D.S. Solanki vs The Maharashtra Sales Tax Tribunal and Others

B.R. Gavai, J.—Rule. Rule made returnable forthwith. By consent heard forthwith.

The petition challenges the order passed by the learned Sales Tax Tribunal dated 4.6.2007 in Rectification Application Nos. 15, 16 and 17 of 2005 field by the Respondent-Revenue thereby allowing the Rectification Applications.

In the present case, we are concerned with the assessment for the years 1993-94, 1994-95 and 1995-96. It is the contention of the petitioner that in the year 1999, the Revenue Authorities had initiated reassessment proceedings in respect of resale claim in respect of purchases from the vendors of the petitioner. Vide order dated 30.3.1999, re-sale claim allowed in respect of purchases from vendors was disallowed. Similarly vide orders dated 31.3.1999 and 29.11.1999, re-sale claim in respect of the assessment period 1994-95 and 1995-96 was also disallowed. Being aggrieved by the said orders, three appeals were preferred. Vide order dated 9.3.2001, the Appellate Authority dismissed the appeals and confirmed the orders passed by the first Appellate Authority. Being aggrieved thereby, three appeals were preferred before the learned Appellate Tribunal. The learned Tribunal vide order dated 29.1.2005, allowed the appeals and set aside the order passed by the Original Authority as well as the first Appellate Authority. The Revenue thereafter preferred the rectification applications, as aforesaid, which are allowed by the impugned order. Being aggrieved thereby, the present petition.

Shri Thakkar, learned counsel appearing on behalf of the petitioner submits that the scope of rectification application, as provided under Section 62 of the Bombay Sales Tax Act, is very limited. The learned counsel submits that the said powers can be exercised only for rectification of any mistake apparent from the record. The learned counsel further submits that by invoking the powers under Section 62 , the Tribunal cannot direct retrial. Shri Thakkar relies on a Judgment of the Apex Court in the case of Deva Metal Powders Pvt. Ltd. Vs. Commissioner, Trade Tax, U.P., (2008) 1 CLT 856 : (2008) 221 ELT 16 : (2007) 13 JT 400 : (2008) 2 SCC 439 : (2007) 12 SCR 893 : (2008) 9 STR 113 : (2007) 10 VST 751 and the order passed by the learned Division Bench of this Court in Writ Petition No. 2087 of 2012 (M/s. Lok Mangal Agro industries Limited and Anr. v. The President, Maharashtra Sales Tax Tribunal and Anr.) dated 15.7.2014.

Smt. Helekar, learned AGP appearing for the Revenue, on the contrary, submits that the learned Tribunal has given sound and cogent reasons while passing the impugned order. The learned AGP for Revenue submits that the perusal of the impugned order would reveal that while deciding the Reference, an error apparent was committed by the learned Tribunal and as such, it was a fit case for exercise of jurisdiction under Section 62 of the said Act. The learned Counsel submits that since the order in Reference itself was passed on erroneous footing, the Tribunal has rightly allowed the rectification applications directing the Reference to be decided afresh. The learned AGP relies on a Judgment of the Division Bench of this Court in the case of Commissioner of Sales Tax Vs. Maharashtra Sales Tax Tribunal and Others, (2004) 137 STC 1 .

Their Lordships of the Apex Court in the case of Deva Metal Powders Pvt. Ltd. (cited supra) had an occasion to consider a pari materia provisions in U.P. Trade Tax Act. The Apex Court while considering the said provisions has observed thus:--

"This Court in M/s. Thungabhadra Industries Ltd. (in all the Appeals) v. The Government of Andhra Pradesh represented by the Thungabhadra Industries Ltd. Vs. The Government of Andhra Pradesh, AIR 1964 SC 1372 : (1964) 5 SCR 174 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."

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 and Others Vs. Millikarjun Bhavanappa Tirumale, AIR 1960 SC 137 : (1960) 1 SCR 890 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."

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. Vs. State of Orissa and Another, AIR 1966 SC 1047 : (1966) 3 SCR 99 : (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.

"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."

In the said case, initially, the assessee was assessed for the aluminum powder treating the same as a metal and as such holding him liable to pay tax at 2.2 %. In the rectification proceedings, it was held that the relevant entry would not include aluminum powder and as such the same was assessed treating the same to be an unclassified item. In this background, the aforesaid observation is made by the Apex Court. It has been held by the Hon''ble Apex Court that in order to attract the provisions of the Act, the mistake must exist and the same must be apparent from the record. It has been held that "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; to make an error in interpreting. It has been further held that a mistake which can be rectified under section 22 is one which is patent, obvious and whose discovery is not dependent on argument or elaboration. However, the Apex Court itself has held that the power under Section 22 of the said Act is not confined to clerical or arithmetical mistake. It is further held that it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. The Apex Court thus held that there cannot be hard and fast rule as to whether mistake is apparent or not and the same would be mostly subjective and the dividing line in border areas is thin and indiscernible. It has been further held that a decision on debatable point of law or fact or failure to apply the law to a set of facts which remain to be investigated, cannot be corrected by way of rectifications.

