M/S MARBLE MEN V. COMMISSIONER COMMERCIAL TAX U.P. LUCKNOW

STRE/1045/2009

AI Insights

M/S Marble Men, a registered dealer in marble goods and other items, faced multiple assessments under the U.P. Trade Tax Act, 1948, which deemed them manufacturers based on purchases from unregistered dealers. After unsuccessful appeals at various levels, including the High Court, they sought rectification from the Tribunal based on a Supreme Court decision in Jhunjhunwala & others vs. State of U.P., which they argued changed the legal interpretation of their status under the Act. The Tribunal dismissed their rectification application, leading to the current revisions before the High Court, which also dismissed the revisions, emphasizing that the rectification sought was in fact a review of the merits, not a correction of an apparent mistake.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 743539 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 23-09-2009
• Assessment Year: misc
• Other Referred Cases: Jhunjhunwala & others vs. State of U.P. & Others, Bhauram Jawahirmal vs. Commissioner of Income Tax, Lucknow, Kil Kotagiri T. & C. Estates Co. Ltd. vs. Income Tax Appellate Tribunal, Deva Metal Powders Pvt. Ltd. vs. Commissioner, Trade Tax, U.P., Thungabhadra Industries Ltd. vs. The Government of Andhra Pradesh, Satyanarayan Laxminarayan Hegde and Ors. vs. Millikarjun Bhavanappa Tirumale
• Laws Referred To: U.P. Value Added Tax Act, 2008, U.P. Trade Tax Act, 1948
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: C S C
• Assessee Lawyers: MANISH GOYAL; SWAPNIL RASTOGI
• Keywords: Assessment Order; Mistake apparent from the record; Rectification Application; Unregistered Dealer; Manufacturer definition
• Section: 11; 22; 58; 81; 2(ee)(ii)

