2013 (4) TMI 243 - HC - VAT and Sales Tax

Maintainability of rectification applications filed u/s 6(6) of the Kerala Tax on Luxuries Act - petitioner s submission that its establishment is a hospital and not a hotel thus inclusion of treatment expenses in the taxable turnover of hotel is erroneous - Held that - Power to rectify its order has been conferred on the assessing authority and appellate authority with the legislative mandate that the exercise of power under this Section shall be only for the purpose of rectifying errors apparent on the face of the records. Error is a mistake or deviation from accuracy or correctness. Thus if the error is so apparent that without further investigation or enquiry, only one conclusion can be drawn in favour of the applicant, such an error is one apparent on the face of the record. As in the present case order reveals that, the appellate tribunal has referred to statutory provisions and has given reasons for its conclusion that it is a hotel. Similarly, after discussion, the tribunal held that ayurvedic treatment given to the guests in the hotel is a service. As far as levy of interest is concerned, contention was that assessment was completed only when order was passed in compliance with Tribunal s order and therefore levy of interest from the assessment year concerned is illegal. Thus at best the petitioner can only say that the orders are illegal and not vitiated by errors apparent on the face of it. Therefore, the answer to the question should be in the negative.

Summary

Issues:
Whether rectification applications filed under section 6(6) of the Kerala Tax on Luxuries Act are maintainable for consideration?

Analysis:
The petitioner established an Ayurvedic Hospital but was assessed as a hotel by the 1st respondent. The Appellate Tribunal allowed the petitioner's appeals and dismissed the State's appeals. The Tribunal upheld the assessing authority's decision, treating the establishment as a hotel. It also considered Ayurvedic treatment and laundry services provided by the hotel as luxuries. The assessing authority then passed an assessment order, which the petitioner sought to rectify through applications.

The petitioner argued that treatment charges should not be included in the taxable turnover of the hotel as the establishment primarily functions as a hospital. They also challenged the levy of interest from the end of financial years in the assessment order. The Government Pleader contended that there were no errors in the orders to be rectified under section 6(6) of the Act.

Section 6(6) empowers the assessing and appellate authorities to rectify errors apparent on the face of records within three years of the order. The court clarified that rectification can only correct mistakes evident without elaborate examination. It emphasized that rectification cannot seek a rehearing or correct illegal orders.

The court assessed the petitioner's contentions regarding errors in the orders. While acknowledging the illegality of the orders, the court found no errors apparent on the face of the records warranting rectification under section 6(6) of the Act. It concluded that the orders were illegal but not vitiated by errors, and dismissed the writ petition, advising the petitioner to seek remedies against the orders in accordance with the law.