Madras High Court
Meco Tranica Private Ltd. vs Assistant Commissioner (Commercial ... on 27 July, 1995
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT Jayasimha Babu, J.
1. Petitioner is a dealer in radios and is an assessee under the Tamil Nadu General Sales Tax Act. For the assessment years 1980-81 and 1981-82, the petitioner was assessed on the basis that the rate of tax payable on the sale of one and two band radios was 15 per cent. After those assessments were concluded, the State Government issued a notification in exercise of its powers under section 17(1) and (3) of the Tamil Nadu General Sales Tax Act, reducing the rate of tax on the sale of one and two band radios to 10 per cent. with retrospective effect. In the notification, it was stated "the variation hereby made shall be deemed to have come into force on and from August 25, 1980". That notification was issued on September 15, 1983. The variation in the rate with retrospective effect having thus been effected by a notification, which was issued subsequent to the assessments, the petitioner sought rectification of the assessment order in so far as it had adopted the rate of tax at 15 per cent. instead of 10 per cent. The petitioner's request for that relief was made to the Assistant Commissioner on March 8, 1985 within five years from the date of the assessment orders. Though in that letter it was stated that revision of the assessment was sought, the petitioner however mentioned that the action was sought under section 55 of the Act, which admittedly deals with rectification of the assessment.
2. Section 55 of the Tamil Nadu General Sales Tax Act, 1959, reads thus :
"Power to rectify any error apparent on the face of the record. - (1) An assessing authority or an appellate or revising authority (including the Appellate Tribunal) may, at any time within five years from the date of any order passed by it rectify any error apparent on the face of the record :
Provided that no such rectification which has the effect of enhancing an assessment or any penalty shall be made unless such authority has given notice to the dealer and has allowed him a reasonable opportunity of being heard.
(2) Where such rectification has the effect of reducing an assessment or penalty, the assessing authority shall make any refund which may be due to the dealer.
(3) Where any such rectification has the effect of enhancing an assessment or penalty, the assessing authority shall give the dealer a revised notice of assessment or penalty and thereupon the provisions of this Act and the rules made thereunder shall apply as if such notice had been given in the first instance.
(3-A) The powers under sub-section (1) may be exercised by the assessing authorities even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision.
(4) The provisions of this Act relating to appeal and revision shall apply to an order of rectification made under this section as they apply to the order in respect of which such order of rectification has been made."
3. The petitioner's case is that the error in the assessment was apparent on the face of the record as, though the rate of 15 per cent. as the rate of sales tax on the sale of one and two band radios, as on the date of the assessment was the rate which had been prescribed in the statute, by reason of the subsequent amendment with retrospective effect, that rate was no longer the applicable rate and in its place the lesser rate of 10 per cent. prescribed in the statute with retrospective effect had necessarily to be adopted in computing the amount of sales tax in law payable by the petitioner.
4. The request of the petitioner for rectification was rejected by the authority in respect of the assessments for the year 1980-81, on the ground that as on the date of the assessment, the rate of tax is only 15 per cent. and therefore, the consideration of the revision of the assessment would not arise. As regards the assessment for the year 1981-82, the request for rectification of the same was rejected, on the ground that the petitioner should seek the remedies by way of appeal under section 31 of the Act.
5. Mr. Prakash Natarajan, learned counsel for the petitioner, submitted that under section 55 of the Act, the authority has a duty, when an application has been made within the period specified therein, to rectify all errors, which are apparent on the face of the record. The fact that such a rectification may have the effect of reducing an assessment is no bar for rectification being effected. When the error is apparent, it is not open to the authority to direct the petitioner to resort to a remedy by way of appeal or to reject the request, on the ground that though the error existed, that error was based on the provision of law, which then existed even though that provision was subsequently altered with retrospective effect.
6. Learned counsel in support of his submissions relied upon the judgment of the Supreme Court in the case of M. K. Venkatachalam, Income-tax Officer v. Bombay Dyeing and Mfg. Co. Ltd. , wherein the court held that when a retrospective amendment is effected, then for all legal purposes, the amended provision is deemed to have been included with effect from the date from which retrospective effect is given. The court further held that the principle of the finality of orders or the sanctity of the existing rights cannot be effectively invoked when such retrospective amendment is carried out to the law, because the action taken earlier, on the basis of the erroneous law as it then prevailed could not be said to be final, in the literal sense of the word.
7. Learned counsel also referred to the judgment of the Supreme Court in the case of Raja Shatrunjit v. Mohammad Azmat Azim Khan , wherein the court held that an order which rejected relief must be held to be suffering from an error on the face of the record, when by a deeming provision, the law was changed retrospectively.
8. The Government Advocate however rebutted the claim of the petitioner and contended that the petitioner is not entitled to any relief, as according to him, the reasons given by the authority for rejecting the request for rectification was justified. He submitted that the petitioner should have filed an appeal against the order and should have sought condonation of delay in filing such an appeal and could not have sought rectification, as the assessment order did not suffer from error on the date, the order was made. He relied upon the decisions of this Court, in the case of State of Tamil Nadu v. Everest Trading Co. [1987] 67 STC 148 and the case reported in [1989] 72 STC 329 [Sneva Diamond Tools (P.) Ltd. v. Appellate Assistant Commissioner (Commercial Taxes)]. Neither of these decisions assist the respondents in this case. The effect of retrospective amendment of the law did not arise for consideration therein.
9. The legislative intent to levy sales tax on one and two band radios at the rate of 10 per cent. with effect from the assessment year 1980, is evident from the notification that was issued by the State. The law for the assessment year 1980-81 and subsequent years till it was altered clearly provided for levy of sales tax at the rate of 10 per cent. and no more. The assessing officer is bound by statute and he is authorised to levy tax at the rate stipulated in the Act and as permitted by law. When the Legislature through its delegate itself chose to retrospectively alter the rate, and did not while so altering direct that assessment already made should continue to be effective, notwithstanding the altered rate which was given retrospective effect, it must be held that there is clearly an error which was apparent on the record in so far as the assessing officer had adopted a rate, which in law was not the rate to be adopted.
10. The following observations of the Supreme Court in the case of Venkatachalam v. Bombay Dyeing and Mfg. Co. Ltd. which was a case under section 35 of the Income-tax Act, 1922, providing for rectification of errors apparent on the face of the record, are apposite : "If a mistake of fact apparent from the face of the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious, cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act."
11. At the time the assessing officer was asked to rectify the error, he had necessarily to read the Act as prescribing the rate of 10 per cent. for these assessment years. The assessment order made on basis that rate was 15 per cent. was clearly not in accordance with the statute and was a error of law apparent from the face of the record. The submission by the counsel for the petitioner that the mistake of law is apparent on the face of the record is sound and must be accepted. The impugned orders are therefore quashed. The respondents shall carry out the necessary rectification in the assessments, in the light of the altered law and grant such relief as the petitioner may be entitled to in the circumstances of the case. The writ petitions are allowed. No costs.
12. Writ petitions allowed.