Orissa High Court
Hindustan Petroleum Corporation Ltd. vs State Of Orissa And Ors. on 16 May, 2008
Equivalent citations: (2008)15VST522(ORISSA)
Author: Chief Justice
Bench: Chief Justice
JUDGMENT B.N. Mahapatra, J.
1. In this writ petition the petitioner challenges the ex parte reassessment order dated February 15, 2007 passed by the Sales Tax Officer, Cuttack-1, East circle, Cuttack (hereinafter referred to as "the assessing officer") under Rule 12(8) of the Central Sales Tax (Orissa) Rules, 1957 [hereinafter referred to as "the CST (O) Rules"] and also the consequential demand notice dated February 15, 2007 for the assessment year 2001-02 wherein the total demand of Rs. 356,68,54,887.27 has been raised. By the impugned order, the assessing officer enhanced the gross turnover and net turnover by making addition to inter-State sale.
2. The short facts which give rise to the present writ petition are as follows:
3. The petitioner is a Government of India undertaking and a Government Company. It is registered under the Orissa Sales Tax Act as well as the Central Sales Tax Act. In respect of the assessment year 2000-01, the petitioner filed its return under the CST (O) Rules in form I, inter alia, disclosing its inter-State sales at Rs. 7,09,74,937.64. Subsequently, the petitioner filed revised return for the said assessment year at the time of hearing of the original assessment case disclosing turnover of inter-State sale to the tune of Rs. 4,27,52,517.96. Vide assessment order dated March 23, 2005, the assessing officer did not accept the revised return on the ground of delay in submitting the revised return and assessed the petitioner at the figure stated in the original return wherein the inter-State sale was stated to be Rs. 7,09,74,937.64. Being dissatisfied with the said assessment order, the petitioner filed an appeal before the first appellate authority which was dismissed by the latter by its order dated December 26, 2005 passed in First Appeal No. AA-(C)24/CUIE/2005-06. Against the said order, second appeal was filed in Orissa Sales Tax Tribunal.
4. While the second appeal was pending before the learned Tribunal, the assessing officer issued a notice on December 29, 2006 under Rule 10 read with Rule 12(8) of the CST (O) Rules, 1957 to the petitioner on the ground that the petitioner's turnover for the period 2001-02 has escaped assessment/has been under-assessed which is attached to the writ petition as annexure 3. The said notice was issued to the petitioner on December 30, 2006 along with one letter of the even date stating the reasons for reopening of the assessment. The said letter is attached to the writ petitions as annexure 4. Subsequently, an order under Rule 12(8) of the CST (O) Rules was passed ex prate on December 15, 2007 vide annexure 7. In the impugned order, the learned assessing officer observed as follows:
In the instant case the dealer-company has already been assessed under Rule 12(4) of the CST (O) Rules for the period 2001-02 to a tax demand of Rs. 16,28,021. Further it is revealed that there is some inter-State transaction effected by the dealer-company during the period 2001-02. But on verification of the assessment record, on prima facie, it is found that the same has not been disclosed in the return and also at the time of assessment. Thus there is a reason to believe that the dealer has been under-assessed due to default in disclosing true and correct picture of business transaction by the dealer-company during the period under question.
Information obtained on transactions of the dealer-company, it is found that the dealer-company has received and dispatched petroleum product such as HSD and SKO as follows:
Product Received quantity in KL Despatched in KL HSD 329178 185785 SKO 43009 28951
But on verification of the assessment record and returns filed under both OST and CST Acts for the period under question it is revealed that the transactions under question have not been reflected in the return submitted and also at the time of assessment, but on the other hand the dealer-company has dispatched huge quantity of goods from Paradeep terminal showing the same as stock transfer. On verification of the returns filed for the year 2001-02 it is found that the dealer has furnished annual revised return as follows:
1. Sale price received or receivable by the dealer in respect of sales of goods during the period for value of Rs. 6,36,53,36,949.25
(a) Inter-State sale as defined in Section 3 of the Act, value of Rs. 4,27,52,517.96
(b) Sale of goods in the course of export or import as defined in Section 5 of the Act for value of Rs. 6,32,25,84,431.28 but the same are not export as understood in Section 5 of the CST Act. This amount is related to stock transfer of the company to outside the State of Orissa.
