Karnataka High Court
Mysore Cements Limited vs Deputy Commissioner Of Commercial ... on 15 November, 1993
Author: R.V. Raveendran
Bench: R.V. Raveendran
JUDGMENT
1. Notice regarding Rule was issued and on appearance, by consent these petitions were finally heard.
The petitioner is a manufacturer and dealer in cement and is an assessee under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the Act"). These petitions relate to assessment years 1980-81, 1981-82, 1982-83, 1983-84 and 1984-85 and involve a common question of law. The petitioner has filed these writ petitions challenging the five orders of rectification made under section 25A adding packing regarding cement to the taxable turnover. The petitioner contends that the assessment orders do not suffer from any mistake apparent from the record and consequently the orders of rectification are without jurisdiction and without authority of law.
2. The petitioner was initially assessed to tax in regard to the said five years by orders dared May 27, 1988, May 27, 1988, May 28, 1988, July 20, 1988 and July 20, 1988. On appeal by the petitioner, the appellate authority set aside the said orders by order by order dated January 12, 1989 and remanded the matters for fresh assessment. On such remand, the petitioner filed revised returns and the assessing authority passed fresh orders of assessment respectively dated April 30, 1992, September 30, 1991, May 25, 1992, May 26, 1992 and May 26, 1992. In these orders, the assessing authority deducted the following amounts being the packing charges relating to cement, from the total turnover ad thereby excluded the said amounts from the taxable turnover of the assessee :
Year Amount 1980-81 Rs. 2,05,39,940.25 1981-82 Rs. 2,09,00,929.12 1982-83 Rs. 2,50,86,247.62 1983-84 Rs. 3,58,10,709.18 1984-85 Rs. 6,01,74,906.93
3. The assessing authority thereafter issued notices dated December 23, 1992, under section 25A of the Act proposing to rectify the assessments completed as aforesaid, by including packing charges in the taxable turnover of the petitioner. The assessing authority proposed to rectify the orders of assessment on the ground that there was an error apparent from the record regarding packing charges, for the following reasons :
"(1) The assessee has sold cement after packing in gunny bags or container.
(2) The expenditure incurred towards the packing material gunny bag in which cement is packed and sold before the same is made available to the customers and such expenses would not come within the meaning of 'charges for packing materials' as specified under rule 6(4)(ff) of the Karnataka Sales Tax Rules, 1957.
(3) Further, cement could not be sold without a container for consumption by the general public and the sale of cement in bags themselves for which the consumer had paid. As such, once the cost of bags had been recovered from purchaser as part of sale price, there was no way by which it could be excluded from the taxable turnover."
4. The petitioner filed objections to the proposed rectification contending :
(a) Deduction of packing charges from the total turnover to arrive at the taxable turnover was justified under rule 6(4)(ff) of the Karnataka Sales Tax Rules, 1957 ("the Rules" for short);
(b) Whether packing charges relating to cement has not be excluded or included in the taxable turnover is a question of fact, to be decided in each case;
(c) The assessing authority having decided that packing charges are to be deducted from total turnover, while passing the orders of assessment, there was no "mistake apparent from the record" which could be rectified under section 25A of the Act.
After considering the objections, the assessing authority passed orders of rectification on April 2, 1993 holding that the deduction of packing charges from the total turnover, was a "mistake apparent from the record" and rectified the orders by including the packing charges in the taxable turnover of the assessee. Aggrieved by the said rectification orders, the petitioner had flied has filed these petitions.
5. Sri Kishore Mallya, leaned counsel for the petitioner, submitted that unless there is a mistake apparent from the record, jurisdiction under section 25A could not be exercised; that there was no error or mistake at all, in deducting the packing charges as such deduction was authorised by rule 6(4)(ff); and even assuming that an error can be made out now, it does not follow that there is any mistake apparent from the record, as the question whether packing charges were taxable was very much an issue open to much debate, doubt and conflict at the time of passing the assessment orders, and the mere fact that subsequently the Supreme Court had resolved and settled the issue did not obliterate the existence of such debate, doubt and conflict prior to such decision and in such circumstances, there was no jurisdiction in the assessing authority to rectify any order, under section 25A. He also submitted that the alleged mistake could not be made out except upon a long and elaborate argument and further investigation of facts. He, therefore, submitted that the rectification orders were without jurisdiction and therefore liable to be set aside in writ proceedings, even though remedy by way of appeal was available under the statute.
