1971 (10) TMI 94 - HC - VAT and Sales Tax

Court quashes tax rectification, upholds exemption, emphasizes burden of proof on dealers.

The court quashed the rectification of the assessment order by the Commercial Tax Officer, emphasizing that rectification can only correct mistakes ... - Issues:1. Jurisdiction of the assessing authority to rectify an assessment order.2. Interpretation of the power of rectification under Rule 38 of the Mysore Sales Tax Rules, 1957.3. Application of the Central Sales Tax (Amendment) Act, 1969 to rectify an assessment order.4. Burden of proof on the dealer regarding tax collection.5. Validity of exemption under Section 10 of the Amendment Act.6. Determination of turnover liable for taxation under the amended law.Jurisdiction of Assessing Authority:The petitioners, a partnership firm, challenged the rectification of their assessment order by the Commercial Tax Officer. The court analyzed the scope of rectification under Rule 38, emphasizing that rectification can only be made for a mistake apparent on the record. It clarified that rectification cannot correct a decision on a debatable legal point or failure to apply the law to a set of facts requiring further investigation.Interpretation of Power of Rectification:The court referred to precedents under income tax laws to establish the principles governing rectification. It highlighted that rectification must be based on a mistake apparent from the record, considering the law in force at the time of the original order. The court assessed whether the power under Rule 38 could be invoked to tax the exempted turnover following the Amendment Act.Application of Central Sales Tax (Amendment) Act, 1969:The court discussed the impact of the Amendment Act, which aimed to bring inter-State sales under taxation. It examined the retrospective effect of the Act and the insertion of Section 6(1A) to supersede previous decisions. The court analyzed whether the rectification was justified based on the amended law.Burden of Proof on Dealer:The court highlighted Section 10 of the Amendment Act, which exempted dealers from tax if they had not collected any tax during a specified period. It emphasized that the burden of proving non-collection of tax rested on the dealers. The court assessed whether the petitioners had collected tax on the disputed turnover, a matter requiring investigation into fresh facts.Validity of Exemption under Section 10:The court upheld the validity of Section 10 of the Amendment Act, which provided relief to dealers who had not collected tax during a specific period. It noted that this exemption was crucial in the context of retrospective taxation and integral to the scheme of the Act.Determination of Taxable Turnover:The court examined the turnover relating to groundnut seeds and cake, considering the dates of sales and the applicability of taxation under the amended law. It differentiated between turnovers eligible for exemption and those requiring taxation based on the timeline of sales.In conclusion, the court allowed the writ petition, quashing the rectification order, as the petitioners had not proven tax collection on the disputed turnover. The judgment emphasized the importance of assessing facts under the amended law and upheld the principles governing rectification based on the law in force at the time of the original assessment order.