Bombay Electric Supply And ... vs State Of Maharashtra
2005 Latest Caselaw 483 Bom

JUDGMENT

J.P. Devadhar, J.

1. This reference arises out of the common judgment and order dated July 30, 2004, passed by the Maharashtra Sales Tax Tribunal, Mumbai, in R.A. No. 37 of 2004 filed by M/s. Bombay Electric Supply & Transport (BEST) undertaking (hereinafter referred to as "the assessee") and R.A. No. 47 of 2004 filed by the Commissioner of Sales Tax (hereinafter referred to as "the CST"). By the said judgment and order, the Tribunal has referred the following two questions for decision of this Court under Section 61 of the Bombay Sales Tax Act, 1959, namely :

1. At the instance of the assesses in R.A. No. 37 of 2004.

Whether on the facts and circumstances of the case and upon true and correct interpretation of the provisions of Section 22(5A) of the Bombay Sales Tax Act, 1959 the Tribunal was justified in holding that the appellant was liable to pay tax on the impugned sales of discarded materials connected with the appellant's transport activity, when in fact, qua this transport activity, the appellant is admittedly not a dealer as per Section 2(11) read with Section 2(5A) of the Bombay Sales Tax Act, 1959?

2. At the instance of the CST in R.A. No. 47 of 2004.

Whether on the facts and circumstances of the case and on true and correct interpretation of Section 55(6) of the Bombay Sales Tax Act, 1959 the Tribunal was justified in holding that in an appeal under Section 55(6)(c), the point involved in the order appealed against but not agitated by the appellant in appeal could not be legally dealt with by the appellate authority?

2. Facts having bearing on the subject-matter of the present reference, are as follows :

3. The assessee is an organisation owned by the Municipal Corporation of Greater Bombay. It carries on two major activities in Bombay, namely : (a) distribution of electricity supply in the city of Bombay and (b) public transport service, i.e., operation of buses within the Greater Bombay area. In the year 1926 the assessee opened a showroom (known as "Consumer's Advisory & Services Department") to advise and educate its consumers in handling the domestic electrical appliances. During the course of these activities, the assessee had made purchases/sales of various items including sale of ferrous, non-ferrous metal scrap and scrap motor vehicles, scrap auto-parts, etc. The assessee had applied for registration under Section 22 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the BST Act") and in pursuance of that application, a registration certificate was granted to the assessee by the Sales Tax Department on January 25, 1960. As per the said registration certificate, the assessee was to carry on various activities including the activity of selling scrap motor vehicles, scrap auto parts, ferrous and non-ferrous metal scrap, etc.

4. The activity of sale of scrap materials and articles was not subjected to sales tax up to January, 1975 as they were treated as "casual sales" not liable to tax.

5. However, by Maharashtra Act No. 62 of 1974 Section 2(5A) was introduced to the BST Act, 1959, with effect from January 15, 1975 so as to define the word "business". Thereupon, the assessee made an application on December 8, 1975 to the CST under Section 52 of the BST Act, 1959, seeking determination of the question as to whether sale of different scrap items would be taxable in view of the newly introduced definition of the word "business" in Section 2{5A) of the BST Act, 1959, For the above determination, the assessee placed before the CST four sale bills all dated September 18, 1975. Out of the said four sale bills, two sale bills related to the sale of aluminium cuttings, brass borings and the remaining two sale bills related to the sale of scrap Leyland Titan buses and jeeps. By the said application, the assessee requested the CST to decide as to whether the sale of scrap/discarded aluminium cuttings and brass borings as well as the sale of unsuitable and scrap assets such as Leyland Titan buses and jeeps effected on September 18, 1975 were liable to tax in the light of the newly introduced Section 2(5A) to the BST Act, 1959.

6. The Deputy Commissioner of Sales Tax (Deputy CST) to whom the powers of determination of disputed question under Section 52 were delegated, heard the above application of the assessee and by an order dated May 31, 1976 held that in view of the voluntary registration obtained by the assessee, the sale of aluminium cuttings , and brass borings would be liable to tax. As regards the sale of buses and jeeps, the Deputy CST held that the same being capital assets, no tax is leviable in the light of the decision of this Court in the case of Famous Cine Laboratory [19751 36 STC 104.