6. Sri H. L. Dattu, learned Government Advocate, appearing for the respondent contended that excluding packing charges from the taxable turnover was clearly a mistake apparent from the record having regard to the decision of the Supreme Court in Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu reported in [1993] 88 STC 151 and the decision of this Court in Visvesvaraya Iron & Steel Ltd. v. Deputy Commissioner of Commercial Taxes reported in [1991] 83 STC 305; and therefore, the assessing authority had jurisdiction to rectify the mistake under section 25A and he was fully justified in exercising such power.
7. On the aforesaid facts and contentions, the following points arise for consideration :
(i) Whether deduction of packing charges form the total turnover, for purpose of determining the taxable turnover was erroneous;
(ii) If so, whether it can be said to be a mistake apparent from the record, inviting rectification under section 25A.
8. A preliminary objection raised by Mr. H. L. Dattu requires to be noted at the outset. He contended that, after filing these petitions, the petitioner had also filed appeals in regard to some of the rectification orders; that as efficacious alternative remedy by way of appeal is available, these petitions should not be entertained. He relied on the observations of the Supreme Court while dealing with the provisions of the Orissa Sales Tax Act in Titaghur Paper Mills Co. Ltd. v. State of Orissa , to contend that the writ petitions should not be entertained if an efficacious alternative remedy by way of appeal was available under the Act. But it is equally well-settled that where an authority acts without jurisdiction or patently in excess of jurisdiction or when rules of natural justice or well accepted rules of procedure are violated or when an assessment is made on the basis of a provision which is ultra vires, it is quite proper to exercise the writ jurisdiction to set right the wrong. In these petitions, the petitioner is challenging the orders of rectification on the ground that the pre-requisites for exercise of jurisdiction under section 25A are non-existent and therefore the orders are without jurisdiction. No doubt the order of rectification are appealable under the Act. But in view of the question of jurisdiction raised, these case deserve an examination on merits rather than dismissal at the threshold on the ground of availability of an alternative remedy.
Re : Point (i) :
9. The learned counsel for the petitioner contended that cement was sold in unpacked conditions (naked cement) or packed in bags; that many a time cement was packed in bags only after sale, on receipt of instructions of the buyer; that there may be instances where the buyers may provide the packing material; that packing charges were always charged separately; that rule 6(4)(ff) clearly authorised the deduction of all packing charges from the total turnover, where such charges were charged by the dealer separately, without including the same in the price of goods sold; that even if packing was completed before sale, so long as the price of packing was not included in the sale price of cement, but separately charged, rule 6(4)(ff) would apply; and therefore packing charges were rightly excluded from the taxable turnover, when the orders of assessment were made. The petitioner also sought support from the provisions of the Cement Control Order, 1967, which was in force at the relevant time. Reference was made to clause 8 which specified the price of naked cement and separately provided for packing charges under the proviso. The inference sought is that packing was not a compulsory concomitant of sale of cement, but only an optional addition. He referred to the following observations of the Supreme Court in Raj Sheel v. State of Andhra Pradesh reported in [1989] 74 STC 379 :
"It is commonly accepted that a transaction of sale may consist of sale may consist of a sale of the product and a separate sale of the container housing the product with respective sale considerations for the product and the container separately; or it may consist of a sal of the product and a sale of the container but both sales being conceived of as integrated components of a single sale transaction; or, what may yet be a third case, it may consist of a sale of the product with the transfer of the container without any sale consideration therefor. The question in every case will be a question of fact as to what are the nature and ingredients of the sale. It is not right in law to pick on one ingredient only to the exclusion of the others and deduce from it the character of the transaction. For example, the circumstance that the prove of the product and the price of the container are shown separately may be evidence that two separate transactions are envisaged, but that circumstance alone cannot be conclusive of the true character of the transaction. It is not unknown that traders may, for the advantage of their trade, show what is essentially a single sale transaction of product and container, or a transaction of a sale of the product only with no consideration for the transfer of the container, as devisable into two separate transactions, one of sale of the product, and the other a sale of the container, with a distinct price shown against each. ...... In every case, the assessing authority is obliged to ascertain the true nature and character of the transaction upon a consideration of all the facts and circumstances pertaining to the transaction. That the problem almost always requires factual investigation into the nature and ingredients of the transaction has been repeatedly emphasised by this Court ........"
