JUDGMENT [ENTITY], J.
1. By this reference under [SECTION] of the [ACT] (hereinafter referred to as "the Act"), the Board of Revenue has referred the following question of law to this Court for its opinion :
Whether, under the facts and circumstances of the case, the Tribunal has rightly held that the turnover relating to sale of cotton seed of Rs. 66,360.05, which was not assessed by the assessing officer and was not at issue before the Appellate Assistant Commissioner, could not be revised by the Commissioner under [SECTION] as the same was time-barred from the date of the original assessment order ?
2. The material facts giving rise to this reference, briefly, are as follows :
The assessee deals in grain, cotton seeds, kerosene oil and machinery at Sanawad. In the assessment proceedings under the Act before the Sales Tax Officer, Khargone, for the period 6th October, 1962, to 30th June, 1963, the assessee claimed exemption for the turnover relating to sale of cotton seeds amounting to Rs. 93,150. The assessing authority exempted sales worth Rs. 66,360 but levied tax on sales worth Rs. 26,790 on the ground that the assessee had not obtained declaration in form XII for resale of those goods. Aggrieved by that part of the order of assessment, the assessee preferred an appeal before the Appellate Assistant Commissioner. It was urged on behalf of the assessee that the assessing authority had wrongly levied tax on sales worth Rs. 26,790. This contention was upheld by the appellate authority and the appeal was allowed. Subsequently, the Commissioner of Sales Tax exercising powers under [SECTION] of the Act, set aside the exemption granted by the first appellate authority and the assessing authority as well, and levied tax not only on sales worth Rs. 26,790, exemption for which was granted by the first appellate authority, but also on sales worth Rs. 66,360, exemption for which was granted by the assessing authority. The Commissioner rejected the contention advanced on behalf of the assessee that as the notice under [SECTION] of the Act was issued on 14th August, 1969, in so far as the order of the assessing authority was concerned, as it was passed on 8th May, 1965, it could not be revised by virtue of the proviso to [SECTION] of the Act, which provided that no proceedings should be instituted after the expiry of three years from the date of the order sought to be revised. The Commissioner held that the order passed by the assessing authority had merged in the order of the first appellate authority and as the first appellate authority had passed the order on 28th August, 1966, action under [SECTION] of the Act was not barred by limitation. Aggrieved by the order passed by the Commissioner, the assessee preferred an appeal before the Board. The Board partly allowed the appeal, holding that the order passed by the Commissioner revising the order of the assessing authority was barred by limitation and thus, the levy of tax on sales worth Rs. 66,360 was set aside. Aggrieved by the order passed by the Board, the department submitted an application for making a reference and it is at the instance of the department that the aforesaid question of law has been referred to this Court for its opinion.
3. Shri [ENTITY], the learned counsel for the department, contended that the order of the assessing authority had merged in the order of the appellate authority as the appellate authority had powers under [SECTION] of the Act to set aside that part of the order of the assessing authority, against which no appeal was preferred. It was, therefore, contended that it was thus the order of the appellate authority that was sought to be revised by the Commissioner, and hence the initiation of proceedings was not barred by limitation. Reliance was placed on the decision of a Division Bench of this Court in [PRECEDENT]. It was further contended that there was conflict in the two decisions of this Court in [PRECEDENT] and in [PRECEDENT] and the matter be referred to a larger Bench.
4. To appreciate the contentions urged on behalf of the department, it is necessary to refer to the relevant provisions of [SECTION] and [SECTION] of the Act:
38. (5) Subject to such procedure as may be prescribed and after such further inquiry as it may think fit the appellate authority, in disposing of any appeal under Sub-section (1) or (2) may-
(a) confirm, reduce, enhance or annul the assessment or the penalty or both; or
(b) set aside the assessment or the penalty or both, and direct the officer whose assessment order, has been appealed against to make a fresh assessment, after such further inquiry, as may be directed; or
(c) pass such orders, as it may think fit.
