M/S. Deva
Metal Powders Pvt. Ltd Vs. Commissioner, Trade Tax, U.P. [2007] Insc 1213 (4 December 2007)
Dr.
Arijit Pasayat & P. Sathasivam
CIVIL
APPEAL NO. 5607 OF 2007 (Arising out of SLP (C) No.9396 of 2006) Dr. ARIJIT
PASAYAT, J.
1.
Leave granted.
2. Challenge
in this appeal is to the judgment of a Division Bench of the Allahabad High
Court allowing the Trade Tax Revision Case Nos. 1055 and 1070 of 1998 filed by
the respondent. The two revisions were filed under Section 11 of the Uttar
Pradesh Sales Tax Act, 1948 (in short the 'Act) and the Central Trade Tax Act,
1956 (in short the 'Central Act').
3.
Factual background in a nutshell is as follows :
Appellant
hereinafter also referred to as the Assessee was dealing with Aluminium powder.
In the original assessment order passed under Section 7(3) of the Act and
Section 9 of the Central Act, Aluminium Powder was treated as metal and
accordingly held liable to tax at the rate of 2.2%. Assessing officer initiated
proceedings under Section 22 of the Act on the ground that this Court had in
Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh and Another
[1981(3) SCC 578] considered the entry "All kinds of minerals, ores,
metals and alloys including sheets and circles" and held that under this
entry only the primary metal is covered. It was also held that sheets and
circle of Aluminium would not be covered under the entry "Metal"
Assessing officer accordingly rectified the assessment orders under Section 22
and levied tax treating the Aluminium powder as an unclassified item.
The
First appellate authority in the appeals filed by the assessee held that
Section 22 of the Act had no application and the assessments were set aside.
The present respondent filed appeals before the Sales Tax Tribunal, Varanasi
Bench (in short the 'Tribunal') which were also dismissed. In the revision
petitions filed, as noted above, the High Court held that action under Section
22 of the Act is clearly sustainable. It referred to a decision of this Court
in M/s. Karam Chand Thapar & Bros. (Coal Sales) Ltd. v. State of Uttar Pradesh & Anr. [(1976) 4 SCC 257] and
held that a decision of this Court can be a ground for rectification of error
in terms of Section 22 of the Act. The High Court did not accept the stand of
the appellant that Aluminium powder in the powder form remains Aluminium in its
primary form and in any case this is a debatable issue and, therefore, Section
22 of the Act does not apply.
4.
Learned counsel for the appellant submitted that this is a case where Section
22 of the Act had no application. The said provision is only applicable to a
case where the error is apparent on the face of the record; Where the issue can
not be decided in a undisputable manner, Section 22 has no application; and
where a matter is disputable there can be no order under Section 22 of the Act.
5.
Learned counsel for the respondent on the other hand submitted that in view of
this Court's decision in Hindustan Aluminium Corporation's case (supra) there
is no scope for taking a different view and, therefore, Section 22 clearly had
application.
6.
Section 22 of the Act reads as follows:
"Rectification
of Mistakes:
(1)
Any officer or authority, or the Tribunal or the High Court may, on it's 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 this 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
assessing authority concerned shall serve on the dealer a revised notice of
demand in the prescribed form and there from all the provisions of the Act and
rules framed there under shall apply as if such notice had been served in the
first instance."
(Underlined
for emphasis)
7. The
Deputy Commissioner (Appeal) held that Section 22 of the Act did not
contemplate rectification of debatable issues and therefore, this was not a
case where Section 22 of the Act applies. Similar was the view taken by the
Tribunal. It has been submitted by the appellant that the Notification
considered in Hindustan Aluminium Corporation's case (supra) was dated
30.5.1975. Subsequently, there has been an amendment by Notification dated
7.9.1981 by which "scrap"
has
also been included in the entry. It is, therefore, submitted that the ratio in
Hindustan Aluminium Corporation's case (supra) applied as scrap has always been
produced as a result of processing of the original metal.
8.
This Court in M/s. Thungabhadra Industries Ltd. (in all the Appeals) v. The
Government of Andhra Pradesh represented by the Deputy Commissioner of
Commercial Taxes, Anantapur, [AIR 1964 SC 1372] held as follows:
"There
is a distinction which is real, though it might not always be capable of
exposition, between a mere erroneous decision and a decision which could be
characterized as vitiated by "error apparent". A review is by no
means an appeal in disguise whereby an erroneous decision is reheard and
corrected, but lies only for patent error. Where without any elaborate argument
one could point to the error and say here is a substantial point of law which
states one in the face and there could reasonably be no two opinions
entertained about it, a clear case of error apparent on the face of the record
would be made out."
