Supreme Court of India
ASSISTANT COMMERCIAL TAXES OFFICERversusM/S MAKKAD PLASTIC AGENCIES
- Citation
- 2011 INSC 235
- Decided
- 29 March 2011
- Disposal
- Appeal(s) allowed
- Bench
- MUKUNDAKAM SHARMA
Holding
Section 37 of the Rajasthan Sales Tax Act, 1994 is confined to rectifying apparent mistakes and does not empower the authority to review or re‑appreciate evidence, rendering the Board’s amendment ultra vires.
Summary
The Rajasthan Sales Tax Assessing Officer had assessed M/s Makkad Plastic Agencies at a 10% rate, which was later set aside by the Deputy Commissioner (Appeals) and then restored by the Rajasthan Taxation Board. The assessee filed a rectification application under Section 37 of the Rajasthan Sales Tax Act, 1994, prompting the Board to modify its own earlier order and remove the penalty on the ground that no malafide intent was proved. The Board’s modification involved re‑appreciating the evidence, which the appellant contended exceeded the Board’s jurisdiction. The Supreme Court held that Section 37 confers only the power to correct mistakes apparent on the face of the record and does not allow a review or re‑appreciation of evidence. Consequently, the Board’s order of 22 January 2009 and the High Court’s upholding of it were set aside, and the original assessing officer’s order was restored. The appeal was allowed without costs.
Issues considered
- Whether the power under Section 37 of the Rajasthan Sales Tax Act, 1994 is limited to rectifying mistakes apparent on the face of the record and does not include the power of review or re‑appreciation of evidence.
- Whether a review of an order can be made in the absence of an express statutory provision for review.
- Whether the Taxation Board exceeded its jurisdiction by modifying its earlier order under Section 37.
Legislation cited
- Income Tax Acts. 154, s. 263
- Rajasthan Sales Tax Act, 1994s. 29(7), s. 37, s. 84, s. 86
- U.P. Sales Tax (Amendment) Act, 1995s. 22, s. 39(2)
Subjects
Section 37rectificationreviewtax assessmentjurisdictionpenaltysales taxRajasthanTaxation Boardmistake apparent on record
Judgment
• (2011] 4 S.C.R. 663
ASSISTANT COMMERCIAL TAXES OFFICER A
v.
M/S MAKKAD PLASTIC AGENCIES
(Civil Appeal No. 2692 of 2011)
MARCH 29, 2011 .
B
[DR. MUKUNDAKAM SHARMA AND
ANIL R. DAVE, JJ.]
Rajasthan Sales Tax Act, 1994: s.37 - Rectification of
error apparent on the face of the record - Exercise of power C
vested u/s.37 - Scope and ambit- Held: The scope and ambit
of the power u/s.37 is circumscribed and restricted within the
ambit of the power vested by the said Section - Such a power
is neither a power of review nor is akin to the power of revision
but is only a power to rectify a mistake apparent on the face o
of the record and for which re-appreciation of the entire
records is neither possible nor called for - Rectification
implies the correction of an error or removal of defects or
imperfections - In the instant case, the Taxation Board
passed an order against assessee whereby it upheld the E
demand of differential tax and imposition of penalty as done
by assessing authority - Assessee filed rectification
application uls. 37 before the Board - The Board modified its
earlier order to the extent that as the assessee had declared
all his sales in the books of accounts, imposition of penalty F
was not justified - While passing the subsequent order, the
Board exceeded its jurisdiction by re-appreciating the
evidence on record and holding that there was no ma/a fide
intention on the part of assessee-respondent for tax evasion
- Such re-appreciation of the evidence to come to a contrary
finding was not available uls.37 while exercising the power of G
rectification of error apparent on the face of the record - Thus,
the subsequent order passed by the Board as a/so the
judgment passed by the High Court upholding the said order
663 H
•
664 SUPREME COURT REPORTS (2011] 4 S.C.R.
•
A of the Board set aside and the original order passed by the
Assessing Officer restored - Review.
Review: Maintainability of - Held. Review is a creature
of the statute - An order of review could be passed only when
8 an express power of review is provided in the statute - In the
absence of any statutory provision for review, exercise of
power of review under the garb of clarification/modification!
correction is not permissible.
