1968 (10) TMI 90 - HC - VAT and Sales Tax

Summary

Issues:
Jurisdiction of Sales Tax Officer to issue notice under section 22 of the U.P. Sales Tax Act for rectification of assessment based on a change in tax rate classification from 2% to 7% for turnover of cement concrete spun pipes.

Analysis:
The petitioner, a partnership firm engaged in manufacturing and selling reinforced cement concrete spun pipes, was assessed under the U.P. Sales Tax Act for the years 1962-63, 1963-64, and 1964-65. The Sales Tax Officer initially applied a tax rate of 2% to the turnover. Subsequently, a notice was issued under section 22 of the Act proposing to rectify the assessment by applying a higher tax rate of 7% based on the classification of spun pipes as "sanitary fittings." The petitioner challenged the jurisdiction of the Sales Tax Officer to issue the notice and proceed with rectification under section 22.

The key contention revolved around the interpretation of section 22 of the Act, which allows the assessing authority to rectify any mistake apparent on the face of the assessment record within three years of the order. The Court emphasized that the provision does not permit rectification of errors of judgment but only mistakes that are evident on a simple review of the record. The decision in Sarin Textiles Mills v. Sales Tax Officer and subsequent rulings highlighted the requirement that the mistake must be apparent without the need for extensive legal or factual analysis.

The Court noted that the proposed rectification by the Sales Tax Officer, involving a reevaluation of whether spun pipes qualify as "sanitary fittings," would necessitate fresh consideration and application of mind. This indicated that the error was not manifest on the face of the assessment record but required a deeper examination. Consequently, the Court held that the Sales Tax Officer lacked jurisdiction to proceed under section 22, leading to the quashing of the notice dated 27th February 1968.

In conclusion, the petition was allowed, and a writ of certiorari was issued to quash the impugned notice under section 22 of the U.P. Sales Tax Act. The Sales Tax Officer was restrained from further proceedings based on the notice, and the petitioner was awarded costs.

This judgment clarifies the scope of rectification under section 22 of the U.P. Sales Tax Act, emphasizing the requirement for mistakes to be readily apparent on the assessment record. It underscores that errors of judgment cannot be rectified under the provision, highlighting the significance of a clear and immediate identification of mistakes for rectificatory action.