"...... In a case where the packing material is an independent commodity and the packing material as well as the contents are sold independently, the packing material is liable to tax on its own footing. Whether a transaction of sale of packing material is an independent transaction will depend upon several factors, some of them being :"
Relying on the said observations, the learned counsel for the petitioner contended that whether packing charges is to be included in the taxable turnover or not is a question of fact requiring investigation and depending on the true nature and character of the transaction and there can be general statement of law that packing charges in regard to cement should be included in the taxable turnover; and the assessing authority having held that packing charges were to be excluded in arriving at the taxable turnover, that finding of fact, cannot be sought to be rectified, merely on the basis of a subsequent decision of the Supreme Court; and that there was no factual or legal basis for including the packing charges in the taxable turnover, by way of rectification.
10. In the case of Visvesvaraya Iron & Steel Ltd. [1991] 83 STC 305, a Division Bench of this Court had occasion to consider an identical question. In that case, for the relevant assessment years, the assessee claimed deduction in regard to packing charges under rule 6(4)(ff). The assessee was a manufacturer of cement. The assessing authority initially allowed such deduction. His successor-in-office found the allowance of deduction impermissible and proposed to rectify the same under section 25A. After notice, the assessment orders were rectified in the light of the decision of the Madras High Court in Natarajan and Sons v. State of Tamil Nadu [1977] 39 STC 443. The said rectification was challenged and ultimately came up in revision before this Court. This Court held :
"It is common knowledge that during the relevant assessment years, cement was declared to be a controlled commodity and its sale and distribution were controlled by order made by the Government of India under the provisions of the Industries (Development and Regulation) Act, 1951. Under the provisions of the order so made, price of cement was fixed from time to time and that price was uniform throughout India. The components of such sale price itself was provided in the order. One such component of the price fixed under the Cement Control Order, 1967, was the cost of the packing material. Therefore, it is obvious that cement was envisaged as a controlled commodity and it could not be sold without containers for consumption of the general public. In that view of the matter, sale of cement in bags impliedly included the sale of the bags themselves for which the consumer had paid. If that is the correct position, pressing into service, rule 6(4)(ff) to compute out the turnover relating to the cost of packing material was clearly an error of law which could be rectified under section 25A of the Act."
11. In Ramco's case [1993] 88 STC 151, the Supreme Court held, while considering the sale of cement covered by the Cement Control Order, 1967, that freight charges and packing charges with excise duty thereon should be included in arriving at the taxable turnover for purposes of both Central sale tax and Tamil Nadu sales tax. The Supreme Court held that packing charges, formed part of "sale price" under the Central Sales Tax Act, 1956 because the expression "any sum charged for anything done by the dealer in respect of the goods" used in the definition in section 2(h) of the Central Sales Tax Act squarely covered such charges, as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price. The Supreme Court also held that the position was no different under the Tamil Nadu General Sale Tax Act, 1959. The Supreme Court held that, -
"Packing charges and excise duty on the packing materials cannot be deducted under rule 6(cc) of the Tamil Nadu General Sales Tax Rules, 1959, in computing the taxable turnover for the purposes of Tamil Nadu General Sales Tax Act, 1959, and the Tamil Nadu Additional Sales Tax Act, 1970, for the reasons that the words 'without including them in the sale price of the goods sold' make it clear that such charges are not to be deducted unless the pre-requisite for their deduction, viz., that these charges should not have been included in the price of the goods sold, is satisfied, and such charges have been included of the Control Order as part of the price of the goods sold."
