Apparent error in assessment and rectification rejection led to remand for fresh tax adjudication

Rectification was found warranted where the record disclosed an apparent error, including omission to account for TDS and disputed adjustments affecting input tax credit, SEZ-related turnover and exemption claims. The rejection of rectification on the footing that no error apparent existed was held unsustainable because material bearing on the assessment remained to be examined. The assessment and the rectification order were set aside, and the matter was remitted for fresh consideration after hearing the assessee and considering the supporting documents, through a speaking order.

---

---

Issues: Whether the rejection of the rectification petition and the assessment order warranted interference on the ground of apparent errors in the assessment, including non-accounting of TDS and the treatment of the SEZ-related turnover, and whether the matter should be remitted for fresh consideration.

Analysis: The assessment order had proceeded on several disputed adjustments, including reversal of input tax credit, higher-rate taxation of turnover, denial of exemption claimed in relation to supplies to SEZ units or developers, and omission of TDS adjustment. In the rectification proceedings, the assessee had also sought to place supporting material to show that the SEZ claim was not founded on Section 18 of the Tamil Nadu Value Added Tax Act, 2006, and that other factual materials were available for the disputed additions. The rejection of rectification on the ground that there was no error apparent on the face of the record was found unsustainable, particularly because the omission to account for TDS itself constituted an apparent error. In the circumstances, the assessment could not be allowed to stand without affording the assessee an effective opportunity to produce the relevant documents and have the assessment revisited by a speaking order.

Conclusion: The impugned assessment order and the order rejecting rectification were set aside, and the matter was remitted to the assessing authority to redo the assessment after hearing the assessee and considering the materials produced.

Final Conclusion: The assessee obtained partial relief by securing remand of the assessment for fresh adjudication on the disputed issues, subject to deposit and production of documents as directed.

Ratio Decidendi: A rectification rejection cannot be sustained where the record discloses an apparent mistake affecting the assessment, and the assessee must be given a fresh opportunity where material bearing on the disputed turnover and tax treatment remains to be examined.

---