7. Being aggrieved by the aforesaid order, the assessee filed an appeal bearing No. 53 of 1976 before the Maharashtra Sales Tax Tribunal, in so far as it pertains to taxing the sale of scrap aluminium cuttings and brass borings. During the pendency of the said appeal, the Sales Tax Department filed a Miscellaneous Application bearing No. 44 of 1982 stating therein that the decision of the Deputy CST in holding that the sale of buses and jeeps are not liable to tax is improper in the light of the special bench decision of the Tribunal in the case of M/s. Ravindra Heracus Pvt. Ltd. (Appeal No. 2 of 1976 decided on November 22, 1978). By its judgment and order dated March 14, 1986 the Sales Tax Tribunal while disposing of the said appeal as well as the miscellaneous application, held that the assessee was a dealer qua both the activities, i.e., providing transport and distribution of electricity and, therefore, the sales of scrap/discarded materials as also of scrap vehicles which were connected with or incidental to the said activities were liable to tax. Accordingly, the Tribunal dismissed the appeal filed by the assessee and allowed the miscellaneous application filed by the Revenue.

8. Being aggrieved by the said order, the assessee filed a reference application raising several questions of law for decision of this Court under Section 61 of the BST Act. However, by an order dated April 6, 1987, the Tribunal referred only one question for the opinion of this Court, viz. :

"Whether in the facts and circumstances of the case, the Tribunal has jurisdiction to entertain the Miscellaneous Application of the department and acting on the said Miscellaneous Application set aside the order under Section 52 including that portion which was in favour of the applicant and against which the applicant had not appealed?"

9. The said reference made to the High Court was registered as Sales Tax Reference No, 92 of 1988. During the pendency of the said Reference Application, the assessee took out Notice of Motion No. 176 of 1990 requesting the High Court to issue directions to the Tribunal to refer other questions which the Tribunal had declined to refer. By a judgment and order dated February 14, 1995, this Court returned the said Sales Tax Reference No. 92 of 1988 unanswered with a direction to the Tribunal to decide the matter afresh after giving proper opportunity of hearing to the concerned parties.

10. In the light of the aforesaid order, the Tribunal heard afresh the appeal No. 53 of 1976 filed by the assessee as well as the Miscellaneous Application No. 44 of 1982 filed by the department and by its judgment and order dated February 21, 2004 partially allowed the appeal filed by the assessee by holding that the transport activity carried on by the assessee did not constitute "business" under Section 2(5A) of the BST Act, 1959, and consequently sale of aluminium cuttings and brass borings if connected with the transport activity, would not be liable to tax. However, the Tribunal held that since the assessee had obtained registration qua its transport activity voluntarily, then, the sale of aluminium cuttings and brass borings effected by the assessee would be liable to tax, irrespective of it being connected with or incidental to the transport activity or electricity activity. With reference to the Miscellaneous Application filed by the department, the Tribunal relying upon the decision of this Court in the case of Amar Dye Chem Limited [1983] 53 STC 14 held that in an appeal filed under Section 55(6)(c) of the BST Act, the powers of the appellate authority are restricted to the points agitated by the assessee in the appeal and it was not legally open to the appellate authority to touch on any point which is not agitated by the assessee in the appeal. Accordingly, the Tribunal dismissed the miscellaneous application filed by the CST. Thereupon, the assessee as well as the CST filed Reference Application bearing No. 37 of 2004 and 47 of 2004 respectively seeking reference on the issues decided against them. The Maharashtra Sales Tax Tribunal allowed both the Reference Applications and referred the aforesaid two questions for the decision of this Court.

