# STATE OF KERALA v. M/S. VIJAYA STORES

- **Citation:** [1979] 1 S.C.R. 538
- **Court:** Supreme Court of India
- **Decided:** 1978-09-01
- **Bench:** P. N. Bhagwati, V. D. Tulzapurkar, R. S. Pathak
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-kerala-v-m-s-vijaya-stores-7591
- **Pages:** 7

## Headnote

Kera/a General Sales Tax Act 1963-Section 39(4)-Scope of-Appellate
Tribunal-if possesses jurfadic:ion ur power to enhance assessment in
1/ie
absence of an appeal or cross-objection by one of the parties.
Section 39(4)(a)(i) of the Kerala General Sales Tax Act 1963 provides
that in disposing of an appeal, the Appellate Tribunal, may, after giving the
parties a reasonable opportunity of being heard either in person or by a representative, confirm, reduce, enhance or annul the assessment or penalty or bDth.
On the ground that 50% of the transactions recorded in 1> rough note-book
detected and seized by the Inspecting Officer from the Head Office of the firm
were not entered in the regular books of accounts maintained by the assessee,_
the Sales Tax Officer made an addition of 10% to the admitted turnover and
completed the assessment.
D
In an appea~, the Appellate Assistant Commissioner, reduced the additiori t<>
5% of the admitted turnover.
The respondents preferred a second appeal before the Appellate Tribunal.
But the Department neither filed an appeal against the Order of the Appellate
Assistant Comniissioner nor raised any cross-objections in the assessee's appe:W.
After issuing a show-cause notice to the assessee, the Tribunal, under section
't_..,,
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39(4) of the Kerala General Sales Tax Act 1963, directed the addition of a
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certain amount to the taxhble tum over.
In its Tax Revision Petition, the respondent contended before the High Court
that the Order of the Tribunal was wrong in that it had no jurisdiction or power
to enhance the assessment in the absence of an appeal or cross-objections by the
Department. Setting aside the impugned Order of the Tribunal the High Court
remanded the cllse for hearing the appeal afresh.
In apeal to this Court, the appellant (Department) contended that on a true
construction of section 39(4) of the Act, the Appellate Tribunal should be
regarded as possessing the power to enhance the assessment even in the absence
of any appenl or cross-objections by the Department against the Appellate Assistant Commissioner's Order.
Dismissing the appeal held :
( 1) The Tribunal has no jurisdiction or power to enhance the assessment
in the absense of an appeal or cross-objections by the Department.
[543 E)
(2) To accept the construction placed by the counsel for the appell"'1t
oo sub .. ection (4)(a)(i) would be really rendering sub-section (2)
of section 39 otiose, for if in an appeal preferred by the assessee
against, the Appellate Assistant Commissioner's Order, the tribunal
would have the power to enhance the assessment, a provision for
cross-objections by the Department was really unnecessary. [543 DJ
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KERALA v. VIJAYA STORES
(Tulzapurkar, J.)
5 39
(3) The elementary principle found in the Code of Civil Procedure that
the· respondent who bas neither preferred his own appeal nor filed
cross-objections in the appeal preferred by the appellant must be
deemed to be satisfied with the decision of the lower authority and
that he will not be entitled to seek relief against a rivbl party in an
appeal preferred
by the latter, is equally
applicable to revenue
proceedings. (543 G]
Motor Union Insurance Co. Ltd. vs. Conunissioner of Income Tax Bo1nboy
(1945) 13 ITR 2i2 and New India
Life
A.o,surance
C'o.
vs.
Co1n111issioner
of Income Tax,
Excess
Profits Tax, Bombay City.
(1957) 31
ITR 844
approved.
Con1rnissioner of Sales Tax, Orissa vs. Clzunnilal Parmeshwar Lal (1961) 12
STC 677 distinguished.
C1wt APPELLATE JURISDICTION : Civil Appeal No. 477 of 1976.
