2021 (7) TMI 838 - HC - VAT and Sales Tax

Validity of NIL demand assessment order - non-availability of documents - benefit of concessional tax - Inter-State sale of goods - sales during the course of transit - HELD THAT - There was a Nil Assessment Order passed under the CST Act, 1956 in favour of the petitioner for the year 2009-10 by the 3rd respondent - This order had been revised by 2nd respondent under Section 32 of the Telangana VAT Act, 2005 r/w Section 9(2) of the CST Act, 1956, and the 2nd respondent withdrew allegedly incorrect exemption/concessional rate allowed to the petitioner to the tune of ₹ 2,19,10,137/-. The finding of the Deputy Commissioner (CT), Secunderabad Division, Hyderabad that only clerical or arithmetical mistake apparent from the record are liable to be corrected under Rule 60 is unexceptionable - there are no error in the order passed by the 2nd respondent warranting interference by us in exercise of jurisdiction under Art. 226 of the Constitution of India. Petition dismissed.

Summary

Issues:
Assessment under CST Act for the year 2009-10, Revision of assessment order, Application under Rule 60 of Telangana VAT Rules, Rejection of application under Rule 60, Clerical and arithmetical mistakes in assessment order.

Assessment under CST Act for the year 2009-10:
The petitioner, engaged in the business of manufacturing and trading machinery, was assessed under the CST Act for the year 2009-10 by the 3rd respondent, resulting in a NIL demand assessment order. Subsequently, the 2nd respondent issued a show cause notice proposing to revise the assessment order due to non-availability of documents related to concessional tax on Inter-State sale of goods and sales during transit.

Revision of assessment order:
After the petitioner submitted written submissions, the 2nd respondent rejected their contentions and passed an order confirming the proposed levy under the show cause notice. The petitioner initially challenged this in a Writ Petition before withdrawing it with liberty to file an application under Rule 60 of the Telangana VAT Rules before the 2nd respondent.

Application under Rule 60 of Telangana VAT Rules:
The petitioner filed an application under Rule 60, arguing that the assessment order should be set aside as the 2nd respondent had levied tax on transit sales not covered by 'C' declaration forms, resulting in double taxation. The 2nd respondent issued a show cause notice questioning the application under Rule 60, leading to detailed explanations by the petitioner on the errors in the assessment.

Rejection of application under Rule 60:
Despite the petitioner's explanations, the 2nd respondent refused to exercise power under Rule 60, citing that only clerical and arithmetical mistakes can be rectified under the rule. The 2nd respondent emphasized that rectification under Section 32 of the Act differs from reassessment under Section 21(5) and can only address arithmetical or clerical errors.

Clerical and arithmetical mistakes in assessment order:
The Writ Petition challenged the rejection of the application under Rule 60, arguing that it was contrary to law. The court analyzed the facts, including the revision of the assessment order withdrawing incorrect exemptions, and upheld the 2nd respondent's decision, stating that only clerical and arithmetical mistakes are rectifiable under Rule 60. The court found no error warranting interference under Article 226 of the Constitution of India, leading to the dismissal of the Writ Petition.