2014 (3) TMI 193 - HC - VAT and Sales Tax

Denial of rectification of mistake - Rate of tax - Levy of additional sales tax without granting basic exemption of the first ₹ 10 lakhs turnover at 2% - Whether for ascertaining the rate of tax under Additional Sales Tax, the turnover for the year has to be taken and the appropriate rate of tax has to be adopted for levy of additional sales tax on the turnover upto 31.7.96 - Held that - Any order made by an authority declining to correct any alleged errors has the effect of leaving the original order intact. It is only when rectification is ordered, and as consequence, one of the parties is aggrieved by such modification, a remedy is required to be provided. For that purpose Section 55(4) of the Act has been introduced. That new sub-section (4) of Section 55 does not confer a right on an applicant who successfully seeks rectification, to file appeal or revision against the order declining to rectify. If the authority which made the original order is of the view that there are in fact no errors in the order which need to be rectified, or can be rectified under Section 55 of the Act, no further proceedings can be taken by applicant, against the refusal of the authority to make an order in favour of the person applying for rectification - Following decision of STATE OF TAMIL NADU v. SPEEDLINE AGENCIES 1997 (8) TMI 489 - MADRAS HIGH COURT - Thus, as against the order of rectification passed resulting in the modification of the original order passed, the assessee has the right of appeal before the appellate forum - Decided against Revenue.

Summary

Issues:
1. Appeal against rectification order
2. Rate of tax under Additional Sales Tax

Issue 1: Appeal against rectification order
The case involved a Tax Case Revision by the Revenue against the Tamil Nadu Sales Tax Appellate Tribunal's order for the assessment year 1996-97. The first issue was whether an appeal would lie to the Appellate Assistant Commissioner against the order of rectification. The Assessing Authority rectified the assessment under the Tamil Nadu additional sales tax to apply the correct rate of additional tax on the taxable turnover. The Appellate Assistant Commissioner, following a previous court decision, held that since the order was not made under specific provisions allowing appeal, no appeal would lie. However, the Sales Tax Appellate Tribunal allowed the appeal, stating that the rectification order was appealable as it went into the merits of the assessment. The High Court referred to previous decisions and determined that when rectification results in modifying the original order, an appeal remedy is available. Thus, the first issue was answered against the Revenue, allowing the assessee to appeal.

Issue 2: Rate of tax under Additional Sales Tax
The second issue was regarding the rate of tax applicable for the period from 1.4.96 to 31.7.96. The Tribunal agreed with the assessee that the rate of tax should be 1.5% instead of 2% as determined by the Assessing Officer in the rectification order. The Tribunal held that the correct rate was 1.5% and allowed the appeal. The Revenue challenged this decision in revision before the High Court. The court, considering previous decisions and a similar case law, found no defect in the Tribunal's order. Consequently, the Tax Case Revision was dismissed.

In conclusion, the High Court clarified the appealability of orders resulting from rectification and upheld the Tribunal's decision on the rate of tax under Additional Sales Tax for the specified period.