2009 (9) TMI 887 - HC - VAT and Sales Tax

Rectification application accepted by tribunal - Held that - In the present case, second application under the caption misc. application was filed on December 8, 2001. That clearly after two years of the appellate order and even after two years of the rejection of the first rectification application on October 19, 1998. The second application, assuming second application lay, was clearly barred by limitation. Therefore, the Tribunal had no power to entertain it. The impugned order therefore has to be set aside. The matter be remanded back to the Tribunal for rehearing rectification application No. 73 of 1997 filed by respondent No. 2 but only regarding the contention of respondent No. 2 that the Commissioner and the Tribunal ought to have given prospective effect to the order of the Commissioner under section 52(2) of the Act. We make it clear that the points already decided in rectification application No. 73 of 1997 shall stand concluded and would not be reopened, but on remand the Tribunal would only consider the issue regarding prospective effect to be given to the order of the Commissioner under section 52(2) of the Act. The Tribunal shall consider the same independently and without being in any way influenced by any of the observations in the impugned order dated February 28, 2002 which is hereby set aside.

Summary

Issues:
Challenge to Tribunal's decision on classification and prospective effect of sales tax order.

Analysis:
The petitioner, State of Maharashtra, challenged the Tribunal's decision allowing the respondent, a mouthwash manufacturer, to classify its product under a specific entry in the Sales Tax Act and grant prospective effect to the order. The Commissioner initially classified the product under a different entry, leading to an appeal by the respondent. The Tribunal confirmed the Commissioner's order, prompting the respondent to file a rectification application seeking prospective effect for the Commissioner's decision. The Tribunal rejected the application but later allowed a subsequent application for the same purpose, leading to the current challenge.

The Court highlighted the powers granted under the Sales Tax Act, specifically Section 52, which allows the Commissioner to determine tax rates and make decisions prospective. The Tribunal also has the authority to rectify mistakes in its orders, but such rectification must occur within two years. In this case, the Tribunal's decision to entertain a second application for rectification, seeking prospective effect, after the initial rejection was deemed without jurisdiction. The Court emphasized that successive rectification applications are not maintainable, especially when filed after the statutory limitation period.

Despite setting aside the Tribunal's decision, the Court acknowledged the need for justice and ordered a rehearing on the issue of prospective effect. It noted that the Tribunal failed to address this specific point in previous proceedings due to considering multiple appeals simultaneously. The Court directed the Tribunal to independently reconsider the prospective effect of the Commissioner's order, emphasizing that previously decided points should not be reopened. The matter was remanded back to the Tribunal for a fresh decision solely on the issue of prospective effect, without influence from the previous order.

In conclusion, the Court ruled in favor of the petitioner, setting aside the Tribunal's decision and remanding the case for a rehearing on the specific issue of granting prospective effect to the Commissioner's order. Each party was directed to bear its own costs, considering the circumstances of the case.