Allahabad High Court
The Commissioner, Commercial Tax U.P. vs S/S Purwar Trading Co. on 24 July, 2019
Author: Saumitra Dayal Singh
Bench: Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. - 1 Case :- SALES/TRADE TAX REVISION No. - 232 of 2019 Revisionist :- The Commissioner, Commercial Tax U.P. Opposite Party :- S/S Purwar Trading Co. Counsel for Revisionist :- Bipin Kumar Pandey Counsel for Opposite Party :- Anshul Nigam,Mayank Tripathi and Case :- SALES/TRADE TAX REVISION No. - 231 of 2019 Revisionist :- The Commissioner, Commercial Tax U.P. Opposite Party :- S/S Purwar Trading Co. Counsel for Revisionist :- Bipin Kumar Pandey Counsel for Opposite Party :- Anshul Nigam,Mayank Tripathi Hon'ble Saumitra Dayal Singh,J.
1. Heard Sri B.K. Pandey, learned Standing Counsel for the revenue and Sri Anshul Nigam, learned counsel for the assessee.
2. The present revisions have been filed by the revenue against the order of the Commercial Tax Tribunal dated 02.11.2018 passed in Second Appeal Nos. 289 of 2018 for A.Y. 2008-09 and 290 of 2018 for A.Y. 2009-10. By those orders, the Tribunal has dismissed the second appeals filed by the revenue and confirmed the order passed by the Additional Commissioner, the first appeal authority. The first appeal authority had set aside the order passed under Section 31 read with Section 32 of the U.P. VAT Act, 2008 (hereinafter referred to as the Act) and had thus set aside the order of rectification passed by the assessing authority subjecting the assessee to tax @ 12.5% on the goods Alpenliebe 1000, 1500, 200, 300, Stic, Freshtils, Chloromint, Chleodiet, Caramel Chocotella, Coffee Alienliebe Coffi Creamfills, Creamfills Xtra Mango, Fruitells, Lolly Pop, Bil Babool, Center Fresh, etc.
3. The present revisions were admitted on the following question of law:
"Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in holding that while passing the original assessment order, the assessing authority has applied the rate of tax after application of mind and the same cannot be corrected under Section 31 of the Act under the heading mistake apparent on the face of record?"
4. Admittedly, the assessee filed its returns for assessment years in question disclosing turnover of sales of the commodities namely Alpenliebe 1000, 1500, 200, 300, Stic, Freshtils, Chloromint, Chleodiet, Caramel Chocotella, Coffee Alienliebe Coffi Creamfills, Creamfills Xtra Mango, Fruitells, Lolly Pop, Bil Babool, Center Fresh and others, declaring the same to taxable @ 4%. In support of its claim, the assessee has also contended that it had raised invoices to charge tax on those commodities @ 4% only treating the goods to be covered under Schedule II of the Act.
5. The revenue admits that no order was passed by the assessing authority under Section 28 of the Act but it is claimed, a self assessment order had been passed on 09.11.2009. That order is actually a rubber stamp affixed on the order sheet. It reads as below:
"उत्तर प्रदेश मूल्य संवर्धित कर अधिनियम, २००८ की धारा-२७ के अंतर्गत संगत वर्ष के लिए कर निर्धारण आदेश के रूप में घोषित स्वीकृत कर देयता सहित स्वीकार |"
6. Only the signature of the assessing officer has been affixed on the rubber stamp noting extracted above.
7. According to the assessing officer, he subsequently discovered that the assessee had been wrongly subjected to tax @ 4% whereas the goods in question were non-classified goods and therefore liable to tax @ 12.5% under Schedule V of the Act. First, he passed an ex parte order under Section 31 of the Act and subjected the assessee to differential rate of tax @ 8.5%. Then, upon an application filed under Section 32 of the Act, that ex parte order was recalled. However after hearing the assessee, assessment @ 12.5% was reiterated by the subsequent order dated 10.08.2016. It is that order which was made the subject matter in first appeal, that came to be allowed on the reasoning that there was no mala fide intent on part of the assessee. The Tribunal has upheld the order on the reasoning that the order dated 10.08.2016 amounted to a change of opinion in the garb of rectification of mistake. It was impermissible.