Thus the transaction as disclosed in the annual revised return in respect of inter-State sale is for value of Rs. 4,27,52,517.96 and the balance amount shown as stock transfer from Paradeep to outside the State of Orissa. But the dealer-company has furnished a statement in respect of stock transfer showing the value of stock transfer as Rs. 3,31,63,04,081.97. Accordingly, the dealer-company has furnished "F" form for Rs. 3,31,63,04,081.97. Basing on the statement furnished by the dealer, assessment has been completed considering the "F" forms submitted by the dealer for stock transfer of Rs. 3,31,63,04,081.97. But for the balance amount of Rs. 3,00,62,80,349.31 there is neither conclusive claim nor documentary evidences that the goods dispatched outside the State through Paradeep port are otherwise than by way of sale. But the fact is that the dealer-company has never disclosed the transactions effected through Paradeep terminal neither in the return nor at the time of assessment. But on the other hand information received from the documents furnished by the IOC before the reporting official revealed that dispatches of goods by HPCL through Paradeep port are mostly to other oil companies. The documents which have been obtained reflecting transaction are called ocean loss report, On verification of the documents which were obtained reflecting the transaction it is calculated out that during the period 2001-02 the dealer-company has delivered goods to the other oil companies such as 185785 KL of HSD and 28959 KL of SKO. Since the goods as stated above have been delivered ex-tanker at the port of destination at Haldia, Port Blair to IOCL, BPCL and IBP Co. and the consignees bear the loss in transit proportionately, it is obvious that the goods were shipped for the purpose of delivery to the above companies. These transactions are clearly inter-State sales falling under Section 3(a) of the CST Act. HSD and SKO consigned by the instant dealer from outside the State of Orissa as inter-State purchase have been unloaded and taken delivery at Paradeep port in the State of Orissa and subsequently the same goods have been dispatched to other companies located outside the State of Orissa at Haldia in the State of West Bengal, Port Blair in Andaman which proves break in journey and another inter-State journey is started from Paradeep port which is a sale in course of inter-State trade and commerce coming under the purview of Section 3(a) of the CST Act.
On examination of the assessment record, documents obtained it is found that the transaction under question are neither reflected in the returns nor disclosed at the time of assessment. Thus, it is understood that the dealer is avoiding to give correct picture of the business transactions and some portion of turnover has been kept out from the returns filed and there is evasion of tax accordingly. Thus it is concluded that the goods under question have been delivered to ex-tanker at the port of destination at Haldia and Port Blair to other oil companies such as IOC, BPCL and IBP Co. as inter-State sale and liable for tax. Beside the dealer has shown stock transfer of Rs. 6,36,53,36,949.25 in the annual revised return. But 'F' form submitted to the extent of Rs. 3,31,63,04,081.97, for the balance amount the dealer has filed to furnish any documentary evidences to prove that the dispatch of goods is other than by way of sale. On the other hand the dealer has furnished misleading statement/figure to keep away the facts and figure to the assessing officer at the time of original assessment. This time also the dealer-company was asked to furnish certain limited information for re-assessment. In spite of the reasonable opportunity given, the dealer failed to furnish any evidences as asked for. Thus it is understood that the dealer is deliberately avoiding to give true and correct picture of transaction related to their business. Thus it is felt proper to complete the assessment basing on the facts and figure available in the record as the substantial amount of revenue is involved in this case. Considering the facts as discussed, assessment is made enhancing the gross turnover by adding the value towards the goods which were dispatched from Paradeep and delivered to other oil companies at the port of destination and so also the quantity shown as stock transfer in the return but failed to furnish any documentary evidence as inter-State sale.
