2011 (3) TMI 1415 - SC - VAT and Sales Tax

Revision petition - rectification/amendment - assessing officer holding that articles sold by the assessee-respondent, should be levied sales tax at 10 per cent instead of eight per cent, treating them as separate articles from plastic goods/products - Deputy Commissioner (Appeals), set aside the demand for difference of tax imposed at two per cent as also the penalty and interest - Taxation Board set aside order passed by the Deputy Commissioner (Appeals), and restored order passed by the tax assessing officer - assessee-respondent thereafter filed a rectification/amendment application purportedly under section 37 of the Act - Taxation Board modified its earlier order that since no such evidence is available on record from which it could be established that the assessee-respondent had the mala fide intention behind recovering the tax at the rate of eight per cent, the order of levying penalty is not justifiable Held that - Taxation Board while passing that order exceeded its jurisdiction by re-appreciating the evidence on record and holding that there was no mala fide intention on the part of assessee-respondent for tax evasion. Such re-appreciation of the evidence to come to a contrary finding was not available under section 37 of the Act of 1994 while exercising the power of rectification of error apparent on the face of the records, orders passed by the Taxation Board on January 22, 2009 as also the impugned order and judgment passed by the High Court upholding the said order of the Taxation Board are hereby set aside and quashed and the original order passed by the assessing officer is restored, appeal is allowed

Summary

Issues Involved:
1. Classification of "thermo ware" and "vacuum ware" for tax purposes.
2. Jurisdictional error by the Taxation Board under Section 37 of the Rajasthan Sales Tax Act, 1994.
3. Legality of the penalty imposed on the assessee-respondent.

Issue-wise Detailed Analysis:

1. Classification of "thermo ware" and "vacuum ware" for tax purposes:
The primary issue was whether "thermo ware" and "vacuum ware" should be taxed at the rate applicable to plastic goods/products (8%) or as separate articles at a higher rate (10%). The assessing officer initially concluded that these items should be taxed at 10%, treating them as distinct from plastic goods. This decision was challenged by the assessee-respondent and set aside by the Deputy Commissioner (Appeals), who ruled in favor of the assessee, applying an 8% tax rate. However, the Rajasthan Taxation Board, upon appeal, reinstated the assessing officer's decision, emphasizing that "thermo ware" and "plastic goods" are different articles, supported by invoice evidence. The High Court upheld this view, leading to the present appeal.

2. Jurisdictional error by the Taxation Board under Section 37 of the Rajasthan Sales Tax Act, 1994:
The Taxation Board later modified its order under Section 37, which allows rectification of mistakes apparent on the record. The appellant contended that the Board overstepped its jurisdiction by re-evaluating evidence and concluding that there was no mala fide intention by the assessee, thereby nullifying the penalty. The Supreme Court examined Section 37, emphasizing that it permits correction of obvious errors but does not allow for re-appreciation of evidence or review of decisions. Citing precedents, the Court reiterated that rectification is limited to correcting clear mistakes and does not extend to revisiting the merits of the case.

3. Legality of the penalty imposed on the assessee-respondent:
Initially, the assessing officer imposed a penalty along with the tax difference, which was later nullified by the Taxation Board on grounds of lack of mala fide intention by the assessee. The Supreme Court scrutinized whether the Taxation Board had the authority to re-assess the evidence and remove the penalty under Section 37. The Court concluded that the Board's action exceeded the scope of rectification, as it involved re-evaluating the intent behind the tax declarations, which is beyond the purview of correcting an apparent mistake. The Supreme Court thus quashed the Board's subsequent order and reinstated the original assessment and penalty imposed by the assessing officer.

Conclusion:
The Supreme Court set aside the Taxation Board's order dated January 22, 2009, and the High Court's judgment upholding it, restoring the original order of the assessing officer. The appeal was allowed without costs, reaffirming the tax rate of 10% on "thermo ware" and "vacuum ware" and the associated penalties.