2007 (11) TMI 553 - HC - VAT and Sales Tax

Revision - period of limitation - Held that - As in the present case the Tribunal has held that the order of rectification passed on September 4 1984 has been passed suo motu and it was not on any application made before the assessing authority the order passed after a period of three years from May 30 1981 was barred by limitation. The revision has therefore no merit and is hereby dismissed.

Summary

Issues Involved:
1. Conflicting opinions of co-ordinate Benches regarding the interpretation of Section 22 of the U.P. Sales Tax Act, 1948.
2. Whether the rectification order passed beyond the period of three years was valid.
3. Applicability of the first proviso of Section 22(1) of the Act in cases of suo motu rectification.

Detailed Analysis:

1. Conflicting Opinions of Co-ordinate Benches:
The case was referred to a Division Bench due to conflicting opinions expressed in "Commissioner of Sales Tax v. India Steel Supply Company [1987] UPTC 493" and "Karam Chand Thapar v. Commissioner of Sales Tax [1980] UPTC 644". The primary issue was whether the rectification of an assessment order under Section 22 of the U.P. Sales Tax Act could be valid if done beyond three years when initiated suo motu.

2. Validity of Rectification Order Beyond Three Years:
The Tribunal had allowed the appeal, holding that the rectification order dated September 4, 1984, was barred by limitation as it was passed more than three years after the original assessment order dated May 30, 1981. The Tribunal's decision was based on the interpretation that Section 22(1) of the Act mandates rectification within three years unless initiated by an application within that period.

3. Applicability of the First Proviso of Section 22(1):
The main provision of Section 22(1) of the Act states that rectification must be done within three years from the date of the order sought to be rectified. The first proviso allows rectification beyond three years only if an application seeking rectification was made within the three-year period. The court concluded that this proviso does not apply to suo motu actions by the assessing authority.

Case Law Analysis:
- Karam Chand Thapar [1980] UPTC 644 (All): The court held that the period of limitation for rectification is three years, and the proviso extending this period applies only to applications made by dealers or interested persons, not to suo motu actions.
- India Steel Supply Company [1987] UPTC 493 (All): This case suggested that issuing a notice within three years suffices for rectification, even if the actual rectification occurs later. However, this view was not followed as it contradicted the explicit language of Section 22(1).
- Sudarsanam Iyengar & Sons [1970] 25 STC 252 (SC): The Supreme Court's interpretation of similar provisions in another statute was distinguished, emphasizing the specific language and legislative intent of Section 22(1) of the U.P. Sales Tax Act.
- Sha Vajeshankar Vasudeva and Company [1974] 34 STC 257 (Karn): The Karnataka High Court's interpretation was not followed due to differences in statutory language and legislative intent.

Conclusion:
The court determined that the decision in "India Steel Supply Company [1987] UPTC 493 (All)" was incorrectly decided, while "Karam Chand Thapar [1980] UPTC 644 (All)" laid down the correct law. Therefore, the rectification order passed on September 4, 1984, was barred by limitation as it was not based on any application made within three years but was a suo motu action.

Final Judgment:
The revision was dismissed, and the Tribunal's decision was upheld. The rectification order passed beyond the three-year period was invalid, and the parties were left to bear their own costs.