2008 (8) TMI 862 - HC - VAT and Sales Tax

Whether the Tribunal was legally justified to refund the amount of the tax which has been realised and deposited inspite of the fact that the tax had become legally payable and section 29(3) prohibited such refund? Whether the Tribunal was legally justified to completely ignore a retrospective amendment made by U.P. Act No. 11 of 1997 regarding taxability of rectified sprit and alcohol? Whether on the facts and in the circumstances of the case, the Trade Tax Tribunal is not legally justified to accept the additional evidence by passing the order on miscellaneous appeal filed under section 22 of the Act without giving opportunity to the Department for verification or rebuttal of the evidence? Held that - The Tribunal while deciding the appeal earlier, had placed reliance upon certain decisions of the apex court and of this court as well, to take a particular view of law on the issue. The said view can be set aside or corrected in a properly constituted revision as provided by section 11 of the Act. But, in the guise of rectification application, it is not permissible to take a different view in a proceeding under section 22 of the Act even if it is wrong. A decision on a debatable point of law or disputed question of fact is not a mistake apparent on the face of the record. The order of the Tribunal passed on rectification application is indefensible and the same is liable to be set aside. The rectification application so far as it relates to the refund of ₹ 5,48,055.62 is concerned stands rejected. It may be added that by the said order the Tribunal has corrected certain mistakes in respect of three forms C. No argument was advanced by the learned standing counsel in this regard and as such, the said portion of the order of the Tribunal stands confirmed, being not subject-matter of the present revision. Revision succeeds and is allowed. The order of the Tribunal is set aside.

Issues Involved:
1. Refund of tax realized and deposited.
2. Retrospective amendment regarding taxability.
3. Acceptance of additional evidence without opportunity for verification.

Issue-wise Detailed Analysis:

1. Refund of Tax Realized and Deposited:
The primary issue revolves around whether the Tribunal was legally justified to refund the amount of tax realized and deposited, despite the tax having become legally payable and section 29(3) prohibiting such refund. The dealer-opposite party had realized and deposited Central sales tax on certain inter-State sales, which was subsequently claimed for a refund. The Tribunal initially rejected this refund claim. However, upon a rectification application, the Tribunal reversed its earlier decision and accepted the refund claim, which led to the present revision under section 11 of the U.P. Trade Tax Act, 1948.

2. Retrospective Amendment Regarding Taxability:
The second issue concerns whether the Tribunal ignored a retrospective amendment made by U.P. Act No. 11 of 1997 regarding the taxability of rectified spirit and alcohol. Although this issue was raised in the memo of revision, it was not pursued during the arguments, and hence, it was not a focal point of the judgment.

3. Acceptance of Additional Evidence Without Opportunity for Verification:
The third issue is whether the Tribunal was justified in accepting additional evidence in a miscellaneous appeal filed under section 22 of the Act without giving the Department an opportunity for verification or rebuttal. The Department argued that the application under section 22 was not maintainable as it effectively reviewed the earlier order by introducing a new ground for refund, which was not raised earlier. The Tribunal's power under section 22 is limited to rectifying mistakes apparent on the face of the record, not to re-evaluate or review the case on new grounds.

Detailed Judgment Analysis:

Refund of Tax Realized and Deposited:
The Tribunal initially rejected the refund claim based on the provisions of section 29A, which had been upheld as valid by various judicial decisions. The dealer's rectification application introduced a new ground, claiming that the tax had been refunded to purchasers through credit vouchers, which was not argued earlier. The court emphasized that rectification under section 22 is permissible only for errors apparent on the face of the record, not for new arguments or grounds that require elaborate reasoning or investigation. The Tribunal's acceptance of the new ground for refund in the rectification application was deemed beyond the scope of section 22, as it effectively reviewed and altered its original decision.

Retrospective Amendment Regarding Taxability:
Although this issue was raised, it was not argued during the proceedings. The court did not delve into this matter in detail, focusing instead on the maintainability of the rectification application and the scope of section 22.

Acceptance of Additional Evidence Without Opportunity for Verification:
The court reiterated that the scope of rectification under section 22 is limited to correcting apparent errors and does not extend to revisiting or reviewing the case on new grounds. The Tribunal's decision to accept the new ground for refund without providing the Department an opportunity for verification was found to be improper. The court cited various judicial precedents to underline that rectification is not meant for addressing debatable points of law or disputed facts, but only for correcting clear and obvious errors.

Conclusion:
The court concluded that the Tribunal's order on the rectification application was indefensible and set it aside. The rectification application concerning the refund of Rs. 5,48,055.62 was rejected. However, the Tribunal's correction of mistakes related to three forms C was confirmed, as no arguments were advanced against this part of the order. The revision was allowed, and the Tribunal's order was set aside, with no order as to costs.

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