11. Dealing with the first question which is raised at the instance of the assessee, Mr. Joshi, learned counsel appearing on behalf of the assessee submitted that the Tribunal having held that the transport activity carried on by the assessee was not a "business" within the meaning of Section 2(5A) as it stood at the relevant time, ought not to have held that in view of voluntary registration the sale of aluminium cuttings and brass borings connected with the transport activity will be taxable under Section 22(5A) of the BST Act. Mr. Joshi submitted that Section 22 relates to the obligation of a dealer who is liable to tax under Section 3 or Section 19(6) to get himself registered while carrying on business as a dealer. Thus, a dealer who is not liable to tax under Section 3 or Section 19(6) of the BST Act, is not obliged to get himself registered. However, Section 22(5A) inserted by Maharashtra Act No. 22 of 1988 with effect from July 1, 1981 provides that where a person though not required to be registered gets himself registered voluntarily and subsequently if it is found that the ought not to have been registered for that activity, then withstanding Section 3, he shall be liable to pay tax on his sales or purchases from the date of registration until the registration is cancelled. Mr. Joshi submitted that once it is held by the Tribunal that the transport activity carried on by the assessee is not a "business" within the meaning of Section 2(5A) then all activities incidental to or connected with the transport activity would fall outside the purview of the BST Act, including Section 22(5A) of the BST Act. In other words, according to Mr. Joshi, Section 22(5A) would apply only if the concerned activity is a "business" activity within the meaning of Section 2(5A) of the BST Act. In the present case, it is held that the transport activity is not a business, and therefore, sale of aluminium cuttings and brass borings which are connected with the transport activity would fall outside the scope of the BST Act, Stores, Eastern Railway [1989] 74 STC 5 and District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer [1976] 37 STC 423 and submitted that even where sale of scrap items is not the main activity but is ancillary or incidental to the main activity, the assessee is liable to be treated as a dealer and liable to tax. Accordingly, the learned counsel for the CST submitted that so long as the assessee continues to be a dealer in respect of sale of electricity, the assessee would be liable to pay tax on sale of scrap articles/buses.

12. Mr. Joshi strongly relied upon two decisions of the Gujarat High Court in the case of Commissioner of Sales Tax v. Anil Cooperative Credit Society [1969] 24 STC 180 and Jai Hind Printing Press v. State of Gujarat [1983] 52 STC 135 and submitted that to attract Section 22(5A) it must be found by some authority under the Act that the person who has been registered as a dealer on his own application ought not to have been so registered. In the present case, there is no such finding recorded by the authorities under the Act and, therefore, the Tribunal was in error in applying the provisions of Section 22(5A) of the Act. Accordingly, Mr. Joshi submitted that in the light of the aforesaid decisions, the first question be answered in favour of the assessee.

13. On the other hand, Mrs. Kejale, learned AGP appearing on behalf of the CST submitted that once a person is classified as a "dealer", he is liable to pay tax in respect of any transaction effected by him, unless specifically exempted. She submitted that there is no provision under the BST Act to suggest that a transaction can be said to be immuned from the payment of tax only on the ground that the main business is held not liable to tax. According to the Counsel for the CST it is not the requirement of law that the assessee should be a dealer qua every single transaction. Therefore, once a person is identified as a dealer in respect of any activity, then, so long as the registration continues, he becomes liable for all transactions effected by him.

14. The learned AGP further submitted that by amending the definition of "business" retrospectively with effect from January 15, 1975 by Maharashtra Act No. 21 of 1998, the Legislature has made it clear that all transactions are now made taxable if those transactions are reflected in the balance sheet of the dealer. Therefore, it is not open to the assessee to contend that the transport activity was not liable to tax. In any event, the counsel submitted, that having voluntarily registered as a dealer in respect of sale of scrap items, the assessee cannot escape liability to pay tax under Section 22(5A) of the Act. In this connection, the counsel for the CST relied upon the decision of this Court in the case of Controller of Stores, Central Railway v. Commissioner of Sales Tax [1995] 99 STC 222 and decisions of various other High Courts to show that a person engaged in sale of unserviceable material and scrap is a dealer liable to tax. The counsel has also relied upon the decisions of the apex Court in the case of Member, Board of Revenue, West Bengal v. Controller of under Section 52 and, therefore, the only remedy available to the CST was to move the appellate authority. Relying upon the decision of this Court in the case of Babulal and Sons v. Assistant Commissioner of Sales Tax [1978] 41 STC 89, the counsel further submitted that even in the absence of any miscellaneous application filed by the CST, the appellate authority was empowered to pass just and proper order so as to rectify the error in the order passed under Section 52 of the BST Act, 1959. Accordingly, it was submitted that the Tribunal was in error in holding that in an appeal filed under Section 55(6)(c), the powers of the appellate authority are restricted to the issues raised in the appeal.