It is concluded that the dealer is liable to pay tax towards inter-State sale suppression of 185785 k1 of HSD valued at Rs. 3,34,41,31,000 and 28959 k1 of SKO valued at Rs. 23,16,72,002 as well as transaction of Rs. 3,00,62,80,349.31 shown as stock transfer but no documentary evidence submitted along with penalty under Rule 12(8) of the CST (O) Rules.
Accordingly the gross turnover of the dealer is determined at Rs. 6,65,30,57,286.95. After allowing deduction towards collection of CST amounting to Rs. 27,29,805.29, the net taxable turnover is arrived at Rs. 6,65,03,27,481.66.
Both tax and surcharge comes together to Rs. 1,43,10,99,972.71. Tax has already been assessed under Rule 12(4) of the CST (O) Rules for Rs. 43,58,017.80. Now the tax due is determined at Rs. 1,42,67,41,954.91.
This order dated February 15, 2007 has been challenged in the present writ petition.
5. Mr. Gourav Banerjee, learned Senior Counsel appearing for the petitioner, raised a preliminary question regarding jurisdiction of the assessing officer in reopening the assessment for the year 2001-02 by issuing notice under Rule 12(8) read with Rule 10 of the CST (O) Rules while the original assessment order has already merged with the appeal order. He submitted that the assessing officer lacks jurisdiction in issuing the notice of reassessment as provided under Rule 12(8) of CST (O) Rules and in passing the reassessment order on the basis of such notice for the year 2001-02.
6. According to learned Counsel for the petitioner, after dismissal of the appeal against the original assessment order dated March 23, 2005, the operative order as of date is the appellate order since the assessment order passed by the Sales Tax Officer merged with the appellate order by operation of the doctrine of merger. He emphasised that if the original assessment has been carried in appeal and confirmed, then the turnover and the assessment order is of the appellate authority and no more of the assessing officer. The doctrine of merger applies and once that happens, the assessing officer has no authority or jurisdiction to review the matter and arrived at a fresh figure of turnover. He further submitted that it was a clear case of change of mind, since earlier the very same transactions were held to be not sale and now the same transactions are attempted to be styled as sale. As a result of the impugned reassessment order, there were two assessment orders, one is the original assessment order and the other is the reassessment order showing two different figures of turnover. There cannot be two turnover figures for the same assessment year. There can be only one operative assessment order in a particular form at one point of time governing the same assessment year.
7. While developing his argument on the aforesaid preliminary issue, the learned Counsel for the petitioner submitted that the subject-matter of assessment and reassessment is turnover. In earlier order of assessment, the turnover for the period 2001-02 was assessed at Rs. 7,09,74,937.64. He further submitted that Rule 12(8) of the CST (O) Rules contemplates a second return and a second assessment order. However, what is not contemplated is that there should be two assessment orders for the same year. At the same point of time, there cannot be two operative assessment orders, as in the present case there is an order of assessment of the Assistant Commissioner and a reassessment order of the Sales Tax Officer.
8. It was argued that it is not the intention of the Legislature to enable the Sales Tax Officer to reopen final decisions passed by a higher authority, otherwise it would be destructive of the hierarchy. The lowest rank officer cannot be permitted to get round the order of the higher authority. According to him, it is identical to a situation where a single judge does not have the jurisdiction to review an appellate order passed by a Division Bench. The subject-matter of assessment both in original assessment and reassessment order is the same. In support of his contention he relied on the judgments of the honourable apex court and different High Court in cases of State of H.P. v. Gujarat Ambuja Cement Ltd. , Kunhayammed v. State of Kerala and State of Orissa v. Ugratara Bhojanalaya reported in [1993] 91 STC 76 (Orissa). Concluding his argument, he further submitted that there were alternative avenues of revision and appeal open to the department, but the Sales Tax Officer has no jurisdiction to revise the turnover as adjudicated upon by the appellate authority.
9. Per contra, learned Counsel appearing on behalf of the Revenue contended that the doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum. The content of the subject-matter of challenge will also determine the applicability of the doctrine of merger. In support of his contention, he relied on the following judgments of the honourable Supreme Court and High Court:
(a) State of Madras v. Madurai Mills Co. Ltd. .
