168.            AB proprietary engaged in supplying service to its customer. A show cause notice demanding tax was issued to the firm and the demand was confirmed. The order was challenged in appeal before appellate authority. The appellant produced additional ground/evidence in its favour at the time of personal hearing before Appellate authority. 

(i)        Is appellant right in producing additional evidence at appeal stage?

(ii)               Issue involved being interpretation of law, penalty is not imposable .

(iii)             Discuss whether appellate authority is justified in not allowing the raising of additional grounds.

(i)    As per rule 112 of Appeals and Revisions Rules an Appellate Authority or the Tribunal can permit an appellant under certain specified circumstances to produce before it an evidence. Since additional grounds raised by AB services before appellate authority was an additional ground, the Appellate Authority will not allow any additional ground. Hence, Appellate Authority is justified in denying the raising of such additional grounds.

(ii)   In the matters of interpretation of statute, penalty cannot be imposed. There are several judicial pronouncements on this issue wherein penalty imposed was set aside.