Words and phrases: Rectification - Meaning of
c
The assessing officer passed the assessment order
that the articles sold by the assessee-respondent
attracted the sales tax of 10% instead of 8% paid by
assessee treating them as separate articles from plastic
o goods. The demand was made for the difference of tax
at 2% alongwith surcharn,e, interest and penalty. The
appellate authority set aside the assessment order. On
appeal, the Taxation Board by its order dated 13.5.2008
restored the assessment order holding that "plastic
E goods" and "thermoware" were two different articles as
was indicated from the invoice itself.
The assessee filed a rectification/amendment
application under Section 37 of the Rajasthan Sales Tax
Act, 1994. The Taxation Board decided the said
F application on 22.1.2009 and modified its earlier order to
the extent that as the assessee had declared all his sales
in the books of accounts, in order to levy penalty, the
department could not show that there was a malafide
intention on the part of the assessee. Accordingly, it held
G that the order of levying penalty was not justified.
Aggrieved, the appellant filed revision before the High
Court, which was also dismissed.
The question which arose for consideration in the
H
• ASSISTANT COMMERCIAL TAXES OFFICER v. MAKKAD 665
PLASTIC AGENCIES
instant appeal was whether, while exercising power A
vested under Section 37 of the Act, the Taxation Board
could re-appreciate the evidence on record and review
its earlier order to hold that there was no mens rea on the
part of the assessee and no penalty was leviable on it.
B
Allowing the appeal, the Court
HELD: 1.1. The exercise of power vested under
Section 37 of the Rajasthan Sales Tax Act, 1994 by the
Taxation Board in the instant case by interfering with its
earlier order was a jurisdictional error and also an C
exercise of power in excess to what is provided in the
statute. The scope and ambit of the power which could
be exercised under Section 37 of the Act is circumscribed
and restricted within the ambit of the power vested by the
said Section. Such a power is neither a power of review D
nor is akin to the power of revision but is only a power
to rectify a mistake apparent on the face of the record.
Rectification implies the correction of an error or a
removal of defects or imperfections. It implies an error,
mistake or defect which after rectification is made right. E
It is also now an established proposition of law that
review is a creature of the statute and such an order of
review could be passed only when an express power of
review is provided in the statute. In the absence of any
statutory provision for review, exercise of power of review F
under the garb of clarification/modification/correction is
not permissible. [Paras 13, 14, 17] [671-B-F; 673-C-E]
Commissioner of Income Tax, Bhopal v. Raison
Industries Ltd. (2007) 2 SCC 326; Commissioner of Trade
Tax, U.P. v. Upper Doab Sugar Mills Ltd.(2000) 3 SCC 676 G
- relied on.
1.2. Section 37 of the Act provides for a power to
rectify any mistake apparent on the record. Such power
is vested on the authority to rectify an obvious mistake H
666 SUPREME COURT REPORTS [2011] 4 S.C.R.
•
A which is apparent on the face of the records and for
which a re-appreciation of the entire records is neither
possible nor called for. When the subsequent order dated
22.01.2009 passed by the Taxation Board is analysed and
scrutinised, it would be clear/apparent that the Taxation
s Board while passing that order exceeded its jurisdiction
by re-appreciating the evidence on record and holding
that there was no mala fide intention on the part of
assessee-respondent for tax evasion. Such re-
appreciation of the evidence to come to a contrary finding
c was not available under Section 37 of the Act while
exercising the power of rectification of error apparent on
the face of the records. Thus, the orders passed by the
Taxation Board on 22.01.2009 as also the impugned order
and judgment passed by the High Court upholding the
said order of the Taxation Board are set aside and
D
quashed and the original order passed by the Assessing
Officer is restored. [Paras 18, 19) [673-F-H; 674-A-B]
Ka/abharati Advertising v. Hemant Vimalnath Narichania
and Others (2010) 9 sec 437 - relied on.
E
Case Law Reference:
(2007) 2 sec 326 relied on Para 15
(2000) 3 sec 676 relied on Para 16
F (2010) 9 sec 437 relied on Para 17
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
2692 of 2011.
G From the Judgment & Order dated 03.05.2010 of the
High Court of Judicature for Rajasthan, Jodhpur Bench, in S.S.
Civil (S.T.) Revision Petition No. 74 of 2010.
Abhishek Gupta, Milid Kumar for the Appellant.