(b) Commissioner of Sales Tax, M.P. v. Sanawad Co-operative Society .
(c) State of Orissa v. Krishna Stores .
(d) Gojer Brothers (P) Ltd. v. Ratan Lal Singh .
10. Learned Counsel for the Revenue further submitted that under the scheme of the Act in the matter of first appeal only the assessee has a right to file appeal and not the department. On that footing he strongly objected to the contention of the petitioner that the first appellate authority having the power to enhance or reduce the assessment under appeal the Revenue had an opportunity to enhance the assessment. In support of his contention, the learned Counsel relied on the decision of the honourable Supreme Court in case of Commissioner of Income-tax, Bombay v. Amritlal Bhogilal and Co. .
11. In the above backdrop the questions which fall for consideration by this Court are as follows:
(i) Whether the original assessment order dated March 23, 2005 passed by the assessing officer merged with the appellate order dated December 26, 2005 by operation of doctrine of merger? If so, whether the assessing officer assumes jurisdiction under Rule 12(8) of the CST (O) Rules to assess the turnover escaped assessment from the original assessment order dated March 23, 2005 by issuing notice under that rule on the basis of new/fresh material which was not before him at the time of original assessment, but it came to light only after completion of the original assessment?
(ii) Whether the appellate authorities in exercise of their power to enhance the assessment, can take into consideration the fresh or new material which was not before the assessing officer but has come to light only after completion of the assessment while disposing of the appeal arising out of the original assessment?
(iii) Whether by exercising power of revision the Commissioner can consider any new or fresh material which was not before the assessing officer, but came to light only after completion of the assessment?
12. To deal with the above questions, it is necessary to know what is contemplated in Rule 12(8) of the CST (O) Rules and the reason on the basis of which the assessing officer initiated reassessment proceeding and reopened the completed assessment. Rule 12(8) of the CST (O) Rules is reproduced below:
(8) If for any reason the turnover of a dealer for any period has escaped assessment or has been under-assessed, the Commissioner may, at any time within five years from the expiry of the year to which the period of assessment relates, call for a return after complying with the provisions of Rule 10, assess the amount of tax due from the dealer and may also direct, in cases where such escapement or under-assessment is due to the dealer having concealed particulars of his turnover or having without sufficient cause furnished incorrect particulars thereof, that the dealer shall pay, by way of penalty, in addition to the tax assessed under this sub-rule, a sum not exceeding one and a half times of the said tax so assessed:
Provided that the period of limitation fixed in Sub-rule (7) shall not apply to assessments under this sub-rule or to enhancement of assessment or order of fresh assessment made or passed in appeal or revision.
13. This Rule 12(8) of the CST (O) Rules contemplates that there must exist reason for belief that the turnover of a dealer for any period to which the Act applies has escaped assessment or has been under-assessed. When such a reason exists, the assessing officer may at any time within five years from the expiry of the year to which the said period relates call for a return after complying with the provisions of Rule 10 of the CST (O) Rules and proceed to assess the amount of tax due from the dealer. The assessing officer may also direct in cases where escapement or under-assessment is due to the dealer having concealed particulars of his turnover or having without sufficient cause furnished incorrect particulars thereof, the dealer shall pay penalty in addition to the tax assessed. Such penalty shall not exceed one-and-a-half times the amount of the tax so assessed.
14. The reason for reopening of assessment order for the year 2001-02 under the CST Act has been informed by the assessing officer to the petitioner in its letter dated December 30, 2006. The said letter is set out herein below:
Office of the Commercial Tax Officer : Cuttack I East Circle, Cuttack No. 5261/CT dated December 30, 2006 To M/s. Hindustan Petroleum Corporation Limited, Sikharpur, Cuttack bearing TIN 21951201791/CUCIE.708 Sub : Reasons for reopening of assessment for the year 2001-02 under the CST Act.
