2007 (11) TMI 703 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Conflict between two coordinate Benches of the Court.
2. Period of limitation for rectification u/s 22 of the U.P. Sales Tax Act, 1948.
3. Interpretation of Sub-section (1) of Section 22 of the Act.
4. Applicability of case laws and precedents.

Summary:

1. Conflict between two coordinate Benches of the Court:
The learned Single Judge identified conflicting opinions between two coordinate Benches in "Commissioner of Sales Tax v. India Steel Supply Co." and "Karam Chand Thapar v. Commissioner of Sales Tax." The matter was referred to the Hon'ble Chief Justice, who directed it to be listed before a Division Bench.

2. Period of limitation for rectification u/s 22 of the U.P. Sales Tax Act, 1948:
The opposite party, a registered dealer, disclosed taxable sales for the assessment year 1979-80. The Sales Tax Officer initially imposed a tax at 6% but later sought to rectify this to 8%, resulting in a short levy. Proceedings u/s 22 were initiated, but the rectification was made after the three-year limitation period. The Tribunal held that the rectification order was barred by limitation as it was passed beyond three years from the original assessment order.

3. Interpretation of Sub-section (1) of Section 22 of the Act:
The main part of Sub-section (1) of Section 22 allows rectification of any mistake apparent on the record within three years from the date of the order. The first proviso permits rectification beyond three years if an application is made within the three-year period. However, this does not apply to suo motu rectification, which must be done within three years. The second proviso ensures natural justice by requiring a reasonable opportunity to be heard before enhancing assessment, penalty, fees, or other dues.

4. Applicability of case laws and precedents:
- Karam Chand Thapar (supra): Held that suo motu rectification must be done within three years, and the proviso applies only to applications made within the three-year period.
- India Steel Supply Co. (supra): Suggested that issuing a notice within three years allows rectification beyond the period, but this view was not followed.
- K.C. Thapar & Bros. (supra): Supported the view that issuing a notice within three years allows rectification beyond the period.
- Sudarasam Iyengar & Sons (supra): Interpreted similar provisions in another context but was found not applicable due to different statutory language.
- Sha Vajeshankar Vasudeva and Co. (supra): Followed the Apex Court's decision but was not agreed upon due to different statutory language.
- Kodaikanal Motor Union (P) Ltd. (supra): Emphasized the purpose and object of the section in interpretation.
- Aditya Kumar Gulab Shanker (supra): Consistently held that rectification must be done within three years unless an application is made within that period.

Conclusion:
The Court concluded that the decision in "India Steel Company" was incorrectly decided, while "Karam Chand Thapar" laid down the correct law. The Tribunal's decision that the rectification order was barred by limitation was upheld, and the revision was dismissed. The parties were left to bear their own costs.