2008 (7) TMI 931 - HC - VAT and Sales Tax

Whether Trade Tax Tribunal was legally justified to quash the order passed under section 22 of the Act despite the fact that the question of tax liability was not debatable and Tribunal has accepted the fact that the dealer was liable to pay tax? Whether Trade Tax Tribunal was legally justified to hold that the mistake in the assessment order was not apparent on the face of record despite the fact that is quite apparent from the records available that the amount of Rs. 5, 250.66 was not covered by form C and the exemption was wrongly allowed in the assessment order? Held that - The order of the assessing authority asking the dealer-opposite party to pay further tax at the rate of six per cent in addition to the tax already paid at the rate of four per cent in proceedings under section 22 of the Act is perfectly justified. It is well-settled that if there is some defect in the form opportunity should be given to get the defect removed. In this view of the matter the mistake in the form appears to be a trivial one and the interest of the Revenue is not at all affected in any manner and the levy of tax at concessional rate was justified. Since the matter is an old one it is not desirable to remit the matter back to the Tribunal and to afford opportunity to the dealer-opposite party to get the form C rectified. The order of the Tribunal with regard to C form No. 72714 is sustained though for different reason. Viewed as above the revision succeeds and is allowed in part and the order of the Tribunal is modified accordingly and it is held that the dealeropposite party is liable to pay the differential rate of tax at the rate of six per cent on a sum of Rs. 7, 871.70. With regard to the rest there is no force in the revision.

Summary

Issues:
1. Proper course of action under section 21 vs. section 22 of the U.P. Trade Tax Act, 1948.
2. Rectification of mistakes in assessment order regarding form C and tax liability.

Analysis:
1. The Tribunal set aside the proceeding initiated under section 22 of the Act and held that proceeding should have been initiated under section 21 instead. The High Court disagreed, emphasizing that sections 21 and 22 operate in different fields, and if the parameters of section 22 are met, the proceeding under it is justified. The mistake in the assessment order regarding form C and tax liability justified invoking section 22.

2. The assessing officer found discrepancies in form C submissions by the dealer, leading to the initiation of proceedings under section 22 for rectification. One discrepancy was the absence of form C for a specific amount, justifying the imposition of additional tax. Another issue was a defective form C with no mentioned amount, which the dealer explained was on a separate sheet. The High Court held that the rectification of these mistakes by the assessing authority was valid, as the mistakes were apparent on the record and affected the tax liability.

3. The High Court addressed the questions of law raised in the memo of revision, emphasizing the legal justification for rectifying mistakes under section 22 when they are apparent on the record. It highlighted that the interest of the Revenue should be protected, and rectification of trivial defects in form C should not impact the concessional tax rate. The Court upheld the assessing authority's decision to rectify the mistakes, modifying the Tribunal's order to hold the dealer liable for paying the differential tax rate on the specified amount.

4. The judgment concluded by partially allowing the revision, modifying the Tribunal's order, and upholding the rectification of mistakes in the assessment order under section 22. The Court emphasized the importance of protecting the Revenue's interest and ensuring the correct imposition of tax liabilities. No costs were awarded in this matter.