A notice under Rule 10 of the CST (O) Rules, 1957 for the year 2001-02 is enclosed. Reasons for re-opening the assessment are as stated below:
(a) It has come to the notice that you have brought in 329178 k1 of HSD and 43009 k1 of SKO during the year 2001-02 to the Lighterage Terminal at Paradeep. During the same period you have dispatched 185785 k1 of HSD and 28959 k1 of SKO to outside the State of Orissa.
(b) Information received further shows that during the year, you have sold goods in course of inter-State trade or commerce from Paradeep Lighterage Terminal to other oil companies.
(c) The returns for the year 2001-02 under the CST Act do not appear to reflect these transactions of Lighterage terminal. The same were also not disclosed during the assessment completed for the year.
The aforesaid position indicates that there is escapement of assessment during the year. Besides the books of account and documents on which you may rely in support of the contentions, you are required to produce the 'tanker-wise ocean loss report', bill of lading and 'proration report' in respect of all receipts/dispatches made at/from the Lighterage terminal at Paradeep including complete accounts of receipt and disposal of goods received at the terminal and all the documents and records relating thereto.
Sd/-
Sales Tax Officer, Cuttack I East Circle, Cuttack.
15. The above letter shows that return for the year 2001-02 filed under the CST Act does not appear to reflect the transactions of inter-State sale effected by the petitioner from Paradeep Terminal to other oil companies. It is further alleged that the same were also not disclosed during the assessment completed for that year. For the above reasons, the assessing officer came to the conclusion that turnover relating to some inter-State sales escaped assessment from the original assessment for which action under Rule 12(8) of the CST (O) Rules was taken and notice under Rule 10 of the said Rules was issued for the year 2001-02.
16. In the present case, reassessment proceeding has been initiated under Rule 12(8) of the CST (O) Rules. The provisions contained in Rule 12(8) of the CST (O) Rules and Section 12(8) of the OST Act are substantially similar. Law is well-settled that the assessing officer must record reasons in some form before initiation of proceeding under Section 12(8) of the OST Act. He must at least indicate the basis for prima facie satisfaction that there has been escapement of assessment or under-assessment. In the absence of such a prima facie satisfaction, the initiation of proceeding under Section 12(8) of the OST Act is not sustainable in the eye of law. (See Suburban Industries Kalinga Private Limited v. Sales Tax Officer, Bhubaneswar [1993] 90 STC 280 (Orissa), State of Orissa v. Ugratara Bhojanalaya [1993] 91 STC 76 (Orissa), Indure Limited v. Commissioner of Sales Tax [2006] 148 STC 61 (Orissa) and D. Ch. Guruvalu Son & Co. v. Sales Tax Officer, Koraput-II Circle, Dist: Rayagada reported in [2008] 14 VST 509 (Orissa) : [2008] I OLR 18 (Orissa).
17. The letter of the assessing officer (annexure 4) as quoted above clearly reveals that the assessing officer has indicated reason for reopening of the assessment and the same has been communicated to the assessee. Thus, the condition precedent for initiating proceeding under Rule 12(8) of the CST (O) Rules has been satisfied in the present case.
18. In order to deal with the first question it is necessary to know what is the doctrine of merger. According to Law Lexicon "the doctrine of merger arises only when there are two independent things and the greater one would swallow up or may extinct the lessor one by process of absorption." The honourable Supreme Court in the case of Amba Bai v. Gopal held that if the judgment or order of an inferior court is subjected to an appeal or revision by the superior court and in such proceedings the order or judgment is passed by the superior court determining the rights of the parties, it would supersede the order or judgment passed by the inferior court. The juristic justification for such doctrine of merger is based on the common law principle that there cannot be, at one and the same time, more than one operative order governing the subject-matter and the judgment of the inferior court is deemed to lose its identity and merges with the judgment of the superior court. Thus, according to the honourable apex court there cannot be more than one operative order governing the subject-matter at the same time. The honourable Supreme Court in the case of State of Madras v. Madurai Mills Co. Ltd. observed as under (at page 145 of STC):
The doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by an inferior Tribunal and the other by a superior Tribunal, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.
