JUDGMENT
K. Shivashankar Bhat, J.
1. The short question involved in this revision petition is :
“Whether the ‘C’ forms could be produced by the dealer either at the appellate stage or at the second appellate stage as has been done in the instant case ?”
2. The assessee produced some “C” forms before the assessing authority on March 10, 1988 and sought modification of the proposal of the assessing authority. This was granted. Thereafter, the assessee filed an appeal to the Deputy Commissioner under section 20 of the Karnataka Sales Tax Act, 1957. According to the assessee, he was not informed of the hearing fixed at the Madikere camp of the first appellate authority. One of the grounds urged before the appellate authority was that, he was not afforded an opportunity for producing the “C” forms. This contention was rejected by the appellate authority on the ground that the assessing authority had entertained the “C” forms on March 10, 1988 and there is nothing to indicate that the time was sought by the assessee to produce further “C” forms. This order was made, in the absence of the petitioner and the petitioner’s contention is that, he has no notice of the hearing date.
3. Before the Appellate Tribunal, the assessee produced several “C” forms along with a memo which shows that the assessee produced 16 “C” forms. According to the assessee, these forms had to be obtained from the dealers at Kerala and there was some difficulty in getting these declarations from those dealers. But the Appellate Tribunal rejected the “C” forms on the ground that, in view of the proviso to section 8(4) of the Central Sales Tax Act, 1956, read with rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, the assessee should have produced “C” forms before the assessing authority and if he could not produce the same, he should have sought time from the said authority to produce the forms.
4. The learned counsel for the assessee contended before us that the Appellate Tribunal failed to exercise the power vested in the Appellate Tribunal under section 22, and that, the Appellate Tribunal had all the powers of the assessing authority. It was contended by the learned counsel that the appeal and the second appeal as per sections 20 and 21 are nothing but continuation of assessment proceedings and the powers of the appellate authority and of the Appellate Tribunal are the same as that of the assessing authority and in these circumstances, the Tribunal could have considered the case of the assessee with reference to “C” forms produced before the Tribunal.
5. Mr. H. L. Dattu, learned Government Advocate, on the other hand urged that the language of the provision of section 8(4) is quite clear and specific. The “C” forms ought to be produced before the assessing authority and the language or rule 12(7) of the Central Rules referred above also is to the same effect. It was contended by the learned Government Advocate that the provision of section 8(1) of the Central Act was not applicable to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner declaration (referred as the “C” form) within the prescribed time or within such further time as that authority may permit, provided sufficient cause is shown. In other words, according to the learned Government Advocate, the language is peremptory and if the assessee seeks the benefit of concessional rate, it is for him to comply with the requirements as provided under section 8(4) read with the proviso thereto.
Section 8(1) of the Central Act provides for levy of tax on sale of goods in the course of inter-State trade or commerce at a concessional rate. To avail of this the dealer shall have to furnish “C” forms (declaration forms). The declaration thus furnished will be the evidence of the nature of the transaction. This declaration has to be obtained by the assessee from another dealer. The question is whether production of this evidential document cannot be permitted in the proceedings before the appellate authority or before the Appellate Tribunal. The Revenue relies upon the language of the proviso to section 8(1) as well as rule 12(7) referred already. These provisions no doubt refer to the assessing authority as the authority before whom these declarations will have to be filed. This is so because primarily it is the assessing authority who makes the original order either accepting or rejecting the case of the assessee. It is the said authority which initiates the case of the Revenue with reference to the particular facts of the case. Therefore, necessarily law requires the dealer to produce all the relevant materials before the said authority.
The question whether the appellate authority should entertain the declaration under the circumstances when the dealer could not produce the same before the assessing authority will have to be considered in the light of the powers of the appellate authority. If the appellate power is a limited power then entertainment of the documents filed by the assessee will depend upon the scope of the said limited power. However, if the appellate power is not restricted in any manner, the said power will be as wide as the power that could be exercised by the assessing authority. Generally stated, the appellate power is co-extensive with the power of the original authority. Section 20 provides for the first appeal. The scope of the appellate power is found in section 20(5). The appellate authority may confirm, reduce, enhance or annul the assessment, or direct the assessing authority to make further enquiry, or pass such order as it may think fit. The power necessarily includes the power of setting aside the assessment and remand the matter. The power is quite wide. There is absolutely no limitation as to exercise of the power by the appellate authority and if so, there is no reason to deny him the power to entertain an application of the assessee to consider the prayer to produce “C” form (declaration) provided the assessee is able to satisfy the authority that due to reasons beyond his control he could not produce them before the assessing authority. It is true that the assessee cannot, as a matter of course, produce these documents before the appellate authority. He will have to show sufficient cause as to why he could not produce them earlier.
