1. This revision petition has been filed by the assessee under Section 86 of the Rajasthan Sales Tax Act, 1994 being aggrieved by the order of learned Tax Board dated 16/8/2004 allowing the Revenue's appeal and setting aside the order of first appellate authority dated 22/8/2000, whereby, the said first appellate authority Deputy Commissioner (Appeals) Jaipur allowed the appeal of the assessee against the order passed by the Assessing Authority under Section 37 of the Act and allowed the application for rectification dated 29/2/2000 filed by the assessee, which was rejected by order dated 13/3/2000 of Assessing Authority.
2. The learned Tax Board in its impugned order dated 16/8/2004 has held that question raised by the assessee in his application for rectification under Section 37 of the Act that the commodity manufactured and sold by him namely;P.U.Resin (Polyurethane Resin) was taxable only at the rate of 10% in residuary Entry and not at the rate of 16% under Entry No.91 of the Notification dated 27/3/95, which prescribes rate of tax at the rate of 16% on all types of synthetic adhesives, is a question which falls outside the ambit and scope of Section 37 of the said Act and, therefore, the learned Deputy Commissioner (Appeals) was not justified in allowing the appeal of the assessee as well as application under Section 37 of the Act. Hence, this revision petition by the assessee before this Court.
3. Learned counsel for the petitioner assessee, Mr. Devendra Kumar urged that, in the first instance, while passing the original assessment order itself on 17/3/1999, the learned Assessing Authority had fallen into error in enhancing the rate of tax from 10% to 16% by levying the additional or difference of tax of 6% on the sale of Rs.15,80,839/- declared by the assessee as taxable at the rate of 10% as sales not supported by declaration form in the return filed by it and imposing additional 6% tax thereon to the tune of Rs.94,850/-. Learned counsel for the assessee submitted that Polyurethane Resin (PU Resin) is nothing but plastic granules, which, by no stretch of imagination, could be used as adhesive, which is a different product also manufactured and sold by the assessee, on which admittedly the rate of tax of 16% is applicable and which the assessee himself has declared and the same was assessed by the same Assessing Authority. He, therefore, submitted that applying such higher rate of tax raising from 10% to 16% on P.U.Resin and imposing additional tax of 6% was a mistake apparent from the record, which attracted the provisions of Section 37 of the Act and, therefore, rejection of application of the assessee by the Assessing Authority under Section 37 of the Act was improper and the first appellate authority was justified in allowing such application by a detailed and speaking order, which has been unfortunately, albeit wrongly, reversed by the learned Tax Board by the impugned order dated 16/8/2004.
4. Learned counsel for the assessee also relied upon the following decisions to support his submission that applying wrong rate of tax amounted to mistake apparent on the face of record, which requires rectification; (i) In Ramco Cement Distribution Co.P.Ltd. vs. Deputy Commercial Tax Officer, Rajapalayam (1974) 33 STC 181, the learned Single Judge of Madras High Court held as under: In a matter where the statute itself gave an exemption and that exemption had been inadvertently not claimed by the assessee, it is a case where the taxing authorities should equitably view the situation and render justice.
(ii) In State Trading Corporation of India Ltd. vs. Sales Tax Officer, Special Circle, Mattancherry & Ors. - (1972) (30) STC 92, the learned Single Judge of Kerala High Court held that:
If, by mistake, an assessment has been made by an assessing authority at a higher rate, it is within the power of the assessing authority under section 43 of the Kerala General Sales Tax Act, 1963, to rectify that mistake and refund to the assessee the excess amount collected. The Deputy Commissioner has also power under section 35 to revise any order erroneously passed by the assessing authority in such a case. (iii) In State of Gujarat vs. Ajay Trading Company (1991) 83 STC 354, the Division Bench of Gujarat High Court held as under:-
Where the Sales Tax Officer brought the respondent's turnover of sweets and toffees to tax under entry 50 of Part A of the Second Schedule to the Gujarat Sales Tax Act, 1969, but at the rate of 8 per cent instead of at 7 per cent as prescribed in the said entry:
Held, that it was a case of a mistake apparent on the face of the record and the Tribunal was right in directing rectification holding that the goods were not covered by the residuary entry 13 of the Third Schedule to the Gujarat Sales Tax Act.
