2015 (3) TMI 914 - HC - VAT and Sales Tax

Rectification of mistake - Review of Tribunal's own order - Held that - Tribunal completely omitted from consideration the first proviso to Clause (b) of Sub-section 3 of Section 36. That proviso enabled the Appellate Authority to remit the whole or any part of the interest payable in respect of any period. It was that power which was invoked and exercised. Once the powers were exercised on the satisfaction that the dealer had financial difficulties, the manufacturing operations had come to a standstill, then, there was no case made out for Rectification. For there was no mistake and apparent on the face of the record which required any correction. - Tribunal exercised powers of review which it did not possess and recalled its earlier order in its entirety. This was impermissible in law and in the given facts and circumstances. All the questions and which have been referred for this Court's opinion and answer arise from the Tribunal's apparent mistake in reviewing its order. If there was no power conferred in it by which it could have recalled the entire order and the alleged mistakes pointed out were as if the revenue was challenging the original order delivered by the Tribunal in Appeal on merits, then, all the more we do not think that the Tribunal was justified in passing an order allowing the application of the Revenue - Decided in favour of assessee.

Issues:
1. Dismissal of second appeal by allowing Rectification Application
2. Mistake in interest calculation by Tribunal
3. Revenue's objection to interest reduction
4. Commissioner's application for Rectification
5. Invocation of Section 36(3)(b) for interest remission

Issue 1: Dismissal of second appeal by allowing Rectification Application
The Tribunal initially allowed the second appeal but later dismissed it by allowing the Rectification Application filed by the Commissioner of Sales Tax. The dealer argued that the Revenue did not object to remitting interest at 36%, and the Rectification Application nullified the earlier consent of the Revenue and Tribunal. The dealer invoked the proviso under Section 36 of the Bombay Sales Tax Act, 1959, to remit interest. The Revenue contended that the remission can only be granted in accordance with the law and objected to the reduction of interest. The High Court held that the Tribunal erred in reviewing its order and recalled it entirely, which was impermissible. The questions were answered in favor of the dealer and against the Revenue.

Issue 2: Mistake in interest calculation by Tribunal
The Tribunal directed the assessing authority to calculate interest at 36% instead of the higher rates charged earlier. The dealer and the Revenue did not object to reducing the interest to 36%. However, the Revenue later filed a Rectification Application to restore the original interest rate. The Tribunal reheard the matter and concluded that the dealer had filed an appeal for full interest remission based on financial difficulties. The High Court found that the Tribunal's recall of its earlier order was unjustified, as there was no mistake apparent on the face of the record requiring correction. The Tribunal's actions were deemed impermissible in law and the questions were answered in favor of the dealer.

Issue 3: Revenue's objection to interest reduction
The Revenue objected to the reduction of interest at 36% for the financial year 1997-98, arguing that the provision under the BST Act did not apply to that year. The Tribunal, despite the Revenue's initial no objection, recalled its order based on the Rectification Application. The High Court held that the Tribunal's recall of the order was unjustified and not supported by the law, as there was no mistake apparent on the record.

Issue 4: Commissioner's application for Rectification
The Commissioner filed a Rectification Application based on the grounds of Section 36(3)(b) provisions, seeking to restore the original interest rate. The Tribunal reheard the matter and concluded that the dealer's appeal for interest remission was based on financial difficulties. The High Court found that the Tribunal's actions were impermissible as there was no mistake apparent on the record requiring correction.

Issue 5: Invocation of Section 36(3)(b) for interest remission
The dealer sought interest remission based on financial difficulties and the Tribunal initially agreed to reduce the interest to 36%. However, the Revenue later objected through a Rectification Application, leading to the Tribunal recalling its earlier order. The High Court held that the Tribunal's recall of the order was unjustified, as there was no mistake apparent on the face of the record requiring correction. The Tribunal's actions were deemed impermissible in law, and the questions were answered in favor of the dealer.

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