# Triveni Engineering & Industries Ltd Naini Allahabad Revisionist v. Commissioner Trade Tax, U.P., Lucknow

- **Citation:** (2020) 2 ILRA 1413
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-01-18
- **Case number:** Sales/Trade Tax Revision No. 211 of 2006
- **Bench:** Alok Mathur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/triveni-engineering-industries-ltd-naini-allahabad-revisionist-v-commissioner-45496
- **Pages:** 10

## Headnote

mistakes - Section 22 - U.P. Trade Tax
Act, 1948 - application should necessarily
1414 INDIAN LAW REPORTS ALLAHABAD SERIES
demonstrate the mistake apparent in the
order passed by the authority concerned
It is clear that the application under Section 22
of the Act, 1948 sought to rectify the mistake
committed by the assessing authority who
passed the assessment order in ignorance of
the amendments made in Section 3F of the Act,
1948 by means of Amendment Act No. 11 of
2001 and therefore the said application was
clearly not maintainable, inasmuch as, in
exercise of power under Section 22 of the Act,
1948, only the mistake committed by the first
Appellate
Authority
could
have
been
rectified.(para 28)
The application moved by the revenue for
correction of the mistake clearly indicates that
there is no mention of any mistake having been
committed by the First Appellate Authority,
inasmuch as, the question of taxability of the
lease rent was not an issue before the First
Appellate Authority. It is clearly not possible to
correct an order or issue which was neither
raised nor considered by the First Appellate
Authority. (para 29)
B. Doctrine of merger - on merger the
merged order loses its existence
Before the appellate authority, the question of
liability to tax the lease rent received by the
revisionist was not in question and therefore in
this regard the order of the assessing authority
did not merge with the order of the first
Appellate Authority. The issue regarding tax on
lease rent became final when the same was
duly accepted by the revisionist and the
revenue did not chose to reopen the same by
exercising powers relating to reopening the
assessment and therefore, the order of the
assessing authority attained finality and was
not liable to be opened in the manner the
revenue has sought to reopen, i.e. by moving
an application under Section 22 of the Act,

## Text

2 All. Triveni Engineering & Industries Ltd., Naini Allahabad Vs. Commissioner Commercial Tax, U.P., Lucknow 1413
5th April, 2011 in Civil Appeal No.2926
of 2011 arising out of SLP (C) No.10522
of 2008 set at rest the dispute as under:-

"14.The appellant had taken the
chance to get a judicial verdict on the said
issue. Once it has been confirmed that the
tax is payable under the Act, the same
becomes payable from the date when it
was due and not from th date when the
judicial verdict was pronounced (unless
and until, in a case, the court specifies a
particular date from which it shall be
payable). Thus, once it has been confirmed
by the Court that the tax is payable under
the Act it would be covered within the
definition of the term "the tax admittedly
payable" as defined in the explanation to
section 8(1) and, in case, the tax had not
been paid then the same becomes payable
along with interest as mentioned in section
8(1)of the Act.

......

16. As in the present case the tax
becomes admittedly payable once it has
been held that the tax is payable under the
Act, the interest would be payable in terms
of sub-section (1) of section 8 of the Act
and not in terms of sub-section (1B) of
Section 8 of the Act.

17. This court in the case of
Commissioner of Sales Tax v. Qureshi
Crucible Centre, 1993 Supp (3) SCC 495
has held that where a dealer fails to pay
tax at the correct rate because he claimed
not to know the revision in the rate, the
dealer remains liable to pay interest at a
higher rate, penal rate under section 8(1)
from the date when the tax became due
and payable. In such a case, the dealer
cannot claim that he is liable only from the
date of the assessment order fixing the
correct rate of tax.

Similarly, in case where the
dealer has taken a chance and it has been
held that the tax is payable under Act, the
same becomes payable from the date when
it was due."