(iv) In T.S.Rajam vs. Controller of Estate Duty, Madras (1968) 69 ITR 342, the Division Bench of Madras High Court while dealing with a matter of Estate Duty & explaining as to what is rectification of mistake apparent from the record, held as under :-
For a rectification of an error which is said to be apparent from the record, the mere complexity of the problem or that genuine argument is necessary to discover the same may not be themselves be sufficient to oust the jurisdiction of the Tribunal to rectify such a mistake. If it could be discerned with some precision after a fair probe into the assessment records and a reasonable and probable conclusion can be arrived at and the court's conscience has been shaken in that there appears an error on the face of the record which has to be certainly corrected, then the jurisdiction of the Tribunal vesting it with power to rectify such mistake arises. The essence of rectification is to bring the order which was expressed and intended to be in pursuance of the existing law into harmony with such law. Once the Tribunal or authority is able to predicate with certainty as to in what manner and how the order suffers by a mistake apparent from the record supported by irrefutable evidence then it would enable them to bring the order complained against or impugned against in conformity with the law and the facts in the record. (v) In Mas Chew Gums (India) Pvt. Ltd. vs. Commercial Tax Officer (2002) 127 STC 424, the learned Single Judge of Madras High Court held that:-
Held,allowing the petition, that the assessing authority or an appellate or revising authority is empowered to rectify any apparent mistake on the face of the record at any time within five years from the date of the order passed by such authority. In the present case, obviously the application has been filed within five years. Section 55(3-A) even empowers the assessing authority to exercise his power even cases, where his order has been the subject matter of appeal or revision.
5. Learned counsel for the assessee submitted that the glaring mistake in the original assessment order, which also suffers from the vice of non compliance with the statutory provisions under section 29(6) of the Act read with Rule 47 of the RST Rules, 1995, which enjoined upon the Assessing Authority to give an opportunity of hearing before raising the rate of tax from 10% to 16% or wrongly imposing 6% difference tax on such sale of P.U.Resin. The remedy available to the assessee, even though the assessee did not avail the remedy by way of appeal against such assessment order under Section 84 of the Act, is to apply for rectification of such apparent error on the face of the record and such rectification having been refused by the Assessing Authority, the appeal against such rejection order was rightly allowed by the Deputy Commissioner (Appeals). He, therefore, submitted that learned Tax Board has fallen into error in setting aside that order of Deputy Commissioner (Appeals). He also submitted that the principle of estoppel and res judicata do not apply to the taxing Statutes and each assessment year being independent, the previous history of taxability of this commodity at 16% & assessee not challenging the same in higher forums, could not stand in the way of assessee from raising this question through rectification application in the present assessment year 1996-97.
6. Per contra, Mr.R.B Mathur, learned standing counsel for the Commercial Taxes Department vehemently opposed this submission of learned counsel for the assessee and submitted that if the assessee was aggrieved of the assessment order, the only appropriate remedy for him was to file an appeal against the assessment order and seek his remedy. Since the question of applying the rate of tax on a particular commodity cannot be said to be a mistake apparent on the face of the record, the debatable point as to what rate of tax should be applied on P.U.Resin, whether 10% or 16% and whether it is synthetic adhesive or not, cannot be determined by resorting to Section 37 of the Act and, therefore, learned Tax Board was justified in setting aside the erroneous order of learned Deputy Commissioner (Appeals) and the same does not require any interference by this Court in revisional jurisdiction under Section 86 of the Act. He, therefore, prayed for dismissal of present revision petition.
7. I have heard learned counsels at length and given my thoughtful consideration to the controversy in hand.
8. The word `mistake' coupled with words `apparent from the face of the record' is the gravamen of Section 37 of the Act dealing with rectification of the mistake. It is just another remedial measure provided to the assessee as well as Assessing Authority including the appellate, revisional or assessing authority to rectify the mistake which is apparent on the face of the record. The limitation provided in sub-section (3) & (4) of Section 37 for initiation of such rectification proceedings and concluding the same are 3 and 4 years respectively, while sub-section (5) enjoins upon the Assessing Authority a duty to give an opportunity of hearing to the assessee if the rectification in question has the effect of increasing the liability of a dealer in any way. The Explanation appended to sub-section (1) of Section 37 explains that a mistake apparent from the record shall include an order which was valid when it was made and it is subsequently rendered invalid by an amendment of the law having retrospective operation or by a judgment of the Supreme Court, the Rajasthan High Court or the Rajasthan Tax Board. Thus, the said explanation to sub-section (1) includes within the scope of definition of `mistake', the adjudicatory process at the hands of the courts of law upto Apex Court of the Country & including the final appellate forum of Tax Boards under the Act. If the judgments of such superior court can furnish a ground for rectification of mistake, if the assessment order in hand is contrary to such law laid down by the courts of law, then, in the opinion of this Court, the word `mistake apparent from the face of record' cannot be put in a very narrow or straitjacket compass and it cannot be restricted to a mistake like 2+2=4 equated with 5 or 6. The settled legal position in this regard is that even a mistake of law can be said to be a mistake apparent on the face of the record requiring rectification. The ultimate object of enacting such a provision in a taxing statute is also to achieve the object of correct assessment order, lest such mistakes would go unnoticed and buried for all times to come. Of course, these provisions have to be invoked subject to limitation prescribed in the provision but the words `mistake apparent from the record' cannot exclude from its ambit and scope, the mistake of applying a wrong rate of tax as well.
