Assistant Commercial
Taxes Officer Vs M/s Makkad Plastic Agencies
JUDGMENT
Dr. MUKUNDAKAM
SHARMA, J.
1.
Leave
granted.
2.
This
appeal is directed against the judgment and order dated 03.05.2010 passed by the
Rajasthan High Court, Jodhpur Bench, in S.B. Civil [Sales- Tax] Revision No. 74
of 2010, whereby the High Court dismissed the said Revision Petition preferred
by the appellant herein and upheld the order dated 22.01.2009 passed by the Rajasthan
Taxation Board, Ajmer, wherein the Taxation Board interfered and modified its earlier
order dated 13.05.2008.
3.
The
assessment of the assessee-respondent for the Assessment Year 2001-02 was
completed by the Assessing Officer under Section 29(7) of the Rajasthan Sales Tax
Act, 1994 [for short "the Act of 1994"] holding that the tax on "thermo
ware" and "vacuum ware", which were the articles sold by the assessee-respondent
during the relevant assessment year, should be levied Sales Tax at 10 per cent instead
of 8 per cent, treating them as separate articles from plastic goods/products. Consequently,
the liability of difference of tax at 2 per cent along with surcharge, interest
and penalty was also levied.
4.
The
aforesaid order of the Assessing Officer was challenged by the
assessee-respondent before the Deputy Commissioner [Appeals], Commercial Tax Department,
Bikaner under Section 84 of the Act of 1994, which was allowed by the Appellate
Authority by order dated 29.03.2005 by setting aside the demand for difference of
tax imposed at 2 per cent as also the penalty and interest.
5.
Aggrieved
by the aforesaid order dated 29.03.2005 of the Deputy Commissioner [Appeals], Bikaner
the appellant herein preferred an appeal before the Rajasthan Taxation Board, Ajmer,
which was heard and disposed of by the Taxation Board by allowing the same vide
its order dated 13.05.2008. The Taxation Board considered various documents placed
on record including invoices and, thereafter, on appreciation thereof, it was held
that "plastic goods" and "thermo ware" are two different
articles as was indicated from the invoice itself. It was also held that the conclusion
arrived at by the Tax Assessing Officer is well-considered and reasonable, whereas
the order passed by the Deputy Commissioner [Appeals], Bikaner is contrary to
facts and law. Having held thus, the Taxation Board allowed the appeal and order
dated 29.03.2005 passed by the Deputy Commissioner [Appeals], Bikaner was set aside
and order passed by the Tax Assessing Officer was restored.
6.
The
assessee-respondent thereafter filed a rectification/amendment application purportedly
under Section 37 of the Act of 1994, which was decided by the Rajasthan Taxation
Board, Ajmer by passing an order dated 22.01.2009. By the aforesaid order the Taxation
Board modified its earlier order to the extent of holding that as the assessee-respondent
had declared all his sales in the books of accounts, in that situation, in order
to levy penalty, department has to also prove additionally, that there was a mala
fide intention on the part of the assessee- respondent for tax evasion, which is
not revealed in the present case. It was further held that as the mala fide intention
of the assessee-respondent for tax evasion has not been proved and since no such
evidence is available on record from which it could be established that the assessee-respondent
had the mala fide intention behind recovering the tax at the rate of 8 per cent,
the order of levying penalty is not justiciable. After recording the aforesaid findings,
the Taxation Board passed an order dated 22.01.2009 to the extent of amending its
previous order dated 13.05.2008 and set aside the order passed by the Deputy Commissioner
[Appeals], Bikaner dated 29.03.2005 on the issue of tax evasion only, however, maintained
the finding on the issue of penalty.
7.
Being
aggrieved by the aforesaid order passed by the Taxation Board a Revision Petition
was preferred by the appellant before the High Court of Rajasthan, Jodhpur
Bench under Section 86 of the Act of 1994. The High Court, however, held that
no question of law arises out of the order passed by the Taxation Board for consideration
and, consequently, the Revision Petition was dismissed. The present appeal, as stated
hereinbefore, is directed against the aforesaid two orders passed by the High Court
as also by the Taxation Board.
8.