15. Dealing with the second question which is referred to at the instance of the CST, the learned AGP submitted that Section 55(1) of the BST Act, 1959 sets out the authorities before whom an appeal would lie against the original order. Section 55(6)(a) sets out the powers of the appellate authority in an appeal against an assessment order and Section 55(6)(b) sets out the powers of the appellate authority in an appeal against an order imposing penalty. In respect of appeals filed under Section 55(6)(a) and under Section 55(6)(b), the appellate authority has the power to confirm, reduce, enhance or annual the assessment as well as confirm or cancel or enhance or reduce the penalty. On the same analogy, it was contended by the learned AGP that in all other appeals filed under Section 55(6)(c), the appellate authority has powers to deal with all the issues considered in the order impugned in the appeal. The submission of the learned counsel is that, if the CST has determined two issues under Section 52, one in favour of the assessee and another against the assessee, then, even though the appeal filed by the assessee is only in respect of the issue which is decided against the assessee, the Tribunal is empowered to deal with the other issue which is not the subject-matter of the appeal. According to the learned AGP, the words "pass such orders in the appeal as it deems just and proper" in Section 55 (6)(c) are very wide and extend to all issues decided in the order impugned in the appeal, even though the appeal itself is filed only on some issues decided in the original order. In this connection, the learned counsel relied upon three decisions of this Court in the case of Indoswe Engineering (P) Ltd. v. State of Maharashtra [1996] 101 STC 177, Ranchhoddas Bhaichand v. Commissioner of Sales Tax, Maharastra State [1996] 101 STC 218 and Khandelwal Ferro Alloys Limited v. State of Maharashtra [1991] 80 STC 42. The learned counsel has also relied upon the decision of the apex Court in the case of Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax [1981] 48 STC 248 and submitted that during the pendecny of the appeal filed by the assessee under Section 55(6)(c), the CST could not invoke Section 57 of the BST Act so as to revise the order passed and consequently, demanding tax under Section 22(5A) of the BST Act, does not arise at all.

16. Mr. Joshi, learned counsel for the assessee, on the other hand supported the order passed by the Tribunal. He submitted that admittedly the appeal filed by the assessee against the order passed under Section 52 was under Section 55(G)(c) of the BST Act, 1959. He submitted that although the Tribunal has wide powers including the power of enhancement in respect of the appeals filed under Section 55(6)(a) and (b), no such power is vested in respect of an appeal filed under Section 55(6)(c) of the BST Act, 1959.

17. Mr. Joshi submitted that Section 55(6) of BST Act as introduced originally with effect from January 1, 1960 read as follows :

"(6) Subject to such rules of procedure as may be prescribed, an appellate authority may pass such order on appeal as it deems just and proper".

By Maharashtra Act No. 42 of 1971, the above Section 55(6) was substituted with effect from December 1, 1971 as follows ;

"(6) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first appeal and the second appeal) shall have the following powers,--

(a) in an appeal against an order of assessment, it may confirm, reduce, enhance or annual the assessment ; or it may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment in accordance with the direction given by it and after making such further inquiry as may be necessary ; and the assessing authority shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment ;

(b) in an appeal against an order imposing a penalty, the appellate authority may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty ;

(c) in any other case, the appellate authority may pass such orders in the appeal as it deems just and proper :

Provided that, the appellate authority shall not enhance an assessment or a penalty or reduce the amount of draw-back, set-off or refund of the tax, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction".

According to Mr. Joshi, the substituted Section 55(6) confers the appellate authority with wide powers including the power to enhance only in respect of appeals filed against the assessment order and the penalty order. No such wide powers are conferred on the appellate authority in respect of other appeals. In other words, the submission is that in respect appeals filed against orders other than the assessment order and penalty order, the powers of the appellate authority are restricted as in the past to the issues raised in the appeal. In support of the above submission, Mr. Joshi relied upon the decision of this Court in the case of Amar Dye Chem Limited v. State of Maharasthra [1983] 53 STC 14 and submitted that in an appeal filed by the assessee under Section 55(6)(c), the appellate authority could not consider an issue which is not raised in the appeal and, therefore, the Miscellaneous Application filed by the Revenue to raise an issue which is not the subject-matter of appeal has been rightly rejected by the Tribunal.

18. Mr. Joshi further submitted that the proper course available to the CST was to invoke the power of revision under Section 57 of the BST Act, within a period of three years from the date of the communication of the order passed under Section 52 of the BST Act. In the present case, admittedly, no such power of revision has been invoked by the CST. Once the remedy of revision is barred, then that issue attains finality and it is not open to the CST to belatedly raise that issue by filing a miscellaneous application in the appeal filed by the assesee under Section 55(6)(c) of the BST Act. In the present case, the order under Section 52 was passed on May 31, 1976 and the limitation for revision of that order under Section 57 expired in May-June, 1979. In the present case, in an appeal filed by the assessee under Section 55(6)(c) the miscellaneous application is filed by the Revenue belatedly some time in the year 1982. Thus, according to Mr. Joshi, the miscellaneous application apart from being not maintainable, is also hopelessly barred by limitation. Accordingly, Mr. Joshi submitted that the Tribunal has rightly rejected the miscellaneous application filed by the CST. Moreover, Mr. Joshi submitted that if the C.S.T. had exercised the power of revision and passed an order against the assessee then the assessee could challenge the same before the Tribunal. Therefore, in an appeal filed by the assessee under Section 55(6)(c), the C.S.T. could not be permitted to file a miscellaneous application to raise an issue wholly unconnected to the issue raised in the appeal.

