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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
APPELLATE SIDE
WRIT PETITION NO.4098 OF 2009
The State of Maharashtra. ...Petitioner.
Vs.
M/s.Bharat Petroleum Corporation Ltd.& Anr. ...Respondents.
....
Mr.A.A.Kumbhakoni, Spl. Counsel with Mr. V.A.Sonpal for the
Petitioner.
Mr.S.P.Surte for Respondent No.1.
Mr.R.A. Dada, Sr.Advocate with Mr. Milind Sathe, Sr.Advocate and
Mr.B.C.Jshi, Mr. P.S.Jaitley and Mr.Zuber Dada i/b. A.S.Dagal &
Asso. for Respondent No.2.
.....
CORAM : DR.D.Y.CHANDRACHUD AND
J.P.DEVADHAR, JJ.
April 20, 2010.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
In these proceedings under Article 226 of the
Constitution, the issue which falls for determination is whether an
appeal against an order passed by the Commissioner of Sales Tax
under Section 52 of the Bombay Sales Tax Act, 1959, is
maintainable under Section 55(1)(c), at the behest of the State
Government, to the Tribunal. The Sales Tax Tribunal has, by its
decision dated 30 June 2008 come to the conclusion that the
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appeal filed by the State was not maintainable.
2. Since the question of law which has been urged in the
Petition raises a question of interpretation, only a brief reference to
the facts would be necessary in order to appreciate the background
in which the dispute between the parties has arisen. The First
Respondent, Bharat Petroleum Corporation Ltd., entered into an
agreement on 24 August 1992 with the Second Respondent,
Reliance Industries Ltd., for the supply of Linear Alkyl Benzene
Feed Stock (LABFS) through a pipe line from the refinery at Mahul
to the petro chemical plant of the Second Respondent at
Patalganga. LABFS is raw material for the manufacture of N-
Paraffin. N-Paraffin is extracted by the Second Respondent at its
plant from the LABFS supplied by the First Respondent. Upon
extraction, the residue is returned to the First Respondent in a
‘return stream’. On 21 April 1992 the First Respondent filed an
application to the Commissioner of Sales Tax and sought a
determination under Section 52 on whether the product in
question, had been correctly classified under Entry C-I-26(1) of the
Schedule to the Bombay Sales Tax Act, 1959 and whether the
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return stream despatched by the Second Respondent to the First
Respondent constituted a “sales return”. The Commissioner of
Sales Tax by a determination dated 14 March 1996 held inter alia
that what was returned back by the Second Respondent (RIL) to
the First Respondent (BPCL) did not constitute goods returned,
but was a purchase of kerosene by the First Respondent. Evidently,
the basis of such a determination would be that what is supplied
by the First Respondent is LABFS which contains N-paraffin and
what goes back to the First Respondent does not contain the
material which is extracted by the Second Respondent at its plant.
The proceedings were eventually remanded back to the
Commissioner by an order, of a Division Bench of this Court, dated
18 February 2003 and the Commissioner was directed to decide
whether the return stream, namely, return of kerosene by RIL to
BPCL would be legally allowable as a sales return or whether it
would amount to a return of kerosene by BPCL to RIL. Upon
remand, the Commissioner by his order dated 6 October 2004
came to the conclusion that LABFS supplied by the First
Respondent to the Second Respondent and return stream were
two different goods and that consequently, what was supplied back
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did not qualify as a sales return in accordance with Rule 4 of the
Bombay Sales Tax Rules, 1959. Once again there was an order of
remand, this time by the Tribunal on 12 August 2005. Upon
remand, the Commissioner by his order dated 11 September 2006
held that the return stream, after the extraction of N-Paraffin out of
the original supply of LABFS, was legally allowable as a sales
return and would not amount to a purchase of kerosene by the
First Respondent from the Second Respondent. This order of the
Commissioner was questioned by the State Government in an
appeal before the Tribunal under Section 55 of the Act. The
Tribunal by its judgment dated 30 June 2008 came to the
conclusion that an appeal by the State against the order of the
Commissioner on a decision under Section 52 was not
maintainable. The appeal has been dismissed only on the ground
of maintainability. The State of Maharashtra has instituted these
proceedings under Article 226 of the Constitution and the
correctness of the order passed by the Tribunal now falls for
determination before the Court.