The Supreme Court approved the view that the packing of cement was to effectuate the sales and therefore, packing charges formed an integral part of the sale price in the following words :
"........ Nor will, for the reasons earlier discussed in relation to freight charges, the assessee be in a position to claim a deduction in respect of these charges by virtue or rule 6(cc) of the Tamil Nadu General Tax Rules. In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das & Bros. in State of Tamil Nadu v. Vanniaperumal & Co. [1990] 76 STC 203 (Mad.) [FB], Dalmia Cement (Bharat) Ltd. v. State of Tamil Nadu [1991] 81 STC 327 (Mad.) and Dalmia Cement (Bharat) Ltd. v. State of Tamil Nadu [1991] 83 STC 442 (Mad.) We are, therefore, of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purposes of the Tamil Nadu Acts."
The wording of rule 6(4)(ff) of the Karnataka Sales Tax Rules is in pari materia with rule 6(cc) of the Tamil Nadu General Sales Tax Rules. Further the provisions of the Cement Control Order, 1967, referred to and relied on by the Supreme Court continued to be in force during the assessment years which are the subject-matter of these petitions. Therefore, in view of the law declared by the Supreme Court in Ramco's case [1993] 88 STC 151, there can now be no doubt or debate on the position that packing charges have to be included in the taxable turnover the cannot be deducted from the total turnover under rule 6(4)(ff), in regard to sale of cement covered by the Central Control Order, 1967. One of the factors that weighted with the courts in several decisions approved in Ramco's case [1993] 88 STC 151 (SC) and in Ramco's case [1993] 88 STC 151 (SC) itself, to come to the conclusion that packing charges are to be included in the taxable turnover is that clause 8 of the Cement Control Order, 1967, specified the price of cement for delivery free or rail destination railway station; that is, for the price fixed, the cement had to be transported and delivered by the producer at the destination railway station; This implies that the cement sold had to be in a packed condition, at the time of delivery and therefore packing is a necessary concomitant of sale. Ramco's case [1993] 88 STC 151 (SC) deals with the sale of cement covered by the Cement Control Order, 1967. The cases on hand also relate to sale of cement under the Cement Control Order, 1967. Though Raj Sheel's case [1989] 74 STC 379 (SC) deals with sale of cement, there is nothing to indicate that observations therein relate to sale of cement under the Cement Control Order, 1967. Thus, when the later decision of the Court in Ramco's case [1993] 88 STC 151, specifically covers the issue relating to sale of cement under Cement Control Order, 1967, the earlier observations in Raj Sheel's case [1989] 74 STC 379 (SC) will have to be considered as general in nature not applicable to sale of cement under the Cement Control Order, 1967. Hence the faint attempt by the learned counsel of the petitioner, that in spite of Ramco's case [1993] 88 STC 151 (SC), there is still a doubt or debate in regard to packing charges relating to cement, having regard to the observations in Raj Sheel's case [1989] 74 STC 379 (SC) cannot be accepted.
12. It is true that the decision of the Supreme Court in Ramco's case [1993] 88 STC 151 was rendered subsequent to the dates of assessment orders in these cases. But even before the date of assessment orders, there was no doubt regarding the position that packing charges were to be included in the taxable turnover, having regard to the Division Bench ruling of this Court in Visvesvaraya's case [1991] 83 STC 305. Thus the first point has to be answered in the affirmative.
Re : Point (ii) :
13. The assessment orders do not disclose any reason as to why packing charges were deducted from the total turnover. There is neither any reference to the nature and character of the transaction nor consideration of the circumstances relating to of the finally of the orders or the sanctity of the existing rights cannot be effectively invoked by the respondent in the present case."