In this background, let us examine as to whether the learned Tribunal has committed an error or not in exercising the powers under Section 62 of the said Act which are analogous to Section 22 of the U.P. Trade Tax. It will be relevant to refer to following observation of the learned Tribunal:--

"It appears that the impugned judgment is given on the footing that the appellant was originally assessed for the said periods under section 33(3) of the Bombay Act, on the basis of verification of the appellant''s books of accounts produced in the assessment proceeding and accordingly the resale claim was allowed in the assessments. After these assessments, the appellant''s place of business was visited by the Enforcement Branch Officers for certain investigation, in which the visiting officers seized the appellant''s books of accounts for the particular periods. Thereafter the concerned Ward Officer visited the office of the Enforcement Branch Officer, verified the appellant''s books of accounts which were in possession of the Enforcement Branch Officer, and thereafter on the basis thereof, issued reassessment notices, thereby proposing to pass necessary reassessment orders so as to withdraw the resale claims. It is on these facts, that the Fourth Bench held that the initiation of the reassessment was without any jurisdiction and hence the reassessment orders were bad in law. It is, now pointed out by the revenue through the rectification applications that so far as the periods 1993-94 and 1994-95 are concerned, the assessments were not made under section 33(3) of the Bombay Act. The assessments were made under section 33(2) by acceptance of the returns. In other words, the books of accounts for the relevant periods were earlier never produced before the Ward Officer and therefore, there was no question of the Ward Officer''s having allowed the resale claim on the basis of verification of the appellant''s books of accounts. Similarly, so far as the period 1995-96 is concerned, the appellant was not assessed by the Ward officer when the Enforcement Branch Officer completed his investigation. At that time, the assessment for the period 1995-96 was pending before the Ward Officer. Therefore, the assessment for the period 1995-96 was pending before the Ward Officer. Therefore, the assessment proceeding for that period were transferred from the Ward Officer to the Enforcement Branch Officer and it is the Enforcement Branch Officer who completed the assessment under section 33(3) of the Bombay Act. In other words, so far as the period 1995-96 is concerned, no reassessment as such is made. What is agitated is assessment itself under section 33 as passed by the Enforcement Branch officer. According to the revenue, the impugned judgment is thus based on these factual inaccuracies which have a bearing on the final decision, and therefore, necessary rectification under section 62 may be made. Mr. Surte representing the opponent dealer admitted that the original assessments for the periods 1993-94 and 1994-95 were made under section 33(2) and not under section 33(3) as mentioned in the impugned judgment. He also admitted that the matter for the period 1995-96 does not involve reassessment and that the said matter had arisen from the assessment itself as passed by the Enforcement Branch Officer. According to him, these inaccuracies have crept in because the Tribunal''s judgment was mainly with reference to the facts involved in the matter relating to the period 1992-93. He, however, submitted that these factual inaccuracies are in the first appeal order itself, and therefore, the Tribunal cannot be blamed for the said inaccuracies having reflected in the impugned judgment. He also asserted that these inaccuracies have no bearing on the final judgment."

It would thus be seen that the learned Tribunal while deciding the Second Appeal proceeds on a footing that the assessment in question was made under Section 33(3) of the said Act. However, the assessments were made in fact under Section 33(2) of the said Act. It could further be seen that even the lawyer who was representing the petitioner before the learned Tribunal in the rectification application, himself admitted that the original assessments were made under Section 33(2) and not under Section 33(3) of the said Act. The learned counsel further admitted that the period for 1995-96 does not involve reassessment and the said matter had arisen from the assessment itself. The learned counsel fairly stated that the inaccuracies have crept in the order passed by the learned Tribunal, since the inaccuracies are in the first appeal itself. It could thus be seen that in the facts of the present case, though the assessments were made under Section 33(2) and not under Section 33(3), the Second Appeals were decided on an assumption that the assessments were done under Section 33(3). It can thus be seen that the error which has been committed is on an erroneous assumption of fact. It is further to be noted that it is not even disputed by any of the parties that the error committed by the learned Tribunal is on an erroneous assumption of fact. These errors are such which can be seen with a necked eye. The errors are not of such a nature which would require detailed arguments to be advanced or a complicated process of investigation to be gone into, so as to unearth them. Any person with some understanding of law, can easily make out these errors. Not only that, but the learned counsel appearing on behalf of the assessee in the rectification proceedings has also admitted that these errors have occurred in the order of which rectification is sought. In that view of the matter, we find that it cannot be said that the jurisdiction exercised by the learned Tribunal was exercised beyond the scope available to it under Section 62.

Insofar as the contention of the learned counsel that the learned Tribunal cannot recall the order is concerned, the Division Bench of this Court in the case of Commissioner of Sale Tax, Mumbai v. Maharashtra Sales Tax Tribunal, Mumbai (cited supra), after considering the relevant provisions of law, has held thus:--

"Accordingly, we hold that in appropriate cases where the error apparent on the face of the record goes to the root of the matter and to eliminate that error, if it becomes necessary to recall the order, the concerned authority is entitled to do so. We would like to make it clear that the power of recall cannot be resorted to review the order in the garb of rectification."

We are in respectful agreement with the observations of the Division Bench. It can thus clearly be seen that the learned Tribunal is very much justified in directing its earlier order to be recalled and directing the appeals to be heard after their restoration in accordance with the basis of accurately recorded facts. No doubt, as held by the Division Bench, the power of recall cannot be resorted to review the order in the garb of rectification. However, if the learned Tribunal has passed the order on the basis of incorrect factual position, the learned Tribunal can very well pass the order after recording the correct factual position.

Insofar as the order passed by the learned Division Bench in W.P. No. 2087 of 2012 is concerned, we find that the Division Bench, in the facts of the said case, found that the order passed by the learned Tribunal was not justified. It was found that the learned Tribunal while allowing the rectification application itself had dismissed the rectification application and as such in the facts of the case, the aforesaid order was passed by the Division Bench. We find that the said order would not be applicable to the facts of the present case.

In the result, the Petition is found to be without substance. Petition is dismissed. Rule is discharged.