The power of Appellate Tribunal has to be traced to section 22 of the Act. As per section 22(4) the Appellate Tribunal shall after giving both the parties to the appeal reasonable opportunity of being heard, pass such orders thereon as it thinks fit. We do not find any limitation on the power of the Appellate Tribunal even under section 22. No doubt various aspects of the appellate power are not enumerated as in the case of section 20(5). Obviously because the Appellate Tribunal is the highest statutory Tribunal under the Act, the Legislature has left the issue to the discretion of the Appellate Tribunal to pass such orders thereon as the Tribunal may think fit with regard to the appeal. The order which the Tribunal would think fit to make has, necessarily a judicial order. In the absence of any restriction as to the scope of this power, the scope has to be inferred by reference to the principle governing the appellate power. It will lead to several difficulties if we hold that the Appellate Tribunal cannot entertain any fresh evidence or additional evidence under any circumstances. There may be several instances wherein as assessee may have been prevented from producing material before the assessing authority or the first appellate authority; the circumstances under which an assessee may be prevented from producing the best evidence which was obtained subsequently, may be due to the reasons beyond his control. Denial of opportunity to the assessee to produce the appropriate relevant material even at the stage of second appeal before the Appellate Tribunal irrespective of the circumstances of the case would result in denial of justice to the assessee. The decision of this Court in C. Govindaswamy v. State of Mysore [1963] 14 STC 65 explains the scope of the Appellate Tribunal’s power. At pages 66-67, it observes thus :
“The expression ‘pass such orders thereon as it thinks fit’ is an expression of wide import. An order of remand can be properly brought within that expression. We see on reason why these words should be construed narrowly. In fact, if a narrow construction is placed on these words, it may work to the prejudice of the assessees in a large number of cases. There may be occasions when a total remand may be required in the interest of justice.”
In an appropriate case, if the Appellate Tribunal finds that the assessee was prevented, due to sufficient cause, from producing material evidence, it is always open to the Appellate Tribunal to entertain the same and if necessary may remand the matter to the assessing authority. In fact, regulation 36 of the Karnataka Appellate Tribunal Regulations provides for such a procedure and recognises the power in the Appellate Tribunal to entertain additional evidence. This apart, second appeal before the Appellate Tribunal is nothing but continuation of the assessment proceedings, because, normally the appeal is nothing but the continuation of the original proceedings. There is no restriction against the application of this fundamental principle as not applicable to the case of an appeal before the Appellate Tribunal.
In Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax , the Supreme Court was concerned with the second appeal before the Appellate Tribunal under the Bombay Sales Tax Act. It was noticed by the Supreme Court that under the Bombay Act, the Appellate Tribunal had power to enhance the assessment. But, the further observation of the Supreme Court would generally govern the scope of the appellate power. The Supreme Court observed thus :
“We may also point out that when an appellate authority is considering a second appeal against a ‘first appellate’ order, it is examining an order which can be broadly described as an order of assessment. It is a final order disposing of an appeal which, in a sense, is a continuation of the assessment. A second appeal against such an order is an appeal against an order of assessment.”
