1986 (3) TMI 315 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of concessional tax rate under section 5(3A) of the Karnataka Sales Tax Act for goods supplied by a petitioner-firm. Rectification application under section 25A of the Act challenging the Deputy Commissioner's order revising the assessment. Determination of error apparent in the revising authority's order and the possibility of rectification under section 25A.

Detailed Analysis:
The petitioner-firm supplied polyurethane foam sheets to manufacturers for use as component parts of goods for sale within the State. The turnover for these goods was taxed at 3% under section 5(3A) when sold to registered dealers for use as component parts, while the same goods sold to others were taxed at 12%. The assessing officer initially accepted the turnover at the concessional rate but later, the Deputy Commissioner revised the assessment, withdrawing the concessional rate due to a purchaser not meeting the manufacturing requirement under section 5(3A) based on a letter from the purchaser. The petitioner filed a rectification application under section 25A, citing precedents and arguing for the restoration of the concessional rate granted initially. The Deputy Commissioner rejected the application, stating no apparent error in the order. The main contention was whether the revising authority's order could be rectified under section 25A based on the law laid down by the Court subsequent to the order (Bangalore Motor Accessories' case [1981] 47 STC 54).

The revising authority's order was challenged on the grounds that it deviated from the law established in previous court decisions, including the requirement for rectification under section 25A. The petitioner argued that the Deputy Commissioner's order was contrary to the law laid down by the Court and should be rectified to align with the precedents. The High Court Government Pleader contended that the revising authority's order was based on a different view and material, which could only be challenged through an appeal, not rectification. The question of whether there was an error apparent in the revising authority's order, justifying rectification under section 25A, was central to the case.

The Court analyzed the facts, including the petitioner's compliance with declaration requirements and the revising authority's basis for withdrawing the concessional rate. It emphasized the importance of adhering to the law established by previous court decisions in determining the rectifiability of an order under section 25A. The Court concluded that the revising authority's order could be rectified to conform with the legal precedents, allowing the writ petition and setting aside the Deputy Commissioner's order, thereby restoring the assessing officer's decision to grant the concessional rate.

In conclusion, the Court held that the revising authority's order was rectifiable under section 25A to align with the legal principles established by previous court decisions. The writ petition was allowed, and the Deputy Commissioner's order was set aside, restoring the assessing officer's decision on the concessional tax rate for the petitioner's goods.