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TMI Blog2006 (4) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... , in view of the order of the Board of Revenue passed in the case reported in Burn Standard Co. Ltd., Jabalpur v. Commissioner of Sales Tax [1994] 18 CTJ 8, wherein it was held that the sale of coal ash was liable to tax. These proceedings were ultimately closed vide order dated September 30, 1996 in view of the directions issued by the Commissioner under section 42B of the M.P. General Sales Tax Act dated February 6, 1991. On May 23, 1998, order dated September 30, 1996 passed in the reassessment proceedings was sought to be revised in exercise of powers under section 39(2) of the Act and in pursuance thereof notices were issued to the petitioner on May 23, 1998 which culminated in passing of the impugned order dated November 13, 1998 imposing liability upon the petitioner to pay tax at 12 per cent on the sale of coal ash. The learned counsel for the petitioner assails the impugned order on three grounds: (a) Firstly, that for the purpose of invoking the powers under section 39, it is a mandatory pre-condition that the order sought to be revised is both erroneous as well as prejudicial to the interest of Revenue in view of the law as laid down in a series of decisions of this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs initiated and the order passed under section 39(2) of the Act are in accordance with law and do not deserve to be interfered with. I have heard the learned counsel for the parties at length. From a perusal of the documents on record, the following undisputed and admitted facts emerge: That the sale of coal ash attracted sales tax at 12 per cent as per the law laid down by this court in the case of Hukumchand Mills [1988] 71 STC 101 [FB] vide judgment dated August 4, 1987, that this law was very much in existence on the date the petitioner was assessed to tax, i.e., on February 10, 1993; that the proceedings for reassessment were initiated under section 19A on July 14, 1994 within a period of three years from the date of the order of assessment in view of the order of the Board of Revenue which simply followed the law as laid down in the case of Hukumchand Mills [1988] 71 STC 101 (MP)[FB]; that the proceedings under section 19A were closed in view of the clear and specific direction and order of the Commissioner under section 42B of the Act dated February 6, 1991; that the issuance of the direction and the fact that the proceedings for reassessment under section 19A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.--. . .' A bare reading of this provision makes it clear that the pre-requisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of the twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent--if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-- recourse cannot be had to section 263(1) of the Act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment was not rendered erroneous consequent to or in light of any judgment or order passed subsequent to the assessment proceedings. As is apparent from a perusal of section 19A of the Act reassessment proceedings can be initiated only within three years from the date of the judgment or order of any court or Tribunal due to which the order of assessment has been rendered erroneous and prejudicial to the interest of Revenue. A Division Bench of this court in the case of Dharamchand Sikharchand [1997] 30 VKN 171, has held that the period of three years as prescribed under section 19A has to be counted from the date, the law is initially declared and laid down and not from the date of any subsequent order following the said judgment. The relevant part of the judgment reads as under: "5. The Commissioner has been given power to reopen the assessment proceedings within a period of three years from the date of order or judgment. The relevant judgment given by this court was dated December 14, 1979 [Karelal Kundanlal Trust v. Commissioner of Sales Tax [1980] 46 STC 202 (MP)] and not the subsequent order passed on November 23, 1982 in M.P. No. 526 of 1981 because this order dated N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eek to reassess and levy tax on the sale of coal ash which was not imposed by the initial order of assessment dated February 10, 1993. In other words, if the proceedings under section 39(2) of the Act are permitted to stand it would amount to permitting revision of proceedings which are otherwise barred by limitation as the real intention of the authorities is to revise the initial order of assessment dated February 10, 1993 in the garb of taking up revision proceedings against the order dated September 30, 1996 closing the proceedings under section 19A. If the authorities are permitted to do so, it would render the statutory object of prescribing the three-year limitation under section 19A and section 39(2), redundant and meaningless. In my considered opinion the method adopted by the respondents is not permissible in law and therefore, deserves to be quashed. Apart from the above facet of the case, if the impugned order under section 39 of the Act is permitted to stand, it would amount to perpetuating an illegality as this court has already held that the initiation of proceedings for reassessment under section 19A was itself misconceived. In the light of the above, the third gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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