1993 (9) TMI 327 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the rectification order dated November 30, 1990, passed by the Tribunal is beyond the period of limitation and therefore without jurisdiction.
2. Whether the earlier order of the Tribunal suffers from a patent error of law which can be termed as a "mistake apparent from the record."
3. Whether on merits, the Tribunal was justified in allowing the rectification application.

Issue-wise Detailed Analysis:

Issue 1: Period of Limitation and Jurisdiction

The petitioner contended that the rectification order was passed beyond the five-year period specified under section 22(6-A) of the Karnataka Sales Tax Act, 1957, and is thus without jurisdiction. The Tribunal's original order was dated October 4, 1985, and the rectification application was filed on December 2, 1989, within four years and two months. The Tribunal passed the rectification order on November 30, 1990, beyond the five-year period from the original order date. The court analyzed section 22(6-A), which states that the Tribunal may rectify any mistake apparent from the record within five years from the date of the order. The court held that the application for rectification moved within five years is sufficient, and the Tribunal can decide the application even after the five-year period. The court cited the decision in Sha Vajeshankar Vasudeva and Company v. Assistant Commissioner of Commercial Taxes [1974] 34 STC 257, which supported this interpretation. Thus, the court concluded that the rectification proceedings were within the permissible time limit and the order was not without jurisdiction.

Issue 2: Mistake Apparent from the Record

The petitioner argued that the Tribunal's earlier decision did not suffer from a patent error of law and thus could not be rectified. The Tribunal had relied on the first McDowell case [1977] 39 STC 151, ignoring the later Constitution Bench decision in the second McDowell case [1985] 59 STC 277. The court held that ignoring a binding decision of the Supreme Court constitutes a patent error of law. The court referred to the decision in Selection Committee for Admission to the Medical and Dental College v. M.P. Nagaraj, which stated that overlooking a Supreme Court decision amounts to an error apparent on the face of the record. Therefore, the court concluded that the Tribunal's earlier decision suffered from a mistake apparent from the record, justifying rectification.

Issue 3: Merits of the Rectification Application

The Tribunal had initially allowed the appeal based on the first McDowell case, which held that excise duty paid directly by purchasers did not form part of the taxable turnover. However, the Constitution Bench in the second McDowell case overruled this decision, stating that excise duty paid by the purchaser on behalf of the manufacturer forms part of the sale price and is includible in the turnover. The court held that the Tribunal's reliance on the overruled decision constituted a patent error. The court cited the decision in Govindaraju Chetty v. Commercial Tax Officer [1968] 22 STC 46, which supported the view that ignoring a Supreme Court decision is a mistake apparent on the record. Consequently, the court found no flaw in the Tribunal's rectification order on merits and upheld the decision to include the excise duty in the taxable turnover.

Conclusion:

The court dismissed the revision petition, upholding the Tribunal's rectification order. The rectification application was within the permissible time limit, the earlier decision suffered from a patent error apparent from the record, and the Tribunal was justified in allowing the rectification application on merits.