H
• ASSISTANT COMMERCIAL TAXES OFFICER v. MAKKAD 667
PLASTIC AGENCIES
The Judgment of the Courl was delivered by A
DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
2. This appeal is directed against the judgment and order
dated 03.05.2010 passed by the Rajasthan High Court,
Jodhpur Bench, in S.B. Civil [Sales-Tax] Revision No. 74 of B
2010, whereby the High Court dismissed the said Revision
Petition preferred by the appellant herein and upheld the order
dated 22.01.2009 passed by the Rajasthan Taxation Board,
Ajmer, wherein the Taxation Board interfered and modified its
earlier order dated 13.05.2008. C
3. The assessment of the assessee-respondent for the
Assessment Year 2001-02 was completed by the Assessing
Officer under Section 29(7) of the Rajasthan Sales Tax Act,
1994 [for short "the Act of 1994"] holding that the tax on "thermo 0
ware" and "vacuum ware", which were the articles sold by the
assessee-respondent during the relevant assessment year,
should be levied Sales Tax at 10 per cent instead of 8 per cent,
treating them as separate articles from plastic goods/products.
Consequently, the liability of difference of tax at 2 per cent along E
with surcharge, interest and penalty was also levied.
4. The aforesaid order of the Assessing Officer was
challenged by the assessee-respondent before the Deputy
Commissioner [Appeals], Commercial Tax Department,
Bikaner under Section 84 of the Act of 1994, which was allowed F
by the Appellate Authority by order dated 29.03.2005 by setting
aside the demand for difference of tax imposed at 2 per cent
as also the penalty and interest.
5. Aggrieved by the aforesaid order dated 29.03.2005 of G
the Deputy Commissioner [Appeals], Bikaner the appellant
herein preferred an appeal before the Rajasthan Taxation
Board, Ajmer, which was heard and disposed of by the Taxation
Board by allowing the same vide its order dated 13.05.2008.
The Taxation Board considered various documents placed on H
668 SUPREME COURT REPORTS [2011] 4 S.C.R.
A record including invoices arfd, thereafter, on appreciation
thereof, it was held that "plastic goods" and "thermo ware" are
two different articles as was indicated from the invoice itself. It
was also held that the conclusion arrived at by the Tax
Assessing Officer is well-considered and reasonable, whereas
B the order passed by the Deputy Commissioner [Appeals],
Bikaner is contrary to facts and law. Having held thus, the
Taxation Board allowed the appeal and order dated 29.03.2005
passed by the Deputy Commissioner (Appeals], Bikaner was
set aside and order passed by the Tax Assessing Officer was
C restored.
6. The assessee-respondent thereafter filed a rectification/
amendment application purportedly under Section 37 of the Act
of 1994, which was decided by the Rajasthan Taxation Board,
Ajmer by passing an order dated 22.01.2009. By the aforesaid
D order the Taxation Board modified its earlier order to the extent
of holding that as the assessee-respondent had declared all
his sales in the books of accounts, in that situation, in order to
levy penalty, department has to also prove additionally, that
there was a mala fide intention on the part of the assessee-
E respondent for tax evasion, which is not revealed in the present
case. It was further held that as the mala fide intention of the
assessee-respondent for tax evasion has not been proved and-
since no such evidence is available on record from which it
could be established that the assessee-respondent had the
F mala fide intention behind recovering the tax at the rate of 8
per cent, the order of levying penalty is not justiciable. After
recording the aforesaid findings, the Taxation Board passed an
order dated 22.01.2009 to the extent of amending its previous
order dated 13.05.2008 and set aside the order passed by the
G Deputy Commissioner [Appeals], Bikaner dated 29.03.2005 on
the issue of tax evasion only, however, maintained the finding
on the issue of penalt.
7. Being aggrieved by the aforesaid order passed by the
Taxation Board a Revision Petition was preferred by the
H
• ASSISTANT COMMERCIAL TAXES OFFICER v. MAKKAD 669
PLASTIC AGENCIES [DR. MUKUNDAKAM SHARMA, J]
appellant before the High Court of Rajasthan, Jodhpur Bench A
under Section 86 of the Act of 1994. The High Court, however,
held that no question of law arises out of the order passed by
the Taxation Board for consideration and, consequently, the
Revision Petition was dismissed.. The present appeal, as
stated hereinbefore, is directed against the aforesaid two B
orders passed by the High Court as also by the Taxation Board.
