1986 PLP (Trib (PTD)

SIKANDAR HAYAT KHAN (MEMBER).‑‑These six appeals at the instance of the assessee are directed against the impugned order of the learned A.A.C. by virtue of which, he dismissed the appeals of the assessee in respect of the charge years 1975‑76 1976‑77, 1977‑78, 1978‑79, 1979‑80 and 1980‑81.

2. The assessee derives income from the manufacture of cotton yarn and cotton fabrics. In this case two separate orders were passed under sections 10(3) and 27(1) of the Sales Tax Act, 1951 (Act No. III of 1951). While passing the orders under section 10(3) of the Sales Tax Act, the Sales Tax Officer by virtue of his orders, dated 30‑4‑1979 filed the proceedings in respect of all the years in the following words:‑ "The assessee's products being exempt from the sales tax, no action appears to, be called for. The proceedings are filed."

3. Simultaneously, while refusing refund to the assessee in respect of all the years, the Sales Tax Officer concluded as under:‑ "Since the final products of the assessee‑company are not liable to sales tax, the assessee's claim of refund cannot be entertained. Proceedings are filed. It is also brought on record that genuineness of the quantum of the assessee's claim of refund has not been verified."

4. Against the orders of the Sales Tax Officer refusing refund to the assessee appeals were filed before the learned A.A.C., who by virtue of appeals Nos. 26 to 31, dated 26‑9‑1982 confirmed the order of the Sales Tax Officer though on a different footing altogether. In this connection, relevant part of the appellate order is set out below:‑ "During the course of hearing of these appeals, it transpired that sales tax is not charged on goods manufactured by the company. The appellant is thus not an assessee as per definition of this word, vide section 2(3) of the Act which reads assessee meant a person by whom tax is payable under this Act. "The appellant not being an assessee has no right to an appeal under section 14(1) of the Act according to which only an assessee is entitled to prefer an appeal before the A.A. C. The subsection reads any assessee objecting to an assessment made or a penalty 'imposed on him, may, within 30, days of the date on which he is served with the notice of demand, appeal to the Appellate Assistant Commissioner, In the prescribed form, etc. There is no denying the fact that sales tax was not payable by the company during the years for which appeals have been preferred. Consequently, appeals could not be filed by it (being not a sales tax assessee) against S.T.O's. orders before the A.A. C. In this view of the matter, the appeals filed by the company cannot be admitted for hearing. Accordingly, these appeals relating to the years 1975‑76 to 1980‑81 having been found infructuous are hereby dismissed."

5. Having failed before the learned A. A. C., the assessee filed second appeals before the Tribunal requesting it to entertain claim of the assessee on account of refund under section 27(1) of the Sales Tax Act, 1951.

6. The first point for consideration for us is, whether an appeal from the order of the Sales Tax Officer lies before the Tribunal or not. In this connection, we have first examined the definition of the assessee as given under section 2(3) of the Sales Tax Act, 1951. According to it an assessee means a per6on by whom tax is payable under‑this Act. The contention of Chief Accountant of the assessee is that sales tax was payable by the assessee but as it was allowed exemption, vide item Nos. 54 and 55 of notification No. 9, dated 27‑6‑1951 it did not pay any sales tax on the manufacture of cotton fabrics and cotton yarn. It has been submitted by him that but for this exemption the assessee was liable to sales tax and is, therefore, an assessee within the meaning of section 2(3) of the Sales Tax Act, 1951. He has accordingly pointed out that the assessee could prefer an appeal under subsection (1) of section 14 of the Sales Tax Act, 1951. The learned D.R. on the other hand has stated that goods manufactured by the assessee were not liable to sales tax and, therefore, it was not an assessee within the meaning of section 2(3) of the Sales Tax Act.

7. Having considered arguments of both the parties it is our considered opinion that but for the exemption extended to the assessee by virtue of notification No. 9, dated 26‑7‑1951, it would have paid sales tax on the manufacture of cotton yarn and cotton fabrics. In other words for all practical purposes the case of the assessee fell within the definition of sub‑clause (3) of section 2 of the Sales Tax Act, 1951. The exemption, however, did not imply that Messrs N

T

Mj

Ltd

ceased to be an assessee. Apart from it exemption allowed by the Government is a matter of discretion and could be withdrawn as and when it so desires. As soon as the Government were to withdraw exemption, the assessee would be liable to pay sales tax and will undoubtedly be an assessee. In respect of the interregnum too Messrs Noshera Textile Ltd., wag an assessee though it did not pay any tax on account of exemption.

8. Considered from another angle Messrs N

T

Ltd., was also an assessee in respect of the charge years 1975‑76 to 1980‑

81. In this connection, we have placed reliance on subsection (2) of section 27 of the Sales Tax Act, 1951 which is incorporated below for facility of reference:‑ "If any person satisfied the Sales Tax Officer that the amount of tax paid by him exceeds the amount with which he is properly chargeable under this Act, he shall be entitled to a refund of such excess, and the provisions of this Act in respect of appeal find revision shall apply to an order passed by the Sales Tax Officer under this subsection as they apply to an assessment."

9. In this case, the assessee asked for refund on the purchase of raw material consumed in the manufacture of cotton yarn and cotton fabrics. The amount of refund claimed by the assessee in respect of the charge years 1975‑76 to 1980‑81 is detailed in the orders of the Sales Tax Officer under section 27(1) of the Sales Tax Act, 1951. It is, however, a different matter altogether that claim of the assessee was neither entertained nor verified by the Sales Tax Officer. Once claim of the assessee on account of refund is refused by the Sales Tax Officer, all the provisions of this Act in respect of appeal and revision mutatis mutandis are to apply to an order passed by the Sales Tax Officer under this subsection as they apply to an assessment. In other words, right of the assessee for an appeal remains intact where his claim on account of refund is rejected by the Sales Tax Officer under subsection (1) of section 27 of the Sales Tax Act, 1951.

10. The learned counsel of the assessee in support of the refund has also relied on 1974 P T D (Trib.)

15. This decision was, however, not followed by us in S.T.A.‑ Nos. 17, 27 a 28 (Pb.) of 1980‑81 and 1981‑82 for the assessment years 1973‑74, 1975‑76 and 1976‑77, dated 25‑11‑1984. In this connection, relevant part of the appellate order is set out below:‑ "We have already held above that even on the end product i.e. cement no assumption of payment of sales tax could be roped in so as to create the myth of double taxation i.e. payment of sales tax on raw material and again on the end product. Here admittedly raw material had suffered sales tax on account of notification too. 9, dated 27‑6‑1951 and the respondent was not entitled to claim any refund on it. Apart from it, the myth of sales tax being included in the levy of central excise duty has not been approved by us. Thus, the only conclusion before us is that there was no double taxation."

11. On account of the discussion made in paras. 6 and 9 it is our considered opinion that the learned A.A.C., was required to hear appeal of the assessee on merit. As this opportunity was denied to it, at the relevant stage we remit the case to the learned A.A.C., with a directive that he may rehear the appeal and dispose it of in accordance with law and the facts of this case. M. Y. H.????????????????????????????????????????????????????????????????????????????????? ??????????? Case remanded.