Appeal by Special Leave from the Judgment and
O'der dated
11-4-1975 of the Kerala High Court in T.R.C. No. 59 of 1973.
P. A. Franc:is and N. Sudhakaran for the Appellant.
Ex parte against the Respondent.

## Text

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538
STATE OF KERALA
v.
M/S. VIJAYA STORES
September 1, 1978
[P. N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.]
Kera/a General Sales Tax Act 1963-Section 39(4)-Scope of-Appellate
Tribunal-if possesses jurfadic:ion ur power to enhance assessment in
1/ie
absence of an appeal or cross-objection by one of the parties.
Section 39(4)(a)(i) of the Kerala General Sales Tax Act 1963 provides
that in disposing of an appeal, the Appellate Tribunal, may, after giving the
parties a reasonable opportunity of being heard either in person or by a representative, confirm, reduce, enhance or annul the assessment or penalty or bDth.
On the ground that 50% of the transactions recorded in 1> rough note-book
detected and seized by the Inspecting Officer from the Head Office of the firm
were not entered in the regular books of accounts maintained by the assessee,_
the Sales Tax Officer made an addition of 10% to the admitted turnover and
completed the assessment.
D
In an appea~, the Appellate Assistant Commissioner, reduced the additiori t<>
5% of the admitted turnover.
The respondents preferred a second appeal before the Appellate Tribunal.
But the Department neither filed an appeal against the Order of the Appellate
Assistant Comniissioner nor raised any cross-objections in the assessee's appe:W.
After issuing a show-cause notice to the assessee, the Tribunal, under section
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E
39(4) of the Kerala General Sales Tax Act 1963, directed the addition of a
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certain amount to the taxhble tum over.
In its Tax Revision Petition, the respondent contended before the High Court
that the Order of the Tribunal was wrong in that it had no jurisdiction or power
to enhance the assessment in the absence of an appeal or cross-objections by the
Department. Setting aside the impugned Order of the Tribunal the High Court
remanded the cllse for hearing the appeal afresh.
In apeal to this Court, the appellant (Department) contended that on a true
construction of section 39(4) of the Act, the Appellate Tribunal should be
regarded as possessing the power to enhance the assessment even in the absence
of any appenl or cross-objections by the Department against the Appellate Assistant Commissioner's Order.
Dismissing the appeal held :
( 1) The Tribunal has no jurisdiction or power to enhance the assessment
in the absense of an appeal or cross-objections by the Department.
[543 E)
(2) To accept the construction placed by the counsel for the appell"'1t
oo sub .. ection (4)(a)(i) would be really rendering sub-section (2)
of section 39 otiose, for if in an appeal preferred by the assessee
against, the Appellate Assistant Commissioner's Order, the tribunal
would have the power to enhance the assessment, a provision for
cross-objections by the Department was really unnecessary. [543 DJ
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v'
KERALA v. VIJAYA STORES
(Tulzapurkar, J.)
5 39
(3) The elementary principle found in the Code of Civil Procedure that
the· respondent who bas neither preferred his own appeal nor filed
cross-objections in the appeal preferred by the appellant must be
deemed to be satisfied with the decision of the lower authority and
that he will not be entitled to seek relief against a rivbl party in an
appeal preferred
by the latter, is equally
applicable to revenue
proceedings. (543 G]
Motor Union Insurance Co. Ltd. vs. Conunissioner of Income Tax Bo1nboy
(1945) 13 ITR 2i2 and New India
Life
A.o,surance
C'o.
vs.
Co1n111issioner
of Income Tax,
Excess
Profits Tax, Bombay City.
(1957) 31
ITR 844
approved.
Con1rnissioner of Sales Tax, Orissa vs. Clzunnilal Parmeshwar Lal (1961) 12
STC 677 distinguished.
C1wt APPELLATE JURISDICTION : Civil Appeal No. 477 of 1976.