19. According to the honourable Supreme Court wherever there are two orders-one by the inferior authority and the other by the superior authority passed in an appeal or revision it cannot be said that there is a fusion or merger of the two orders irrespective of the subject-matter of the appellate or revisional order.
20. In the case of Kunhayammed v. State of Kerala , the honourable Supreme court held that the doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative order governing the same subject-matter at a given point of time.
21. The honourable apex court in the case of S. Shanmugavel Nadar v. State of Tamil Nadu , held that the doctrine of merger has a limited application. The nature of jurisdiction exercised by the superior forum and the contents or subject-matter of challenge laid or which could have been laid shall have to be kept in view.
22. In the present case, the issue sought to have been examined by the appellate authority is limited to the subject-matter dealt by the assessing officer. No doubt that the subject-matter dealt by the assessing officer when considered by the appellate authority, the same merged with the order of the appellate authority. However, when the subject-matter is not same, question of applicability of doctrine of merger will not arise.
23. In the case of State of Orissa v. Ugratara Bhojanalaya reported in [1993] 91 STC 76 (Orissa) relied on by the petitioner, this Court while dealing with Section 12(8) of the Orissa Sales Tax Act, in paragraph 6 of the said judgment, held that a juristic justification of doctrine of merger may be sought on the principles that there cannot be at one and the same time more than one operative orders governing the same subject-matter. Therefore, the doctrine of merger is attracted only in the case of the same subject-matter.
24. Apart from the above, that judgment has been rendered in different facts and circumstances. In that case, this Court further held that for the year 1976-77 the assessee was assessed to tax. In appeal, assessment orders were nullified by relying on the decision of the honourable Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386. Notices were issued under Section 12(8) of the Act thereafter to re-open the assessment and the stand of the Revenue was that the subsequent decision of the honourable Supreme Court of India in Northern India Caterers (India) Ltd. v. LT. Governor of Delhi [1980] 45 STC 212 was not taken into consideration by the first appellate authority. It is relevant here to point out that the Revenue did not prefer any second appeal even though the Revenue has a right for preferring such second appeal under the statute and under the circumstances, the order of the first appellate authority relying on the aforesaid decision Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi reported in [1978] 42 STC 386 became final and it is also pertinent to note that the entire assessment was nullified by the first appellate authority. Therefore, after the order of the first appellate authority, there was virtually no order of assessment. It is trite law that Section 12(8) is a provision in respect of assessment or under-assessment. When there is no assessment, question of escaped assessment or underassessment does not arise.
25. In the present case, the assessing officer issued notice under Rule 10 of the CST (O) Rules by exercising jurisdiction under Rule 12(8) of the CST (O) Rules on the ground that some inter-State sales effected by the appellant were neither reflected in the return nor disclosed at the time of assessment. Admittedly, this aspect has not been considered by the assessing officer while passing the original assessment order on March 23, 2005 under Rule 12(5) of the CST (O) Rules since this information came to the possession of assessing officer only after completion of the assessment as discussed in the impugned assessment order and also in annexure 4. In that view of the matter, it cannot be said that the subject-matter on the basis of which the reassessment proceeding has been initiated was merged with the appellate order.
26. Apart from the above, the honourable Supreme Court in the case of Madurai Mills Co. Ltd. [1967] 19 STC 144 : AIR 1967 SC 681 held that the application of doctrine of merger depends on the nature of the appellate or revisional order in each case and the scope of statutory provision conferring the appellate or revisional jurisdiction. The scheme of the CST Act, 1956 read with the Rules framed thereunder relating to the assessment which is similar to the scheme of the Orissa Sales Tax Act, inter alia, contemplates that an original assessment order has to be passed on the basis of returns filed and any dealer if dissatisfied with any such order can file appeal before the first appellate authority and thereafter the second appellate authority if needed. Separate provision has been made to assess turnover which escaped assessment from the original assessment or in case of under-assessment at the time of passing of original assessment order. The limitation provided for issuing notice in respect of such escaped turnover is five years from the relevant assessment year whereas no such time-limit has been prescribed for disposing of the appeals by the first appellate authority or the second appellate authority. Thus, the intention of the Legislature is very much clear that irrespective of the original assessment and continuation of the same in appeal a separate/independent assessment proceeding can be initiated in respect of the turnover which escaped assessment from the original assessment.