3. In assailing the order passed by the Commissioner,
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Counsel appearing on behalf of the State submitted that (i) Section
55(1)(c) is neutrally worded and provides an appeal from every
original order, not being an order mentioned in Section 56, passed
under the Act or the Rules by the Commissioner, to the Tribunal;
(ii) The Commissioner, when he makes a determination of a
disputed question under Section 52, exercises quasi judicial
powers in the exercise of which he is independent of the State and
the State exercises no control directly or indirectly on the exercise
of those powers; (iii) The observations contained in a judgment of
a Division Bench of this Court in Amar Dye Chem Ltd. vs. The
State of Maharashtra,1 are passing observations and the question
which arises in the present appeal did not arise in the reference
made to the High Court in that case under Section 61; (iv) It is a
settled principle of law that a judgment in a reference under
Section 61 is in the nature of an advisory opinion rendered on
specific questions of law which are referred for the decision of the
High Court and a question of law which was not referred to the
Court cannot be regarded as arising out of the order of reference;
(v) The scheme of the Bombay Sales Tax Act,1959 would clearly
1 (1983) 53 STC 14 (Bom)
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establish that the powers which are exercised by the Commissioner,
upon his appointment under Section 20(1) are those which are
conferred by the Act. The decision of the Commissioner is not
necessarily the decision of the State. Under Section 52, the
Commissioner discharges a quasi judicial duty imposed by the
legislation and does not perform an executive act. The decision of
the Commissioner under Section 52 is, therefore, not a decision of
the State; (vi) An appeal by the State, which has a vital interest in
the collection of revenue would be maintainable under Section
55(1)(c) against the decision of the Commissioner; (vii) The
Tribunal has manifestly erred in equating the role and position of
the Commissioner as a quasi judicial authority with the position of
the State under the Act. The basis of the judgment of the Tribunal
is hence, flawed.
4. On the other hand, it has been urged on behalf of the
First Respondent by Counsel that (i) Tax legislation contemplates
a distinction between statutory provisions relating to the charge of
tax and those relating to assessment, remedies and recovery of
revenue; (ii) The assessment of tax under Sales Tax legislation is
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done by the Commissioner or by his subordinates. The
Commissioner protects the interests of the revenue and of the State
and he has no independent interest of his own; (iii) Powers of
reassessment, revision and of imposing penalties, amongst others,
are vested in the Commissioner; (iv) Under the Act the
Commissioner is a representative of the Government, the object
being to protect the interests of the State; (v) If the logic of the
State Government that it can file an appeal against an order passed
by the Commissioner under Section 52 to the Tribunal is held to be
correct, that would mean that an appeal can be filed by the State
against an order passed by the Sales Tax Officer. Sufficient
powers have been given to the Commissioner to make a
reassessment or to exercise revisional jurisdiction under the Act;
(vi) The State has no independent interest except to ensure that the
provisions of the Act are implemented and that tax is properly
collected. The Commissioner is expected to protect the interests of
the State; (vii) The provisions of the Act, must result in the
inference that even if Section 55 is facially neutral, an appeal by
the State Government against an order of the Commissioner is not
contemplated; (viii) The interpretation which is sought to be
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placed on the provisions of the Act is buttressed by relying on the
provisions of the Rules and forms prescribed for the filing of an
appeal.
5. The publication of the Government of Maharashtra
suffers from a printing error in Section 55(1)(c). As would be
noted in greater detail later, Section 55(1)(c) provides that an
appeal from every original order, not being an order as set out in
Section 56, shall lie “if the order is made by the Deputy
Commissioner, Additional Commissioner or Commissioner to the
Tribunal”. The Bombay Government Gazette of 28 September
1959 in which the Act has been initially published, specifically
makes the aforesaid provision which contemplates an appeal
against the decision of the Commissioner to the Tribunal. The
same provision continued in subsequent publications of the State
Government, there being no amendment to Section 55(1)(c), in so
far as it provides for an appeal against an original order of the
Commissioner to the Tribunal. The deletion of the words “or
Commissioner” in the version of the Act published by the State
Government is, therefore, an obvious printing error. The Petition
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has been argued by all the Counsel on that basis, upon verification
that this is a printing error and that the aforesaid provision has not
been altered by the legislature.
