2016 (12) TMI 1703 - HC - VAT and Sales Tax

Sales Tax Tribunal exceeded jurisdiction by delving into merits. Rectification not for legal view change.

Singhi Oil and General Mills Versus State of Punjab and others

The Court held that the Sales Tax Tribunal exceeded its jurisdiction by delving into the merits of the controversy and reflecting a change of opinion. It ... Jurisdiction - whether the Sales Tax Tribunal, Punjab, Chandigarh could have validly exercise its jurisdiction while deciding the rectification application, filed under Section 21A(2) of the Punjab General Sales Tax Act, 1948? - Held that: - the Tribunal may, at any time within two years from the date of any order passed by it, rectify any mistake apparent from the record. This may be done either on its own motion or on the matter being brought to its notice by any person. Power to rectify a mistake should be exercised when the mistake is a patent one and is quite obvious. The mistake cannot be such which can be ascertained by a long-drawn process of reasoning. It was held that while rectifying a mistake, an erroneous view of law or a debatable point cannot be decided. It was specifically held that incorrect application of law can also not be corrected. Whether the amendment to Rule 29(xii) vide notification dated 15.4.2002 was merely clarificatory and hence retrospective in nature, being a decision on a debatable question of law, could not have been construed to be a mistake apparent on the record and was not liable to be rectified in exercise of power under Section 21-A of the Act. Even if the earlier view was an erroneous view in law, it was, as per the aforementioned decisions, not amenable to be corrected in exercise of the power under Section 21-A. Petition allowed - decided in favor of petitioner. Issues:1. Jurisdiction of Sales Tax Tribunal to decide rectification application under Section 21A(2) of the Punjab General Sales Tax Act, 1948.Analysis:The petitioner, a registered dealer engaged in the business of manufacturing and sale of oil, filed returns for Assessment Year 1999-2000. The Assessing Authority issued a refund, but the Revisional Authority disallowed it. The petitioner then approached the Tribunal, arguing about the implications of a notification related to the deduction of purchase value of goods subjected to tax. The petitioner contended that the omission of Section 5(3) in Rule 29(xii) was a mistake rectified by a subsequent notification. The Tribunal, in its order, accepted the petitioner's plea, stating that the rectification was credible, and ruled in favor of the petitioner, directing the refund of the tax paid on cotton seed.Subsequently, the Assessing Authority filed a rectification application under Section 21A of the Act, challenging the Tribunal's earlier order. Another officer of the Tribunal allowed the rectification application, stating that the earlier order was based on a wrong interpretation of law and was a patently wrong order. The rectification application was deemed maintainable, and the earlier order was modified, dismissing the revision petition.The petitioner challenged the rectification order, arguing that the Tribunal exceeded its jurisdiction by delving into the merits of the controversy and reflecting a change of opinion. The State counsel contended that the earlier order was illegal as it declared a provision to operate retrospectively without legal basis. The Court analyzed Section 21-A, emphasizing that rectification should only correct a patent mistake, not an erroneous view of law. Citing relevant case laws, the Court held that the amendment to Rule 29(xii) was a debatable question of law, not a mistake apparent on record, and thus not liable for rectification under Section 21-A.Consequently, the Court set aside the Tribunal's order allowing the rectification application and restored the earlier order in favor of the petitioner. The writ petition was disposed of in favor of the petitioner.