Appeal by Special Leave from the Judgment and
O'der dated
11-4-1975 of the Kerala High Court in T.R.C. No. 59 of 1973.
P. A. Franc:is and N. Sudhakaran for the Appellant.
Ex parte against the Respondent.
The Judgment of the Court was delivered by
TULZAPURKAR, J.-The short question raised in this appeal
by
special leave is whether the Appellate Tribunal has power under s.
39(4) of the Kerafa General Sales Tax Act, 1963 to enhance the assessment in the absence of any appeal or cross-objections by the Revenue?
The respondent firm (M/s. Vijaya Stores) is a dealer in stationery
having fts head office at Cochin and
branches at Ernakulam and
Kottayam.
For the assessment year 1965-66 the
respondent firm
returned a total turnover of Rs. 25,54,974.58 and a net taxable turnover, after claiming exemptions, of Rs. 12,99,996.49. The Sales Tax
Officer rejected the Book results
on the basis of certain material
gathered from a 'fOugh note-book detected and seized by the Inspecting
Officer from the Head Office at Cochin; it was found that about 50%
of the transactions recorded in that rough note-book were not entered
in the regular books maintained by the assessee; the Sales Tax Officer,
therefore, made an addition of 10% (Rs. 45,654.73) to the admitted
turnover of the Coch.in 'shop and accordingly completed the assessment
by his order dated Janua.ry 16, 1967. In an appeal preferred by the
respondent-firm to the Appellate Assistant Commissioner, the assessee
raised a two-fold contention that the rejection of accounts was not justified and that the addition made on the basis of the rough note-book
was excessive ~nd arbitrary. The Appellate Assistant ~mmissioner
by his order dated November 1, 1968 negatived the first contention and
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as regards the second he gave relief to the assessee by reducing and
limiting the addition to 5% (Rs. 22,823.00) of the admitted turnover
of the Cochin shop. Against the order of the Appellate Assistant Commi~sioner the respondent firm preferred a second appeal to the Appellate
Tribunal challenging the addition of 5 % to the taxable turnover. No
· appeal nor any cross-objections were filed by the Revenue to the TribuB
nal against the said order of the Appellate Assistant Commissioner.
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The Appellate Tribunal was of the view that the Sales Tax Officer and
the Appellate Assistant Commi'ssioner had no reason to make addition
at any figure less than Rs. 80,218.22 as was seen from the detected
rough note-book; the Tribunal, therefore, by invoking the power under
s. 39(4) of the Act issued notice to the assessee to show cau·se against
the proposed enhancement of the turnover and after hearing the objections of the assessee by its order dated May 10, 1973 directed an addition of a sum of Rs. 80,218.22 to the taxable turnover. The respondent-firm preferred a Tax Revision Petition (being T.R.C. ~9 of 1973)
to the Kerala High Court contesting that the Tribunal had up jurisdiction
or power to enhance the assessment in the absence of an appeal or
cross-objections by the Department ~nd prayed for quashing of tbe
order. The K11rala High Court by its judgment and order dated April
11,1975 accepted the contention of the respondent-firm and set aside
the impugned order of the Tribunal and remanded the case for hearing
the appeal of the assessee afresh in accordance with law and in the
light of what it had said in its judgment; in doing so the High Court
relied upon two decisions of the Bombay High Court in Motor Union
Insurance Co., Ltd. v. Commissioner of Income Tax, Bombay('') and
New India Life Assurance Co. Ltd. v. Commissioner of Income-Tax,
Excess Profits Tax, Bombay City('). The State of Kerala has come
up in appeal to this Court
Counsel for the appellant raised two contentions in support of the
appeal. He first contended that on a true construction of s. 39 ( 4) of
the Act the A.12pellate Tribunal should be regarded ·as posse·ssing the
power to enhance the assessment in the absence of any appeal or crossobjections by the Department against the Appellate Assistant Commissioner's order and that the only requirement before making such
enhancement was to give a reasonable opportunity of being heard
against the proposed enhancement which the Appellate Tribunal had
done in this case; secondly, he contended that s. 39( 4) of the Kerala
General Sales Tax Act, 1963 was not in pari materia withs. 33(4) of
the Indian Income Tax Act, 1922, and, therefore, the High Court
ought nqt to have relied upon the decisions of tne Bi:imbay"High Court
(I) [1945] 13 I. T. R. 272.
