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State Trading Corporation of India Ltd. Vs. Sales Tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case Number O.P. No. 272 of 1970
Judge
Reported in[1973]30STC93(Ker)
AppellantState Trading Corporation of India Ltd.
RespondentSales Tax Officer and ors.
Appellant Advocate V. Rama Shenoi and; R. Raya Shenoi, Advs.
Respondent AdvocateGovernment Pleader
Excerpt:
- .....took the matter in revision before the fourth respondent, the board of revenue, who dismissed the revision application by its order, exhibit p-6 dated 22nd september, 1969. this writ petition has been filed to quash exhibits p-2, p-4 and p-6, and to direct the second respondent to refund to the petitioner the sum of rs. 14,019.66, alleged to have been collected from it without any authority of law.2. there is no dispute that rock phosphate is a chemical fertilizer which is item no. 54 in the first schedule to the act and its turnover is liable to tax only at 2 per cent. that being so, what the second respondent was requested to do by the petitioner was to rectify that obvious error; and i am unable to appreciate the ground stated by him for rejecting the petitioner's application under.....
Judgment:

M.U. Isaac, J.

1. The petitioner is the State Trading Corporation of India Ltd., who was assessed by the first respondent, the Sales Tax Officer, Special Circle, Mattancherry, under the Kerala General Sales Tax Act, 1963, for the year 1964-65, by his order exhibit P dated 24th November, 1965. The assessee's return was accepted ; and the assessment was made on that basis. The total turnover related to four items, one of which was rock phosphate. The turnover in respect of that item was Rs. 14,01,966.34; and it was charged to tax at 3 per cent. The petitioner paid the whole tax as per the assessment. Subsequently, the petitioner filed an application, exhibit P-l dated 31st December, 1966, before the second respondent, the Sales Tax Officer, III Circle, Mattancherry, to whom the petitioner's case had been transferred, under Section 43 of the Act praying to rectify the order of assessment on the ground that the turnover of rock phosphate was chargeable to tax only at 2 per cent, and that the assessment at 3 per cent, in respect of that item was an error on the face of the record. The application also prayed for refund of a sum of Rs. 14,019.66, which represented the excess tax collected on account of the above error. The application was rejected by the second respondent by his letter, exhibit P-2 dated 23rd March, 1967, stating that it may settle the matter in appeal or revision, and that he could not interfere at that stage. Then, the petitioner filed revision before the third respondent, the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Central Zone, Ernakulam, who dismissed it by his order, exhibit P-4 dated 7th September, 1968, stating that the question whether the assessment of the turnover in respect of rock phosphate at 3 per cent, was correct or not has to be decided by the appellate authority, and that there was no provision to entertain a revision petition against an assessment which is appealable under the Act. The petitioner took the matter in revision before the fourth respondent, the Board of Revenue, who dismissed the revision application by its order, exhibit P-6 dated 22nd September, 1969. This writ petition has been filed to quash exhibits P-2, P-4 and P-6, and to direct the second respondent to refund to the petitioner the sum of Rs. 14,019.66, alleged to have been collected from it without any authority of law.

2. There is no dispute that rock phosphate is a chemical fertilizer which is item No. 54 in the First Schedule to the Act and its turnover is liable to tax only at 2 per cent. That being so, what the second respondent was requested to do by the petitioner was to rectify that obvious error; and I am unable to appreciate the ground stated by him for rejecting the petitioner's application under Section 43 of the Act. There can be no doubt that, if as a result, of an error, the assessee happened to be assessed at too low a rate, the assessing authority, by virtue of his power under Section 43 of the Act, would be entitled to rectify the error, correct, the assessment and demand the proper tax that would be payable by the assessee. Similarly, if by mistake, the assessment has been made at a higher rate, then also, it is within, his power under Section 43 of the Act to rectify the mistake and refund the excess amount collected. The third respondent has also power under Section 35 of the Act to revise any order erroneously passed by a subordinate authority. That section reads :

35. Powers of revision of the Deputy Commissioner suo motu.-(1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings' recorded under this Act by the Inspecting Assistant Commissioner or any officer or authority of rank below that of an Inspecting Assistant Commissioner and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit.

(2) The Deputy Commissioner shall not pass any order under Sub-section (1) if-

(a) the time for appeal against the order has not expired ;

(b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court; or

(c) more than four years have expired after the passing of the order referred to therein.

(3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard.

The only ground on which he refused jurisdiction was that there was no provision to entertain a revision against an assessment order which is appealable under this Act. This is a patent error. The Board of Revenue in its order exhibit P-6 stated the following reasons for refusing relief to the petitioner :

(1) Actually in this case, the Sales Tax Officer has not issued any proceedings as such. In his letter dated 23rd March, 1967, he has only declined to invoke Section 43 with the result that the original assessment for 1964-65 is left intact. The proper remedy in such a situation is to prefer an appeal before the appellate authority.

(2) If as a matter of fact, the letter of the Sales Tax Officer dated 23rd March, 1967, is considered as proceedings under Section 43, then such proceedings form only supplementary proceedings of assessment which have no separate existence independent of the original assessment. In this view also, the order dated 23rd March, 1967, is appealable.

In any view of the matter, it is clear that the proper remedy available to the petitioner is by way of appeal.

The Board of Revenue seems to have thoroughly misunderstood the legal position. Exhibit P-2, the communication from the second respondent, was his decision rejecting the petitioner's application under Section 43 to rectify the error in the assessment. Such a decision is not subject to any appeal under the Act, and the only remedy for an assessee aggrieved thereby is revision. The Board of Revenue is also wrong in its view that exhibit P-2 can be treated as a supplementary proceeding to the assessment, and an appeal can be filed from that. Any error apparent on the face of the record in an assessment can be rectified on an application made within three years of the order of assessment. If any order rejecting an application for rectification is a supplementary proceeding to the assessment, which has no separate existence independent of the original assessment and an appeal can be filed from that, as the Board of Revenue seems to think, any assessee can file an application under Section 43 of the Act within the aforesaid time, and if the application is rejected, he can then file an appeal from the original assessment. This is a hardly statable position. It is true that if an assessment is rectified it would stand amended, as it happens if it were modified as a result of an appeal or revision. That does not mean that a proceeding under Section 43 of the Act is one supplementary to the assessment.

3. The sum of Rs. 14,019.66, which the petitioner seeks to get refunded is, on the admitted facts of the case, an amount collected by the respondents without any authority of law. In that view of the matter also, the petitioner is entitled to get the said amount refunded. It is surprising that the petitioner's application for refund of that amount which the Government should not have collected, and which happened to be collected as a result of an obvious error in the order of assessment, has been rejected by all the three authorities on sheer technical and totally untenable grounds. I quash the orders, exhibits P-2, P-4 and P-6, and direct the respondents to refund to the petitioner the sum of Rs. 14,019.66 within two months from this date. The respondents will pay the costs of the petitioner.


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