39. (2) The Commissioner may of his own motion or on information received call for and examine the record of any proceeding under this Act, if he considers that any order passed therein by any person appointed under [SECTION] to assist him is erroneous in so far as it is prejudicial to the interests of the revenue, he may after giving the dealer or persons an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify including an order enhancing or modifying, the assessment, or cancelling the assessment and directing a fresh assessment:
Provided that no proceedings shall be initiated under this sub-section after the expiry of three years from the date of the order sought to be revised.
Now, the appellate authority undoubtedly had jurisdiction under [SECTION] of the Act to set aside the order of the assessing authority granting exemption of sales worth Rs. 66,360. But the appellate authority did not even touch that part of the order of the assessing authority. The question as to the extent to which the order passed by an assessing authority merges with the order of the appellate authority, has been concluded by two Full Bench decisions of this Court in [PRECEDENT] and in [PRECEDENT]. The following observations of the Full Bench in [PRECEDENT] are relevant:
The result, therefore, is that the doctrine of merger applies to income-tax proceedings but the extent of its application depends on the scope and subject-matter of the appeal and the decision rendered by the appellate authority. Where an appeal has been preferred by the assessee to the A.A.C. from an order of assessment made by the I.T.O. in respect of only some of the items covered by the I.T.O.'s order and the remaining items, forming part of the I.T.O.'s assessment order were not agitated by either party, though it was open also to the revenue to agitate them or the A.A.C. to consider them suo motu and no decision of the A.A.C. is, therefore, made in respect of the remaining items, the I.T.O's order merges with the appellate order of the A.A.C, only to the extent it was considered and decided by the A.A.C, but the matters which are not covered by the appellate order of the A.A.C. are left untouched and to that extent the I.T.O.'s assessment order survives, permitting exercise of revisional jurisdiction by the Commissioner under [SECTION] of the [ACT]. It necessarily follows that the items considered and decided by the A.A.C in his appellate order are beyond the scope of the revisional power of the C.I.T. under [SECTION] inasmuch as the I.T.O.'s order merges to that extent with that of the A.A.C. and the Commissioner has no revisional power over the A.A.C. The question whether the I.T.O.'s order has merged with that of the A.A.C. has to be answered on this basis.
To the same effect is the decision of the Full Bench in [PRECEDENT]. It is true that the question in the aforesaid two cases before the Full B6nch arose out of income-tax proceedings but that would not make any difference as regards the applicability of the principle of merger. The appellate authority under the [ACT] as well as under the [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, the order of the assessing authority to that extent cannot be held to merge in the order of the appellate authority.
5. In view of the two decisions of the Full Bench of this Court, it is not necessary to refer to the various decisions cited at the Bar. In [PRECEDENT], the question for consideration was whether the Commissioner was entitled under [SECTION] of the Act to revise the order of the appellate authority when it had failed to take action under [SECTION] of the Act by imposing penalty while disposing of the appeal. It is true that there is conflict in the two decisions of this Court in [PRECEDENT] and [PRECEDENT]. But the question arising in this case is slightly different and is covered by the two Full Bench decisions of this Court in [PRECEDENT] and [PRECEDENT]. It is, therefore, not necessary to refer the question arising in this case to a larger Bench as was urged on behalf of the department. If the question arising in this case would have been the same as arose in [PRECEDENT] and [PRECEDENT], we would have referred the matter to a Full Bench to resolve the conflict. But in the instant case, it is not necessary to do so.
6. For all these reasons, our answer to the question referred to this Court is that the Tribunal was right in holding that the turnover relating to sale of cotton seeds worth Rs. 66,360.05, which was not assessed by the assessing officer and was not at issue before the Appellate Assistant Commissioner, could not be revised by the Commissioner under [SECTION] of the Act, after the expiry of three years from the date of the order passed by the assessing authority.
7. Reference answered accordingly.
8. Parties shall bear their own costs of this reference.