1987 (1) TMI 458 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Tribunal has the power to reverse its original stand under section 55 of the Tamil Nadu General Sales Tax Act, 1959.
2. Whether the Tribunal's order of reversing the addition of Rs. 10,000 to the taxable turnover is valid.

Issue 1: Tribunal's Power to Reverse Its Original Stand Under Section 55 of the Tamil Nadu General Sales Tax Act, 1959

The primary contention from the learned Government Pleader was that the Tribunal erroneously exercised its power under section 55 of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal had followed the decision in Kuppana Gounder v. Appellate Assistant Commissioner [1973] 32 STC 522 (Mad.), which was later reversed by the Division Bench in Appellate Assistant Commissioner v. N. Kuppanna Gounder [1975] 35 STC 170 (Mad.). The Revenue argued that the Tribunal should not have entertained the application under section 55 in light of the circumstances of the case and should have adhered to the decision in Kalyan Textiles v. Appellate Assistant Commissioner [1972] 29 STC 381 (Mad.).

The Tribunal had initially dismissed the appeal in T.A. No. 64 of 1977, sustaining the addition of Rs. 10,000 for non-maintenance of stock accounts. However, upon a miscellaneous petition filed under section 55, the Tribunal reversed its decision, citing an error in not following the opinion of the Main Bench in T.A. No. 399 of 1977. The Tribunal justified this reversal by referencing the decision in Kuppana Gounder v. Appellate Assistant Commissioner [1973] 32 STC 522 (Mad.), which allowed for rectification of an assessment if a subsequent court decision rendered the original levy illegal.

However, the court emphasized that the decision in Appellate Assistant Commissioner v. Kuppanna Gounder [1975] 35 STC 170 (Mad.) remained good law. This decision clarified that a statutory provision's interpretation has effect from the inception of the provision, and any error evident from such interpretation could fall within the purview of section 55. The court concluded that section 55 does not grant the Tribunal the wide power to reverse its own order based on a subsequent decision by a higher forum, as such an action would exceed the scope of rectifying an error apparent on the face of the record.

Issue 2: Validity of Reversing the Addition of Rs. 10,000 to the Taxable Turnover

The Tribunal initially upheld the addition of Rs. 10,000 to the taxable turnover due to the non-maintenance of stock accounts, as observed in T.A. No. 64 of 1977. The Tribunal's later decision to reverse this addition was based on the Main Bench's opinion that non-maintenance of stock accounts alone did not justify the rejection of accounts and the subsequent best judgment assessment.

The court scrutinized whether the Tribunal's reversal constituted a valid rectification under section 55. It was noted that "rectification" implies correcting an error or removing defects, which presupposes the existence of an error or defect in the original order. The court found that the Tribunal's reversal was not a mere rectification of an error but an overreach of its authority under section 55, as it effectively disowned its earlier judgment based on a new interpretation of a subsequent decision.

The court concluded that the Tribunal's action was not justified under section 55, as the provision does not authorize an authority to overturn its own earlier judgment under the guise of rectifying an error. Consequently, the court allowed the revision petition, set aside the Tribunal's order, and upheld the addition of Rs. 10,000 to the taxable turnover.

Conclusion:
The revision petition was allowed, and the Tribunal's order reversing the addition of Rs. 10,000 was set aside. The Tribunal's power under section 55 does not extend to reversing its own earlier judgment based on subsequent decisions, and the original addition to the taxable turnover was reinstated.