6. The salient provisions of the Act and the statutory
scheme must be elucidated. Section 2(7) defines the expression
“Commissioner” to mean the person appointed to be the
Commissioner of Sales Tax for the purposes of the Act. Clause (11)
of section 2 defines the expression “dealer” to mean any person
who whether for commission, remuneration or otherwise carries on
the business of buying or selling goods in the State, and includes
the Central Government, or any State Government which carries on
such business, and also any society, club or other association of
persons which buys goods from or sells goods to, its members.
The expression “State” is defined in clause (31) of Section 2 to
mean the State of Maharashtra. The incidence and levy of tax is
provided in Chapter II and under Section 3(1) a dealer whose
turnover either of all sales or of all purchases exceeds the limit
prescribed is liable to pay tax under the Act on his turnover of sales
and turnover of purchases made on or after the notified day.
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Chapter III provides for the constitution of sales tax authorities and
the Tribunal. Sub-section (1) of Section 20 provides that for
carrying out the purposes of the Act, the State Government shall
appoint an officer to be called the Commissioner of Sales Tax.
Under Sub-section (2) the State Government is similarly vested
with the power to appoint Additional Commissioners of Sales Tax
and other subordinate officers. By Sub-section (3) of Section 20,
the Commissioner has jurisdiction over the whole of the State of
Maharashtra, while an Additional Commissioner has also
jurisdiction over the whole of the State or, where the State
Government so directs, over any local area thereof. The
jurisdiction of the other officers is over such local areas as the State
Government may specify. Sub-section (4) of Section 20 provides
that the Commissioner shall have and exercise all the powers and
perform all the duties, conferred or imposed on the Commissioner
by or under the Act. An Additional Commissioner save as
otherwise directed by the State Government, can exercise the
jurisdiction conferred upon the Commissioner. By sub-section (7)
the State Government is empowered to delegate to the
Commissioner the powers conferred upon it by sub-sections (2)
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and (3), other than for the appointment of Additional
Commissioners or Deputy Commissioners. The constitution of the
Tribunal is provided for in Section 20.
7. Chapter IV of the Act deals with registrations, licences,
authorizations, recognitions and permits. In several provisions of
the Act, powers have been vested in the Commissioner of Sales
Tax. These include inter alia the power to refuse an authorization
(Section 27); and to cancel or suspend an authorization (Section
28). Chapter V of the Act provides for returns, assessment,
payment, penalty, recovery and refund of tax. The Commissioner
is conferred with the power to make an assessment of taxes under
Section 33. In certain situations, the Commissioner is empowered
to issue directions not to proceed with the assessment of a
particular dealer or class of dealers for a particular period if the
assessment involves a decision of a point which is concluded
against the State by a judgment of the Tribunal or the High Court
and the State Government or the Commissioner have initiated
proceedings against such a judgment before an appropriate forum.
The power to reassess, where there is reason to believe that any
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turnover of sales or purchases has escaped assessment is vested in
the Commissioner under Section 35. The Commissioner is
empowered to impose a penalty for the contravention of Section 37
and to issue orders in the nature of garnishee orders under Section
39.
8. In this background now it is necessary to advert to the
provisions of Section 52. Sub-section (1) of Section 52 empowers
the Commissioner to determine a question which arises, otherwise
than in proceedings before a Court or before the Commissioner has
commenced assessment or reassessment of a dealer under Section
33 or 35, whether, for the purposes of the Act:
“(a) any person, society, club or association or any firm
or any branch or department of any firm, is a dealer, or
(b) any particular thing done to any goods amounts to or
results in the manufacture of goods, within the meaning
of that term, or
(c) any transaction is a sale or purchase, or where it is a
sale or purchase the sale price or the purchase price, as
the case may be, therefor, or
(d) any particular dealer is required to be registered, or
(e) in the case of any person or dealer liable to pay tax,
any tax is payable by such person or dealer in respect of
any particular sale or purchase, or if tax is payable the
rate thereof.”
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In discharging the functions conferred by or under the Act, the
Commissioner under Section 53 has all the powers of a Civil Court
for the purpose of (a) Proof of facts by affidavit; (b) Summoning
and enforcing the attendance of any person, and examining him on
oath or affirmation; (c) Compelling the production of documents;
and (d) Issuing commissions for the examination of witnesses.