9. An
error apparent on the face of the record for acquiring jurisdiction to effect
rectification must be such an error which may strike one on a mere looking at
the record and would not require any long drawn process of reasoning. The
following observations in connection with an error apparent on the face of the
record in the case of Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa
Tiruymale [ AIR 1960 SC 137] need to be noted:
"An
error which has to be established by a long drawn process of reasoning on
points where there may conceivably be two opinions can hardly be said to be an
error apparent on the face of the record. Where an alleged error is far from
self-evident and if it can be established, it has to be established, by lengthy
and complicated arguments, such an error cannot be cured by a writ of certiorari
according to the rule governing the powers of the superior Court to issue such
a writ."
10. A
bare look at Section 22 of the Act makes it clear that a mistake apparent from
the record is rectifiable. In order to attract the application of Section 22,
the mistake must exist and the same must be apparent from the record. The power
to rectify the mistake, however, does not cover cases where a revision or
review of the order is intended. "Mistake" means to take or
understand wrongly or inaccurately; to make an error in interpreting; it is an
error, a fault, a misunderstanding, a misconception. "Apparent" means
visible; capable of being seen, obvious; plain. It means "open to view,
visible, evident, appears, appearing as real and true, conspicuous, manifest,
obvious, seeming." A mistake which can be rectified under Section 22 is
one which is patent, which is obvious and whose discovery is not dependent on
argument or elaboration. In our view rectification of an order does not mean
obliteration of the order originally passed and its substitution by a new
order.
What
the Revenue intends to do in the present case is precisely the substitution of
the order which according to us is not permissible under the provisions of
Section 22 and, therefore, the High Court was not justified in holding that
there was mistake apparent on the face of the record. In order to bring an
application under Section 22, the mistake must be "apparent" from the
record. Section 22 does not enable an order to be reversed by revision or by
review, but permits only some error which is apparent on the face of the record
to be corrected. Where an error is far from self-evident, it ceases to be an
apparent error. It is, no doubt, true that a mistake capable of being rectified
under Section 22 is not confined to clerical or arithmetical mistake. On the
other hand, it does not cover any mistake which may be discovered by a
complicated process of investigation, argument or proof. As observed by this
Court in Master Construction Co. (P) Ltd. v. State of Orissa [1966] 17 STC 360,
an error which is apparent from record should be one which is not an error
which depends for its discovery on elaborate arguments on questions of fact or
law.
11.
"Mistake" is an ordinary word but in taxation laws, it has a special
significance. It is not an arithmetical error which, after a judicious probe
into the record from which it is supposed to emanate is discerned. The word
"mistake" is inherently indefinite in scope, as to what may be a
mistake for one may not be one for another. It is mostly subjective and the
dividing line in border areas is thin and indiscernible. It is something which
a duly and judiciously instructed mind can find out from the record. In order
to attract the power to rectify under Section 22, it is not sufficient if there
is merely a mistake in the order sought to be rectified. The mistake to be
rectified must be one apparent from the record. A decision on a debatable point
of law or a disputed question of fact is not a mistake apparent from the record.
The plain meaning of the word "apparent" is that it must be something
which appears to be so ex facie and it is incapable of argument or debate. It,
therefore, follows that a decision on a debatable point of law or fact or
failure to apply the law to a set of facts which remains to be investigated
cannot be corrected by way of rectifications.
12. In
the Hindustan Aluminium Corporation's case (supra) the dispute did not relate
to Aluminium Powder. What the assessing officer and the High Court did was to
inferentially apply the ratio of the said decision to Aluminium powder. The
ratio in Karam Chand's case (supra) has, therefore, no application.
13.
Above being the position, the High Court's order is clearly unsustainable and
is set aside. We make it clear that we have not expressed any opinion on the
issue as to whether Aluminium powder can be regarded "metal in primary
form" for the purpose of payment of tax. There is no need to adjudicate
that aspect in view of the fact that the rectification done in purported
exercise of Section 22 of the Act is clearly impermissible.
14.
The appeal is allowed without any order as to costs.
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