18. Whether appeal order, which was not subject matter for allowance of set off can be revised?

Held : No.

The appellant was engaged in the business of manufacturing and sale of edible oils at Erandol, Dist. Jalgaon. He was assessed for the year 1995-96 u/s 33(3). The assessment order resulted in to net refund Rs. 3,53,524/- Subsequently assessing authority issued notice in form 28, and initiated reassessment proceeding because they felt that there was some excess allowance of set off u/r 41F. The order passed u/s 35 on 22-2-1999 resulted into demand of Rs. 2,00,300/-. Against this order an appeal was filed, it was challenged mainly on the ground of being bad in law on account of having been passed without giving proper opportunity of being heard. The appellate Dy. Commissioner accepted the contention and set aside the reassessment order. However while doing so he made observation in the order that the appellant has been granted excess set-off, which needs to be withdrawn, and since this is apparent mistake, the assessing authority should rectify the mistake u/s 62, The Dy. Commissioner advised assessing authority to rectify the order u/s 62 withdrawing excess set off u/r 41 F granted in the context of cotton seed oil cake. Against this order of Dy. Commissioner in appeal no further appeal has been preferred, nor did the assessing authority initiated any action u/s 62, because action was barred by limitation.
 

Subsequently the Additional Commissioner of Sale Tax, Pune issued notice in form 40 on 17-1-2003 thereby proposing to revise appeal order to withdrawn excess set off allowed. The order passed u/s 57 on 7-7-2005 withdrawing set off u/r 41F resulted into extra demand of Rs. 2,00,330/-.
 

Against this order, appellant came before the Tribunal with the grievances that revisional jurisdictions being fatally defective.
 

The Additional Commissioner revised appeal order, the mistake if any was in the assessment order itself, and therefore what is revised is assessment order and not the appeal order. The assessment order was passed in July 1998 and therefore revision proceeding initiated on 17-1-2003 and order passed on 7-7-2005 in the context of the alleged mistake were both barred by limitation.

According to revenue the assessment and re-assessment orders merged into appeal order, therefore, revision order passed by the Additional Commissioner is correct.
 

Tribunal did not agree with the submission of revenue that there is a merger of order into the appeal order. The reassessment order itself was a nullity and therefore there was no merger of the assessment order into such a null and void reassessment order. And re-assessment order into the appeal order passed in an appeal against the assessment order. Therefore the mistake regarding excess allowance of set off was in the assessment order and not in the appeal order.
 

Therefore Tribunal set aside the revision order which was passed without proper assumption of revisional jurisdictions.

 

[M/s Shree Balaji Oil Mills Appeal No. 79 of 2005 decided on 4-5-2006 Judgment by Shri G.G. Kochrekar Member of Third Bench Shri P.V Surte Advocate appeared for the appellant.]

19. Whether set off on Plant & Machinery should be allowed with the set off of "Raw Material" to PSI Units who opted for deferral  mode ?

Held : Set off u/r 41 D on Plant and Machinery should be allowed in cash

The appellant, holding entitlement certificate under PSI opted for deferral mode.

An interesting question for determination was whether set off u/r 41D on Plant and Machinery should be allowed with set off u/r 41D on raw material to adjust towards other tax liability, instead it should be allowed in cash.

The appellant made comparison of set off system in different circumstances such as

1. Units who opt for "exemption" mode and who can purchase raw materials on 'BC' forms without payment of tax. Such units cannot issue 'BC' forms in respect of machinery purchase and have to pay taxes on such purchase and claim set off u/r 41D. The set off is given in cash to such units at the time of assessment.
    

2. The units who opt for "deferral mode" and hold recognition Certificate up to 30-9-1995 and Certificate u/e. 88 of Group "A" could purchase "Plant and Machinery" at confessional rate.
    

3. The units opting for deferral mode but not holding Recognition Certificate or any certificate u/e. 88 of Group A, can purchase "Plant and Machinery" on payment of tax and claim set off u/r 41D of the Bombay Sales Tax Rules, 1959.