15. The principle laid down in Venkatachalam's case regarding retrospective operation of law, making valid orders invalid, was extended and applied by the Bombay High Court in a case where a subsequent decision of the Supreme Court, had the effect of rendering an order passed by the authority wrong in law (Walchand Nagar Industries Ltd. v. V. S. Gaitonde, Income-tax Officer reported in [1962] 44 ITR 260). Rejecting the contention that the principle laid down in Venkatachalam's case while dealing with retrospective legislation, cannot be applied to decisions of the Supreme Court, the Bombay High Court held :
"It would be seen that even though the assessment order made by the Income-tax Officer was a good order on the date it was made, the subsequent enactment rendered that order into a mistaken order, and it was held that that mistake could be rectified under section 35 of the Act. Mr. Joshi tried to distinguish this case from the present case. It is his argument that the order made by the Income-tax Officer in that case was rendered bad by the subsequent enactment, while the order in the instant case, which was a good order, was rendered had as a consequence of a reversing the said view held that such a question would arise only if it is really a case of completed assessemnt in the literal sense of the word. If the limitation for rectification had not expired, the order could not be said to have become final or complete merely because the time for filing an appeal had expired. The Supreme Court held :
"..... it must be held that the Appellate Assistant Commissioner's order dated June 26, 1970, had not become final in the literal sense of the word notwithstanding the fact that no appeal had been preferred against that order or that the requisite period for appeal was allowed to expire. The said order was and continued to be liable to be modified under section 35(7) of the Act and, in this view of the matter, the assessee herein also would not be in a position to invoke the principle of finality of the orders or the sanctity of the existing rights which are said to have been acquired by her under the initial order."
16. In A. S. Gauraya v. S. N. Thakur , the Supreme Court had occasion to consider the binding nature of its judgment. When a judgment of the Supreme Court was brought to the notice of a Sessions Judge, he had held :
"So far as article 141 of the Constitution of India and the ratio of these decisions are concerned, there can be no dispute whatsoever. At the same time a pronouncement as to the position of law in a judicial decision by the Supreme Court cannot be treated as a sort of legislation by the Parliament giving retrospective effect as to enjoin reopening of all matters which have already become final and closed."
The Supreme Court held :
"The observations of the Sessions Judge, extracted above, discloses a confusion of thought about the effect of a decision rendered by this Court and a misreading of article 141 of the Constitution. There is nothing like any prospective operation alone of the law laid down by this Court. ..... He got rid of the effect of this Court's judgment by observing that a decision by this Court cannot be treated as 'a sort of legislation by Parliament' and thus overlooked the binding nature of the law declared by this Court, mandating under article 141, every court subordinate to this Court to accept it ........"
17, In M. V. Govindaraju Chetty v. Commercial Tax Officer [1968] 22 STC 46, a Division Bench of this Court had to consider the question whether an order of assessemnt could be rectified on the basis of law declared subsequently by this Court and the Supreme Court. The provision for the rectification considered by this Court was rule 38 of the Mysore Sales Tax Rules which is in pari materia with section 25A of the Act and section 35 of the Income-tax Act, 1922. Rejecting a contention that subsequent decisions of the Supreme Court or concerned High Courts do not have the result of reopening concluded matters and following the decision of the Bombay High Court in Walchand Nagar case [1962] 44 ITR 260, A. Narayana Pai, J. (as he then was) speaking for the Division Bench, observed :
"........ To say that a decision of the Supreme Court to the effect that a particular levy was wrong or not in accordance with law means that the levy was at no time good, is nothing more than to state in clear terms the real effect of a decision of the court. The decision gets rid of the order as it was originally made which gave rise to the appeal to the Supreme Court in which the decision in question was rendered. That is the position so far as the particular case decided is concerned. It is no doubt true that every decision does not reopen every other concluded matter. But is is equally emphatic that under article 141 of the Constitution, the law declared by the Supreme Court shall be binding an all courts within the territory of India. Whenever, therefore, any court or any authority in India has occasion to apply the law, it is bound to apply it as declared by the Supreme Court. Although a decision of the Supreme Court may not reopen a concluded decision, if an appeal is pending against an order at the time a decision of the supreme Court is rendered, there is not question that the appeal will have to be decided in accordance with the decision of the Supreme Court is rendered, there is no question that the appeal will have to be decided in accordance with the decision of the Supreme Court applying the law as declared by the Supreme Court. If an appeal had not been filed, but the time for presenting the same has not expired, the appellant is certainly entitled to ask the appellate court to reverse the original order in the light of the decision of the Supreme Court.
If such is the clear position in law, we cannot see any difficulty in one taking advantage of a provision for rectification of a mistake by the original authority in the same way as he may take advantage of a provision for preferring an appeal against his order, provided the circumstances are such that he can bring the case within the four corners of the provision for rectification."