Section 55 of the Act provides for appeals and reads as follows:
“55. (1) An appeal from every original order, not being
an order mentioned in section 56 passed under this Act
or the rules made thereunder shall lie-
(a) if the order is made by a Sales Tax Officer, or any
other officer subordinate thereto, to the Assistant
Commissioner;
(b) if the order is made by an Assistant Commissioner, to
the Deputy Commissioner;
(c) if the order is made by a Deputy Commissioner,
additional Commissioner or Commissioner to the
Tribunal.”
Sub-section (3) of Section 55 provides that every order passed in
appeal under the Section shall, subject to the provisions of Sections
57, 61 and 62 be final. Sub-section (4) provides a limitation of
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sixty days from the date of the communication of the order
appealed against for the filing of an appeal. Section 59 provides
that in computing the period of limitation, the provisions of
Sections 4 and 12 of the Limitation Act, 1963 shall, so far as may
be, apply. Sub-section (5) of Section 55 inter alia provides that an
appeal against an order of assessment with or without penalty, or
interest or against an order imposing a penalty, or interest, or
against an order directing the forfeiture of any tax collected by a
dealer, shall not ordinarily be entertained by an appellate
authority, unless it is accompanied by satisfactory proof of the
payment of the tax with or without penalty, or interest, or as the
case may be, of the payment of the penalty, or interest, or the
amount forfeited. The Appellate Authority is permitted to waive
this requirement for reasons to be recorded in writing. Under sub-
section (6), the Appellate Authority both in first and second
appeals has the power (a) In an appeal against an order of
assessment to confirm, reduce, enhance or annul the assessment,
or set it aside and refer the case back to the assessing authority for
making a fresh assessment; (b) In an appeal against an order of
imposing a penalty or interest to confirm, cancel or vary the order
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so as to enhance or reduce the penalty or interest; and (c) in any
other case to pass such orders in the appeal as it deems just and
necessary. Certain orders are made non-appealable under Section
56. These orders include a notice issued under the Act calling
upon a dealer for an assessment or to show cause against
prosecution, orders pertaining to the seizure or retention of
documents, orders sanctioning prosecution and other orders as
specifically provided. Section 56 provides as follows :
“56. No appeal and no application for revision shall lie
against-
-(1) a notice issued under this Act, calling upon a dealer
for assessment or asking a dealer to show cause as towhy he should not be prosecuted for an offence under
this act, or notices issued under any of the provision ofsection 38B of this act, or notice or any order issued
under the provisions of section 39-1A or
-(1A) Orders issued by the Commissioner under the
third proviso to sub-section (4A) of section 33, or
-(2) an order pertaining to the seizure or retention of
account books, registers and other documents, or
-(2A) any order issued under sub-section(1) of section
53, or
-(3) an order sanctioning a prosecution under this act, or
-(4) an order ……… under section 70.”
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9. Section 57 of the Act empowers the Commissioner,
subject to Section 56, to call for and examine the record of his own
motion, or any order passed (including an order passed in appeal)
under the Act or the rules by any officer or person subordinate to
him and to pass such orders thereon as he thinks just and proper.
Prior to its amendment by Maharashtra Act 24 of 1990, Section 57
inter alia contemplated a revision to the Tribunal on an application
made to it against an order of the Commissioner, not being an
order passed under Section 55(2), in second appeal. The State
Legislature amended the provision in 1990 so as to delete the
remedy of a revision against an order passed by the Commissioner
to the Tribunal that was available under clause (b) of Sub-section
(1) of Section 57.
-10. In Section 55, the legislature has made a provision for an
appeal against original orders passed by the various authorities.
An appeal against an order of the Sales Tax Officer lies to the
Assistant Commissioner; an appeal against an order of the Assistant
Commissioner lies to the Deputy Commissioner and an appeal
against an order passed by the Deputy Commissioner, Additional
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Commissioner or Commissioner lies to the Tribunal. Sub-section
(1) of Section 55 provides that an appeal from every original order,
not being an order mentioned in Section 56 passed under the Act
or the rules, would lie if an order is made by one of the authorities
stipulated therein to the appellate authorities as specified. The
appellate authority against an original order passed by the
Commissioner is the Tribunal. The mandate of the law is that an
appeal lies against every original order passed under the Act or
rules which is made by one of the authorities specified. The
exception is that certain orders specified in Section 56 are non-
appealable.