27. The Sales Tax Act provides levy of tax on sale of taxable goods during a particular period under the provisions of the statute. The same may be taxed in one order or more than one orders as has been done in the present case, i.e., by an order passed under Rule 12(5) and by an another order under Rule 12(8) of the CST (O) Rules. What is important and required under the law is that the self-same transaction of purchase or sale should not be subjected to tax more than one in the same series of purchase or sale.
28. Learned Counsel appearing for the petitioner relying on paragraph 6 of the judgment of this Court in Ugratara Bhojanalaya's case [1993] 91 STC 76, vehemently argued that because of the disposal of the appeal against the assessment order dated March 23, 2005, the operative order as of the date was the appellate order since the assessment order passed by the assessing officer merged with the appellate order by operation of doctrine of merger. In that case, in same paragraph 6, this Court held that the juristic justification of the doctrine of merger may be sought on the principles that there cannot be at any time more than one operative order governing the same subject-matter. Therefore, the decision in Ugratara Bhojanalaya's case [1993] 91 STC 76 (Orissa) is of no help to the petitioner. The learned Counsel also placed reliance on the case of State of H.P. v. Gujarat Ambuja Cement Ltd. reported in. In that case, the subject-matter before the assessing officer and the appellate authority being same the assessment order got merged with the first appellate order and the honourable Supreme Court held that the same could not have been revised. Thus, this case is of no help to the petitioner as in the present case the subject-matter before the assessing officer while passing original assessment order and the subject-matter for initiating proceedings under Rule 12(8) are different. The other case relied on by the learned Counsel for the petitioner is Kunhayammed's case , in which the honourable Supreme Court, as stated above, has categorically held that the logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. For the reasons stated above, this case is also of no help to the petitioner.
29. Reliance was placed by the learned Senior Counsel appearing for Revenue on the case of Commissioner of Sales Tax, M.P. v. Sanawad Cooperative Society where it has been held by their Lordships that it is true that the question in aforesaid two cases before the Full Bench arose out of the Income-tax proceeding but that will not make any difference as regards the applicability of principles of merger. The appellate authority under the Income-tax Act as well as the Sales Tax Act has jurisdiction to consider and decide even that part of the order of the assessing authority against which no appeal has been preferred. But when the appellate authority does not touch any part of the order of the assessing authority, order of the assessing authority to that extent cannot be held to have merged with the order of the appellate authority.
30. The learned Senior Counsel appearing for the Revenue also placed reliance on the judgment of the honourable Supreme Court in the case of State of Orissa v. Krishna Stores reported in [1997] 104 STC 594 where the honourable apex court held at page 600 as follows:
...Basically, therefore, unless the appellate authority has applied its mind to the original order or any issue arising in appeal while passing the appellate order, one should be careful in applying the doctrine of merger to the appellate order.
31. In the case of Gojer Brothers (P) Ltd. v. Ratan Lal Singh the honourable apex court held that the subject-matter of the suit and subject-matter of the appeal being identical, the doctrine of merger will be applicable. Therefore, if the subject-matter is not the same, question of applicability of the doctrine of merger will not arise.
32. In the above premises, we are of the considered view that the original assessment order passed by the assessing officer merged with the appellate order by application of doctrine of merger. In spite of that the assessing officer assumes jurisdiction under Rule 12(8) of the CST (O) Rules to assess the turnover escaped assessment from the original assessment by issuing notice under that rule on the basis of new/fresh material which was not the subject-matter in the original assessment, but comes to light only after completion of original assessment.