33. On applying aforesaid principles
to the facts of the present case, the
Tribunal has wrongly granted relief to the
assessee
by
deleting
interest.
After
rejection of Form 3-b the amount of
interest levied on admitted tax was liable
to be paid by the assessee and the order of
the Assessing Officer in this regard is in
conformity with the statutory schemes as
well as the judgments quoted hereinabove.
The order of the Tribunal in this regard is
set aside and the question of law No.(ii) is
answered in favour of the revenue as
against the assessee.

34. The revision is accordingly
partly allowed.
----------
(2020)02ILR A1413

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.01.2020

BEFORE
THE HON'BLE ALOK MATHUR, J.

Sales/Trade Tax Revision No. 211 of 2006

Triveni Engineering & Industries Ltd
Naini Allahabad ...Revisionist
Versus
Commissioner Trade Tax, U.P., Lucknow
 ...Opposite Party

Counsel for the Revisionist:
Sri Kunwar Saksena, Sri Nishant Mishra

Counsel for the Opposite Party:
C.S.C.

A. Trade/Sales Tax - Rectification of
mistakes - Section 22 - U.P. Trade Tax
Act, 1948 - application should necessarily
1414 INDIAN LAW REPORTS ALLAHABAD SERIES
demonstrate the mistake apparent in the
order passed by the authority concerned
It is clear that the application under Section 22
of the Act, 1948 sought to rectify the mistake
committed by the assessing authority who
passed the assessment order in ignorance of
the amendments made in Section 3F of the Act,
1948 by means of Amendment Act No. 11 of
2001 and therefore the said application was
clearly not maintainable, inasmuch as, in
exercise of power under Section 22 of the Act,
1948, only the mistake committed by the first
Appellate
Authority
could
have
been
rectified.(para 28)
The application moved by the revenue for
correction of the mistake clearly indicates that
there is no mention of any mistake having been
committed by the First Appellate Authority,
inasmuch as, the question of taxability of the
lease rent was not an issue before the First
Appellate Authority. It is clearly not possible to
correct an order or issue which was neither
raised nor considered by the First Appellate
Authority. (para 29)
B. Doctrine of merger - on merger the
merged order loses its existence
Before the appellate authority, the question of
liability to tax the lease rent received by the
revisionist was not in question and therefore in
this regard the order of the assessing authority
did not merge with the order of the first
Appellate Authority. The issue regarding tax on
lease rent became final when the same was
duly accepted by the revisionist and the
revenue did not chose to reopen the same by
exercising powers relating to reopening the
assessment and therefore, the order of the
assessing authority attained finality and was
not liable to be opened in the manner the
revenue has sought to reopen, i.e. by moving
an application under Section 22 of the Act,
1948. (para 30)
C. Scope - Appellate Authority - Section
9(3) of the U.P. Trade Tax Act, 1948 -
appellate authority can not only confirm,
vary or annul the order of the assessing
authority but may enhance and assess
the assessee to tax on the issue which
was not taken up before the assessing
authority
Revision Allowed. (E-10)

List of cases cited:-

1. V.K. Singhal Vs. State of U.P. 1995 UPTC 337

2. M.R. Soap (Pvt.) Ltd. V. Asstt. Commissioner
1991 UPTC 517 (followed)

3. Commissioner of Central Excise, Delhi V.
Pearl Drinks Ltd. 2010 (255) E.L.T. 485(S.C.)
(followed)

4. M/s Triveni Engg. Industries V. Commissioner
of Trade Tax Sales Tax Revision No. 212 of
2006 (distinuished)

(Delivered by Hon'ble Alok Mathur, J.)

1. Heard Sri Nishant Mishra, learned
counsel for the revisionist as well as Sri
Bipin Kumar Pandey, learned Standing
Counsel appearing on behalf of revenue.

2. This revision has been preferred
against the judgment and order dated
18.01.2006, passed by the Commercial
Tax Tribunal, whereby the Appeal No. 133
of 2003 has been allowed in part while the
another Appeal No. 294 of 2005 for the
same assessment year has been dismissed.
This revision relates to the assessment year
1995-96.