-11. The submission which has been urged on behalf of the
Respondents is that though Section 55(1) is neutrally worded, the
scheme of the Act would result in the conclusion that the State
Government cannot be aggrieved by an order passed by the
Commissioner so as to maintain an appeal under Section 55(1).
The submission which has been urged is that the Commissioner is
appointed with the intent and purpose of protecting the revenue
concern of the State Government and in numerous provisions of
the Act, it is the Commissioner who discharges the role of being the
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protector of the revenue. Hence, it has been urged that the State
cannot maintain an appeal against an order passed by the
Commissioner.
12. Reading Section 55 as it stands, the provision does not
contain a restriction of the nature sought to be inferred on behalf
of the Respondents. Section 55 provides for an appeal from every
original order except for those orders mentioned in Section 56. An
original order under Section 52 is not mentioned in Section 56.
On its plain and natural meaning, an appeal against an original
order passed under Section 52 is maintainable under Section 55.
In construing the provisions of a fiscal statute, the Court must
adopt the ordinary and natural meaning of the words used by the
legislature, for the legislature is deemed to intend and mean what
it says. Where the language of a statute is clear and unambiguous,
the Court cannot read a restriction which has not been introduced
by the legislature. The intention of the legislature has to be
construed from the words used and by the language adopted. The
words that have been used in Section 55 are not susceptible to the
interpretation that the appellate remedy is available only to the
assessee.
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12. The fallacy in the submission of the Respondents, which
found acceptance by the Tribunal, lies in equating the exercise of
the quasi judicial powers by the Commissioner, with the exercise of
powers by the State. Undoubtedly, under Section 20(1), the State
Government appoints the Commissioner of Sales Tax for carrying
out the purpose of the Act. The Commissioner is vested with the
exercise of all the powers and with the performance of the duties
conferred by the Act. In these proceedings, the issue before the
Court relates to the exercise of powers by the Commissioner while
deciding a disputed question under Section 52. The power which
the Commissioner exercises to decide such a question is a quasi
judicial power. Section 52 is a part of Chapter VII which is
entitled “Proceedings”. The nature of the determination under
Section 52 is quasi judicial. Section 53 which immediately follows
Section 52, specifically confers upon the Commissioner, the powers
of a Civil Court though in certain specific areas for proof of facts by
affidavit, summoning and enforcing the attendance of any person,
compelling the production of documents and for issuing
commissions for the examination of witnesses. In the discharge of
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his quasi judicial powers, the Commissioner is required to apply his
mind independently and is not subservient to the State. The
exercise of quasi judicial power by the Commissioner cannot be
subject to the dictate or to the directions of the State. Though the
Commissioner is vested with statutory powers under the Act and
his appointment is with a view to carry out the purposes of the Act,
when he exercises quasi judicial powers, the exercise of those
powers is subject to the discipline of the law which attaches to the
discharge of a quasi judicial power. A determination by the
Commissioner under Section 52 is an original order within the
meaning of sub-section (1) of Section 55. To hold that an appeal
at the behest of the State would not be maintainable against such
determination, is liable to produce startling results. The
submission of the Respondents is that even if the Commissioner
were to err in the discharge of his quasi judicial powers under
Section 52, the statute does not provide a remedy for its
correction, save and except for a review which can be exercised by
the Commissioner. This would be destructive of the legitimate
concerns of the State in the collection of Revenue. Clear words
would be necessary to produce such a result. The legislature has
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not imposed such a prohibition. The Tribunal dealt with the issue
by holding that it was for the State Government to take steps to
bring about an amendment by legislation. The provision as it
stands, is not susceptible of being interpreted in such a manner as
would exclude an appeal by the State against an order passed by
the Commissioner under Section 52. Section 55(1) does not
contain any such restriction. A restriction of that nature could only
be by express words used by the legislature or if as a result of a
necessary implication drawn from the statutory provision only one
possible conclusion could be arrived at. That is not so in the
present case.
