2010 (9) TMI 972 - HC - VAT and Sales Tax

Whether the non-exercise of power vested in the respondent under rule 60 of the Rules has resulted in civil consequences? Held that - We have considered the factual background of the present case in the light of the ratio laid down by the Division Bench in Arora Enterprises 2010 (7) TMI 927 - ANDHRA PRADESH HIGH COURT . We do not find any error in the impugned assessment, nor we countenance the submission that there should be a notice of hearing in every case which does not fall within the ambit of the second limb of rule 60 of the Rules. Appeal dismissed.

Summary

Issues:
1. Application for rectification of assessment order under rule 60 of Andhra Pradesh Value Added Tax Rules, 2005.
2. Compliance with rules of natural justice regarding opportunity of being heard.
3. Interpretation of rule 60 of the Rules in the context of rectification of clerical or arithmetical mistakes.
4. Comparison with the decision in M.K. Venkatachalam case under the Income-tax Act, 1922.
5. Analysis of the Division Bench judgment in Arora Enterprises regarding rectification of mistakes under rule 50 of the Andhra Pradesh General Sales Tax Rules, 1957.

Analysis:

1. The petitioner, a value-added tax dealer, filed a writ petition seeking rectification of an assessment order passed by the respondent under section 4(8) of the Andhra Pradesh Value Added Tax Act, 2005. The petitioner contended that the respondent's non-exercise of power under rule 60 of the Rules had civil consequences, emphasizing the need for compliance with the rules of natural justice, especially regarding the opportunity of being heard.

2. The court considered the precedents emphasizing the requirement for quasi-judicial authorities to record reasons and provide an opportunity of being heard. However, it clarified that the compliance with the rules of natural justice is not a rigid formula to invalidate quasi-judicial actions unless prejudice is demonstrated by the petitioner due to non-compliance.

3. Rule 60 of the Rules was analyzed, highlighting that rectification of clerical or arithmetical mistakes is time-bound within four years from the order date. The rule mandates compliance with natural justice only when rectification enhances tax liability or penalty, requiring a notice and an opportunity of being heard in such cases.

4. The court distinguished the M.K. Venkatachalam case under the Income-tax Act, 1922, stating that a mistake apparent on the face of the record differs from a clerical or arithmetical mistake. The judgment clarified the scope and effect of rectification powers under different legal provisions.

5. Referring to the Division Bench judgment in Arora Enterprises, the court emphasized that rectification under rule 50 of the Andhra Pradesh General Sales Tax Rules, 1957, requires mistakes to be patent and not dependent on extensive arguments. The judgment highlighted that rectification does not involve reversing orders but correcting obvious errors apparent from the record.

In conclusion, the court dismissed the writ petition, stating that there was no error in the assessment and rejecting the argument for a notice of hearing in cases not falling within the scope of rule 60 of the Rules.