Rectification for mistake apparent from record upheld where tribunal followed overruled Supreme Court law on taxable turnover

Rectification under the Karnataka Sales Tax Act was held maintainable because the application was filed within the five-year period, and the later passing of the amended order did not defeat jurisdiction. A tribunal's reliance on an overruled Supreme Court decision, contrary to the binding law declared under Article 141, constituted a mistake apparent from the record. On merits, rectification was justified because the controlling later decision treated excise duty paid by purchasers on behalf of the manufacturer as part of sale consideration and includible in taxable turnover. The challenge to rectification therefore failed.

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Issues: (i) Whether the rectification order was beyond the period of limitation and without jurisdiction; (ii) whether the earlier Tribunal order suffered from a patent error of law amounting to a mistake apparent from the record; (iii) whether the rectification application was rightly allowed on merits.

Issue (i): Whether the rectification order was beyond the period of limitation and without jurisdiction.

Analysis: Section 22(6-A) of the Karnataka Sales Tax Act, 1957 permits rectification where the application is made within five years from the date of the order sought to be amended. The time limit governs the initiation of rectification proceedings, not the date on which the amended order is ultimately passed. Since the application was filed within five years and the parties were heard before the order was made, the later completion of the proceedings did not defeat jurisdiction.

Conclusion: The rectification order was not barred by limitation and was within jurisdiction.

Issue (ii): Whether the earlier Tribunal order suffered from a patent error of law amounting to a mistake apparent from the record.

Analysis: A binding declaration of law by the Supreme Court under Article 141 of the Constitution of India is obligatory for all authorities. The earlier Tribunal order had followed an earlier Supreme Court decision that had been displaced by a later Constitution Bench decision. Ignoring the controlling decision and proceeding on an overruled view of law constituted an obvious legal error, which did not require elaborate argument to demonstrate.

Conclusion: The earlier Tribunal order did suffer from a mistake apparent from the record.

Issue (iii): Whether the rectification application was rightly allowed on merits.

Analysis: The later Supreme Court decision held that excise duty paid by purchasers on behalf of the manufacturer formed part of the consideration for sale and was includible in turnover. The Tribunal's earlier reliance on the displaced decision resulted in exclusion of that amount from taxable turnover. Rectification was therefore justified to align the order with the binding law.

Conclusion: The rectification application was rightly allowed.

Final Conclusion: The challenge to the rectification order failed, and the assessee's revision was dismissed, leaving the revenue's stand undisturbed.

Ratio Decidendi: Where a tribunal's order ignores a binding Supreme Court decision and follows an overruled view of law, the resulting error is a mistake apparent from the record and is amenable to rectification if proceedings are initiated within the prescribed limitation period.

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