He then proceeded to examine the scope of the words "mistake apparent on the record" and held :
"First of the conditions for rectification under rule 38 of the Mysore Sales Tax Rules or under section 35 of the Indian Income-tax Act is that the mistake sought to be rectified must be a mistake apparent on the record. What mistakes are mistakes apparent on the record is a matter covered by several decisions of the Supreme Court and High Courts. Although the position may not be capable of a general statement of universal application, two considerations which are considered well established are that a claim that there is a mistake which is capable of being made out only upon further evidence or investigation or further facts can never be regarded as a claim that there is any mistake apparent on the face of the record, and that a mistake which cannot be made out except upon long and elaborate argument cannot ordinarily be regarded as a mistake apparent on the face of the record. Where, however, no further investigation of facts is called for and on the facts found, the principle of law declared by the Supreme Court may be straightway applied with the consequence of rendering an existing order mistaken it would certainly be a case of mistake apparent on the face of the record within the meaning of section 35 of the Income-tax Act as well as rule 38 of the Mysore Sales Tax Rules."
18. In K.B. Foams (P.) Ltd. v. Deputy Commissioner of Commercial Taxes reported in [1986] 62 STC 233, rectification of an assessment order was sought by an assessee under section 25A on the basis of a subsequent decision of this Court. This Court held :
"The error apparent can be both of fact as well as law. It is well-settled that an order can be rectified on either ground. If the revisional over made under section 21 in this case was not in conformity with the law laid down by this Court, such an order could be rectified under section 25A within 5 years from the date of the order in which the mistake had occurred."
19. In Visvesvaraya Iron & Steel Ltd. case [1991] 83 STC 305, referred to above, on identical facts, this Court held that applying the rule 6(4)(ff) to deduct the cost of packing material, in case of cement, was clearly an error of law which could be rectified under section 25A of the Act.
20. In Selection Committee for Admission to the Medical and Dental College v. M. P. Nagaraj AIR 1972 Mys. 44 a Division Bench of this Court had occasion to consider what is a "mistake or error apparent on the face of the record" under the order 47, rule 1, Code of Civil Procedure. One view canvassed before this Court was that if a binding decision bearing on a material question was overlooked, that would be an error apparent on the face of the record. The contrary view submitted was that even if the court overlooks a binding decision, that will not be an error apparent on the face of the record. This Court after considering the matter held :
"In this state of divergence of views as to whether overlooking a binding decision amounts to an error apparent on the face of the record, the key to the solution of this question is, in our opinion, found in the test laid down by Rajagopala Ayyangar, J., who spoke for the court in Tungabhadra Industries Ltd. v. Government of Andhra Pradesh . Without intending to deal with that question exhaustively his Lordship said that where without any elaborate argument one could point to the error and say here is a substantial point of law which stares one in the face, and there could reasonably be no two opinions entertained about it, a clear case of error apparent on the face of the record would be made out.
Article 141 of the Constitution provides that the law declared by the court, shall be binding on all courts within the territory of India. Hence, where there is a decision of the Supreme Court bearing on a point and where a count has taken a view on that point which is not consistent with the law laid down by the Supreme Court, it needs no elaborate argument to point to the error and there could reasonably be no two opinions entertained about such error. Applying the above test laid down by Rajagopala Ayyangar, J., in (Tungabhadra Industries Ltd. v. Government of Andhra Pradesh), such an error would clearly be an error apparent on the face of the record. The reasoning of Srinivasa Iyengar, J., in AIR 1927 Mad. 998 (Opporti Padhi v. Paila Vijula) and of Waller, J., in AIR 1933 Mad. 631 (Venkatappayya v. Ponnayya) that a mistake of law apparent from a contrary decision of a superior court, cannot be rendered on the point involved by a High Court other than the High Court of the concerned State. It is needless to point out that when a point is covered by a decision of the Supreme Court or concerned High Court, either rendered prior to or subsequent to the order proposed to be rectified, then the point ceases to be a debatable point; it also ceases to be a point requiring elaborate arguments or detailed investigation/enquiry. To encapsulate, the following will be "mistakes apparent from the record" relating to a question of law :
(a) An order made, ignoring or overlooking : (i) a binding decision of the Supreme Court or the concerned High Court rendered prior to the date of such order; and/or (ii) a relevant provision of existing law;
(b) An order, found to be erroneous : (i) by applying a subsequent enactment given retrospective effect; and/or (ii) by applying a subsequent decision of the Supreme Court or concerned, High Court.
