TaxTMI 
TaxTMI 
2016 (3) TMI 1156
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....ation under Section 54(1) and pointed out various errors and mistakes in the order of assessment. Grievance of the petitioners is that the applications for rectification/correction of mistake has been rejected, behind their back, without notice to them, without hearing them and as the principles of natural justice are violated it is said that the orders are unsustainable. 3. Shri Sumit Nema, learned counsel appearing for the petitioners invited out attention to Section 54(1) of the M.P. VAT Act and argued that under this provision, the Assistant Commissioner has given power for rectification either on his own motion or on an application made by the dealer and if the application is filed then the rectification is permissible in accordance to the procedure contemplated under the Rules. He submitted that the procedure for rectification is contemplated under Rule 65 of the M.P. VAT Act Rules, 2006 and under this Rule, notice on rectification is required to be issued in Form No.45. It is said that in this case as the rectification has been ordered without issuance of notice as is required, the action is unsustainable. He also invited out attention to Section 254(1) of the Income Tax Ac....
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....ri Awasthy prays for dismissal of the petitions. 5. We have heard learned counsel for the parties and we have considered the statutory provision for rectification, as if contemplated under Section 54(1) of the Vat Act, the statutory provision provides and empowers the Commissioner either on his own motion at any time within one calender year from the date of passing of the order or on an application made by the dealer within one calender year from the date of passing of the order to rectify an order passed by him in such manner as may be prescribed. The provision empowers the Commissioner to correct any clerical, arithmetical mistake or any error arising therein from any omission. The provision contemplates and creates a prohibition in the matter of entertaining an application after a particular period of time and proviso (ii) mandates that no such rectification shall be made if it has the effect of enhancing the tax or reducing the amount of refund unless the Commissioner has given notice in the prescribed form to the dealer and has allowed a dealer a reasonable opportunity of being heard. The prescribed procedure is contemplated under Rule 65 of the M.P. Vat Rules 1966 and it sa....
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....d has dealt with the question in the following manner:- "In order to understand the full import and effect of section 254(2), it has first to be seen at whose instance an order under section 254(2) can be passed. In the absence of any such specific mention, the said provision should be so construed as to make it meaningful and effective. There are three entities or parties who are directly involved in or concerned with the passing of an appellate order. They are the Tribunal itself and the appellate and the respondent before it. This being so, it is possible that the Tribunal may, suo motu from the opinion that there is a mistake apparent from the record which requires an order passed by it under section 254(1) to be rectified or amended. In addition thereto, the existence of any mistake apparent from the record can be brought to the notice of the Income-tax Appellate Tribunal by either of the parties to the appeal, namely, the assessed or the Income-tax Officer. The power under section 254(2) can thus be exercised by the Tribunal either suo motu or at the instance of either of the parties before it. In the present case, we are not concerned with the circumstances under which an ....
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....n effect, be prejudicial to the interests of the Revenue. When section 254(1) specifically contemplates hearing being given to the Revenue, on an appeal filed by the assessed, which appeal, if allowed, may have the effect of reducing the assessment or the tax liability or increasing the refund, it cannot possibly stand to reason that a hearing to the Department is not contemplated when the success of an application under section 254(2) by an assessed may have the same effect as if the assesse's appeal under section 254(1) has been allowed. It is now well-settled that, even where hearing is not specifically provided, principles of natural justice have to be complied with before any order adverse to any party is passed especially by a judicial or a quasi-judicial authority. This principle would be negated if section 254(2) is to be given a narrow construction, as sought to be placed by Shri. B. Gupta, and the hearing is limited only in the cases as contemplated by the proviso thereto. and, after analyzing the various eventualities as are indicated hereinabove i.e. the effect of an application filed by the assessee; the effect of the application filed by the revenue; and the effe....
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....ecting the rights of person adversely then the requirement of the principles of natural justice has to be read into the Rules. In the instant case also, if we apply the principles of reading into the statute i.e. section 54(1), the requirement of the principles of natural justice, we find that the legislature was conscious of the fact that a dealer or the department or the revenue may after orders of assessment are passed, find some error in the orders passed, therefore, the rule makers incorporated a provision i.e. 54(1) providing for an application to be filed or suo motu action to be taken for rectification of a mistake or correcting of an order. Once such a provision is provided by incorporation in the statutory rules or regulations, the intention of the legislature has to be given full effect to and when an application for rectification is filed by a dealer and if he is not granted an opportunity to explain to the statutory authority, the grounds and circumstances on which he wants the rectification to be ordered, it would be nothing but negating and nullifying the statutory provision and destroying the effect of the statute itself. The very purpose of giving a right to a dea....