2022 (12) TMI 823 - HC - VAT and Sales Tax

Rectification of Mistake - mistake apparent from the record or not - whether the Tribunal was right in exercising power under Section 62 of the Act and analyses the facts only in this context and not for adjudicating the dispute? - HELD THAT - The language of the section would indicate that what can be rectified is mistake apparent from the record . What is the exact ambit of the phrase mistake apparent from the record that has fallen for consideration of the Honorable Supreme Court in various cases. In the case of COMMISSIONER OF CENTAL EXCISE, BELAPUR, MUMBAI VERSUS RDC CONCRETE (INDIA) P. LTD. 2011 (8) TMI 25 - SUPREME COURT after taking review of the earlier decisions on the subject, the Honorable Supreme Court observed that power to rectify a mistake should be exercised when the mistake is a patent one and should be quite obvious. Thus, the mistake apparent from the record has to be obvious and patent mistake and not the one that needs to be established by long drawn process of reasoning. As regards a ground in the rectification application based on the decision of Pee Vee Textiles, the learned Assistant Government Pleader contended that the decision in the case of Pee Vee Textiles 2008 (10) TMI 616 - BOMBAY HIGH COURT contains an elaborate discussion of facts and various factual distinctions made between the two schemes, i.e. of 1993 and 1988 have been omitted from consideration and reading of Pee Vee Textiles would clearly show that there is no legal proposition sought to be culled out by the Tribunal in the First Order as emerges from the decision of Pee Vee Textiles in respect of the 1988 Package Scheme of Incentives. The learned Assistant Government Pleader states that if Respondent No. 1 intends to take steps to challenge the order passed by the Tribunal on 18 April 2009, the issue of limitation may arise. However, this aspect will have to be decided by the court where such proceedings are presented. The concerned court will no doubt consider that it was not necessary for the Respondents to file any proceedings to challenge the First Order to date because the Respondent had succeeded in the Rectification proceedings. Petition allowed.

Summary

Issues Involved:
1. Legality of the Tribunal's exercise of power under Section 62 of the Bombay Sales Tax Act, 1959.
2. Application of pro-rata method for tax determination under the 1988 and 1993 Schemes.
3. Consideration of previous judgments and factual distinctions in the Tribunal's decisions.

Detailed Analysis:

1. Legality of the Tribunal's Exercise of Power Under Section 62:

The central issue was whether the Tribunal was right in exercising its power under Section 62 of the Bombay Sales Tax Act, 1959. Section 62 allows rectification of mistakes apparent from the record. The Court emphasized that a "mistake apparent from the record" must be an obvious and patent mistake, not one that requires a long-drawn process of reasoning. The Court referred to the Supreme Court's interpretation in cases like *Commissioner of Central Excise, Belapur* and *Honda Siel Power Products Ltd. vs. Commissioner of Income Tax*, highlighting that the rectification power is to correct manifest errors that cause prejudice due to the Tribunal's mistake, error, or omission.

2. Application of Pro-rata Method for Tax Determination:

The Petitioner contended against the application of the pro-rata method for determining tax liability, arguing that there was no expansion in respect of the entitlement certificate granted for the period from 16 April 1996 to 15 April 2004. The Tribunal initially ruled in favor of the Petitioner, stating that in the absence of any Rules under Section 41BB of the Bombay Sales Tax Act, the pro-rata basis could not be applied. The Tribunal relied on the decision in *Commissioner of Sales Tax, Mumbai vs. Pee Vee Textiles Ltd.*, which discussed the implications of the absence of rules on tax incentives.

3. Consideration of Previous Judgments and Factual Distinctions:

The Respondent filed Rectification Applications arguing that the Tribunal's decision in the case of *Pee Vee Textiles* was incorrectly applied as it pertained to the 1993 Scheme and not the 1988 Scheme. Additionally, the Tribunal allegedly failed to consider its own decision in *M/s. Balkrishna Industries Limited*, which allowed pro-rata calculation under the 1988 Scheme. The Court noted that the Tribunal, in its First Order, consciously applied what it perceived as a general proposition of law from *Pee Vee Textiles*, which it believed applied to both the 1993 and 1988 Schemes due to the absence of rules. The Court found that the Tribunal did not overlook the factual distinctions but made a conscious decision based on its interpretation of the law.

Conclusion:

The Court concluded that the Tribunal's Rectification Orders were beyond the ambit of the power conferred under Section 62 of the Act. The Tribunal had not made a mistake apparent on the record but had made a conscious decision on the application of the law. The proper recourse for the Respondents, if aggrieved by the Tribunal's decision, was to challenge the First Order rather than seek rectification. The Writ Petition was allowed, and the impugned Rectification Orders were quashed and set aside. The Court clarified that its observations were only in the context of the exercise of power under Section 62 of the Act.