1. Heard Sri Suyash Agarwal, learned counsel for the applicant and Sri B.K. Pandey, learned standing counsel for the respondent.
2. This revision relates to the Assessment Year 2005-06.
3. The revision is admitted on the following questions of law:
"Whether the Tribunal was correct to hold that the rectification application was not maintainable on the facts and circumstances of the case as there was no mistake apparent on the face of the record?"
4. With the consent of learned counsel for the parties this revision is being finally heard.
5. Briefly stated the facts of the present case are that the applicant is a registered dealer engaged in fabrication/manufacturing of iron doors and windows (blacksmithy). The applicant's unit is an institution certified by The Uttar Pradesh Khadi and Gram Udyog Board. Undisputedly, certificate issued by The U.P. Khadi and Gram Udyog Board was valid upto 7th September, 2008. Vide entry No.3 of notification No. 7037 dated 31.1.1985 sales of certain specified goods manufactured by units certified by The Uttar Pradesh Khadi and Gram Udyog Board which includes ''blacksimithy' were exempted under Section 4 (c) of the U.P. Sales Tax Act, 1948 from payment of sales tax. The said notification was amended by Notification No. 2792 dated 30th September, 2004 by which the following commodities as are relevant for the purposes of case were substituted:-
"Agricultural instruments, doors, windows, manufacturing of hardware and furniture related to the work of blacksmithy and carpentry and servicing involving use of power upto 10 horse power."
6. Aforenoted facts are wholly undisputed. On these facts exemption to the applicant was granted by the assessing officer for the Assessment Year 2003-04 in respect of turnover of steel fabricated items, namely, doors and windows etc, vide assessment order dated 22.12.2005. For the assessment year 2004-05 also the assessing officer noted the fact that the applicant is a unit certified by The Uttar Pradesh Khadi and Gram Udyog Board and holds certificate in this regard and accordingly granted exemption in respect of blacksmithy items, namely, iron doors and windows etc., vide assessment order dated 14th February, 2007. However, for the assessment year in question i.e. assessment year 2005-06 an ex-parte assessment order dated 31st March, 2008 was passed by the same assessing officer whereby the turnover of iron doors and windows etc. manufactured by the applicant was determined at Rs. 20 lacs and tax @ 10% was imposed. Thus demand of Rs. 2 lacs was created.
7. It appears that since it was well within the knowledge of the assessing officer that the applicant is a black smithy unit certified by Uttar Pradesh Khadi Gram Udyog Board and exemption as available under the relevant notification was granted by the same assessing officer for the earlier assessment years and, as such, the applicant moved an application under Section 22 of the U.P. Trade Tax Act, 1948 for rectification of mistake in levying tax on black smithy items manufactured and sold by the applicant which were undisputedly exempted from tax upto a turnover of Rs. 50 lacs. However, the application under Section 22 was rejected by the assessing officer even though the fact that the applicants unit is certified by The Uttar Pradesh Khadi and Gram Udyog Board was not disputed. Aggrieved with the aforesaid order, the applicant filed first appeal under Section 9 of the U.P. Trade Tax Act, 1948 which was rejected by the Additional Commissioner, Grade-II (Appeal) IIIrd, Commercial Tax, Allahabad by order dated 12.9.2012 on the ground that the alleged mistake of not granting exemption is out side the scope of Section 22 of the Act. Against this order the applicant filed second appeal No. 142 of 2013 before the Member Commercial Tax Tribunal, Allahabad Bench-II, Allahabad which was rejected by the Tribunal by order dated 28th February, 2014 merely observing that the assessing officer cannot rectify such an order. Aggrieved with the order of the Tribunal the applicant has filed the present revision.
8. Sri Suyash Agarwal, submits that not allowing exemption to the applicant in the ex parte assessment order with respect to turnover of black smithy items, namely, iron doors and windows etc., although the applicant was undisputedly qualified for exemption upto a turnover of Rs. 50 lacs in view of the certificate of Uttar Pradesh Khadi Gram Udyog Board and the notification No. 7037 dated 31.1.1985 and Notification No. 2792 dated 30st September, 2004; was a mistake apparent on record and thus was rectifiable under Section 22 of the Act particularly when in the earlier assessment years the same assessing officer has granted the above exemption. He, therefore, submits that the first appellate authority as well as the Tribunal have committed manifest error of law and fact to reject the appeals of the applicants on the grounds that the claim for exemption does not fall within the scope of Section 22 of the Act.