3. The facts in brief of this case are
that the revisionist is carrying on the
business of manufacture and sale of sugar
plant and machinery and has its head
office situated at Naini, Allahabad. The
revisionist firm is registered under Section
8A of the U.P. Trade Tax Act, 1948
(hereinafter referred to as "the Act, 1948")
as well as under Section 7(1) and 7(2) of
the Central Sales Tax Act.
2 All. Triveni Engineering & Industries Ltd., Naini Allahabad Vs. Commissioner Commercial Tax, U.P., Lucknow 1415

4. During course of business the
revisionist entered into lease agreement
with a firm at New Delhi on 20.08.1993
and 24.08.1993, for the purpose of leasing
out certain machinery such as turbine,
turbo alternator and other machineries to
the sugar unit of the lessee i.e. M/s
Gangeshwer Limited at Deoband and Ram
Kola, both situated in the State of U.P.

5. Contention of the revisionist is
that the lease rent received by the
revisionist from the lessee, was not
amenable to levy of tax on the transfer of
right to use the goods as per Section 3F of
the Act, 1948 and therefore they were not
liable for payment of any tax, as such.

6. The vires of Section 3F of the
Act, 1948 were challenged before this
High Court by way of writ petitions
and by the this Court by means of
judgment in the case of V.K. Singhal
Vs. State of U.P., 1995 UPTC 337
(decided
on
11.01.1995),
the
provisions of Section 3F of the Act,
1948 were declared as ultra vires.

7. At the time of assessment for
the year 1995-96, the amount received
on account of lease rent from the
lessee, was disclosed at Rs. 51,84,
382/-, but no liability of tax on the said
amount was admitted. The assessing
authority for the assessment year 199596, did not accepted the contention of
the revisionist and levied tax on the
aforesaid amount of lease rent at the
rate of 5%. The revisionist being
aggrieved by the aforesaid assessment
order preferred appeal on the ground
that this Court in the case of V.K.
Singhal (supra) has declared Section
3F of the Act, 1948 ultra vires and
therefore, they were not liable to be
assessed to any tax on the same and
therefore, the order of the assessing
authority in this regard was arbitrary and
illegal.

8. The appellate authority, considering
the contention raised by the revisionist,
remanded the matter to the assessing authority
and thereafter, fresh assessment order was
passed and the assessing authority accepted the
contention of the revisionist regarding the fact
that he was not liable to pay any tax under
Section 3F of the Act, 1948. The revisionist
thereafter
filed
an
appeal
against
the
assessment order passed in respect of the
amount other than the amount representing the
lease rent, which appeal was dismissed by
means of order dated 01.01.2003.

9. It has been vehemently urged that the
question of liability of tax on lease amount was
neither canvassed nor decided by the Joint
Commissioner (Appeals).

10. After the decision of the appeal
on 01.01.2003, the assessing authority in
exercise of power under Section 22 of the
Act, 1948, moved an application before
the Joint Commissioner (Appeals) on
17.05.2004, seeking to correct the mistake
in the appellate order with regard to the
fact that the provisions of Section 3F of
the Act, 1948 which had been declared
ultra vires by this High Court, were
amended and introduced by means of U.P.
Act No. 11 of 2000, published on
30.04.2001 and the said amendment
further provided that all actions taken and
assessment
made
during
the
period
01.05.1987 to 01.03.1997, were validated.

11. The Joint Commission (Appeals),
issued notice to the revisionist and after
hearing both the sides, allowed the said
application on 25.07.2005 and rectified the
1416 INDIAN LAW REPORTS ALLAHABAD SERIES
order
passed
earlier
on
01.01.2003,
thereby subjecting the revisionist to tax
under Section 3F of the Act, 1948 for the
amount of lease rent received by the
revisionist from the lessee.

12. The revisionist being aggrieved
by the said order, filed second appeal
before the Trade Tax Tribunal, Allahabad
(hereinafter referred to as "the Tribunal")
being Second Appeal No. 294 of 2005,
which has been rejected by means of order
dated
18.01.2006,
which
has
been
impugned in the instant revision.

