2017 (9) TMI 62 - HC - VAT and Sales Tax

Jurisdiction - rectification / revision of order - whether the First Appellate Authority was within its jurisdiction in imposing tax upon the dealer under Section 3F in proceedings under Section 22 of the U.P. Trade Tax Act? - Held that - On plain reading of Section 22 of the Act makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of Section 22, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. Mistake means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error, a fault, a misunderstanding, a misconception. Apparent means visible; capable of being seen, obvious; plain. It means open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming. A mistake which can be rectified under Section 22 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The ambit and scope of Section 22 is distinct and different, the section does not confer power of appeal or revision as contemplated under Section 9 or 10B of the Act respectively. Nor does Section 22 confer power upon the assessing authority to assess or reassess the dealer on whole or any part of the turnover of the dealer that has escaped assessment to tax or has been under-assessed or has been assessed to tax at a lower rate or any deduction or exemption has wrongly been allowed. Section 22 merely confers upon all the authorities under the Act to rectify any mistake that has crept into the order which is apparent on the face of the record. The rectification can be sought by a dealer or by a person interested which in my opinion would include the assessing authority. The assessing authority can rectify the mistake in its order on its own motion, but where the order is subjected to challenge in appeal and the appellate authority has disposed of the appeal, then in that event the assessing authority being the interested person is empowered to move an application for rectification. The second proviso requires providing opportunity of hearing to the affected party be it the dealer or the other person, meaning thereby that the expression other person would include the assessing officer. The mistake is apparent on the record of the order of the first appellate authority which was rightly rectified under Section 22 of the Act. The rectification and subsequent assessment to tax under Section 3F does not amount to review/revision but a rectification of mistake apparent on the record in the order of the first appellate authority in view of retrospective application of Amendment Act restoring Section 3F and validating all actions taken thereunder - revision dismissed.

Summary

Issues Involved:
1. Jurisdiction of the First Appellate Authority to impose tax under Section 3F during proceedings under Section 22 of the U.P. Trade Tax Act, 1948.
2. Validity of the application under Section 22 for rectification of mistake.
3. Scope and limitations of Section 22 regarding rectification of mistakes apparent on the record.
4. Applicability of retrospective amendments to Section 3F.

Issue-wise Detailed Analysis:

1. Jurisdiction of the First Appellate Authority:
The primary issue was whether the First Appellate Authority had the jurisdiction to impose tax on the lease rent under Section 3F during proceedings under Section 22. The revisionist argued that the First Appellate Authority overstepped its jurisdiction by imposing tax on lease rent, which was not initially assessed by the Assessing Authority. The court found that the appellate authority was within its jurisdiction to rectify an apparent mistake in the order, especially given the retrospective validation of Section 3F by U.P. Act 11 of 2000.

2. Validity of the Application under Section 22:
The revisionist contended that the Assessing Authority was not an "interested person" under Section 22 and thus could not file for rectification. The court rejected this argument, clarifying that the term "interested person" includes the Assessing Authority. The court emphasized that Section 22 allows any officer or authority to rectify mistakes apparent on the record, and the Assessing Authority's application was valid.

3. Scope and Limitations of Section 22:
The court elaborated on the scope of Section 22, stating that it permits rectification of mistakes that are patent and obvious from the record. It does not allow for revision or review of the order. The court cited multiple precedents, including Deva Metal Powders (P) Ltd. vs. Commissioner, Trade Tax, Uttar Pradesh, to emphasize that a mistake apparent from the record must be self-evident and not require elaborate argument or investigation. The court concluded that the error in not applying Section 3F, which was retrospectively validated, was a mistake apparent on the record and thus rectifiable under Section 22.

4. Applicability of Retrospective Amendments:
The court noted that the retrospective amendment by U.P. Act 11 of 2000 validated all actions taken under Section 3F between 1 May 1987 to 1 March 1997. The court held that the First Appellate Authority correctly applied this retrospective amendment to rectify the mistake. The court cited Commissioner Sales Tax, U.P. vs. S/s Hind Lamps Ltd. Shikohabad, which supported the principle that orders must be rectified to conform with retrospective amendments.

Conclusion:
The court dismissed the revision, affirming that the First Appellate Authority acted within its jurisdiction to rectify the mistake under Section 22. The rectification was deemed lawful and did not amount to a revision or review but was a correction of an apparent mistake due to the retrospective validation of Section 3F. The court upheld the imposition of tax on the lease rent, validating the actions taken by the appellate and assessing authorities.