9. Sri B.K. Pandey, learned standing counsel submits that the Tribunal has correctly held that the exemption has been rightly denied to the applicant by rejecting his application under Section 22 of the Act. He submits that the impugned orders do not suffer from any infirmity.
10. I have carefully considered the submission of learned counsel for the parties.
11. It is undisputed that the applicant's unit was certified by The Uttar Pradesh Khadi and Gram Udyog Board, Lucknow and the certificate was valid from 8th September, 2003 upto 7th September, 2008. Iron doors and windows are black smithy items. The applicant unit has been manufacturing and selling these items in earlier assessment years also. After examination, the assessing officer has allowed exemption to the applicant on the turnover of iron doors and windows etc. for the assessment year 2003-04 vide assessment order dated 22nd December, 2005. After due discussion the assessment order dated 14.2.2007 for the assessment year 2004-05 was also passed by the same assessing officer and the exemption was granted.
12. Thus it is undisputed and completely not deniable by the respondents as per documents available on record that the applicant was a unit certified by The Uttar Pradesh Khadi and Gram Udyog Board, Lucknow and the certificate so granted was effective till 7th September, 2008 and for that reason the turnover of iron doors and windows etc. manufactured by the applicant was exempt upto the specified limit of Rs. 50 lacs in view of Notification No. 7037 dated 31.1.1985 as amended by Notification No. 2792 dated 30th September, 2004. The assessment order for the assessment year in question i.e. assessment year 2005-06 was passed exparte by the same assessing officer whereby tax on sale turnover of Rs. 20 lacs of black smithy items, namely, iron doors and windows etc. was levied despite the fact that the applicant unit was certified by The Uttar Pradesh Khadi and Gram Udyog Board, Lucknow. The assessment order for the assessment year 2005-06 was passed under Rule 41 (8) of the U.P. Trade Tax Rules, 1948 which provides as under:
"8. Upon the expiry of the assessment year, the assessing authority shall, after such enquiry, as he may deem necessary determine the turnover of sales or of purchases, or both, as the case may be, of the dealer in respect of the Assessment year and shall assess the tax payable thereon:
Provided that in the case of a dealer to whom sub-section (1) of section 18 applies or owner or incharge of the vehicle to whom sub-section (1) of section 28-B applies, the assessing authority may make an assessment order and assess the tax payable thereon before the expiry of the assessment year:
Provided further that, before determining the turnover of the dealer to the best of his judgment, the assessing authority shall cause a notice to be served on the dealer, stating the reasons, for non-acceptance of the turnover of sales or purchases or both, as disclosed in the returns, if any, submitted by him and shall give him a reasonable opportunity of furnishing his reply thereto"
13.Section 7 of the U.P. Trade Tax Act, 1948 provides for determination of turnover and assessment of tax. Section 3 is the charging section which provides that subject to the provisions of this Act, every dealer shall for each assessment year pay a tax at the rate provided by or under Section 3A or Section 3D his turnover of sales or purchases for both, as the case may be, which shall be determined in such manner as may be prescribed.
14.Section 4 (c) of the Act provides that no tax under this Act shall be payable on the sale or purchase of such goods by such other person or class of persons as the state government may, by notification in the Gazette, exempt subject to conditions as may be specified in the notification.
15.Notification No. 7037 dated 31.1.1985 as amended by notification No. 2792 dated 30th September, 2004 were issued by the State Government under Section 4 (c) of the Act which exempted turnover of sales of blacksmithy items upto certain limits manufactured by a unit certified by The Uttar Pradesh Khadi and Gram Udyog Board, Lucknow.
16.The provisions aforenoted makes it clear that assessing officer is bound to grant benefit of exemption if it is available in accordance with law to an assessee, so as to determine his liability of tax. Therefore, non grant of exemption on the admitted facts of the case and documents/non available on record that the applicant unit is certified by The Uttar Pradesh Khadi and Gram Udyog Board and on the basis of the same certificate with respect to the turnover of the same commodity it granted exemption after due discussion in assessment years 2003-04 and 2004-05, was a mistake apparent on record and was thus rectifiable under Section 22 of the Act. The Tribunal and the authorities below have committed manifest error of law and facts to hold that the mistake as sought to be rectified by the applicant, was not a mistake apparent on record. The question of law deserves to be answered in negative, i.e. in favour of the assessee applicant and against the respondent. It is held that the mistake was apparent on record and must have been rectified and on rectification there shall be no liability of tax of the applicant.