8. From the aforesaid narration of facts it is crystal clear
that the earlier order dated 13.05.2008 passed by the Taxation
Board was interfered with and modified by the Taxation Board
itself under its order dated 22.01.2009. The said order dated C
22.01.2009 is practically challenged in the present case on the
ground that the said order was passed by the Taxation Board
in excess of its jurisdiction. The said order dated 22.01.2009
was passed on the basis of an Amendment Application filed
by the assessee-respondent under Section 37 of the Act of D·
1994. In the said order dated 22.01.2009, the Taxation Board
proceeded on the ground that the said application was in the
nature of Amendment Application praying for amendment of its
judgment and order dated 13.05.2008.
E
9. Content!on raised on behalf of the appellant is that the
Taxation Board committed a jurisdictional error in amending
and reviewing its earlier order dated 13.05.2008 while
exercising the power of rectification of a mistake apparent on
the face of the record.
F
10. It may be stated herein that despite service of notice,
none appears for the assessee-respondent and, therefore, we
proceed to dispose of this appeal on the basis of the
submissions made by the counsel appearing for the appellant
and also on the perusal of the records placed before us. G
11. In order to appreciate the aforesaid contention, we are
required to extract the relevant part of Section 37 of the Act of
1994, which was the power exercised by the Taxation Board
for passing the order dated 22.01.2009: - H
670 SUPREME COURT REPORTS [2011] 4 S.C.R.
A "Se.ction 37: Rectification of a Mistake -
(1) With a view to rectifying any mistake apparent from the
record, any officer appointed or any authority constituted
under the Act may rectify suo motu or otherwise any order
passed by him.
B
Explanation: A mistake apparent from the record shall
include an order which was valid when it was made and
is subsequently rendered invalid by an amendment of the
law having retrospective operation or by a judgment of the
c Supreme Court, the Rajasthan High Court or the Rajasthan
Tax Board.
"
12. The Taxation Board by its order dated 13.05.2008 was
D disposing of an appeal filed against the order dated
29.03.2005 passed by the Deputy Commissioner [Appeals]. By
the aforesaid order dated 13.05.2008 the Taxation Board
upheld and accepted the contention of the appellant herein that
"thermo ware" is not similar to "plastic product" and that rather
E they are two different products/articles, which in fact is also
proved and established from the documents on record. It was,
therefore, held that the conclusion arrived at by the Assessing
Officer is well-considered and reasonable. It was also held that,
although, in the appellate judgment, given by the Deputy
F Commissioner [Appeals], reference was made to the use of
"plastic granules" and "powder" as raw material for
manufacturing "thermo ware" for treating "thermo ware" as
covered under the category of plastic goods/products, but
neither any evidence nor any reasonable and justifiable ground
G was given in the said order for doing the same. After recording
the aforesaid findings, the Taxation Board set aside the
judgment of the Deputy Commissioner [Appeals] and restored
the order of the Tax Assessing Officer, who had by his order,
held that the assessee-respondent is liable to pay tax at the
H rate of 10 per cent, as the product "thermo ware" and "vacuum
• ASSISTANT COMMERCIAL TAXES OFFICER I/. MAKKAD 671
PLASTIC AGENCIES [DR. MUKUNDAKAM SHARMA, J]
ware", which are the articles sold by the assessee-respondent, · A
are assessable to tax at the rate of 10 per cent instead of 8
per cent to be levied on plastic wares.
13. The aforesaid well-reasoned order came to be
interfered with by the Taxation Board itself while exercising the 8
purported powers under Section 37 of the Act of 1994, which
empowers the Board only to rectify a mistake apparent on the
face of the record .. The issue, therefore, is whether, ·while
exercising such power vested under Section 37 of-the Act of
1994, the Taxation Board could re-appreciate the evidence on C
record and review its earlier order by holding that there was
no mens rea on the part of the assessee-respondent and,
therefore, no penalty is leviable on them. The·aforesaid exercise
of power by the Taxation Board in the present case by
interfering with its earlier order was submitted to be a
jurisdictional error and also purportedly to be an exercise of D
power in excess to what is provided in the statute:
14. The scope and ambit of the power which could be
exercised under Section 37 of the Act of 1994 is circumscribed
and restricted within the ambit of the power vested by the said E
Section. Such a power is neither a power of review nor is akin
to the power of revision but is only a power to rectify a mistake
apparent on the face of the record. Rectification implies the
correction of an error or a removal of defects or imperfections.
It implies an error, mistake or defect which after rectification is F
made right.