From
the aforesaid narration of facts it is crystal clear that the earlier order dated
13.05.2008 passed by the Taxation Board was interfered with and modified by the
Taxation Board itself under its order dated 22.01.2009. The said order dated 22.01.2009
is practically challenged in the present case on the ground that the said order
was passed by the Taxation Board in excess of its jurisdiction. The said order dated
22.01.2009 was passed on the basis of an Amendment Application filed by the assessee-respondent
under Section 37 of the Act of 1994. In the said order dated 22.01.2009, the Taxation
Board proceeded on the ground that the said application was in the nature of
Amendment Application praying for amendment of its judgment and order dated
13.05.2008.
9.
Contention
raised on behalf of the appellant is that the Taxation Board committed a jurisdictional
error in amending and reviewing its earlier order dated 13.05.2008 while exercising
the power of rectification of a mistake apparent on the face of the record.
10.
It
may be stated herein that despite service of notice, none appears for the
assessee-respondent and, therefore, we proceed to dispose of this appeal on the
basis of the submissions made by the counsel appearing for the appellant and
also on the perusal of the records placed before us.
11.
In
order to appreciate the aforesaid contention, we are required to extract the
relevant part of Section 37 of the Act of 1994, which was the power exercised by
the Taxation Board for passing the order dated 22.01.2009: -"Section 37:
Rectification of a Mistake - (1) With a view to rectifying any mistake apparent
from the record, any officer appointed or any authority constituted under the Act
may rectify suo motu or otherwise any order passed by him. Explanation: A
mistake apparent from the record shall include an order which was valid when it
was made and is subsequently rendered invalid by an amendment of the law having
retrospective operation or by a judgment of the Supreme Court, the Rajasthan High
Court or the Rajasthan TaxBoard.......................................................................................
"
12.
The
Taxation Board by its order dated 13.05.2008 was disposing of an appeal filed against
the order dated 29.03.2005 passed by the Deputy Commissioner [Appeals]. By the aforesaid
order dated 13.05.2008 the Taxation Board upheld and accepted the contention of
the appellant herein that "thermo ware" is not similar to "plastic
product" and that rather they are two different products/articles, which in
fact is also proved and established from the documents on record. It was,
therefore, held that the conclusion arrived at by the Assessing Officer is well-considered
and reasonable. It was also held that, although, in the appellate judgment, given
by the Deputy Commissioner [Appeals], reference was made to the use of "plastic
granules" and "powder" as raw material for manufacturing
"thermo ware" for treating "thermo ware" as covered under the
category of plastic goods/products, but neither any evidence nor any reasonable
and justifiable ground was given in the said order for doing the same. After recording
the aforesaid findings, the Taxation Board set aside the judgment of the Deputy
Commissioner [Appeals] and restored the order of the Tax Assessing Officer, who
had by his order, held that the assessee-respondent is liable to pay tax at the
rate of 10 per cent, as the product "thermo ware" and "vacuum ware",
which are the articles sold by the assessee- respondent, are assessable to tax
at the rate of 10 per cent instead of 8 per cent to be levied on plastic wares.
13.
The
aforesaid well-reasoned order came to be interfered with by the Taxation Board itself
while exercising the purported powers under Section 37 of the Act of 1994, which
empowers the Board only to rectify a mistake apparent on the face of the
record. The issue, therefore, is whether, while exercising such power vested under
Section 37 of the Act of 1994, the Taxation Board could re-appreciate the evidence
on record and review its earlier order by holding that there was no mens rea on
the part of the assessee-respondent and, therefore, no penalty is leviable on them.
The aforesaid exercise of power by the Taxation Board in the present case by interfering
with its earlier order was submitted to be a jurisdictional error and also
purportedly to be an exercise of power in excess to what is provided in the
statute.
14.
The
scope and ambit of the power which could be exercised under Section 37 of the
Act of 1994 is circumscribed and restricted within the ambit of the power vested
by the said Section. Such a power is neither a power of review nor is akin to
the power of revision but is only a power to rectify a mistake apparent on the face
of the record. Rectification implies the correction of an error or a removal of
defects or imperfections. It implies an error, mistake or defect which after
rectification is made right.