Attention was also drawn to the scheme of PSI. The benefit under the scheme is admissible only in respect of purchase of "Raw Materials". The word "raw material" is defined in notifications entry. The definition of raw material does not include "Plant & Machinery". Therefore while interpreting Expl. IV of Rule 31B this cannot be ignored. The meaning of the word used in a statute, one has to look to context and also ascertain object with which the word has been employed by the legislature and interpret in accordance with it. (Chimappa Muddaliar 53 ITR 323 and 11 STC 612)

After referring to various decisions of High Courts & Supreme Court quoted by the Appellant the Tribunal observed that :

"The tax liability in respect of purchase and sale of "Plant and Machinery" is kept outside the purview of the Package Scheme of Incentives. Since the Plant & Machinery kept outside the purview of the scheme neither any tax liability nor any set off payable on Plant & Machinery could be considered while working out the deferral tax liability of the eligible unit. The set off used in Expl. IV has to be read with Rule No. 31B. Therefore, it is necessary to know rule 31B as a whole. Looking to the all aspects in the matter, we are of the considered view that word set off appearing in the Expl. IV has to be read with Rule 31B as a whole. The whole scheme talks about the liability on purchase of "raw material" liability to pay tax on sales of "manufactured goods". It does not refer to the purchases of Plant and Machinery. The definition given in Expl. II of Rule 31B does not include Plant and Machinery. Therefore, for all the practical purposes, the appellant is liable to pay tax on sale or purchase of Plant and Machinery. His liability to pay tax on Plant and Machinery is not exempt from payment of tax nor it can be taken into the amount of deferment of tax. Since the liability to pay tax on plant and machinery is kept outside the purview of the benefits imparted to the eligible units, obviously set off u/r.41D if admissible on purchase of plant and machinery has got to be given in cash. The set off admissible on purchases of plant & machinery, therefore, cannot be adjusted from the amount of deferment of tax."

[M/s Indian Seamless Steel & Alloys Ltd. SA Nos. 402, 404 & 169 of 2003 Supreme Industries Ltd. SA No. 1467 of 2003. Awade Pulp and Paper Mills Pvt. Ltd. SA No. 180 of 2004 decided on
6-5-2006. Judgments delivered by Shri J.N Khambait Member of First Bench Shri A.B Ghanekar STP, Shri C.D. Balai STP and Shri P.W. Deshpande STP respectively appeared for the appellants.]

20. Whether part payment made in appeal can be withheld ?

Held : No

The Sales Tax Officer imposed penalty u/s 36(4A) for not filing returns in time in the year 1997-98. The penalty of Rs. 13,500/ and Rs. 18,000/- was imposed without giving any show cause notice to the appellant. Against this order an appeal was filed before the Assistant Commissioner of Sales Tax (Appeals) P 12, Andheri Dn., Mumbai on the ground that, penalty is imposed by violating rule of natural justice. The appeals were admitted on payment of Rs. 2,500/- and Rs. 3,000/-. Subsequently the learned Assistant Commissioner decided the appeal, and found that the mandatory provisions of giving opportunity of hearing to the appellant is not followed, therefore, he set aside the orders imposing penalty, but he refused to refund the part payment made in appeal. His order was "The appeal is allowed and the levy of penalty u/s 36(4A) be set aside, but the part payment made by the appellant is not refunded back in the protection of the Government revenue it is kept with the Department. The Sales Tax Officer is directed to take note of the same and take action as per the provisions of law".
 

Appellant came in Second Appeal before the Tribunal against this order. Tribunal set right the order, ordered to refund the part payment made in appeal to the appellant. The Tribunal found that, the order is self contradictory and not supported with any appropriate provision of laws.
 

[M/s Shah and Shah S.A. 1577 of 1578 of 2004 decided on 6th May 2006 Shri S. G. Tambe of Fourth Bench delivered the judgment, Shri H. G. Shah Advocate appeared for the appellant]