17.Section 22 of the Act reads as follows:
"1.Any officer or authority, or the Tribunal or the High Court may, on it's own motion or on the application of the dealer or any other interested person rectify any mistake in any order passed by him or it under this Act apparent on the record within three years from the date of the order sought to be rectified:
Provided that where an application under this sub-section has been made within such period of three years, it may be disposed of even beyond such period. Provided further that no such rectification as has the effect of enhancing the assessment, penalty, fees or other dues shall be made unless reasonable opportunity of being heard has been given to the dealer or other person likely to be affected by such enhancement.
2. Where such rectification has the effect of enhancing the assessment, the assessing authority concerned shall serve on the dealer a revised notice of demand in the prescribed form and there from all the provisions of the Act and rules framed there under shall apply as if such notice had been served in the first instance."
18.Under Section 22 of the Act a mistake apparent on record in any order passed under the Act by any officer of authority or the Tribunal or the High Court is rectifiable either on its motion or on the application of the dealer or any other interested person. ''Mistake apparent on record' is essential for acquiring jurisdiction to effect rectification which 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. In order to attract Section 22 of the Act, 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 review of the order is intended.
19.''Mistake' means to take or understand wrongly or inaccurately, to make an error in interpreting. It is an error, a fault, a misunderstanding or a misconception.
20.The word ''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."
21. Thus such mistakes can be rectified under Section 22 of the Act which is patent, obvious and whose discovery is not dependent on argument or elaboration. Rectification of mistake does not mean obliteration of the order originally passed and its substitution by new order. Section 22 does not cover any mistake which may be discovered by a complicated process investigation, argument or proof. 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 exfacie and it is incapable of argument or debate. Therefore 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. Undisputed facts of the present case as briefly noted above leaves no manner of doubt that it is a case of mistake apparent on record.
22.In the case of Deva Metal Powders Pvt Ltd Vs. Commissioner, Trade Tax, U.P. 2008 (2) SCC 439 Hon'ble Supreme Court considered the meaning of words ''mistake' and ''apparent' as used in Section 22 of the Act and observed thus:
"9. An error apparent on the face of the record for acquiring jurisdiction to effect 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. The following observations in connection with an error apparent on the face of the record in the case of Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tiruymale [ AIR 1960 SC 137] need to be noted:
"An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. Where an alleged error is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments, such an error cannot be cured by a writ of certiorari according to the rule governing the powers of the superior Court to issue such a writ."
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 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, 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."
23. In the case of Asst. Commissioner, Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd. 2010 (18) S.T.R. 84 (S.C.) Hon'ble Supreme Court considered the scope of rectification of mistake with reference to the provisions of Section 254 (2) of the Income Tax Act and held as under:
"37. In our judgment, therefore, a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long- drawn-out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said to be covered by an error apparent on the face of the record.
39. As stated earlier, the decision was rendered in appeal by the Income Tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub- section (2) of Section 254 of the Act stating therein that a decision of the `Jurisdictional Court', i.e. the High Court of Gujarat in Hiralal Bhagwati was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification.
40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under Section 254(2).
45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality.
46. In S. Nagaraj & Ors. v. State of Karnataka, 1993 Supp (4) SCC, Sahai, J. stated; "Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order.
47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub- section (2) of Section 254 of the Act and in rectifying "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for."
24. In the case of Amar Deep Oil Extraction, Mainpuri Vs. Sales Tax Officer (A), Mainpuri 2004 U.P.T.C.-992, a Division Bench of this Court held as under:
"12. From the above facts it appears that prior to Notification Nos. 2994 and 2995, dated 3rd April, 1975 it was made liable to tax @ 2 per cent. Although oil cake includes de-oiled cake, but to clarify this position the aforesaid Notification No. 8447 dated Ist October, 1975 was issued which specifically provided 'oil cake' (including de-oiled cake) to be liable to tax @ 4 per cent. Since then the taxability on de-oiled cake is continuing, which fact is further evident from spedific Notifications No. 5787, dated 7th September, 1981 and 3712, dated 5th June, 1985.