13.

Learned
counsel
for
the
revisionist
has
raised
following
contentions :

(I)
In
exercise
of
power
conferred under Section 22 of the Act,
1948, an application can be made for
rectification of a mistake, where as in the
present case there was no mistake
committed in the order of the appellate
authority and therefore the said application
was itself not maintainable.

(II) The application seeking
rectification of the order of appellate
authority was not maintainable inasmuch
as the order of the assessing authority
stood merged with the order of the
appellate authority and the order which is
not in existence cannot be rectified and
therefore the application filed by the
revenue was misconceived.

(III) By means of impugned order
the Tribunal has upheld the application for
rectification which does not amount to
rectification of mistake, instead it is a fresh
imposition of tax liability which should have
been done by the proper assessment and giving
opportunity to the assessee, which is a matter
of debate, hence fresh assessment could not
have been done in the garb of rectification of
mistake.

14. Learned counsel for the respondentrevenue on the other hand submits that the
order of assessing authority merged with the
appellate order and therefore the revenue had
no option but to move an application for
correction of mistake in the appellate order so
as to bring the amount of lease rent to tax in the
light of amended provisions of Section 3F of
the Act, 1948.

15. In support of his contention, learned
Standing Counsel appearing on behalf of
revenue has placed reliance on the judgment in
the case of M.R. Soap (Pvt.) Ltd. Vs. Asstt.
Commissioner, 1991 UPTC 517.

16. Heard learned counsel for the parties
and perused the record.

17. The questions of law which arise for
consideration of this Court are :

(i) Whether the Tribunal was
justified in up holding the applicability of
Section 22 of the Act, 1948?

(ii) Whether the Tribunal was
justified in up holding the order of the first
appellate authority in allowing the application
filed under Section 22 of the Act, 1948 and
correcting the mistake thereby levying tax on
the revisionist?

(iii) Whether the order of the
assessing authority was amenable to any
correction after it stood merged with the
appellate order?

18. The undisputed facts of this case
which emerge are that the revisionist
leased out certain machinery to the sugar
units of M/s Gangeshwar Ltd. at Deoband
and
Ramkola.
An
amount
of
2 All. Triveni Engineering & Industries Ltd., Naini Allahabad Vs. Commissioner Commercial Tax, U.P., Lucknow 1417
Rs.51,84,382/-
was
received
by
the
revisionist during the assessment year
1995-96, towards lease rent, which was
initially subjected to tax under Section 3F
of the Act, 1948, but on remand by means
of order dated 07.06.2002, it was not
assessed to tax under the belief that
Section 3F of the Act, 1948 had been held
to be ultravires by this Court in the case of
V.K. Singhal (supra).

19. After the declaration of Section
3F of the Act, 1948 ultravires an amending
Act
was
passed,
reintroducing
the
provisions of Section 3F by means of U.P.
Act No. 11 of 2001, published on
30.04.2001, validating all actions taken
during
the
period
01.05.1987
to
01.05.1997.

20. The assessing authority while
assessing
the
revisionist
in
remand
proceedings
made
assessment
on
07.06.2002 on which date the amended
Section 3F had come into existence and it
was open to the assessing authority to
assess the revisionist in the light of
amended provisions of the Act, 1948. The
assessment order dated 07.06.2002, it
seems was passed in ignorance of the
aforesaid amendment and the amount of
lease rent disclosed by the revisionist was
not put to tax.

21. The issue regarding liability of
tax under Section 3F with regard to lease
rent was not carried by the revisionist to
the appellate authority, rather appeal was
preferred with regard to other issues from
which the revisionist was aggrieved with
and the issue regarding taxability of lease
rent became final. The revenue also did
not seek to reopen the assessment in this
regard in exercise of powers as conferred
by the provisions contained in Act, 1948.
It is only after passing of the final order by
the
first
Appellate
Authority
on
01.01.2003
that
the
application
for
rectification of the said order was moved
on 17.05.2004, for rectification of the
mistake in the appellate order dated
01.01.2003.

