1990 (10) TMI 336 - HC - VAT and Sales Tax

Summary

Issues:
1. Rectification of assessment order due to clerical mistake.
2. Failure of assessing authority to rectify the mistake.
3. Petitioner seeking correction of tax calculation.
4. Applicability of Rule 50 of the A.P. General Sales Tax Rules, 1957.
5. Granting of exemplary costs to the petitioner.

Analysis:
The High Court of Andhra Pradesh, in a judgment delivered by Lakshmana Rao, J., addressed the issue of rectification of an assessment order due to a clerical mistake. The respondent had passed an assessment order taxing a net turnover and levying tax, including an item taxable at 3.5%. However, a mistake in computing the tax amount led to an erroneous tax levy of Rs. 87,713.15 instead of Rs. 8,771.31. The petitioner promptly brought this error to the assessing authority's attention within days of receiving the assessment order, as per Rule 50 of the A.P. General Sales Tax Rules, 1957. Despite multiple reminders and representations, the assessing authority failed to rectify the mistake for over four years, leading to hardship for the petitioner.

The Court found that the assessing authority had indeed committed a clerical error in computing the tax and unjustifiably refused to correct it even after being notified promptly by the petitioner. Consequently, the Court set aside the impugned order and held that the petitioner was liable to pay only Rs. 8,771.31 instead of the erroneous amount of Rs. 87,713.15. The respondent was deemed not entitled to recover tax exceeding the correct amount on the turnover in question. The assessment order for the relevant year was modified accordingly, and the demand notice was adjusted.

In light of the authority's failure to act on the mistake despite ample notice, the Court deemed it appropriate to award exemplary costs to the petitioner against the department. The respondent was directed to pay Rs. 1,000 to the petitioner as costs in the writ petition. Additionally, the petitioner was given the option to seek refund or adjustment of any excess tax paid beyond the corrected amount. The writ petition was allowed with costs, emphasizing the importance of timely rectification of errors in assessment orders to prevent undue hardship on taxpayers.