8. Assailing the aforesaid order, learned Standing Counsel has submitted, in the context of Section 31 of the Act, the mistake must be apparent from the record itself. It was neither relevant whether the mistake had been committed bona fide nor it was relevant whether any material had subsequently come on record to establish such mistake. On the second aspect, it has been submitted infact, any other material that may come on record after passing of the assessment order may never be relevant to examine whether a mistake apparent from the record had been committed.
9. In the context of the order that has been rectified, learned Standing Counsel would submit that there was no application of mind made by the assessing officer while passing the order dated 09.11.2009 whereas undisputedly, the goods were taxable under Schedule V of the Act as non-classified goods as there is no taxing entry under Schedule II to the Act to which the goods in question may describe. Therefore, there could be no two opinions about the taxability of the commodity @ 12.5%. Consequently, the mistake is claimed to be self apparent as may not call for any doubt, deliberation or debate.
10. Opposing the aforesaid submission, learned counsel for the assessee would submit, for rectification of an error, it must be a mistake apparent from the record which is patent i.e. obvious and whose discovery is not dependent on any argument or alteration. He has relied on a Division Bench decision of this Court in M/s Varun Electronics Vs. State of U.P. & Ors. passed in Writ Tax No.1207 of 2012 decided on 16.08.2016 and also a decision of the Supreme Court in Mepco Industries Ltd., Madurai Vs. Commissioner of Income Tax & Anr.; (2010) 1 SCC 434 wherein relying on the Deva Metal Powders (Pvt.) Ltd. Vs. Commissioner of Trade Tax; (2008) 2 SCC 439, it had been laid down that rectification may be made only of a patent mistake whose discovery is not dependent on elaborate arguments. Accordingly, he submits, the issue of rate of tax would remain an arguable question and the same could not have been rectified in exercise of power under Section 31 of the Act.
11. Having heard learned counsel for the parties, it is first necessary to note that the alleged order that has been sought to be rectified is admittedly one passed under Section 27 of the Act as has been self (rubber) stamped by the assessing authority vide order-sheet entry dated 09.11.2009. Section 27 of the Act reads as below:
"27. Self assessment. --
(1) Subject to provisions of section 28, every dealer, who has submitted the return of last tax period as well as the prescribed Annexures of Consolidated Details in the prescribed form and manner, shall be deemed to have been assessed to an amount of tax admittedly payable on the turnover of purchase or sale or both, as the case may be, disclosed in such Annexures and to an amount of input tax credit shown admissible in such Annexures.
(2) For all purposes under this Act and rules made thereunder,-
(a) Annexures of Consolidated Details submitted by a dealer, shall be deemed to be an assessment order and facts disclosed or figures mentioned in such Annexures shall be deemed part of such assessment order; and
(b) last date of the assessment year, succeeding the assessment year in which the date prescribed for submission of such Annexures of Consolidated Details falls, shall be deemed to be the date of such assessment order."
12. Perusal of sub-section 1 of Section 27 of the Act, makes it clear that a deemed assessment arises by operation of law to the amount of tax admittedly payable on the disclosed turnover of sale or purchase or both, as the case may be, disclosed by the assessee. Thus, the Act does not contemplate any order to be passed by the assessing authority but it only contemplates the effect or consequence of a disclosure made by the assessee in manner prescribed. Thus, by deeming fiction the act of disclosure made by an assessee has been placed on parity with an assessment order that may otherwise be passed. The purpose and effect of the deeming fiction is that notwithstanding any order passed by the assessing authority, the assessee who may have filed a return, would become bound to pay admitted tax and to avail Input Tax Credit (ITC) as he otherwise would be, had he been regularly assessed to tax.
13. That intent has been further made clear by Section 27(2)(b) of the Act. It provides for the date on which such deemed order of assessment may come into existence or deeming fiction may come to life. That date has been defined or prescribed by the Act as the last date of the assessment year following the assessment year during which the last date to file the return for the relevant assessment year expired.
14. Thus, Section 27 of the Act does not contemplate coming into existence of any order, in any manner, neither by conscious exercise of power nor upon application of mind by the assessing authority. In fact neither an order is required to nor can be passed by the assessing authority and no order ever comes into existence. Rather, it is a pure legal fiction created by the legislature. Only the imagination in law gives birth to two effects or consequences of an assessment order. The imagination is driven, solely by the self-act of the assessee of filing his return of turnover. That solitary act needs no contribution or any corresponding or consequential or other act to be performed by the assessing authority. It gestates for one year from the end of the assessment year in which the last date to file that return expired. Upon completion of that period of time the imagination in law springs forth.