22. A perusal of the application dated
17.05.2004, which is part of the record of
the instant revision, would indicate that it
has been clearly stated that the assessing
authority had assessed the revisionist by
means of order dated 07.06.2002 for the
assessment year 1995-96 did not imposed
any tax with regard to the lease rent,
despite the fact that U.P. Act No. 11 of
2001 had come into existence which
provides that all the proceedings and
assessments
from
01.05.1987
to
01.05.1997 had been validated. The
application further states that in the light
of the judgment of Division Bench of this
Court in the case of M.R. Soap (Pvt.) Ltd.
(supra) the order of the assessing
authority having merged in the order of the
first Appellate Authority, the application
under Section 22 of the Act, 1948, is being
preferred.

23. Perusal of the entire application
does not reveal as to what is the mistake
committed by the first Appellate Authority
which
necessitated
moving
of
an
application for rectification of the mistake,
rather, in the entire application it seems
that actually the order of the assessing
authority dated 07.02.2002 is being sought
to the rectified in the garb of application
for rectification of the order of the first
Appellate Authority.

24. Learned Standing Counsel
appearing on behalf of revenue could not
point out as to the error in the order of the
1418 INDIAN LAW REPORTS ALLAHABAD SERIES
first Appellate Authority which required
any rectification for which the application
has been moved.

25. Section 22 of the Act, 1948
provides for rectification of the mistakes,
and states that the authority or the Tribunal
or High Court may on its own motion or
on application of the dealer or any other
interested person, rectify any mistake in
any order passed by him or it under the
Act, apparent on record, within three years
from the date of the order sought to be
rectified.

26. The application for rectification
would necessarily have to demonstrate that
there is an apparent mistake in the order
passed by the authority concerned on
which the rectification is sought and such
an application is to be moved within three
years from the date of the order sought to
be rectified.

27. Perusal of the provisions of
Section 22 of the Act, 1948, also clearly
indicate
that
the
application
is
maintainable only where there is a mistake
in the order of the authority itself before
whom such an application is made. For
ready reference, Section 22 of the Act,
1948 is reproduced herein below :

"22. Rectification of mistakes.-
(1) Any officer or authority or the Tribunal
or the High Court may, on its own motion
or on the application of the dealer or any
other interested person rectify any mistake
in any order passed by him or it under the
Act, apparent on the record within three
years from the date of the order sought to
be rectified :

Provided
that
where
an
application under this sub-section has
been made within such period of three
years, it may be disposed of even beyond
such period :

Provided further that no such
rectification as has the effect of enhancing
the assessment, penalty, fees or other dues
shall
be
made
unless
reasonable
opportunity of being heard has been given
to the dealer or other person likely to be
affected by such enhancement.

(2) Where such rectification has
the effect of enhancing the assessment, the
authority concerned shall serve on the
dealer a revised notice of demand in the
prescribed form and therefrom all the
provisions of the Act and Rule framed
thereunder shall apply as if such notice
had been served in the first instance."

28. Considering the arguments of
learned counsel for the parties as well as
perusal of the application under Section 22
of the Act, 1948 moved by the revenue, it
is clear that the application under Section
22 of the Act, 1948 sought to rectify the
mistake committed by the assessing
authority who passed the assessment order
in ignorance of the amendments made in
Section 3F of the Act, 1948 by means of
Amendment Act No. 11 of 2001 and
therefore the said application was clearly
not maintainable, inasmuch as, in exercise
of power under Section 22 of the Act,
1948, only the mistake committed by the
first Appellate Authority could have been
rectified.

29. The application moved by the
revenue for correction of the mistake
clearly indicates that there is no mention
of any mistake having been committed by
the First Appellate Authority, inasmuch as,
the question of taxability of the lease rent
was not an issue before the First Appellate
Authority. It is clearly not possible to
correct an order or issue which was neither
2 All. Triveni Engineering & Industries Ltd., Naini Allahabad Vs. Commissioner Commercial Tax, U.P., Lucknow 1419
raised nor considered by the First
Appellate Authority.