19. Mr. Joshi referred to the decision of the apex Court in the case of Tel Utpadak Kendra [1981] 48 STC 248 and submitted that the apex Court in that case has specifically held (at page 252) that the power of enhancement is conferred upon the appellate authority only in appeals filed under Section 55(6)(a) and Section 55(6)(b), i.e., appeal against assessment order and penalty order. Mr. Joshi submitted that the aforesaid observations of the apex Court support the case of the assessee that in an appeal filed under Section 55(6)(c) of the BST Act, the powers of the appellate authority are restricted to the issues raised in the appeal only and, therefore, the Tribunal was justified in rejecting the miscellaneous application filed by the CST.

20. We have carefully considered the rival submissions as also the authorities placed before us.

21. The first question relates to the decision of the Tribunal in holding that the sale of aluminium cuttings and brass borings effected by the assessee are taxable under Section 22(5A) of the BST Act. In the present case, by an order dated May 31, 1976 the Deputy CST to whom the powers under Section 52 of the BST Act were conferred had ruled that the sale of aluminum cuttings and brass borings effected by the assessee are taxable, because, the assessee has voluntarily got registered for that activity. On appeal filed by the assessee, the Tribunal held that the transport activity carried on by the assessee is not a "business" within the meaning of Section 2(5A) of the Act and consequently, if the sale of aluminium cuttings and brass borings is incidental to or connected with the transport activity then the same would not taxable, however, in view of the voluntary registration obtained by the assessee such a sale would be taxable under Section 22(5A) of the BST Act. Thus, the question to be considered in this reference is whether Section 22(5A) of the BST Act is applicable to the facts of the present case.

22. Before dealing with the merits of the case, it would be appropriate to refer to some of the relevant provisions of the BST Act. Section 2(5A) introduced to the BST Act with effect from January 15, 1975 defines the word "business" to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern. Section 2(11) defines the word "dealer" to mean any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State. Section 2(25) defines "registered dealer" to mean a dealer registered under Section 22. Section 3(1) of the Act provides that every dealer whose turnover either of all sales or of all purchases made during the year exceeds the limits prescribed under Section 3(4) shall be liable to tax under the BST Act on his turnover of sales/purchases. Section 3(3) provides that every dealer who has become liable to pay tax under the BST Act shall continue to be so liable until his registration is duly cancelled. Section 19(6) of the Act provides that where a dealer liable to pay tax under the BST Act dies or transfers or disposes of his business in whole or in part, then, the person who succeeds that business shall be liable to pay tax on the sales or purchases of the goods made by him after the date of such succession and further requires him to apply for registration, if not already registered.

23. Section 22(1) of the BST Act which is material for the purpose of this reference provides that no dealer shall, while being liable to pay tax under Section 3 or under Section 19(6), carry on business as a dealer unless he possess a valid certificate of registration as provided under the Act. Thus, the registration under Section 22(1) is compulsory to only those persons who carry on "business" as a dealer and are liable to tax on account of their turnover exceeding the limits prescribed under Section 3 of the Act. If the turnover of a person who carries on business as a dealer is less than the limit prescribed under Section 3, then, such a dealer is not taxable and consequently such a dealer is not required to be registered.

24. Section 22(5A) as it stood at the relevant time (from July 15, 1962 to June 30, 1981) reads as follows :

"(5A) If any person upon an application made by him has been registered as a dealer under this section, and thereafter it is found that he ought not to have been so registered under the provisions of this section, he shall be liable to pay tax on his sales or purchases made from the date on which his registration certificate took effect until it is cancelled - notwithstanding that he may not be liable to pay tax under Section 3."