(2) [1957] 31 J.T.R. 844.
KERALA v. VIJAYA STORES (Tulzapurkar, J.)
541
rendered \lnder s. 33(4) of the Indian Income Tax Act, 1922. He
also pressed 'the contrary view taken by the Orissa High- Court in the
case of Commissioner of Sales Tax, Orissa v. Chunilal Parameshwar
Lal('), for our acceptance. For the reasons which we shall presently
indicate it is not possible to accept either of these contentions urged
by counsel for the appellant.
The question raised before us really turns upon the correct interpretation to be placed on s. 39(4) of the Act, but sub-ss. (1), (2),
(3) and (4) of s. 39 are material for our purposes which run thus:
"39. Appeal to the Appellate Tribunal.
(I) Any officer empowered by the Government in this
behalf or any _other person objecting to an order passed
by the Appeffate Assistant Commissioner under subsection (3) of section 34 and any person objecting
to an order passed by the Deputy Co=issioner under
·sub-section (1) of section 35, and any person objecting to an order passed by the Inspecting Assistant
Co=issioner under clause (c) of sub-section (4)
of section 28 may, within a period of sixty days from
the date on which the order was served on him-in the
manner prei;cribed, appeal against such order to the
Appellate Tribunal;
Provided that the Appellate Tribunal may admit an
appeal presented after the expiration of the said period
if_ it is satisfied that the appellant had sufficient cause
for not presenting the appeal within the said period.
(2) The Officer authorised under sub-section (!) or the
person against whom an appeal has been preferred,
:is the case may be, on receipt of notice that an appeal
against the order of the Appellate Assistant Commissioner has been preferred under sub-section (1) by
the other party, m'1y, notwithstanding that he has not
apR_ealed against such order or any part thereof, file,
within thirty days of the receipt of the notice, a memorandum of cros's-objections, verified in thl) prescribed
manner against any part of the Appellate Assistant
Commissioner, and such memorandum shall be disposed of by the Appellate Tribunal as if it were an
appeal presented within the time specified in subgction (1).
(1) [19611 12 S.T.C. 677.
·.1!1-526 SCl/78
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( 3) The appeal or the memorandum of cro'ss-objections
.§hall be in the prescribed form and shall be verified
in the prescribed manner, and, in the case of an appeal
preferred by any person other than an officer emPQWered by the Government under sub-section (1 ),
it shall be accompanied by such fee not exceeding one
hundred rupees as may be prescribed.
( 4) In disposing of an appeal, the Appellate Tribunal may,
after giving the parties a reasonable opportunity of
being heard either in person or by a representative.
(a) in the case of an order of assessment or penalty.
(i) confu:m, reduce, enhalnce
or annul
the
assessment or penalty or both;
(ii) set aside the assessment and direct the assessing authority to make a fresh assessment
after such further enquiry as may be. directed; or
(iii) pass such other nrders as it may think fit;
or
(b) in the case of any other order, confirm, cancel
or vary such order."
Considerable emphasis was laid by counsel for the appellant upon
sub-s.(4) which indicates what things the Appellate Tribunal may do
while disposing of an appeal and in particular it was pointed out that
under sub-s.(4) (a)(i) the Appellate Tribunal has been given power
"to enhance the assessment" while disposing of an appeal against an
order of assessment after giving the party a reasonable oppcrtunity
of being heard and it was nrged that such power could be exercised
even when the appeal against the Appellate Assistant Commissioner's
assessment order had been preferred by the assessee and not by the
Department.
To place such a construction on
sub-s.