30. Before the appellate authority,
the question of liability to tax the lease
rent received by the revisionist was not in
question and therefore in this regard the
order of the assessing authority did not
merge with the order of the first Appellate
Authority. The issue regarding tax on lease
rent became final when the same was duly
accepted by the revisionist and the revenue
did not chose to reopen the same by
exercising powers relating to reopening
the assessment and therefore, the order of
the assessing authority attained finality
and was not liable to be opened in the
manner the revenue has sought to reopen,
i.e. by moving an application under
Section 22 of the Act, 1948.

31. The situation would have been
different had the issue regarding lease rent
been considered and decided by the first
appellate authority.

32. In the aforesaid circumstances,
the "doctrine of merger" as canvassed by
the learned counsel for the revenue would
not apply. The "doctrine of merger" has
been discussed by Hon'ble Apex Court in
the case of Commissioner of Central
Excise, Delhi Vs. Pearl Drinks Ltd.,
2010 (255) E.L.T. 485 (S.C.). The Court
in para no. 14 has held as under :

"14. Applying the above test to
the case at hand the doctrine would have
no application for the plain and simple
reason that the subject matter of the
appeal filed by the assessee against the
adjudicating authority's order in original
was limited to disallowance of two out of
eight deductions claimed by the assessee.
The Tribunal was in that appeal concerned
only with the question whether the
adjudicating authority was justified in
disallowing deductions under the said two
heads. It had no occasion to examine the
admissibility of the deductions under the
remaining six heads obviously because the
assessee's appeal did not question the
grant of such deductions. Admissibility of
the said deductions could have been raised
only by the Revenue who had lost its case
qua
those
deductions
before
the
adjudicating authority. Dismissal of the
appeal filed by the assessee could
consequently bring finality only to the
question of admissibility of deductions
under the two heads regarding which the
appeal was filed. The said order could not
be understood to mean that the Tribunal
had expressed any opinion regarding the
admissibility of deductions under the
remaining six heads which were not the
subject matter of scrutiny before the
Tribunal. That being so, the proceedings
instituted by the Commissioner, Central
Excise pursuant to the order passed by the
Central Board of Excise and Customs
brought up a subject matter which was
distinctively different from that which had
been examined and determined in the
assessee's appeal no matter against the
same order, especially when the decision
was not rendered on a principle of law
that could foreclose the Revenue's case.
The Tribunal obviously failed to notice this
distinction and proceeded to apply the
doctrine of merger rather mechanically. It
failed to take into consideration a situation
where an order may be partly in favour
and partly against a party in which event
the part that goes in favour of the party
can be separately assailed by them in
appeal filed before the appellate Court or
authority but dismissal on merits or
otherwise of any such appeal against a
part only of the order will not foreclose the
1420 INDIAN LAW REPORTS ALLAHABAD SERIES
right of the party who is aggrieved of the
other part of this order. If the doctrine of
merger were to be applied in a pedantic or
wooden
manner
it
would
lead
to
anomalous results inasmuch as a party
who has lost in part can by getting his
appeal dismissed claim that the opposite
party who may be aggrieved of another
part of the very same order cannot assail
its correctness no matter the appeal
earlier disposed of by the Court or
authority
had
not
examined
the
correctness of that part of the order."

33.

Learned
counsel
for
the
revisionist has fairly placed the judgment
in the case of M/s Triveni Engg.
Industries Ltd. Vs. Commissioner of
Trade Tax passed in Sales Tax Revision
No. 212 of 2006 (decided on 28.08.2017),
The aforesaid judgment pertains to a
similar dispute between the revisionist and
the revenue for the assessment year 199697. The question considered by the court
in M/s Triveni Engg. Industries Ltd.
(supra) is whether the First Appellate
Authority was within its jurisdiction in
imposing tax upon the dealer under
Section 3F in the proceedings under
Section 22 of the Act, 1948?