15.
In
the case of Commissioner of Income Tax, Bhopal v. Ralson Industries Ltd. reported
in (2007) 2 SCC 326 a similar situation arose for the interpretation of this Court
regarding the scope and ambit of Section 154 of the Income Tax Act vesting the power
of rectification as against the power vested under Section 263 of the Income Tax
Act, which is a power of revision. While examining the scope of the power of rectification
under Section 154 as against the power of revision vested under Section 263 of
the Income Tax Act, it was held by this Court as follows at Para 8: - "8. The
scope and ambit of a proceeding for rectification of an order under Section 154
and a proceeding for revision under Section 263 are distinct and different. Order
of rectification can be passed in certain contingencies. It does not confer a
power of review. If an order of assessment is rectified by the Assessing
Officer in terms of Section 154 of the Act, the same itself may be a subject matter
of a proceeding under Section 263 of the Act. The power of revision under Section
263 is exercised by a higher authority. It is a special provision. The
revisional jurisdiction is vested in the Commissioner. An order thereunder can be
passed if it is found that the order of assessment is prejudicial to the
Revenue. In such a proceeding, he may not only pass an appropriate order in exercise
of the said jurisdiction but in order to enable him to do it, he may make such inquiry
as he deems necessary in this behalf." In paragraph 12 of the said
judgment it was also held that when different jurisdictions are conferred upon
different authorities, to be exercised on different conditions, both may not be
held to be overlapping with each other. While examining the scope and
limitations of jurisdiction under Section 154 of the Income Tax Act, it was held
that such a power of rectification could only be exercised when there is an
error apparent on the face of the record and that it does not confer any power of
review. It was further held that an order of assessment may or may not be
rectified and if an order of rectification is passed by the Assessing Authority,
the rectified order shall be given effect to.
16.
We
may also at this stage appropriately refer to yet another decision of this Court
in Commissioner of Trade Tax, U.P. v. Upper Doab Sugar Mills Ltd. reported in (2000)
3 SCC 676, in which the power and scope of rectification was considered and pitted
against the scope of review. The aforesaid decision was in the context of Section
39(2) of the U.P. Sales Tax (Amendment) Act, 1995 which provides the power of review.
Section 22 of the said Act provides for rectification of mistake. In the said decision,
it was held that when two specific and independent powers have been conferred upon
the authorities, both powers can be exercised alternatively, but, it cannot be
said that while exercising power of rectification, the authority can
simultaneously exercise the power of review.
17.
Both
the aforesaid two decisions which were rendered while considering taxation laws
are squarely applicable to the facts of the present case. It is also now an
established proposition of law that review is a creature of the statute and
such an order of review could be passed only when an express power of review is
provided in the statute. In the absence of any statutory provision for review, exercise
of power of review under the garb of clarification/modification/correction is not
permissible. In coming to the said conclusion we are fortified by the decision
of this Court in Kalabharati Advertising v. Hemant Vimalnath Narichania and Others
reported in
18.
Section
37 of the Act of 1994 provides for a power to rectify any mistake apparent on the
record. Such power is vested on the authority to rectify an obvious mistake
which is apparent on the face of the records and for which a re- appreciation of
the entire records is neither possible nor called for. When the subsequent order
dated 22.01.2009 passed by the Taxation Board is analysed and scrutinised it would
be clear/apparent that the Taxation Board while passing that order exceeded its
jurisdiction by re-appreciating the evidence on record and holding that there
was no mala fide intention on the part of assessee-respondent for tax evasion. Such
re-appreciation of the evidence to come to a contrary finding was not available
under Section 37 of the Act of 1994 while exercising the power of rectification
of error apparent on the face of the records.
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19.
Thus,
the orders passed by the Taxation Board on 22.01.2009 as also the impugned order
and judgment passed by the High Court upholding the said order of the Taxation
Board are hereby set aside and quashed and the original order passed by the
Assessing Officer is restored.
20.
In
terms of the aforesaid observations, the present appeal is allowed but without
costs.
............................J
[ Dr. Mukundakam Sharma ]
.............................J
[ Anil R. Dave ]
New
Delhi,
March
29, 2011.
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