2014 (4) TMI 257 - HC - VAT and Sales Tax

Exemption Certificate - Power of commissioner to rectify eligibility certificate Whether it was open to the Commissioner, Trade Tax, to rectify eligibility certificate issued by Divisional Level Committee w.r.t. grant of exemption to assessee w.e.f. 9.8.1993 after having lost the matter before Tribunal in view of its judgment dated 18.6.1999 passed in Appeal No.162/98 - Held that - The power of Commissioner to make any rectification etc. u/s 4-A(3) of Act, 1948 cannot be doubted but, when a particular issue or order or document as such has been held to be legal by an adjudicatory forum, higher is status than Commissioner, Commissioner cannot sit in appeal over said authority so as to pass an order, which has effect of altering position, as it has arrived at after decision of higher adjudicatory forum. The eligibility certificate granted by Divisional Level Committee was restored by Tribunal after setting aside an order passed by Commissioner under Section 4-A(3) of Act, 1948 - Therefore, it is the order of Tribunal, which has sustained order of Divisional Level Committee and it seized to be an order of Divisional Level Committee but its status is that of an order, correctness whereof has been adjudged by an authority, having superior power of adjudication over Commissioner and Commissioner has no jurisdiction whatsoever to say that consequence flowing after decision of Tribunal are not correct and he still can pass an order making alteration in respect to something, which has already been finalized by Tribunal - If there is any error or mistake etc., it was open to Commissioner to seek rectification/clarification/modification from Tribunal itself or order of Tribunal could have been assailed before this Court in revisional jurisdiction, but, having accepted order of Tribunal and surrendering to it, it is not open to the Commissioner to suo motu find out some error in respect to an order, which has been upheld by Tribunal and again exercise his power making modification in such order, which has effect of varying Eligibility Certificate of Divisional Level Committee though it has been upheld by Tribunal - Such power has neither been bestowed upon Commissioner by Section 4-A(3) nor can be read therein nor a bare perusal thereof I find to exist - The order passed by Commissioner was patently without jurisdiction - The revision is thus allowed - The impugned order of Tribunal is set aside - The assessee is also entitled to cost of ₹ 25,000/- - Decided in favour of the assessee.

Summary

Issues:
1. Interpretation of Commissioner's power to alter eligibility certificate after losing before Trade Tax Tribunal.

Analysis:
The case involved a dispute regarding the Commissioner's authority to amend an eligibility certificate after losing before the Trade Tax Tribunal. The applicant, an assessee, had established a new unit for manufacturing 'Toffee' and obtained an eligibility certificate for exemption from sales tax. Subsequently, the Commissioner, Trade Tax, deemed the certificate invalid due to the product falling within a prohibited list. However, the Tribunal later overturned the Commissioner's decision, reinstating the eligibility certificate. Despite this, the Commissioner unilaterally issued a notice to modify the certificate, changing the commencement date of exemption. The Tribunal upheld the Commissioner's power to make alterations, rejecting the principle of res judicata or estoppel in Section 4-A(3) proceedings.

The High Court analyzed the situation, emphasizing that once an order has been confirmed by a higher adjudicatory forum like the Tribunal, the Commissioner cannot unilaterally alter it. The Court highlighted that the Tribunal's decision elevated the status of the eligibility certificate, making it beyond the Commissioner's jurisdiction to modify. The judgment underscored that the Commissioner should have sought clarification or modification from the Tribunal itself if there were any errors. It was deemed impermissible for the Commissioner to unilaterally amend a finalized order, especially after accepting the Tribunal's decision.

The Court further noted that the Commissioner's actions lacked legal basis and jurisdiction. It emphasized that the power granted under Section 4-A(3) did not extend to altering decisions already upheld by superior adjudicatory bodies. The judgment concluded in favor of the assessee, holding that the Commissioner's order was without jurisdiction. Consequently, the revision was allowed, the Tribunal's order was set aside, and the assessee was awarded costs amounting to Rs.25,000.