2019 (7) TMI 1459 - HC - VAT and Sales Tax

Rectification of mistake - mistake apparent from the record - application of mind - Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in holding that while passing the original assessment order, the assessing authority has applied the rate of tax after application of mind and the same cannot be corrected under Section 31 of the Act under the heading mistake apparent on the face of record? HELD THAT - Clearly, for a mistake to be rectified by the assessing officer, it had to be a mistake found in any order that may have been passed by him at an earlier point in time. For exercise of power under section 31, there had to pre-exist an order passed by him, upon conscious exercise of his powers to make assessment/reassessment - In the present case, in absence of any order being passed by the assessing authority, either under Section 28 or 29 of the Act, it cannot be conceded to him that he had any power to make the rectification, as claimed. The alleged order sheet entry dated 09.11.2009, is a rubber stamp noting of no consequence. On that date, first, the period prescribed under section 27 of the Act had not expired. Therefore the legal fiction with respect to payment of admitted tax and his entitlement to claim ITC had itself not arisen. Even otherwise, that note remained only an expression of legal fiction contained in section 27 of the Act. It did not and it could not provide for any effect or consequence more than the legislature contemplated. Thus, it was not an assessment order for any other purpose. It would always remain limited to the twin purpose (noted above), for which it had been created by the legislature - in absence of any assessment order issued by him there existed no basis to invoke the power of rectification under section 31 of the Act, by the assessing authority. Consequently, the assessing authority never acquired any jurisdiction to issue any notice or pass any order under Section 31 of the Act. The entire exercise carried by the assessing authority was a nullity and it must therefore necessarily fall. The question of law (as framed above) is answered in the affirmative i.e. against the revenue and in favour of the assessee.

Summary

Issues:
- Interpretation of Section 31 of the U.P. VAT Act, 2008 for rectification of mistakes in assessment orders.
- Validity of rectification of tax rate from 4% to 12.5% on certain goods by the assessing authority.
- Jurisdiction of the assessing authority to rectify mistakes apparent on the face of the record.

Analysis:

Issue 1: Interpretation of Section 31 of the U.P. VAT Act, 2008
The judgment delves into the provisions of Section 31 of the Act, which allows rectification of mistakes apparent on the face of the record in any order passed under the Act. It highlights the requirement for a pre-existing order by the assessing authority for rectification under this section. The judgment emphasizes that the power to rectify mistakes is limited to orders passed by the assessing authority upon conscious exercise of their powers to make assessments or reassessments.

Issue 2: Validity of rectification of tax rate
The case involves the rectification of the tax rate on certain goods from 4% to 12.5% by the assessing authority. The assessing officer initially subjected the assessee to a differential tax rate of 8.5% through an ex parte order under Section 31, which was later recalled. Subsequently, the tax rate was set at 12.5%. The Tribunal held that this rectification amounted to a change of opinion and was impermissible. The judgment discusses the grounds for rectification and whether the mistake was apparent on the face of the record, ultimately ruling in favor of the assessee.

Issue 3: Jurisdiction of the assessing authority
The judgment scrutinizes the jurisdiction of the assessing authority to rectify mistakes in the absence of a formal assessment order under Section 28 or 29 of the Act. It highlights that the alleged order stamped by the assessing authority was a mere legal fiction created by the legislature under Section 27 of the Act. The judgment concludes that without a valid assessment order, the assessing authority lacked the jurisdiction to invoke the power of rectification under Section 31, rendering the entire exercise null and void.

In conclusion, the judgment provides a detailed analysis of the interpretation of legal provisions, the validity of rectification actions taken by the assessing authority, and the jurisdictional limitations in rectifying mistakes in the absence of formal assessment orders. The decision ultimately favors the assessee based on the grounds discussed in the judgment.