Rectifiable tax mistake: concessional compounding rate based on a non-statutory proposal could not prevail over the Act.

A concessional compounding rate fixed in a permission order could be rectified because it was based on a Finance Bill proposal and an administrative circular that did not match the governing statute. The reduced rate was not supported by the statutory rate in force, either before or after the Finance Act, 2009, so the order contained a mistake apparent on the face of the record. The circular was only an implementation instruction for a bill proposal and could not override the Act or create an enforceable entitlement to the concessional rate. Rectification under section 66(3) of the Kerala Value Added Tax Act, 2003 was therefore valid.

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Issues: Whether the compounding rate fixed in the permission order, having been granted on the basis of a Finance Bill proposal and an administrative circular inconsistent with the statute, was liable to be rectified under section 66(3) of the Kerala Value Added Tax Act, 2003.

Analysis: The rate granted in the permission order was not the rate prescribed by the statute either before or after the Finance Act, 2009. The reduced rate reflected only a proposal in the Finance Bill and operational instructions issued through the circular, but the proposed amendment was not incorporated into the statute in the manner assumed while issuing the permission. As the statutory rate in force did not support the concessional fixation, the order suffered from a mistake apparent on the face of the record. The circular, being only an instruction for implementing a bill proposal and not an interpretative circular issued under the Act, could not override the statute or confer an enforceable right on the assessee.

Conclusion: The rectification proposal under section 66(3) was valid, and the assessee was not entitled to retain the concessional compounding rate fixed in the permission order.

Ratio Decidendi: An order granting tax benefit on the basis of a non-statutory proposal or an administrative circular inconsistent with the governing Act contains a rectifiable mistake apparent on the face of the record, and such circular cannot prevail over the statute.

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