34. The learned Single Judge in M/s
Triveni Engg. Industries Ltd. (supra)
considered various judgments of the
Hon'ble Supreme Court and concluded as
under :

"Thus, in my considered opinion,
the mistake is apparent on the record of
the order of the first appellate authority
which was rightly rectified under Section
22 of the Act. The rectification and
subsequent assessment to tax under
Section
3F
does
not
amount
to
review/revision but a rectification of
mistake apparent on the record in the
order of the fist appellate authority in view
of retrospective application of Amendment
Act, restoring Section 3F and validating
all actions take thereunder.

The revision being devoid of
merit is, accordingly dismissed."

35.

Learned
counsel
for
the
revisionist has urged that the said
judgment would not be binding to decide
the controversy raised in the present
revision which pertains to the assessment
year 1995-96, and that principle of resjudicata are not applicable for subsequent
assessment years, and also a binding
judgment of the Division Bench of this
Court in the case of M.R. Soap (Pvt.) Ltd.
(supra) was not considered by the learned
Single Judge. The Court in M.R. Soap
(Pvt.) Ltd. (supra), in para nos. 12, 13
and 14 observed as under :

"12. It will be seen that the
jurisdiction of the Appellate Authority
under Section 9(3) is of the widest possible
amplitude. The Appellate Authority cannot
only confirm, vary or annul the order of
assessment but may even enhance the
amount of assessment, irrespective of
whether such enhancement arises from the
points raised in the grounds of appeal or
otherwise considered by the Assessing
Authority. The appellate power under this
provision, is, as observed by the learned
Chief Justice Chagla in Narroandas
Manordas (supra) in the nature of the
power of revision, and, as observed by the
Supreme Court in (1967) 66 ITR 443, 449
(supra), it would be wholly erroneous to
compare such appellate powers with the
narrow and restricted powers possessed
by a court of appeal under the Code of
Civil Procedure. That being so, the entire
assessment order, whether challenged in
2 All. Triveni Engineering & Industries Ltd., Naini Allahabad Vs. Commissioner Commercial Tax, U.P., Lucknow 1421
appeal as a whole or only in part, will
merge in the appellate order irrespective
of the points urged by the parties or
decided by the Appellate Authority.

13. Once it is found that the order of
assessment has merged in the appellate order,
it follows as a matter of necessary corollary
that the Assessing Authority shall not have the
power to reopen the asssessment under Section
22 of the U.P. Sales Tax Act. The reason is
obvious. The original order of assessment
cease to exist, its identity having merged in the
appellate order. That being so, the impugned
notice issued by the Assessing Authority is
plainly and manifestly without jurisdiction.

14. Some single Judge decisions
have, however, been brought to our notice by
the learned Standing Court in which a
somewhat different view seems to have been
expressed on theissue whether there is merger
even with regard to the part of the order of the
Assessing Authority which was not appealed
against by the assessee. The learned Standing
Counsel, however, vary candidly conceded
that the contrary view expressed by the learned
Single Judges runs counter to the decision of
the Division Bench in J.K. Synthetics. We think
that the learned Standing Counsel is clearly
right in his submission."

36. Perusal of the aforesaid judgment
clearly lays down the law in this regard that the
order of the assessing authority merge with the
order of appellate authority and thereby it
ceases to exist as its identity stands merged
with the appellate order and therefore any
application under Section 22 of the Act, 1948,
for correction of assessment order, would not
be maintainable.

37. The Division Bench of this Court in
M.R. Soap (Pvt.) Ltd. (supra) while
considering the powers under Section 22 of the
Act, 1948, took note of the jurisdiction of the
appellate authority under Section 9(3) of the
Act, 1948 where they have noticed that the
appellate authority under the Act, 1948 is
extremely wide and the appellate authority can
not only confirm, vary or annul the order of the
assessing authority but may enhance and
assess the assessee to tax on the issue which
was not taken up before the assessing authority
and therefore concluded that in exercise of
power under Section 22 of the Act, 1948, the
assessment cannot be reopened as has been
sought to be done in the present case.