15. Thus, by way of first effect or consequence, the assessee becomes bound to discharge the admitted tax liability. Second, he earns a right to claim ITC. Both effects or consequences arise due to passage of prescribed time, solely on account of the return filed by him. That being done, no other or further consequence can ever arise as the legislature did not contemplate or provide for a third effect or consequence of the event of filing return by an assessee. The settled rule of interpretation prohibits any extension beyond the clearly visible legislative field, noted above. Reliance may be placed on that expression of law made by Justice S.R. Das (as his lordship then was), in his dissenting opinion in the Constitution bench decision of the Supreme Court in State of Travancore-Cochin & Ors Vs. Shanmugha Vilas Cashewnut Factory, Quilon; AIR 1953 SC 333 (para 38), which principle was reiterated and applied by another Constitution bench of the Supreme Court in Bengal Immunity Co. Vs. State of Bihar; AIR 1953 SC 661 (para 31). Consequently, no assessment order can be assumed or imagined to exist in law, for any other purpose such as rectification of mistake etc.
16. Also, the powers of the assessing authority to pass any assessment order are contained in the later provisions being Sections 28 and 29 of the Act. A regular assessment order may be passed by the assessing officer under Section 28 of the Act. Also, in the event of any escapement of the turnover from assessment, the assessing authority has been given the power to make a re-assessment under Section 29 of the Act. While a regular assessment may be made in the normal period of limitation, that is prescribed as three years, under Section 29(3) of the Act, the re-assessment order may be passed even thereafter subject to the stipulations contained under Section 29 of the Act.
17. Clearly, on 09.11.2009, in view of Section 28(1)(b)(iv) of the Act, it may have been within the powers of the assessing authority to pass a regular assessment order/s for A.Ys 2008-09, upon gaining knowledge of the fact that the assessee had disclosed lesser tax liability @ 4% whereas he was liable to tax @ 12.5% but, the assessing authority did not adopt that procedure. He also has not chosen to reassess the assessee, in such facts.
18. In light of the discussion made above, for a mistake to be rectified, it would be governed by the provisions of Section 31 of the Act. In this regard, Section 31(1) of the Act reads as below:
"Section 31. Rectification of mistakes. -
(1) Any officer, authority, the Tribunal or the High Court may on its own motion or on the application of the dealer or any other interested person rectify any mistake apparent on the face of record, in any order passed by him under this Act, within three years from the date of the order sought to be rectified:
PROVIDED that where an application under this sub-section has been made within such period of three years, it may be disposed of even beyond such period:
PROVIDED FURTHER that no rectification which has the effect of enhancing the assessment, penalty, fees or other dues, shall be made unless reasonable opportunity of being heard has been given to the dealer or other person likely to be affected by such enhancement."
19. Clearly, for a mistake to be rectified by the assessing officer, it had to be a mistake found in any order that may have been passed by him at an earlier point in time. For exercise of power under section 31, there had to pre-exist an order passed by him, upon conscious exercise of his powers to make assessment/reassessment. In the present case, in absence of any order being passed by the assessing authority, either under Section 28 or 29 of the Act, it cannot be conceded to him that he had any power to make the rectification, as claimed. The alleged order sheet entry dated 09.11.2009, is a rubber stamp noting of no consequence. On that date, first, the period prescribed under section 27 of the Act had not expired. Therefore the legal fiction with respect to payment of admitted tax and his entitlement to claim ITC had itself not arisen. Even otherwise, that note remained only an expression of legal fiction contained in section 27 of the Act. It did not and it could not provide for any effect or consequence more than the legislature contemplated. Therefore, it was not an assessment order for any other purpose. It would always remain limited to the twin purpose (noted above), for which it had been created by the legislature.
20. Thus, in absence of any assessment order issued by him there existed no basis to invoke the power of rectification under section 31 of the Act, by the assessing authority. Consequently, the assessing authority never acquired any jurisdiction to issue any notice or pass any order under Section 31 of the Act. The entire exercise carried by the assessing authority was a nullity and it must therefore necessarily fall.
21. Accordingly, the question of law (as framed above) is answered in the affirmative i.e. against the revenue and in favour of the assessee. However, upon a different reasoning than that adopted by the first appeal authority and the Tribunal.
22. The present revisions stand dismissed.
Order Date :- 24.7.2019 Abhilash