( 4) (a)(i)
would amount to ignoring the scheme of s. 39. Sub-s.
(1) prnvides
for an appeal being preferred against an assessment order passed by
the Appellate Assistant Commissioner under s. 34 ( 3) either by the
assessee or by the Department through an officer empowered by the
Government in that behalf.
Further, sub-s. (2) provides for filling
of cross-objections by a party, against whom an appeal has been preferred, notwithstanding that he has not himself appealed against the
decision or any part thereof and such cross-objection·s are to ·.be
disposed of by Appellate Tribunal as if it were an appeal.
Then
comes sub-s. ( 4) which enumerates the various powers conferred upon
KERALA v. VIJAYA STORES
(Tulzapurkar, J.)
543
the Appellate Tribunal while disposing of such appeals (including
~ross-objections) and the power conferred upon the Appellate Tribunal
under s. 4(a) (i) is "to confirm, reduce, enhance or annul the assessment"; the power to enhance the assessment must be appropriately
read as relatable to an appeal or cross-objections filed by the Department The normal rule that a party not appealing from a decb'>ion
must be deemed to be satisfied with the decision, must be taken to
have acquiesced therein and be bound by it.
and, therefore, cannot
seek relief against a rival party in an appeal preferred by the latter,
has not been deviated from in sub-s. ( 4 )(a) (i) above. In other
words, in the absence of an appeal or cross-objections by the Department against the Appellate Assistant Commissioner's order the Appellate Tribunal will have no jurisdiction or power to enhanqi the assessment.
Further, to accept the construction placed by the counsel for
the appellant on sub-s. (4)(a)(i) would be really rendering sub-s.
(2) of s. 39 otiose, for if in an appeal preferred by the assessee agaiilst
the Appellate Assistant Commissioner's order the tribunal would have
the power to enhance the assessment, a provision for cross-objections
by the Department was really unnecessary.
Having regard to the
entire scheme of s. 39, therefore, it is clear that on a true and proper
construction of sub-s. ( 4) (a) (i) of s. 39 the Tribunal has no jurisdiction
or power to enhance the assessment in the absence of an appeal or
cross-objections by the Department.
It is true that the two Bombay decisions reported in 13 I.T.R.
272 and 31 I.T.R. 844 (supra) on which the High Court has relied
have been rendered in relation to s. 33 ( 4) of Indian Income Tax
Act, 1922 but in our view the said provisions of Income Tax AG!
is in pari materia with the provision of s.39 ( 4) of the Kerala General
Sales Tax Act, 1963. Moreover, the Bombay High Court has pointed out in those decisions that s. 33 ( 4) merely enacted what was the
elementary principle to be found in Civil Procedure Code that the
respondent who has neither preferred his own appeal nor filed crossobjections in the appeal preferred by the appellant, must be deemed
to be satisfied with the decision of the lower authority and he will
not be entitled to seek relief against a rival party in an appeal preferred by the latter. In the first mentioned case the elementary
principle is stated at page 282 of the report thus :
"Apart from statute, 'it is elementary that if a party
appeals, he is the party who comes before the Appellate
Tribunal to redress a grievance alleged by him. If the other
side has any grievance, he has a right to file a cro~s-appeal
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or cross-objections.
But if no such thing is done, the
other party, in law, is deemed to be satisfied with the decision.
He is, of course, entitled to support the judgment of
the first officer on any ground open to him, but he is not
entitled to raise a ground so as to work adversely to the
appellant and in his favour."
As regards the decision of the Orissa High Court in C ommissio11er of Sales Tax, Orissa v. Chunnilal Parmeshwar Lal (supra), the
same cannot avail the appellant for the decision in that case was
rendered on a concession made by the assessee's counsel.
In the result we are clearly of the opinion that the High Court
was right in the vkw it took and the appeal, therefore, fails and is
dismissed. Since the respondent has pot appeared, there is no
question of any costs.
N.V.K.
Appeal dismissed.