Agrawal Wood Products vs Commissioner, Trade Tax

Satish Chandra, J.—Both the trade tax revisions have been filed u/s 11 of the U.P. Trade Tax Act, 1948, against the order dated September 25, 2004, passed by the Trade Tax Tribunal, Lucknow, in Appeal Nos. 523 and 524 of 2002 for the assessment years 1997-98 and 1998-99, respectively. The brief facts of the case are that the revisionist is a manufacturer of the timber items. The assessing officer has passed the orders u/s 22 (rectification orders) on May 11, 2001 and May 5, 2001 whereby he has levied tax at 15 per cent on timber. However, in the first appeal, the first appellate authority has considered Notification No. T.I.F.-2-2375/XI-9(251)/97-U.P. Act-15-48-Order-98, dated November 23, 1998, where with effect from December 1, 1998, the timber was declared as taxable items at 15 per cent (entry No. 76). So, he considered that for the assessment year 1997-98, the items are not taxable; and for the assessment year 1998-99 for only four months, i.e., December 1, 1998 to March 31, 1999, the items are taxable at 15 per cent. Finally, he reduced the tax demand for the abovementioned assessment years.

Not being satisfied, the Department has filed an appeal before the Tribunal, who upheld the orders of the assessing officer by setting aside the order passed by the first appellate authority.

Being aggrieved, the revisionist has filed the present revisions.

With this backdrop, Sri Pradeep Agrawal, learned counsel for the revisionist, submits that as per notification (supra) for the assessment year 1997-98, timber item was not taxable at all. For the assessment year 1998-99, only four months, the items are taxable as the same were brought under the clutches of tax with effect from December 1, 1998.

He also submits that rectification orders cannot be passed by the assessing officer in the absence of any relevant material as per ratio laid down in Deva Metal Powders Pvt. Ltd. Vs. Commissioner, Trade Tax, U.P., , where it was observed that the mistake must be apparent on the face of record. To this effect, he reads out the following paras of the judgment, which are as under (pages 755 and 756 in 10 VST):

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 u/s 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 u/s 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 u/s 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. Vs. State of Orissa and Another, , 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.

''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 u/s 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.

On the other hand, Ms. Madhurima Bhargava, learned standing counsel, has justified the impugned order passed by the Tribunal. She submits that the assessing officer has rightly passed the order u/s 22 of the Trade Tax Act.

After hearing both the parties and on perusal of the material available on record, it appears that as per notification (supra) for the assessment year 1997-98, no tax can be levied as the timber was not taxable item.

For the assessment year 1998-99, only for four months (December 1, 1998-March 31, 1999), the sale of timber or its items are subject to the tax at 15 per cent, as the said notification is applicable with effect from December 1, 1998.

In view of above, I set aside the impugned order passed by the Tribunal for the assessment year 1997-98; and modified it for the assessment year 1998-99 to the effect that the assessing officer will pass a fresh order pertaining to the levy of tax on the sale of timber for the period of December 1, 1998 to March 31, 1998 (four months) after examining the record, but within a period of three months after receipt of a certified copy of this order, as the matter is too old.

The Trade Tax Revision No. 324 of 2004, for the assessment year 1997-98 is allowed; and the Trade Tax Revision No. 325 of 2004 for the assessment year 1998-99 is partly allowed. No cost.