Judgement Text

"Court No. - 10 1. Case :- SALES/TRADE TAX REVISION No. - 1045 of 2009 Revisionist :- M/S Marble Men Opposite Party :- Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Manish Goyal,Swapnil Rastogi Counsel for Opposite Party :- C.S.C. Connected with 2. Case :- SALES/TRADE TAX REVISION No. - 1044 of 2009 Revisionist :- M/S Marble Men Opposite Party :- Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Manish Goyal,Swapnil Rastogi Counsel for Opposite Party :- C.S.C. And 3. Case :- SALES/TRADE TAX REVISION No. - 1046 of 2009 Revisionist :- M/S Marble Men Opposite Party :- Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Manish Goyal,Swapnil Rastogi Counsel for Opposite Party :- C.S.C. And 4. Case :- SALES/TRADE TAX REVISION No. - 1047 of 2009 Revisionist :- M/S Marble Men Opposite Party :- Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Manish Goyal,Swapnil Rastogi Counsel for Opposite Party :- C.S.C. And 5. Case :- SALES/TRADE TAX REVISION No. - 1048 of 2009 Revisionist :- M/S Marble Men Opposite Party :- Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Manish Goyal,Swapnil Rastogi Counsel for Opposite Party :- C.S.C. Hon'ble Rohit Ranjan Agarwal,J. 1. These five connected Commercial Tax Revisions filed under Section 58 of the U.P. Value Added Tax Act, 2008 (hereinafter called as \"act of 2008\") read with Section 81 of Act of 2008 assail the common order passed by Tribunal dated 23.09.2009 dismissing the miscellaneous appeal filed under Section 22 of the U.P. Trade Tax Act, 1948 (hereinafter called as \"Act of 1948\") for rectifying its earlier order dated 31.8.2004. 2 2. Through these revisions, the assessee has tried to raise following questions of law : “i. Whether the appeal for rectification under Section 22 of the U.P.Trade Tax Act, 1948 is maintainable before the Trade Tax Tribunal in a case where its order in assessment proceedings have been upheld in a revision before the Hon'ble High Court under Section 11 of the U.P. Trade Tax Act? ii. Whether the Tribunal is competent to rectify the order of assessment by exercising powers under Section 22 of the U.P. Trade Tax Act, 1948 on the basis of declaration of law by the Hon'ble Supreme Court at a later stage? Iii. Whether in the alternative the Hon'ble High Court can entertain an application under Section 22 of the U.P. Trade Tax Act, 1948 for rectification of its own order passed under Section 11 of the U.P. Trade Tax Act, 1948?” 3. The assessee before this Court was a registered dealer under the Act of 1948. He was dealing in the business of purchase and sale of marble goods, paper Messie, Brassware etc. The dispute relates to assessment years 1997-98, 1998-99, 1999-00, 2000-01 and 2001-02. During the assessment proceedings, the purchase made by the assessee/dealer from unregistered dealer was treated as to be goods manufactured by the assessee and he was deemed manufacturer in view of Section 2(ee)(ii) of Act of 1948. Aggrieved by the assessment order, first appeal was preferred, which was dismissed. Against the dismissal of the first appeals, second appeal was preferred before the Tribunal which was also dismissed on 31.8.2004. 4. The assessee approached this Court through Trade Tax Revision Nos.2245 of 2004, 2246 of 2004, 2247 of 2004, 2248 of 2004 and 2257 of 2004. All the five revisions were decided by common judgment order dated 09.11.2004 and the revisions were dismissed. 5. The assessee had challenged the validity of Section 2(ee)(ii) of Act of 1948 through Writ Petition No.820 of 1999. The said petition 3 was dismissed on 03.04.2001 against which a Special Leave Petition was preferred before the Hon'ble Apex Court. During pendency of the special leave petition, in another matter of Jhunjhunwala & others vs. State of U.P. & Others 2007(41) STJ 26, the Apex Court on 22.9.2006 pronounced the judgment dealing Section 2(ee)(ii) of the Act of 1948. Subsequently, the revisionist withdrew his appeal which was dismissed as withdrawn on 19.4.2007. 6. On 25.6.2009 the assessee moved a rectification application under Section 22 of Act of 1948 before the Tribunal relying upon the decision of Jhunjhunwala & others (supra) which was registered as Misc. Appeal No.10 of 2009. The said appeal was dismissed vide judgment and order dated 23.9.2009 hence the present revisions. 7. Sri Nikhil Mishra, Advocate, holding brief of Sri Swapnil Rastogi, learned counsel appearing for the assessee submitted that after the judgment of Apex Court in Jhunjhunwala & others (supra), the assessee was entitled to get the benefit of said decision and the authorities were to review its order holding him to be manufacturer though purchase has been made from unregistered dealer. He then submitted that the Tribunal was not justified in rejecting rectification application filed under Section 22 and has placed reliance upon a Division Bench judgment of this Court in Bhauram Jawahirmal vs. Commissioner of Income Tax, Lucknow, (1980)121 ITR 487 and decision of Kerla High Court in Kil Kotagiri T. & C. Estates Co. Ltd. vs. Income Tax Appellate Tribunal (1988) 174 ITR 579. 8. Counsel for the assessee further submitted that a mistake, which does not require any elucidation or debate for its discovery could be rectified as has been held by Division Bench exercising power under Section 154 of the Income Tax Act. He then contended that the scope of rectification is much larger than the scope of Order 47 Rule 1 of the 4 Code of Civil Procedure (Review), which is more restrictive. Relevant para 8 of the judgment in Kil Kotagiri T. & C. Estates Co. Ltd. (supra) is extracted hereas under : “8. S. 254(2) and S. 154 of the Income Tax Act enable the concerned authorities to rectify any “mistake apparent from the records”. The said expressions have a wider content than the expression “error apparent on the face on the record” occurring in Order 47, Rule 1 C.P.C. The restrictions on the power of review under O. 47 R. 1 C.P.C. do not hold good in the case of S. 254(2) and S. 154 of the Income Tax Act. Even so, a subsequent binding decision taking a different view in law was held to be a good ground for review which will constitute an error apparent on the face of the record within the meaning of O. 47 R. 1 C.P.C. (See—Pathrose v. Kuttan alias Sankaran Nair (1969 KLT 15); and Chandrasekharan Naiv v. Pumshothaman Nair (1969 KLT 687). These two decisions were overruled by a Bench of this Court, in Board of Revenue v. Akbar Sahib (1973 KLT 497). But, the Supreme Court reversed the Bench decision, aforesaid, holding that the Bench was not justified in refusing to entertain the review petition on supertechnical considerations which were ill-founded. (See— State of Kerala v. P.K. Syed Akbar Sahib (1988) 1 SCC 599 : AIR 1988 SC 702). So, it appears that even for the purpose of O. 47 R. 1 C.P.C. which is more restrictive, a subsequent binding authority taking a different view of law is a good ground for review, on the ground that the order sought to be reviewed passed on antecedent decision, which stands overruled, constitutes an error apparent on the face of the record. So far as this case is concerned, it is unnecessary for us to base our decision on the provisions of O. 47 R. 1 C.P.C. which is more restrictive. The Original Petition is allowed. Ext. P.6 is quashed. The Appellate Tribunal is directed to restore Ext. P.5, the petition filed by the petitioner dated 17-6-1982 (M.P. No. 9 (Coch)/1982), and dispose of the same in accordance with law and in the light of the observations, contained herein above.” 