by the Assessment Officer and he revised the taxable turnover. At that time he disallowed the amount of credit notes and increased the turnover by the figure indicated in his order dated 28.8.2006. This was the power of revision which was exercised by the Joint Commissioner and when he made the order dated 28.8.2006, which resulted in increase in demand.
Though, it is true that this order was scrutinized by the Additional Commissioner of Sale Tax, Pune Division, Pune, but he formed an opinion that there is an impropriety allegedly committed in allowing G-I form. That was the transaction with M/s. Gharda Chemicals Ltd. and it is claimed that the Dealer enjoyed the exemption by virtue of exemption notification and, therefore, there was no requirement of paying any tax thereon. It is this exemption granted earlier which was sought to be withdrawn by the Additional Commissioner of Sales Tax and that is why he issued a notice in the Form No. 40 dated 13.7.2009. He issued notice on the basis that the assessment merged in the revisional order dated 28.8.2006.
Precisely this exercise was interfered with by the Tribunal as it found that it had no legal sanction. The Tribunal found that the order of assessment has been already made and communicated on 22nd February, 2006. That notice in the form No. 40 dated 13.7.2009 is after expiry of three years from the date of communication of the assessment order. The exercise, therefore, was barred by limitation. When confronted with these difficulties the Revenue sought to support this notice by invoking principle of merger. The Tribunal found that the said principle has no application here. The revisional exercise which was carried out by the Joint Commissioner of Sales Tax (Administration) -I, Pune Division, Pune of revising the taxable turnover was on account of disallowance of the amount of credit notes. That has gained finality and this revisional order dated 28.8.2006 does not speak of any impropriety nor it made any reference to the issue of sale against G-1 form. While scrutinizing this order of revisional Authority, the Additional Commissioner thought that the same failed to notice the alleged impropriety in allowing G-1 form. This was altogether a new aspect and for that to be taken into account the principle of merger will not save the bar of limitation. The principle could have been applied provided the assessment order made originally had merged in the revisional order after noticing that the revisional order also deals with such exemption issue. That having not been part of that order but sought to be dealt with by issuing revisional notice and further on 13.7.2009 that the Tribunal found that the period of three years having expired or lapsed, the notice itself could not have been issued. That notice was barred because the order of assessment was sought to be revised and that was made prior to more than three years from issuance of notice dated 13.7.2009.
On such a factual finding, we do not see how the questions of law would arise. Eventually, the plea of limitation and raised was decided by taking into account the admitted facts. It was also found that the issue of merger as raised also is a mixed issue. Unless the relevant orders and issues dealt with thereunder are pointed out, these principles cannot be applied in abstract or academically as a matter of course. Even, we would have to find out whether relevant tests for applicability of these principles are satisfied or not. The Tribunal found in paragraph 15 of its initial order that the exercise undertaken above was impermissible in terms of the proviso below clause (a) of sub-section (1) of Section 57 of the Act which we have reproduced above. We find that as a fact there is no merger and further the notice is issued beyond three years from the date of communication of the assessment order which was sought to be revised. Once the revisional exercise was held to be barred by limitation and on the ground and for the reasons assigned hereinabove, we do not find that the reference application has been erroneously dealt with. The Tribunal reiterated this very principle.
For the judgment in the case of "Kirloskar Oil Engines Ltd." (supra) what has been found relevant thereunder was that the respondent-dealer therein was assessed for the Assessment Year 1995-96 by the Assistant Commissioner of Sales Tax, Pune. This order passed on 31.3.1999 was communicated to the dealer on 21.4.1999. The assessment resulted in an order of refund. The order of the Assessing Officer was challenged by the dealer only on the ground relating to levy of interest and penalty. The Deputy Commissioner of Sales Tax allowed this appeal and set aside imposition of interest and penalty on 30.6.2000. This order was communicated to the dealer on 31.7.2000. The Additional Commissioner of Sales Tax by notice dated 27.8.2001 proposed to revise the order of assessment dated 31.3.1999 and the appellate order of the Deputy Commissioner dated 30.6.2000. The notice of revision was forwarded in the Form 40 on 21.12.2001 and the revision order which dealt with four issues was passed on 27.6.2005.
That is how the dealer filed the appeal which was allowed on 28.7.2010. The Tribunal held that the period of limitation within the meaning of proviso would commence from 21.4.1999. The power was exercised within three years from the date of communication but the revision order was passed on 27.1.2005 which is beyond the period of five years enunciated in Section 57(1)(a) of the Act, that is how the appeal was allowed and the order of the Additional Commissioner passed in the Revision was set aside. The argument based on merger was dealt with and the Court found that for the principle to apply, some very relevant tests have to be satisfied. This Court, then, reiterated these tests as culled out from Supreme Court Judgements.
We do not see how reference to this judgment and the principle of merger by the Tribunal in the present case can be said to be patently erroneous exercise or faulted with. It is the Revenue which invoked this principle and in dealing with the Revenue''s contention, a reference to the principle and as reiterated in the decision of "Kirloskar oil Engines Ltd." (supra) came to be made.
We do not see any perversity on the part of the Tribunal nor the order passed can be termed as erroneous in law. With the aid of the principle of merger, the bar of limitation was sought to be saved and that exercise was held to be faulty.
In the present case, therefore, no questions of law arise and which we can answer. The matter has been approached and dealt with totally considering the facts and circumstances and which are undisputed. They are as emerging from the record of the present case. In such eventuality we do not see any reason to entertain this application. It is accordingly dismissed.