25. Thus, for invoking Section 22 (5A) two conditions are required to be fulfilled, (1), a person must have applied for and obtained registration as a dealer under Section 22 of the BST Act and (2), thereafter it must be found that he ought not to have been so registered under Section 22 of the Bombay Sales Tax Act. If the above conditions are fulfilled then only the liability to tax arises under Section 22 (5A) of the BST Act. In the present case, the question raised for consideration under Section 52 was relating to the taxability on sale of scrap item and there was no dispute relating to the registration certificate obtained by the assessee under Section 22 of the Act. Consequently, there is no finding given by the Deputy CST in his order dated May 31, 1976 regarding the validity of registration certificate obtained by the assessee under Section 22 of the Act. On the contrary, the decision of the Deputy CST is based on the registration voluntarily obtained by the assessee. Counsel for the CST could not point out any decision passed by the authorities under the BST Act, holding that the assessee ought not to have been registered for the transport activity or activity incidental thereto or connected with the transport authority under the BST Act. Therefore, in the absence of any finding that the assessee ought not to have been registered under Section 22 of the BST Act which is a condition precedent, the Deputy CST could not have invoked Section 22 (5A) of the BST Act and hold that the assessee is liable to tax.

26. In the present case, the Tribunal has upheld the contention of the assessee that its transport activity does not constitute "business" under Section 2(5A) of the BST Act. We make it clear that we are not expressing any opinion on the above finding of the Tribunal that the transport activity carried on by the assessee does not constitute business and, therefore, the sale of aluminium cuttings and brass borings connected with or incidental to the transport activity is not liable to tax, because, that is not the question, raised in this reference. The only question required to be answered in this reference is whether the Tribunal was justified in holding that the assessee is liable to tax on sale of aluminium cuttings and brass borings under Section 22(5A) of the BST Act. As stated hereinabove, one of the condition precedent for invoking Section 22(5A) has not been fulfilled in the present case, that is, there is no finding recorded to the effect that the assessee ought not to have been registered as a dealer under Section 22 and therefore, the authorities below were not justified in invoking Section 22 (5A) and holding that the assessee is liable to tax on sale of aluminium cuttings and brass borings.

27. Reliance was placed by the counsel for the CST on various decisions of the apex Court wherein it is held that a person engaged in the sale of unserviceable material and scrap is liable to tax. In our opinion, none of the aforesaid decisions are relevant for the purpose of answering the question raised in the present reference. As stated earlier, whether the sale of aluminium cuttings and brass borings is a business activity taxable under the BST Act is not the question raised in this reference. Therefore, the decisions relied upon by the counsel for the CST holding that the sale of unserviceable material and scrap is a business liable to tax has no relevance for deciding the question raised in this reference. As held by the Gujarat High Court in the case of Anil Credit Co-operative Society [1969] 24 STC 180 to invoke Section 22(5A) the precondition is that there must be a finding given by some authority under the BST Act that the person who has been registered as a dealer on his own application ought not to have been so registered. In the present case, no such finding has been recorded by the authorities and, therefore, the assessee could not be held liable to pay tax under Section 22(5A) of the BST Act. The Tribunal declined to follow the aforesaid decision of the Gujarat High Court on the ground that the facts therein were slightly different. The factual difference if any noticed in the above case does not affect the interpretation of Section 22(5A) and in our opinion, the ratio laid down therein is squarely applicable to the facts of the present case. Accordingly, we hold that in the facts of the present case, the Tribunal was in error in confirming the order of Deputy CST and holding that the assessee was liable to pay tax on sale of aluminium cuttings and brass borings under Section 22(5A) of the BST Act.

28. Now we take up the second question which relates to the scope and ambit of the powers of the appellate authority in an appeal filed under Section 55(6) (c) of the BST Act.