9. Sri A.C.Tripathi, learned Standing Counsel appearing for the State submitted that Section 22 of the Act of 1948 envisages a 5 situation that where any mistake has occurred in an order which is apparent on the face of record, the same can be rectified by an officer or an authority or the Tribunal or the High Court on its own motion or on the application of the dealer. He then submitted that no such rectification, which has the effect of enhancing assessment, penalty, fees or other dues can be made. 10. According to him, if any alleged error creates any doubt or can only be established by advancing argument etc. cannot be treated as error apparent for the purpose of rectification under the relevant section. According to him, the judgment of Hon'ble Apex Court in Jhunjhunwala & others (supra) has to be factually determined in case of the assessee, as to whether a seller is a manufacturer or not and therefore, it leaves a Court for further interpretation and ascertainment. Reliance has been placed upon decision of Apex Court in Deva Metal Powders Pvt. Ltd. vs. Commissioner, Trade Tax, U.P. (2008) 2 SCC 439. 11. I have heard the counsel for the parties and perused the material on record. 12. A short question, which arises for consideration is :- \"whether in the garb of rectification under Section 22, the judgment and order of the Tribunal, having been confirmed by the High Court, can be set aside on merit.\" 13. It is not in dispute that the assessment order upheld by the Tribunal on 31.8.2004 was confirmed by this Court on 09.11.2004 in the revisions filed by the assessee. As no challenge was made to the order passed by this Court, it attained finality. Reopening of the case by the assessee in garb of Section 22 of Act of 1948 cannot be permitted as there is no error apparent on the record. 6 14. Language employed in Section 22 is clear and authorises the officers of authority, Tribunal or High Court to rectify the mistake on its own motion or on application of the dealer within the period prescribed therein. The assessee relying on the decision rendered by Hon'ble Apex Court in Jhunjhunwala & others (supra) had moved rectification application for not considering him under the definition given in Section 2(ee)(ii) of the Act. It is not an error apparent on record but is a debatable point of law or a disputed question of fact, which requires a decision on merit and is not a mistake apparent from the record. 15. In Thungabhadra Industries Ltd. vs. The Government of Andhra Pradesh AIR 1964 SC 1372, the Apex Court held that a review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. 16. Similarly, in Satyanarayan Laxminarayan Hegde and Ors. vs. Millikarjun Bhavanappa Tirumale AIR 1960 SC 137, the Apex Court held that an error apparent on the face of the record for acquiring jurisdiction to affect rectification must be such an error which may strike one on a mere looking at the record and would not require any long-drawn process of reasoning. 17. In Deva Metal Powders Pvt. Ltd. (supra) the Apex Court while considering the provisions of Section 22 of the Act of 1948 held that a decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. Relevant paras 10 and 11 of the judgment are extracted hereas under : \"10. A bare look at Section 22 of the Act makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of Section 22, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or 7 review of the order is intended. \"Mistake\" means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error, a fault, a misunderstanding, a misconception. \"Apparent\" means visible; capable of being seen, obvious; plain. It means \"open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming.\" A mistake which can be rectified under Section 22 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. In our view rectification of an order does not mean obliteration of the order originally passed and its substitution by a new order. What the Revenue intends to do in the present case is precisely the substitution of the order which according to us is not permissible under the provisions of Section 22 and, therefore, the High Court was not justified in holding that there was mistake apparent on the face of the record. In order to bring an application under Section 22, the mistake must be \"apparent\" from the record. Section 22 does not enable an order to be reversed by revision or by review, but permits only some error which is apparent on the face of the record to be corrected. Where an error is far from self-evident, it ceases to be an apparent error. It is, no doubt, true that a mistake capable of being rectified under Section 22 is not confined to clerical or arithmetical mistake. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by this Court in Master Construction Co. (P) Ltd. v. State of Orissa [1966] 17 STC 360, an error which is apparent from record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. 11. \"Mistake\" is an ordinary word but in taxation laws, it has a special significance. It is not an arithmetical error which, after a judicious probe into the record from which it is supposed to emanate is discerned. The word \"mistake\" is inherently indefinite in scope, as to what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under Section 22, 8 it is not sufficient if there is merely a mistake in the order sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. The plain meaning of the word \"apparent\" is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectifications.\" 18. Thus, the argument of assessee counsel cannot be accepted to the extent that post decision in Jhunjhunwala & others (supra), rectification under Section 22 of the Act of 1948 was maintainable. The language used in Section 22 is plain and simple and there is no ambiguity so as to give a different meaning, which only provides that in case of error apparent on the record an order for rectification of such mistake can be passed. 19. Considering the facts and circumstances of the case, this Court finds that no interference is required in the order of the Tribunal dated 23.09.2009. 20. All the revisions lack merits and are hereby dismissed. 21. The questions of law, raised above, stands answered in favour of the Revenue and against the assessee. Order Date :- 16.1.2023 Kushal Digitally signed by :- KUSHAL AGRAWAL High Court of Judicature at Allahabad "