21. It should however be borne in mind that orders which have become final, cannot be rectified. This is not because a mistake apparent on the record ceases to be so in regard to an order which has become final, but because the time/limitation prescribed for appeal, revision, review or rectification, had expired. In other words, so long as the time prescribed for rectification or other remedy under the relevant statute has not expired, the order cannot be said to have become final, for purpose of rectification.
22. Before applying these principles to the case on hand, it is necessary to refer to two decisions relied on by the petitioners which take different view. The first is a decision of a Division Bench of the Calcutta High Court in Jiyajeerao Cotton Mills Ltd. v. Income-tax Officer dealing with section 154 of the Income-tax Act, 1961, wherein it was held :
"....... We are, however, unable to accept the contention of Mr. Pal that the principle of retrospective legislation is applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on a provision of a statute between the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court, in our opinion, cannot be said to have retrospective operation in the sense that although a debate or doubt or a conflict or judicial opinion is resolved and settled by the Supreme Court, yet still that does not obliterate the existence of such debate or doubt or conflict that existed prior to the decision of the Supreme Court setting at rest debate or doubt or conflict."
The second is a decision of a Division Bench of the Madras Court in State of Tamil Nadu v. Meenambal and Co. reported in [1984] 56 STC 82, wherein it was held :
"The learned counsel for the assessees put forward the well-known doctrine of jurisprudence that whenever a court declares what that law is, it takes effect, not from the date of the judgment, but from the very date of the commencement of the law in question. This is a well-known fiction of our jurisprudence. Cynics sometimes refer to this doctrine by describing court judgments as always being retrospective, in contrast to Acts of the Legislature which are generally prospective and where occasional retrospectivity is the butt of high-faulting criticism from legal purists and from the pulpit of the Bench. We quite agree with the learned counsel for the assessees that retrospectivity is the very life-breath of court decisions generally. But this doctrine of jurisprudence cannot alter the realities of time or space. At the time when the Tribunal rendered their decision in these cases, there was no Supreme Court decision at all. So it cannot be said that the Tribunal's decision could be regarded, ex facie as running counter to the Supreme Court's decision, and so ex facie erroneous. The Supreme Court have no doubt clarified what the law under the Tamil Nadu General Sales Tax Act, 1959, was from its very commencement, but their judgment has not the effect of rendering the orders of the Tribunal dated 31st January, 1973, and 25th April, 1978 as mistakes apparent from the record.
The learned counsel for the assesses submitted that on the wording of section 55 for an error to be apparent from the face of the record it is not correct to say that the error could have been avoided even at the time when it had been committed. The learned counsel pointed out that section 55 carries a three-year period of time to rectify the error, and this shows that an error can become apparent at any time within that period, which means that it could become apparent subsequent to the commission of the error. This argument is misconceived. Section 55 contains two things : one is the commission of apparent error; the other is its rectification. The period of limitation prescribed by the section relates to the aspect of rectification. The learned counsel's contention is based on a transference of limitation period of three years prescribed for rectification to the very basic requirement, namely, the commission of an apparent error which is the provocation for the exercise of the rectificatory power."
