Rectification of assessment error and refund of excess tax collected on a wrong rate were upheld.

An obvious assessment mistake under section 43 of the Kerala General Sales Tax Act, 1963 could be rectified where rock phosphate was taxable only at 2 per cent under the First Schedule, and refusal to correct that error was not a fresh appealable assessment order. The proper remedy was revision, so the revisional authority erred in holding that no revision lay. As tax had been collected at 3 per cent on an item taxable at 2 per cent, the excess was collected without authority of law and had to be refunded.

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Issues: (i) Whether an order rejecting an application for rectification of an assessment error under section 43 of the Kerala General Sales Tax Act, 1963 was appealable or was only revisable; (ii) Whether excess tax collected on a mistaken higher rate of tax on rock phosphate was refundable.

Issue (i): Whether an order rejecting an application for rectification of an assessment error under section 43 of the Kerala General Sales Tax Act, 1963 was appealable or was only revisable.

Analysis: Rock phosphate was treated as a chemical fertiliser falling under item 54 of the First Schedule and was chargeable only at 2 per cent. The application before the assessing authority was directed against an obvious mistake in the assessment and sought rectification of the rate applied. A refusal to rectify such an error was not a fresh assessment order appealable under the Act. The proper remedy against rejection of rectification was revision, and the revisional authority erred in holding that no revision lay because the assessment was appealable.

Conclusion: The rejection of the rectification application was not appealable in the manner assumed by the authorities, and the assessee was entitled to invoke revisional jurisdiction.

Issue (ii): Whether excess tax collected on a mistaken higher rate of tax on rock phosphate was refundable.

Analysis: The admitted facts showed that tax had been collected at 3 per cent on an item taxable only at 2 per cent. The excess amount was therefore collected without authority of law. Once the assessment error was apparent and the rate was wrong, the authorities were bound to correct the mistake and refund the amount wrongly collected.

Conclusion: The excess tax was refundable and the assessee was entitled to relief.

Final Conclusion: The assessment error was rectifiable, the refusal to grant rectification was unsustainable, and the assessee was entitled to refund of the excess tax collected.

Ratio Decidendi: An obvious assessment error can be rectified under the statutory rectification power, and a rejection of such rectification is revisable where the law does not provide a separate appeal; tax collected without authority of law must be refunded.

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