13. In Amar Dye Chem Ltd. vs. State of Maharashtra, 2 a
Division Bench of this Court considered four questions on a
reference by the Tribunal, at the instance of the assessee, under
Section 61(1). The questions which were referred for the
determination of the Court were as follows :
“(1) Whether, on the facts and in the circumstances of
the case and considering the dates of filing of returns,
assessment order and filing of the first appeal, all prior to
1971, the Tribunal was right in holding that the Assistant2 (1983) 53 STC 14 (Bom)
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22Commissioner of Sales Tax did have power of enhancing
the quantum of purchases from Rs.3,52,597 to Rs.
7,69,246 while deciding the appeal?
(2) Whether, on the facts and in the circumstances of the
case, the Tribunal was right in holding that the AssistantCommissioner of Sales Tax possessed jurisdiction of
enhancing the rate of purchase tax from 3 per cent to 5
per cent taking recourse to sub-section (2A) of section 14
of the Bombay Sales Tax Act, 1959, as substituted andalways deemed to have been substituted by Maharashtra
Act 13 of 1973)?
(3) On the facts and circumstances of the case and
regard being had to 67 per cent of local sales as against
purchases on form 15 only of 45 per cent, was the
Tribunal justified in law in holding that the applicantmade breach of recitals of form 15 and thereby was
liable to purchase tax under section 14 of the BombaySales Tax act, 1959?
(4) On the facts and circumstances of the case and
regard being had to overall purchases made within and
without the State of Maharashtra, was the Tribunal
justified in law in holding that the applicant was notentitled to the full set-off of Rs.1,26,634?”
The first question related to the power of the Assistant
Commissioner to enhance the quantum of purchases which had
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become exigible to purchase tax under Section 14, while the
second question related to his jurisdiction to enhance the rate of
purchase tax on such purchases. Sub-section (6) of Section 55 as it
originally stood, provided that an Appellate Authority may pass
such orders on appeal as it deems just and proper, subject to such
rules and procedure as may be prescribed. As a result of
Maharashtra Act 42 of 1971, sub-section (6) was substituted so as
to inter alia provide that in an appeal against an order of
assessment, the Appellate Authority may confirm, reduce, enhance
or annul the assessment. The Division Bench held that under the
new sub-section (6) of Section 55, the appellate authority became
clothed with a wider power and jurisdiction than under the old
sub-section (6). The assessee had not filed the appeal after the
amended sub-section (6) came into force and the appeal was
required to be decided according to the provisions of the old sub-
section (6). The Division Bench held that the only question that
remained for determination was whether the order of the Appellate
Commissioner was one which he was competent to pass under the
old sub-section (6). The Division Bench held that the order of
Assistant Commissioner in appeal was under the unamended sub-
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section (6) of Section 55 and that in view of the questions arising
in the appeal filed by the assessee, he had the power to enhance
the quantum of purchases. The rate of sales tax could be enhanced
by reason of the retrospective operation of Section 14(2A) of the
Bombay Sales Tax (Amendment and Validating Provisions) Act,
1973.
14.
During the course of the judgment in Amar Dye Chem,
the Division Bench compared the provisions of the Bombay Sales
Tax Act, 1959, with the Income Tax act, 1961. The Division Bench
held that under the Income Tax Act, against an order passed in
appeal by the Assistant Commissioner, both the assessee and the
Department could approach the Appellate Tribunal but there was
no such provision under the Sales Tax Legislation, and an appeal
could be available only to the assessee.
