2018 (7) TMI 148 - HC - VAT and Sales Tax

Review application - modification/rectification of assessment of base year - compounding of tax under the Kerala General Sales Tax Act - Held that - It is apposite to allow these review petitions and recall the judgment, against which these applications have been impelled.

Summary

Issues:
Review of judgment regarding compounding of tax under the Kerala General Sales Tax Act based on modification in the assessment of base years.

Analysis:
The judgment in question pertains to applications for review filed by the Deputy Commissioner and other functionaries of the Commercial Taxes Department of Kerala against a Division Bench judgment confirming the dismissal of appeals. The main issue revolved around whether an order sanctioning the compounding of tax can be automatically rectified, modified, or changed due to modifications in the assessment of the base years. The appellants argued for automatic modification, while the respondents contended that such changes cannot be made after the statutory limitation period had elapsed.

During the hearing, the Bench referred to the Supreme Court judgment in Bhima Jewellery case, stating that orders of compounding are akin to concluded contracts and cannot be altered later on. However, it was later revealed that another Division Bench judgment in Kalika Hotel and Bar case had considered the same issue differently, allowing for modifications in certain circumstances. The Government Pleader argued that the judgment in question was erroneous as it did not consider the precedent set by Kalika Hotels and Bar case.

In response, the respondents' counsel cited a judgment authored by one of the judges in a different case, stating that the review petitions did not point to an error apparent on the face of the judgment but rather sought a rehearing of the case. The Court acknowledged the arguments presented and the conflicting judgments, particularly the relevance of the Supreme Court judgment in M/s Hans Steel Rolling Mill case, which emphasized treating orders of compounding as an independent regime not bound by statutory provisions.

Considering the conflicting precedents and the need for a detailed examination of the legal principles involved, the Court decided to allow the review petitions and recalled the judgment under review. Additionally, the Court noted that another judge had issued a detailed order of reference due to conflicting views in previous judgments, further justifying the decision to recall the judgment. The matters were directed to be placed before the appropriate Bench for further consideration.