13. Since the period of assessment involved in the instant writ petitions are Assessment Years 1981-82, 1982-83 and 1983-84, they are governed by by Notification No. 5787, dated 7th September, 1981 with regard to taxability of oil cake. Hence non-imposition of tax on the transactions of de-oiled cake by the Assessing Authority in the assessment orders for these assessment years was, in our opinion a mistake apparent on the record and as such rectificable under Section 22 of the Act. Hence, the impugned notices are valid.
17. In Narain Chemical Industries Vs. Sales Tax Officer, 1970 U.P.T.C. 605, a Division Bench of this Court held following the earlier Division Bench decision in Commissioner of Sales Tax Vs. Rohilkhand Glass and Syndicate Works, (1969) 24 S.T.C. 413 that a mistake in applying the rate cannot be corrected under Section 21, but can be corrected under Section 22 of the U.P. Sales Tax Act."
25. In the case of Commissioner of Sales Tax, U.P. Vs. Chetmani Abhushan Bhandar 1970 UPTC 178 a Division Bench of this Court following the earlier Division Bench judgment in the case of Commissioner of Sales Tax Vs Rohikhand Glass & Syndicate Works (1969) 24 STC 413, held that where wrong rate of tax was applied, the same may be rectified under Section 22 of the Act. Similar view was taken by another Division Bench of this Court in the case of Narain Chemical Industries Vs. Sales Tax Officer, Moradabad 1970 UPTC 605.
26. In the case of M/s Jeet Mal Ram Gopal, Hathras Vs. Additional Judge (Revisions) Sales Tax 1974 UPTC 555 a Division Bench of this Court considered the scope of rectification of mistake under Section 22 of the U.P. Sales Tax Act, 1948 and held as under:
"7. Section 22 authorises the assessing, appellate or revising authority to rectify any mistake apparent on the face of the record of assessment, appeal, revision or reference, as the case may be. The record of assessment would generally consist of all documents and material considered in the course of assessment proceedings. The return filed by the assessee and any other material or evidence adduced by him or gather by the assessing authority in the course of the assessment proceedings would constitute the record of assessment. In the present case the assessee had produced his account books before the assessing authority. It was on a comparison of the return and the account books that the version disclosed by the account books was rejected. The account books, would, in our opinion, constitute a part of the record of assessment. The record of assessment would also be a part of the record of appeal and revision. A mistake apparent on the face of such a record, is capable of being rectified under Section 22.
8. Section 22 does not specify the nature or character of the mistake beyond saying that it would be apparent on the face of the record. Section 22 does not predicate the nature and extent of the scrutiny that will make the mistake apparent, provided the scrutiny is confined to the record as it is. In the present case the assessee pleaded that a perusal of the account books would show that there was a clear mistake in the return filed by him. If that be so, it would, in our opinion, be a case of mistake apparent on the face of the record, no matter what may be the nature of the scrutiny that may be required to be made of the contents of the record, namely, return and the account books.
9. It may be remembered that Order 41 rule 27, C.P.C. permits production of additional evidence in appellate courts, and the amendment introduced by the Allahabad High Court provides that the evidence sought to be adduced by a party to the appeal is evidence, which after exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree or order under appeal was passed or made. Similarly, Order47, Rule 1, C.P.C. permits review, inter alia, on the ground of discovery of new and important matter or evidence, which after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made. Section 22 does not provide for rectification because of discovery of new material. Equally it does not prohibit the rectification of any mistake merely on the ground that such a mistake could have been pointed out in appeal or revision but the assessee failed to do so. It authorizes rectification of any mistake if it is apparent on the face of the record. In our opinion the refusal to rectify should not be based merely on the ground that the alleged mistake could have been pointed out and correct at the appellate or revisional stage. The account books were produced before the assessing authority, but unfortunately the alleged mistake remained undetected. It is also noticeable that section 22 is not confined to mistake of law alone: it extends to mistake of facts as well. If the mistake is evident from the record, it is capable of being rectified. In the present case the assessee alleges that a perusal of the account books would bring out the mistake in the return. He reinforces the submission by reference to the finding recorded by the Judge (Revisions) at the reference stage. Under the circumstances the case was prima facie within the purview of section 22 and the Judge (Revisions) ought to have gone into the merits of the mistake."
27. In view of the above discussions, the question of law as framed above, is answered in negative i.e. in favour of the assessee-applicant and against the respondents. The impugned order of the Tribunal is set aside and the revision is allowed.
28. In result revision succeeds and is hereby allowed. However, there shall be no order as to costs.
Order Date :- 24.7.2014 MT**