2004 (11) TMI 325 - SC - VAT and Sales Tax

Unable to accept the submission that as the G. O. Ms. No. 304 is an errata it necessarily means that G. O. Ms. No. 303 had never come into existence. The word errata in our view implies that there was something in existence which is being corrected. The fact that this was an errata itself showed that there was something in existence which was being corrected. This aspect has also been overlooked by the High Court. Appeal allowed.

Summary

Issues:
1. Interpretation of Government Orders (G.O.) regarding sales tax rates on jewellery and precious stones.
2. Effect of an errata issued on the tax rate.
3. Application of law when assessing officers accept returns at incorrect rates.
4. Consideration of equitable basis in judgment.

Interpretation of Government Orders (G.O.):
The case involved a dispute over the interpretation of Government Orders (G.O.) related to sales tax rates on jewellery and precious stones in Andhra Pradesh. Initially, G.O. Ms. No. 252 reduced the tax rate on jewellery to two per cent, but later G.O. Ms. No. 303 rescinded the reduction, making the tax rate on jewellery four per cent again. The High Court accepted the argument that an errata issued later clarified the tax rate on jewellery to be three per cent, to be applied prospectively. However, the Supreme Court disagreed, emphasizing that once a G.O. is published in the Official Gazette, it is deemed to be known to all, and ignorance of the law cannot be an excuse. The Court held that the tax rate on jewellery was four per cent from the date of publication of G.O. Ms. No. 303, and any incorrect assessments could be rectified by the assessing officers.

Effect of Errata on Tax Rate:
The Supreme Court clarified that the errata issued on May 4, 1998, only reduced the tax rate from four per cent to three per cent, contrary to the High Court's interpretation that the rate of tax had been increased. The Court highlighted that the errata corrected an existing provision and did not nullify the existence of G.O. Ms. No. 303. The Court emphasized that the law should be applied as per the published G.O., and confusion or lack of awareness among parties or assessing officers does not justify deviating from the legal provisions.

Application of Law by Assessing Officers:
The judgment addressed the issue of assessing officers accepting returns at incorrect tax rates due to ignorance or laxity. The Court emphasized that once a G.O. is published, it becomes effective, and ignorance of the law is not a valid excuse. Assessing officers were expected to follow the law as published, and any incorrect assessments could be rectified. The Court rejected the argument that confusion among parties justified deviating from the legal provisions and emphasized the importance of upholding the law despite any lack of clarity or awareness.

Consideration of Equitable Basis:
The Supreme Court set aside the High Court's judgment, emphasizing that equitable considerations cannot override clear legal provisions. The Court held that if the law is clear, it must be enforced, regardless of confusion or lack of awareness among parties. The judgment highlighted that courts cannot ignore the law based on equitable grounds and must uphold the legal provisions. The appeals were allowed, and no costs were awarded in the case.

In conclusion, the Supreme Court's judgment clarified the interpretation of Government Orders related to sales tax rates, emphasized the importance of applying the law as published, addressed the role of assessing officers in following legal provisions, and underscored the significance of upholding clear legal provisions over equitable considerations.