9. It is true that debatable question requiring adducing of evidence, interpretation of provisions of law and application of case laws and precedents may fall outside the scope of Section 37 of the Act but there is no reasonable basis for denying this remedy to the assessee where he comes with a clear case that wrong rate of tax has been applied in his assessment order and the Assessing Authority as well as Appellate Authorities cannot shirk their responsibility of deciding this question as to what is the correct rate of tax which ought to be applied in the facts of the assessee in a case before them.
10. The contention of the learned counsel for the assessee before this Court in the present case is that P.U.Resin can, by no stretch of imagination, be held to be synthetic adhesive and, therefore, could not be taxed at 16% under Entry No.91 of the Notification dated 27/3/1995 & it is certainly a question which arises in the case in hand and requires consideration. Apparently, it appears to be a mistake apparent from the face of record to levy the tax on the same rate @ 16%. While passing the original assessment order on 17/3/1999, the Assessing Authority does not appear to have given any show cause notice or opportunity of hearing to the assessee in this regard. If such an opportunity was given to the assessee, the assessee could have certainly explained before the Assessing Authority that for given reasons, the commodity in hand would be taxable at the rate of 10% only under the residuary Entry and not at the rate of 16% irrespective of its past history of rate of tax applied in his own case because the commodity in question was not synthetic adhesive. In fact, by a cursory dismissal of the rectification application of the assessee under Section 37 of the Act by the order dated 13/3/2000, this question was refused to be answered by the Assessing Authority & while the first appellate authority allowed such question to be raised under Section 37 of the Act and answered the question in favour of the assessee by holding that the commodity in question could not be held to be synthetic adhesive and, therefore, rate of tax at 16% could not be applied, that order came to be set aside by the learned Tax Board by the impugned order while allowing the Revenue's appeal on 16/8/2004.
11. The contention of learned counsel for the Revenue, Mr. R.B.Mathur that the option available to the assessee was to avail remedy by way of appeal under Section 84 of the Act against the assessment order, if he felt aggrieved and, therefore, such debatable question could not be raised under Section 37 of the Act, does not have much of the strength in the light of the facts obtaining in the present case. It is true that remedy by way of appeal was also available to the assessee against the impugned assessment order also, but at the same time the issue as has been raised by the assessee in the rectification application under Section 37 of the Act also deserves to be decided on merits instead of throwing out such application as falling outside the parameters of Section 37 of the Act. In the absence of such question having been decided promptly after giving an opportunity of hearing to the assessee by leading the evidence as to the nature of the commodity and the Entry which ought to have been applied for applying the correct rate of tax to the commodity in question namely; P.U.Resin, this question has virtually remained undecided, at least not decided properly even at the hands of Deputy Commissioner (Appeals), who touched the merit of the issue and decided the question in favour of the assessee. Therefore, while holding that this question falls within the four corners of Section 37 of the Act dealing with the rectification of mistake apparent on the face of the record, this Court is inclined to set aside all the three orders passed by the three authorities below & remand the case back to the assessing authority itself.
12. Accordingly, this revision petition is allowed and the three orders namely; order dated 13/3/2000 passed by the Assessing Authority, order dated 22/8/2000 passed by the Deputy Commissioner (Appeals) and order dated 16/8/2004 passed by the learned Tax Board are set aside and the matter is remanded back to the learned Assessing Authority, who will decide the rectification application on merits de novo after giving an opportunity of hearing to the assessee and allowing him to adduce relevant evidence in support of his contentions before him. In view of long lapse of time, it is expected that learned Assessing Authority shall decide the application under Section 37 of the Act de novo within a period of six months from today. Costs easy.