38. It has further been contended by
learned counsel for the revisionist that the
order of assessment on remand was passed
on 07.06.2002, thereby no tax was levied
on the proceeds of lease rent taken from
M/s Gangeshwar Limited under the belief
that provisions of Section 3F of the Act,
1948 were declared ultra vires by this
Court in the case of V.K. Singhal (supra).
An appeal was preferred by the revisionist
on some other issues but the issue
regarding lease rent attained finality. Even
if the stand of the revenue is accepted that
no tax was levied on the lease rent, taking
into account the fact that same had been
declared ultra vires and the assessing
authority
was
ignorant
about
the
reintroduction of the same provision by
means of subsequent amendment in the
Act, 1948, it was always open for the
revenue to exercise the power contained
under Section 21 of the Act, 1948 as the
same would amount to escaped assessment
to tax, but, a fresh assessment cannot be
made in the garb of exercise of powers
conferred under Section 22 of the Act,
1948, which only provides for rectification
of mistakes.

39. The very words "rectification of
mistake" includes due application of mind
on a particular set of fact or law which are
liable to be corrected under the powers
1422 INDIAN LAW REPORTS ALLAHABAD SERIES
conferred under Section 22 of the Act,
1948. In the facts of the present case, I am
of the considered opinion that where an
issue
was
never
raised
before
the
Appellate Authority nor considered by it,
it cannot be subject matter for correction
of a mistake and therefore application
under Section 22 of the Act, 1948,
preferred by the revenue for correction of
mistake
in
the
order
of
Joint
Commissioner (Appeals), was clearly
misconceived.

40. Another aspect of the matter
which
has
been
considered
in
the
discussion made above is with regard to
the "doctrine of merger" as discussed in
the case of M.R. Soap (Pvt.) Ltd.
(supra). According to the Division Bench
of this Court in the aforesaid case, it is
provided as under :

"12..........That being so, the
entire
assessment
order,
whether
challenged in appeal as a whole or only in
part, will merge in the appellate order
irrespective of the points urged by the
parties or decided by the Appellate
Authority.

13. Once it is found that the
order of assessment has merged in the
appellate order, it follows as a matter of
necessary corollary that the Assessing
Authority shall not have the power to
reopen the assessment under Section 22 of
the U.P. Sales Tax Act. ......"

41. Taking into consideration the
"doctrine of merger" as per the judgment
of the Hon'ble Apex Court in the case of
Commissioner of Central Excise Vs.
Pearl Drinks Ltd. (supra), and applying
it to the facts of the present case, it
emerges that issue regarding taxability on
the lease rent as provided under Section 3F
of the Act, 1948, becomes final at the
stage of the Assessing Authority and the
same was not challenged by the revenue
before the Joint Commissioner (Appeals)
nor there was an order of reassessment and
therefore, the said issue became final and
even if the said issue did not merge with
the order of the Appellate Authority, the
same could not have been rectified by an
application under Section 22 of the Act,
1948.

42. From the perusal of the record,
the application for rectification under
Section 22 of the Act, 1948 was moved
by the revenue for rectification of the
order
of
the
Joint
Commissioner
(Appeals) but in the entire application
there was no mention of the mistake
sought to be rectified in the said order
and therefore, such an application would
not be maintainable and it would be a
colourable exercise that under the garb
of rectification of mistake of the order of
first Appellate Authority, the order of
the
Assessing
Authority
is
rectified/modified and fresh assessment
is made in this regard.

43. In the light of above, the
impugned order of the Tribunal is not
sustainable and therefore the same is set
aside.

44. The revision is allowed.
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(2020)02ILR A1422

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.01.2020

BEFORE
THE HON'BLE ALOK MATHUR, J.

Sales/Trade Tax Revision No. 570 of 2013