15. In the case of Commissioner of Income Tax, Bhopal
v. Raison Industries Ltd. reported in (2007) 2 SCC 326 a
similar situation arose for the interpretation of this Court G
regarding the scope and ambit of Section 154 of the Income
Tax Act vesting the power of rectification as against the power
vested under Section 263 of the Income Tax Act, which is a
power of revision. While examining the scope of the power of
rectification under Section 154 as against the power of revision
H
672 SUPREME COURT REPORTS (2011] 4 S.C.R. •
A vested under Section 263 of the Income Tax Act, it was held
by this Court as fq!lows atPara 8: -
"8. lhe scope and ambit of a proceeding for rectification
of an order under Section 154 and a proceeding for
B revision under Section 263 are distinct and different. Order
of rectification can be passed in certain contingencies. It
does not confer a power of review. If an order of
assessment is rectified by the Assessing Officer in terms
of Section 154 of the Act, the same itself may be a subject
c matter of a proceeding under Section 263 of the Act. The
power of revision under Section 263 is exercised by a
higher authority. It is a special provision. The revisional
jurisdiction is vested in the Commissioner. An order
thereunder can be passed if it is found that the order of
assessment is prejudicial to the Revenue. In such a
D
proceeding, he may not only pass an appropriate order in
exercise of the said juriadiction but in order to enable him
to do it, he may make such inquiry as he deems necessary
in this behalf."
E In paragraph 12 of the said judgment it was also held that when
different jurisdictions are conferred upon different authorities,
to be exercised on different conditions, both may not be held
to be overlapping with each other. While examining the scope
and limitations of jurisdiction under Section 154 of the Income
F Tax Act, it was held that such a power of rectification could only
be exercised when there is an error apparent on the face of
the record and that it does not confer any power of review. It
was further held that an order of assessment may or may not
be rectified and if an order of rectification is passed by the
G Assessing Authority, the rectified order shall be given effect to.
16. We may also at this stage appropriately refer to yet
another decision of this Court in Commissioner of Trade Tax,
U.P. v. Upper Doab Sugar Mills Ltd. reported in (2000) 3 SCC
H 676, in which the power and scope of rectification was
• ASSISTANT COMMERCIAL TAXES or::FrCER v. MAKKAD 673
PLASTIC AGENCIES [DR. MUK:UNOAKAMSHARMA, J.J
considered and pitted againstthe .scope of review. The A
aforesaid decision was in the context of Section 39(2) of the
U.P. Sales Tax (Amendment) Act, 1995 which provides the
power of review. Section 22 of the said Act provides for
rectification of mistake. In the said decision, it was held that
when two specific and independent powers have been B
conferred upon the authorities, both powers can be exercised
alternatively, but, it cannot be said that while exercising power
of rectification, the authority can simultaneously exercise the
power of review.
17. Both the aforesaid two decisions which were rendered
c
while considering taxation laws are squarely applicable to the
facts of the present case. It is also now an established
proposition of law that review is a· creature of the statute and
such an order of review could be passed only when an express
power of review is provided in the statute .. Jn the absel}ce of D
any statutory provision for review, exercise of poi,verofreview
under the garb of clarification/modificatiqn/correcti6~ is. f10t
permissible. In coming to the said.conclµsioil we .are fortified
by the decision of this Court in Kalabharatl Advertising v.
Hem ant Vimalnath Narichania and Others reported in (2010) E
9 sec 437.
18. Section 37 of the Act of 1994 provides for a power to
rectify any mistake apparent on the record. Such power is
vested on the authority to rectify an obvious mistake which is F
apparent on the face of the records and for which a re-
appreciation of the entire records is neither possible nor called
for. When the subsequent order dated 22.01.2009 passed by
the Taxation Board is analysed and scrutinised it would be clear/
apparent that the Taxation Board while passing that order G
exceeded its jurisdiction by re-appreciating the evidence on
record and holding that there was -no tnala fide)ntentidri on the
part of assessee-respondent Jo'rJax;evasion. Such re-
appreciation of the evidence to c6me to a contrary finding was
not available under Section 37 of the Act of 1994 while
H
674 SUPREME COURT REPORTS (2011) 4.S.C.R.
A exercising the power of rectification of error apparent on the
face of the records.
19. Thus, the orders passed by the Taxation Board on
22.01.2009 as also the impugned order and judgment passed
B by the High Court upholding the said order of the Taxation
Board are hereby set aside and quashed and the original order
passed by the Assessing Officer is restored.
20. In terms of the aforesaid observations, the present
appeal is allowed but without costs.
c
D.G. Appeal allowed.
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