A Full Bench of the Madras High Court in State of Tamil Nadu v. Arulmurugan and Company [1982] 51 STC 381 considered the very scope of section 8(4) of the Central Act. The question was whether the appellate authority should consider the declarations in “C” forms. It was held that an appeal is a continuation of the process of assessment and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular tax-payer’s case. Thereafter the Full Bench held that the Appellate Tribunal may receive “C” forms at the time of the appeal provided sufficient cause is shown for its earlier non-production. The Tribunal can then either proceed to the next step of applying the concessional rate of tax to the turnover covered by the “C” forms or the Tribunal may remand the case to the assessing authority. It depends upon the particular fact-situation as to whether the remand should be for the specific purpose of going into the question of sufficient cause. Under certain circumstances, the Tribunal itself may accept the cause explained by the assessee and remand the matter for adjustment of tax liability. This decision clearly recognises the wide power of the Appellate Tribunal. At page 394, the Full Bench dealt with the arguments which was also addressed before us by Mr. Dattu. The relevant observation of the Full Bench on the construction of rule 12(7) reads thus :
“Two minor points of construction which the learned Government Pleader placed before us in the course of his argument may be briefly noted and disposed of. While urging that an appellate authority could not possibly have been intended as one of the authorities invested with the power to grant further time for filing C form declarations, the learned Government Pleader referred to the description of the assessing authority, as ‘the first assessing authority’ in the proviso to rule 12(7). The argument was that the term ‘first’ must be given due significance, and such significance can only be given by excluding the appellate authority and all other authorities from the purview of the power to extend the time. We do not think that the inclusion of the word ‘first’ in the phrase ‘first assessing authority’ leads to this result. We see nothing significant in the use of the epithet ‘first’ occurring before the words ‘assessing authority’. If the intention of the draftsman were that the appellate authority and other authorities are to be severely excluded from the rule, then that need not have been sought to be achieved by the use of the appellation ‘first assessing authority’, as if there can be a second assessing authority, a third assessing authority, and so on. In our view, by a ‘first’ assessing authority is meant no more than the authority who makes the assessment, in the first instance. The designation does not mean anything else. Even otherwise, the basis of our conclusion that the appellate authority also can allow further time for filing C form declarations in deserving cases is not derived from the words of the proviso to section 8(4) or the proviso to rule 12(7). Our conclusion is based, rather, on the true juristic conception of the role which the appellate authority has to play under the tax code as respects assessments in appeal. Our conclusion is least affected by the particular form of words which the rule-making draftsman has adopted in drawing up the proviso to rule 12(7).”
The Kerala High Court in Deputy Commissioner of Sales Tax v. Abdul Salam [1988] 69 STC 144 dealt with the power of the first appellate authority to receive the declaration forms. The observation made therein regarding the scope of the appeal would equally govern the scope of the second appeal before the Appellate Tribunal also unless the statute clearly restricts the scope of such power.
The decision of Andhra Pradesh High Court in State of A.P. v. Meda Mines and Minerals is applicable to the facts of the present case. It was observed therein that filing of “C” forms is governed by rule 12(7) of the Central Rules. Proviso to the said sub-rule empowers the receiving of the said forms beyond the stage prescribed in the said sub-rule. Even the appellate authority has power to receive the said forms. “C” forms are thus equated to material evidence relevant to the assessment.
The High Court of Punjab and Haryana in Prestolite of India Limited v. State of Haryana [1988] 70 STC 198 held that the production of “C” and “D” forms was mandatory for grant of the concessional rate of tax, but the provision was directory in so far as they could be produced at any stage in the assessment proceedings. It was also held that the petitioner (assessee) could have produced the duplicate forms before the assessing authority, Commissioner, Tribunal or even the High Court.
The learned Government Advocate cited the decision in Shelly Products v. Commissioner of Sales Tax [1988] 69 STC 18 (MP). The observation in the said decision that the assessee could have filed the declaration in “C” form only before the prescribed authority has to be read in the context of the facts of the case. Sufficient opportunity had been given by the assessing authority to the assessee to produce “C” form. But the assessee did not avail of this opportunity. In these circumstances the attempt made by the assessee before the Appellate Tribunal to produce the documents was not successful and the High Court affirmed the order of the Tribunal.
In the instant case, the assessee could not be present before the appellate authority, because he had not received the notice of hearing and the hearing was fixed at Madikere. Before the Appellate Tribunal, the assessee filed the declarations in “C” forms. The Tribunal has not considered the circumstances under which the petitioner could not produce the forms earlier. Question of sufficiency of the cause was not at all considered. In the circumstances, the question whether the assessee-petitioner had sufficient cause for the belated production of “C’ forms will have to be considered and only thereafter the question of accepting them would arise.
In this view of the matter, we set aside the orders of the assessing authority, the first appellate authority and of the Appellate Tribunal.
Accordingly we allow this revision petition and remand the matter to the assessing authority who shall consider the sufficiency of the cause under rule 12(7) of the Central Rules and make an appropriate order either to accept or not to accept the declarations in “C” forms filed by the assessee before the Appellate Tribunal on December 14, 1989. The assessee-petitioner shall take back the “C” forms and produce the same before the assessing authority.
Petition allowed.