23. The Calcutta and Madras High Courts have proceeded on the basis that an order ex facie legal and correct, when made, cannot become erroneous by reason of any subsequent declaration of law by the Supreme Court or the respective High Court. They further assume that a "mistake apparent on the record" should be demonstrated on the date of making of the order and not with reference to any subsequent binding decision of a superior court. There is an inherent fallacy in this reasoning. In Jiyajeerao's case and Meenambal's case [1984] 56 STC 82 (Mad.) though the principle that when a superior court whose declarations of law are binding, declares what the law is, it takes effect not from the date of judgment but from the very inception of the law in question has been referred, it was not given effect, as they made a distinction between the retrospective operation of statutes and retrospective operation of binding decisions of superior courts. When a superior court declares of law, it is not "making" law on the date of judgment but merely declaring the law. The decision being an enunciation of the true and correct position of law, becomes applicable from the date when the concerned law came into effect. If, therefore, the Supreme Court or the concerned High Court declared the true position on the point of law, it relates back to the date of the enactment itself. If so, the law so declared is deemed to have existed and applied, on the date of the order which is sought to be rectified. Hence the validity of the order will necessarily have to be examined with reference to the legal position as enunciated by the Supreme Court, even though such enunciation may be subsequent to the order of assessment. If so done, it would be seen that the order to the contrary, suffers from an error apparent from the record. The decisions of the Calcutta and Madras High Courts in Jiyajeerao and Meenambal [1984] 56 STC 82 run counter to the law laid down by the Supreme Court in the cases of Bombay Dyeing , Model Mills [1967] 64 ITR 67, Bhatia and Gauraya . I, therefore, respectfully disagree with the views expressed in Jiyajeerao and Meenambal [1984] 56 STC 82 (Mad.). It now remains to examine whether the orders of rectification are justified in these cases, in the light of the principles stated in para 26 above.
24. The decision of this Court in Visvesvaraya's case [1991] 83 STC 305 was rendered on September 20, 1990. The said decision was binding on all authorities in Karnataka. The orders of assessments were passed on September 30, 1991, April 30, 1992, April 25, 1992 and May 26, 1992, all subsequent to the date of decision in Visvesvaraya . It needs no arguments to say that if the assessing authority had applied the ratio decidendi in Visvesvaraya case , he could not have excluded packing charges from the taxable turnover. The assessing officer did not refer to that decision. Nor do the orders contain any discussion or reason as to why packing charges were excluded while calculating taxable turnover. In these circumstances, no long or elaborate argument is necessary to hold that the said orders were passed by overlooking or ignoring the binding decision of this Court in Visvesvaraya [1991] 83 STC 305. Thus the said deduction of packing charges is a mistake apparent on the record amendable to rectification on the ground stated in para 26(a) above.
25. Learned counsel for the petitioner contended that the decision in Visvesvaraya's case was contrary to the decision of the Supreme Court in Raj Sheel's case [1989] 74 STC 379 and therefore the question regarding packing charges was still debatable on the date of the assessment order. It is not necessary to go into the question whether Visvesvaraya's case was contrary to Raj Sheel's case [1989] 74 STC 379 (SC). Even assuming for the purpose of argument, that the decision in Visvesvaraya's case was not available, the position is no different. When the Supreme Court categorically declared in Ramco's case [1993] 88 STC 151 that packing charges should also be included in the taxable turnover for both CST and TNST, the said declared law became applicable even in regard to Karnataka Sales Tax Act. The said decision in Ramco's case [1993] 88 STC 151 (SC) though rendered on October 20, 1992, subsequent to the orders of assessment, will have to be applied to find out whether there is any mistake apparent from the record. It should be deemed that in regard to sale of cement governed by Cement Control Order of 1967, packing charges should be included in taxable turnover, ever from the beginning. Tested on the touchstone of Ramco's case [1993] 88 STC 151 (SC), exclusion of packing charges from taxable turnover becomes ex facie illegal and erroneous, amenable to rectification on the ground stated in par 26(b) above. Thus, the assessing authority was justified in rectifying the orders of assessment by including the packing charges in the taxable turnover.
26. I, therefore, hold that the orders of rectification impugned in these writ petitions, in so far as they seek to include packing charges in the taxable turnover are valid and justified. If the petitioner has any other grievance in regard to the orders of rectification, on the calculations made in pursuance of the rectification, it is open to them to urge that limited question in the appeals filed or to be filed by them.
27. It is stated that the petitioner has not filed appeals in regard to assessment years 1983-84 and 1984-85 having regard to the pendency of these petitions. It is needless to say that if such appeals are filed, the appellate authority will have to take note of the time spent in these writ petitions and condone the delay in filing such appeals.
Subject to the above observations, these writ petitions are rejected.
28. Writ petitions dismissed.