2015 (9) TMI 255 - HC - VAT and Sales Tax

Applicability of relevant Notification during assessment Invocation of power under section 22 On basis of inter-state sale effected to buyers in State of Uttar Pradesh, transaction would not attract any tax This was done on basis of Form C made available by respondent dealer but later on, power under Section 22 of UP Trade Tax Act, 1948 was invoked and tax at rate of 2.5% was levied Tribunal disapproved resort to section 22 and allowed appeal Held that -Respondent submitted that as on date of sale relevant notification would be notification issued by State of U.P. dated 30th October, 2001 and in respect of transactions which took place thereunder, rate of tax is Nil in regard to sales against Form 3-B AO sought to revisit assessment on basis that notification dated 07.02.2000 would be notification which is applicable If original assessment was afflicted with error apparent, undoubtedly, power under section 22 could have been exercised That, in turn, would depend upon question as to whether word in notification is susceptible of only one meaning As noticed, present debate is that notification is capable of another meaning, then matter passes from realm of being undisputed to realm of dispute If that being so, revenue would not have authority to correct any kind of mistake but only mistake which is apparent on face of record Therefore, view taken by Tribunal does not suffer from any infirmity Decided against revenue.

Summary

Issues:
1. Interpretation of notification regarding tax rate on inter-state sales.
2. Application of Section 22 of the Act for rectification.
3. Jurisdiction of the assessing officer to correct errors in assessment.

Issue 1: Interpretation of Notification
The case involved a dispute regarding the interpretation of notifications issued by the State of Uttar Pradesh and Uttarakhand concerning the tax rate on inter-state sales. The respondent assessee, a wood dealer, had made sales to dealers in Uttar Pradesh, leading to a tax assessment at a rate of 2.5%. The State argued that a subsequent notification reducing the tax rate to Nil was not applicable to Uttarakhand. The High Court analyzed the notifications and held that the original notification specifying the tax rate would apply at the time of sale, emphasizing the importance of the wording in the notifications. The court concluded that the assessing officer erred in revisiting the assessment based on an incorrect notification, leading to the dismissal of the State's appeal.

Issue 2: Application of Section 22 for Rectification
The State sought to rectify the assessment by invoking Section 22 of the Act, which allows for correction of apparent errors. The State contended that the assessing officer should have corrected the error in applying the correct notification. However, the respondent argued that Section 22 cannot be used for matters open to debate. The High Court referred to a Supreme Court judgment emphasizing that Section 22 applies only to errors apparent on the face of the record, not to disputable matters. The court held that since the interpretation of the notification was debatable, Section 22 could not be invoked, and the Tribunal's decision to disallow rectification was upheld.

Issue 3: Jurisdiction of Assessing Officer
The assessing officer's jurisdiction to correct errors in the assessment was a key aspect of the case. The court highlighted that the officer's power to rectify mistakes is limited to those that are apparent and not subject to debate. The court emphasized that if an issue is disputable, the officer cannot use Section 22 for rectification. In this case, the court found that the assessing officer's attempt to correct the assessment based on differing interpretations of the notification was not a clear error but a matter of debate. Therefore, the Tribunal's decision to disallow rectification was deemed appropriate, and the revision was dismissed.

In conclusion, the High Court's judgment in this case clarified the application of notifications, the limitations of Section 22 for rectification, and the jurisdiction of assessing officers in correcting errors. The decision underscored the importance of clear and unambiguous legal provisions in tax assessments and upheld the Tribunal's ruling against rectification in this context.