2016 (9) TMI 662 - HC - VAT and Sales Tax

Imposition of Section 31 of VAT Act - rectification - tax liability - 3% or 4% - Entry No. 10 of the Schedule - is subsequent view taken by authority with regard to application of another entry be said to be a case of rectification so as to attract Section 31 of VAT Act, or a case of escaped assessment? - Held that - Reliance is placed on M/s Deva Metal Powders Pvt. Ltd. Vs Commissioner of Trade Tax, 2007 (12) TMI 221 - SUPREME COURT OF INDIA . There is any apparent mistake so as to attract power of rectification under Section 31 of VAT Act - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to jurisdiction of notice under U.P. Value Added Tax Act, 2008 - Rectification vs. escaped assessment under Section 31 of VAT Act - Interpretation of mistake apparent from the record under Section 22 of U.P. Trade Tax Act, 1948.

Analysis:
The judgment by the Allahabad High Court involved a challenge to a notice dated 29.09.2012 issued by the Deputy Commissioner, Commercial Tax, Sector-4, Noida, under Section 31 of the U.P. Value Added Tax Act, 2008. The petitioner contested the notice on grounds of lacking jurisdiction, as the Assessing Authority had changed the tax liability from 3 percent to 4 percent under a different entry in the Schedule, leading to the issuance of the impugned notice. The petitioner argued that this change did not constitute rectification but rather an escaped assessment, citing the case law of M/s Deva Metal Powders Pvt. Ltd. Vs Commissioner of Trade Tax, U.P. 2008 NTN (Vol. 36) -4 (S.C.).

During the proceedings, the Standing Counsel for respondents acknowledged that the situation might be one of escaped assessment rather than rectification. Reference was made to the principles outlined in the case law mentioned earlier, emphasizing that rectification under Section 22 of the U.P. Trade Tax Act, 1948, requires a mistake that is apparent from the record without the need for extensive reasoning. The court reiterated that rectification does not involve replacing the original order but correcting a patent error that is visible and does not require elaborate arguments or investigation.

Drawing parallels to a similar case involving the classification of Aluminium Powder for taxation purposes, the court concluded that the change in tax rate did not constitute rectification under Section 31 of the VAT Act. The judgment highlighted that rectification must address a mistake that is manifest from the record, not a debatable legal or factual issue. Consequently, the impugned order was set aside, allowing the respondents to proceed in compliance with the law without precluding further action.

In summary, the judgment delved into the distinction between rectification and escaped assessment under tax laws, emphasizing the requirement for a mistake that is apparent from the record to invoke rectification powers. The court's analysis focused on the legal interpretation of rectification principles, highlighting the need for a clear, visible error that does not necessitate extensive argumentation for correction.