29. In the present case, the assessee had made an application under Section 52 of the BST Act seeking determination on two disputed questions. The first question was on the taxability of sale of aluminium cuttings and brass borings and the second question was on the taxability of sale of discarded buses and jeeps. By the impugned order dated May 31, 1976, the Deputy CST held that the sale of aluminium cuttings and brass borings are taxable under Section 22(5A) of the BST Act in view of the voluntary registration obtained by the assessee. As regards the sale of buses and jeeps the Deputy CST held that the sale of scrap buses and jeeps being sale of capital goods it would not be liable to tax. The appeal filed by the assessee in the year 1976 under Section 55(6)(c) was restricted to challenge the decision of the Deputy CST in so far as it pertains to taxing the sale of aluminium cuttings and brass borings. In that appeal, a miscellaneous application was filed by the CST belatedly in the year 1982 requesting the Tribunal to consider the validity of the decision of the Deputy CST relating to the sale of scrap buses and jeeps in the light of the decision of the Tribunal in the case of M/s. Ravindra Heracus dated November 22, 1978 wherein it is held that the sale of scrap buses and jeeps are liable to tax. The Tribunal without going into the merits of the case rejected the miscellaneous application by holding that the powers of the appellate authority under Section 55(6)(c) are restricted to the points agitated by the assessee in the appeal and it was not open to the appellate authority to touch on any point which is not agitated by the assessee in the appeal. In this reference, we are not called upon to decide the correctness of the order passed by the Deputy CST holding that the sale of scrap buses and jeeps are not taxable. The question that falls for consideration in the present reference is, whether, the powers of the appellate authority in an appeal filed under Section 55(6)(c) is restricted to the issues raised in the appeal or it extends to all the issues determined in the order impugned in the appeal?

30. Section 55(6) of the BST Act as originally enacted (from January 1, 1960) empowered the appellate authority, subject to the prescribed rules of procedure to pass such order on appeal as it deems just and proper. There was no categorisation of appeals and in all appeals the appellate authority was required to pass just and proper order. By Maharashtra Act No. 42 of 1971, Section 55(6) was substituted with effect from December 1, 1971 and under the substituted section, the powers of the appellate authority in an appeal against the order of assessment, against the penalty order and in other cases were separately provided. Section 55(6)(a) provides that in an appeal against the assessment order, the appellate authority shall have power to confirm, reduce, enhance or annul the assessment order. Section 55(6)(b) provides that in an appeal against penalty order, the appellate authority shall have power to confirm, cancel, reduce or enhance the order of penalty. Section 55(6)(c) provides that in respect of all other appeals the appellate authority may pass such orders in the appeal as it deems just and proper. In the present case we are concerned with the appeal filed under Section 55(6)(c) of the BST Act. The Tribunal on construction of the words "just and proper" in Section 55(6)(c) of the BST Act has held that the powers of the appellate authority are restricted to the issues raised in the appeal.

31. It is pertinent to note that Section 55(6) was substituted by Maharashtra Act No, 42 of 1971 with a view to confer necessary powers on the appellate authority on the lines of Section 251 of the Income-tax Act, 1961. Section 55(6)(a) and Section 55(6)(b) of the BST Act are similar to Section 251(1)(a) and Section 251(1)(b) of the Income-tax Act. Similarly, Section 55(6)(c) of the BST Act is similar to Section 251(1)(c) of the Income-tax Act and the only difference is that although the powers of the appellate authority under Section 55(6)(c) of the BST Act is empowered to pass "just and proper" order in the appeal and in Section 251(1)(c) of the Income-tax Act the appellate authority is empowered to pass an order "as he thinks fit". This difference in words is, however, not material. Thus, the powers of the appellate authority both under the BST Act and under the Income-tax Act in respect of appeals other than the appeals against the assessment order/penalty order are similar in nature.

32. As stated earlier, prior to December 1, 1971, the appellate authority under Section 55(6) of the BST Act was empowered to pass just and proper order on all appeals. If the word "just and proper" contained in the original Section 55(6) of the BST Act was wide enough to include the power of enhancement, then there was need for the Legislature to substitute the section and specifically provide that in an appeal against the assessment order/penalty order, the appellate authority shall have power of enhancement. The very fact that the Legislature in the substituted Section 55(6) has categorised the appeals into three categories and has conferred specific powers in respect of appeals filed against the assessment orders and penalty orders clearly shows that the powers conferred on the appellate authority under Section 55 (6)(c) cannot be said to be on par with the powers of the appellate authority in respect of appeals filed under Section 55(6)(a) or Section 55(6)(b) of the BST Act. In other words, the powers of the appellate authority to pass just and proper order in the appeal filed under Section 55(6)(c) cannot be said to be wider than the powers that were conferred upon the appellate authority under the old Section 55(6) of the BST Act.