33. The other ground taken by the learned Senior Counsel appearing on behalf of the petitioner is that since the appellate authority has the power to enhance any assessment, while disposing of an appeal, he can take into consideration the adverse material which comes to the light after completion of the original assessment for the purpose of enhancement. This is a fallacious proposition. So far first appeal is concerned there is no provision in the statute empowering the assessing officer to file an appeal before the first appellate authority. The statute also does not provide opportunity to implead the assessing officer as a party to the appeal. There is no provision under the sales tax statute enabling the assessing officer to bring any new/fresh adverse material to the notice of appellate authority which comes to his possession after completion of original assessment order. Under the statute, the appellate authorities are also not vested with any power/ authority to accept and consider any such new/fresh adverse material while disposing of appeal for the purpose of enhancement. Thus, there is no scope for the assessing officer to bring any new/fresh adverse material which subsequently comes to his possession relating to escaped turnover to the notice of the first and second appellate authorities for their consideration while disposing of appeal.
34. It will also be judicial impropriety on the part of an appellate authority to consider any material which is not the subject-matter before the assessing officer. Both the first and the second appellate authority are empowered to decide in appeal on the issues adjudicated in the assessment order. They cannot decide any issue which was not considered by the assessing officer in the assessment order. Thus, the subject-matter on the basis of which reassessment proceeding is initiated being not before the assessing officer, same cannot be considered by the appellate authorities for the purpose of enhancement.
35. We are therefore of the considered view that the appellate authorities while disposing of the appeal arising out of an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment.
36. The third question which falls for consideration is whether by exercising power of revision the Commissioner can consider any new or fresh material which was not before the assessing officer, but came to light only after completion of the assessment?
37. Under the provisions of the Act, the Commissioner of Sales Tax on his own motion has power to revise any order made under the statute by any taxing authority other than the Tribunal. This power of the Commissioner is suo motu revisional power. The Commissioner is empowered to exercise his power in suo motu revision in respect of an order which is erroneous so far as it is prejudicial to the interest of the Revenue. While exercising such power the subject-matter before the Commissioner was the order of the subordinate authorities. He cannot take into consideration any new or fresh material which was not subject-matter of the order which he wants to revise. Thus, by exercising the power of suo motu revision the new and fresh adverse materials cannot be utilised against a dealer for which there is a specific provision in the statute like Section 12(8) of the OST Act or Rule 12(8) of the CST (O) Rules, as the case may be.
38. Thus, we are of the considered view that by exercising power of revision, the Commissioner cannot consider any new or fresh material which was not before the assessing officer and comes to light only after passing of the original assessment order. In the present case, the stand of the Revenue is that subsequent to the completion of the original assessment, it came to the notice of the assessing officer that there were some inter-State transactions effected by the petitioner-company during the period 2001-02. But on verification of the assessment record, prima facie the assessing officer found that the same has not been disclosed in the return and also at the time of assessment. Hence, he came to the conclusion that there was reason to believe that the dealer had been under-assessed due to default in disclosing the true and correct picture of business transactions during the year in question. Petitioner's case is that the alleged transactions were already disclosed by the petitioner-company as branch transfer. These are purely disputed questions of facts, which cannot be decided by this Court in exercise of its writ jurisdiction and as such the writ petition is not maintainable. In the present case, the challenge is not only to the notice issued under Rule 12(8) of the CST (O) Rules but also to the order of assessment made on the said notice. Since the assessment had already been made, challenge to the legality of the notice is really without any relevance. Further, the order of assessment can be assailed in statutory appeal provided. After completion of the assessment, challenge to the legality of the notice does not survive consideration because the question whether the notice had any legal foundation could have been decided in appeal against assessment. Nevertheless, as the petitioner has requested to adjudicate that aspect, therefore, we have done it, though in the normal course that could have been the subject-matter of appeal against the order of assessment.
39. Since the preliminary issue has been decided in the manner aforesaid, nothing survives for adjudication in the writ petition, which is accordingly dismissed. However, it is open to the petitioner to prefer statutory appeal against the assessment order along with petition for condonation of delay. If such an appeal is filed, the appellate authority shall consider the question of delay taking into consideration that the writ petition was pending in this Court since March 20, 2007. No cost.
A.K. Ganguly, C.J.
40. I agree.