2015 (4) TMI 37 - HC - VAT and Sales Tax

Imposition of penalty u/s 78(5) of the Rajasthan Sales Tax Act, 1994 - Rectification of order - Whether in the facts and circumstances of the case the Rajasthan Tax Board was justified in law in completely changing and reviewing its earlier order in rectification application which is having limited scope - Held that - Rectification implies the correction of an error or removal of defects or imperfections and could not be used to appreciate the evidence on new facts which were not placed earlier. Rectification implies an error, mistake or defect which after rectification is made right. - the order of the Tax Board, by which the order has been rectified, certainly appears to be reviewing its own order and coming to a different conclusion than what was reached by the Tax Board earlier on 27/11/2007. - Tax Board was unjustified in reviewing the order in the garb of rectification order dt.19/01/2011 - Decided in favour of Revenue.

Summary

Issues:
1. Review of earlier order by Tax Board in rectification application.
2. Justification of deleting penalty under Sec. 78(5) by Tax Board.

Issue 1: Review of earlier order by Tax Board in rectification application:

The revision petition was admitted based on substantial questions of law regarding the Tax Board's review of its earlier order in a rectification application. The petitioner argued that the Tax Board unjustly reviewed its previous decision on the same facts and material, reversing the penalty imposed under Sec. 78(5) of the Rajasthan Sales Tax Act, 1994. The petitioner contended that rectification under Sec. 33 is limited to correcting obvious mistakes and clerical errors, citing the judgment in Assistant Commercial Taxes Officer Vs. Makkad Plastic Agencies. The court observed that rectification is permissible only for apparent mistakes and not for re-evaluating evidence or reaching a different conclusion. Quoting Section 33 of the Act, the court emphasized the limited scope of rectification and the need for a mistake to be obvious and glaring for rectification to be justified.

Issue 2: Justification of deleting penalty under Sec. 78(5) by Tax Board:

The petitioner argued that the Tax Board wrongly deleted the penalty under Sec. 78(5) without valid grounds, as the declaration form ST-18A was not submitted with the goods. The court noted that the Tax Board's decision to delete the penalty was based on a review of its earlier order, which is impermissible under the law unless there is a clear and obvious mistake. Referring to legal precedents, the court highlighted that rectification should not involve re-assessment of evidence or reaching a different conclusion from the original order. The court concluded that the Tax Board's action amounted to reviewing its own decision and reaching a different outcome without sufficient grounds, leading to the revision petition being allowed in favor of the revenue.

In summary, the High Court held that the Tax Board's review of its earlier order in a rectification application was unjustified and exceeded the permissible scope of rectification under the law. The court emphasized that rectification is limited to correcting apparent mistakes and clerical errors, not for re-assessing evidence or changing conclusions. The judgment serves as a reminder of the legal principles governing rectification proceedings and the importance of adhering to the statutory limitations while exercising such powers.