33. This Court in the case of Amar Dye Chem Limited [1983] 53 STC 14 has considered the scope and ambit of the powers of the appellate authority under the original Section 55(6) as well as the substituted section and has held at page 29 as follows :

"The old Sub-section (6) of Section 55 of the Act uses the phrase 'pass such orders on appeal as it deems just and proper' while the relevant provisions in the old as also the new Income-Tax Acts with reference to the powers of the Appellate Tribunal use the words "pass such orders thereon as it thinks fit'. We do not see any substantial difference in the meaning of these two expressions. The word 'thereon' in Section 33(4) of the old Income-tax Act and in Section 254(1) of the new Income-tax Act can only mean 'on appeal' and the decisions, which we have referred to earlier, are abundantly clear. The old Sub-section (6) of Section 55 of the Act expressly uses the words 'on appeal'. Therefore, under the old Sub-section (6) whatever powers that the appellate authority was entitled to exercise could have been exercised by it only with respect to the actual subject-matter of the appeal, namely, the questions raised before it by the appellant or in other words those parts of the assessment with which the assessee was aggrieved, and it could not suo motu go into any matter adverse to the assessees and not having any connection with any of the points arising for determination in that appeal. In Hukumchand Mills' case the Supreme Court held that the words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by Section 31 of the old Income-tax Act though the exercise of such powers is restricted by the word 'thereon' to the subject-matter of the appeal. This interpretation put by the Supreme Court on Section 33 (4) of the old Income-tax Act would apply equally to the old Sub-section (6) of Section 55 of the Act." (emphasis* supplied)

Thus, under the old Section 55(6) and the substituted Section 55(6)(c) of the BST Act, the powers of the appellate authority to pass "just and proper order" on the appeal or in the appeal would be restricted to the issues raised in the appeal and it will not be open to the appellate authority to travel beyond the issues raised in the appeal.

34. Heavy reliance was placed by the learned counsel for the CST on the decisions of this Court in the case of Indoswe Engineering (P) Ltd. [1996] 101 STC 177, Ranchhoddas Bhaichand [1996] 101 STC 218 and Khandelwal Ferro Alloys Limited [1991] 80 STC 42. It is pertinent to note that in none of the aforesaid cases the scope and ambit of the powers of the appellate authority in an appeal filed under Section 55(6)(c) have been considered and, therefore, the ratio laid down therein would not be relevant for the issues raised herein. Similarly, the decision of the apex Court in the case of Tel Utpadak Kendra [1981] 48 STC 248 does not support the case of the CST as the ratio laid down therein does not touch upon the powers of the appellate authority in an appeal filed under Section 55(6)(c) of the BST Act.

35. It may not be out of place to mention that though the substituted Section 55(6) of the BST Act is on the lines of Section 251 of the Income-tax Act, the Legislature has consciously omitted to incorporate the explanation appended to Section 251 of the Income-tax Act into Section 55 (6) of the BST Act. The explanation appended to Section 251 of the Income-tax Act expressly provides that in disposing of an appeal the appellate authority may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised in the appeal. In other words, under Section 251 of the Income-tax Act, the Legislature even after empowering the appellate authority to enhance the assessment or penalty order has chosen to append an explanation to the section, with a view to explain that the power of enhancement contained in the Section 251(1)(a) and Section 251(1)(b) will extend to the matter not raised in the appeal. In the present case, the Legislature has consciously chosen not to incorporate such explanation while substituting Section 55(6) of the BST Act. It may be, that the Legislature while substituting Section 55(6) of the BST Act has considered that the power to enhance includes the power to consider the issues not raised in the appeal. However, the same cannot be inferred while passing just and proper order. In any event, as we have held that the words "pass such orders in the appeal as it deems just and proper" in Section 55(6)(c) of the BST Act do not empower the appellate authority to consider a matter which is totally unconnected with the issue raised in the appeal, irrespective of an explanation similar to Section 251 of the Income-tax Act incorporated in Section 55(6) of the BST Act, it will have to be held that the appellate authority under Section 55(6)(c) of the BST Act is not empowered to consider an issue which is not raised in the appeal. In other words, though the appellate authority under Section 55(6)(c) of the BST Act can consider the issues allied to the main issue raised in the appeal, the appellate authority cannot consider an issue which is totally unconnected to the issue raised in the appeal.

36. For all the aforesaid reasons, we hold that the Tribunal was justified in holding that in an appeal filed under Section 55(6)(c) of the BST Act, the powers of the appellate authority are restricted to the issues raised in the appeal and, accordingly dismiss the miscellaneous application filed by the CST.

37. Accordingly, we answer the question No. 1 in the negative i.e., in favour of the assessee and against the Revenue. We answer question No. 2 in the affirmative, i.e., in favour of the assessee and against the Revenue.

38. The reference application is disposed of in above terms with no order as to costs.