15. Now, it is a settled principle of law that a decision
rendered by the High Court on a reference is in an advisory
capacity and that the Court can decide only questions which are
referred to it and not any other question. This principle was
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reiterated in the context of the provisions of sub-sections (1) and
(2) Section 66 of the Income Tax Act, 1922 in the decision of the
Supreme Court in CIT vs. Scindia Steam Navigation Co. Ltd.3
The Supreme Court held that the High Court hearing a reference
under Section 66(1) does not exercise appellate, revisional or
supervisory jurisdiction over the Tribunal. The Court acts purely in
an advisory capacity, on a reference which properly comes before it
under sub-sections (1) and (2) of Section 66. The Supreme Court
held that it is of the essence of such a jurisdiction that the Court
can decide only questions which are referred to it and not any
other questions. The same principle has been reiterated by the
Supreme Court in its judgments in Aluminium Corporation of
India Ltd. vs. CIT,4 and in CIT vs. Bansi Dhar & Sons.5 In the
circumstances, following the settled position in law, the ratio of
the judgment of the Division Bench in Amar Dye Chem must be
confined to the questions of law on which a reference was made to
the Court. The issue as to whether an appeal against an order
passed by the Commissioner would be maintainable before the
Tribunal under Section 55(1)(c) was not referred to this Court
3 (1961) Vol.XLII ITR 589
4 86 ITR 11 (1972)
5 (1986) 157 ITR 665
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under Section 61. Consequently, the observations of the Division
Bench on that issue cannot be regarded as arising out of the order
passed on the reference.
16. Counsel appearing on behalf of the Respondents relied
upon the judgment of a Division Bench of this Court in Kulko
Engineering Works Ltd. vs. The State of Maharashtra.6 In that
case the submission which was urged on behalf of the Revenue
was that the decision of the Commissioner under Section 52(1)
has no binding effect and the Sales Tax Officer is not bound by it.
While rejecting this argument, the Division Bench held that the Act
provides for a hierarchy of authorities; some of them possess
original jurisdiction, some appellate or revisional jurisdiction or
both. This Court observed that the hierarchy of authorities under
the Act is provided in order to have a superior authority to correct
wrong orders or to provide a remedy by way of appeal and revision
to a party aggrieved by an order. If a question submitted to the
Commissioner for determination under Section 52 has been
determined by him upon an interpretation of the provisions of the
6 (1980) 46 STC 454
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27
Act or Rules, it would not be open to a Sales Tax Officer to ignore
that interpretation and to place his own interpretation contrary to
or different from the interpretation which has been placed by the
Commissioner. The judgment of the Division Bench, therefore,
does not decide the issue as to whether a determination under
Section 52 would be subject to an appeal under Section 55 by the
State. Similarly, the decision of the Supreme Court in
Commissioner of Sales Tax vs. Indra Industries,7 reiterated the
position in law that a circular issued by the Department would be
binding on the Department and the taxing authority cannot be
heard to advance an argument that is contrary to that
interpretation.
17. The order which has been passed by the Tribunal is
manifestly misconceived and would warrant interference of this
Court in its extraordinary jurisdiction under Article 226 of the
Constitution. The basic postulate of the decision of the Tribunal is
that orders which are passed by the Commissioner are in exercise
of powers which are delegated to him by the government and that
7 (2001) 122 STC 100
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the Commissioner acts as a representative or agent of the
Government. This assumption is incorrect. The Commissioner who
is vested with a quasi judicial authority under Section 52 cannot
be regarded as being a representative or agent of the State
Government when he decides an issue under that provision. The
Tribunal was, with respect, in manifest error when it held that a
legal injury cannot be said to be sustained by the State
Government, nor can the State Government be regarded as an
aggrieved person qua the order passed by the Commissioner who is
a representative of the State. The State is vitally interested in the
collection of revenue. An error on the part of the Commissioner in
the exercise of his quasi judicial powers is subject to correction by
the Tribunal in an appeal filed by the State. To hold otherwise
would result in a manifest miscarriage of justice and would defeat
the very basis and intent of the legislature in enacting the
legislation. The State which has a vital interest in securing the
collection of revenue is entitled to file an appeal against an order
passed by the Commissioner where that order is regarded as being
contrary to law.
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18. Before concluding, it would be necessary to note that
the Tribunal has dismissed the appeal only on the ground of
maintainability. The Tribunal has not decided any other question
including the question of limitation. That being the position, it
would not be either appropriate or proper to express any view on
the questions which would arise before the Tribunal including on
the question of limitation. All these questions are kept open to be
urged before and to be decided by the Tribunal.
19. In the circumstances, Rule is made absolute by setting
aside the order of the Tribunal dated 30 June 2008. The appeal
shall in the circumstances, be restored back to the file of the
Tribunal to be disposed of in terms of the aforesaid directions. In
the circumstances of the case, there shall be no order as to costs.
( Dr.D.Y.Chandrachud, J.)
( J.P.Devadhar, J.)
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