2003 (11) TMI 82 - HC - VAT and Sales Tax

Rectification of mistake u/s 55 - taxability of a sale - Assessee purchased voltage stabilizers - HELD THAT - The Sales Tax Act was amended with effect from 17-7-1996. The amended Section 3 of the Act provides for levy of sales tax on the second sale, if the first sale has not suffered tax for any reason in cases where the point of levy is the first sale. The amendment did not cover the assessment year 1992-93. The Supreme Court in the case of Shanmuga Traders, etc. v. State of Tamil Nadu and Others 1998 (4) TMI 484 - SUPREME COURT , held that when the tax is a single point tax, the point of levy is the first sale. If the tax is not collected at that point by reason of an exemption granted by the Government, such tax could not be levied on the sale subsequently effected. After that judgment of the Supreme Court, the assessee applied for rectification of the assessment that had been made. The application of rectification was filed within the time allowed by law. While dealing with such a claim, although on facts it held that rectification was not permissible in that case, as the assessee had merely sought to argue by analogy that a decision rendered by a superior Court with reference to another provision of the same Act would govern a different provision under which it had paid that tax, in the course of the order. It is, therefore, clear that notwithstandings what may have been done by any other authority below the Supreme Court, when the Supreme Court pronounces on the true position of law any decision rendered by any other authority contrary to that is required to be regarded as an error which is apparent on the record. Rectification of such an error within the period permissible under law and in accordance with the provisions of the statute is clearly required to be effected. The impugned order of the Tribunal and other authorities, therefore, cannot be sustained. The application for rectification filed by the petitioner shall stand allowed.

Summary

Issues Involved:
The refusal of rectification under Section 55 of the Tamil Nadu General Sales Tax Act based on a subsequent Supreme Court judgment regarding taxability of a sale.

Summary:
The assessee purchased voltage stabilizers during the assessment year 1992-93 from a charitable organization exempt from sales tax. The assessing officer levied tax on the resale, considering it the first sale, despite the exemption. The Sales Tax Act was amended post the assessment year, not covering 1992-93. A subsequent Supreme Court judgment clarified that tax on a single point should not be levied if exempted at the first sale. The assessee sought rectification post this judgment, within the legal timeframe.

The assessing officer, appellate authority, and Taxation Special Tribunal rejected the rectification request, citing inability to rely on a post-assessment Supreme Court judgment. Counsel for the State referenced previous court judgments and a Supreme Court decision emphasizing that refund claims should be made under specific provisions, not based on judgments in other cases.

In contrast, the assessee's counsel highlighted a Supreme Court case allowing rectification based on a subsequent judgment. Another case discussed rectification under a similar provision in a different Act. The Court emphasized that errors contrary to Supreme Court interpretations are rectifiable within the legal timeframe and as per statutory provisions.

The Court noted that decisions of lower courts contrary to Supreme Court rulings should be rectified. Previous court decisions relied upon by the Revenue were deemed overruled by Supreme Court precedents. Consequently, the Tribunal's order and other authorities' decisions were deemed unsustainable, and the rectification application by the petitioner was allowed.