M-S. DEVA METAL POWDERS PVT. LTD. v. COMMISSIONER, TRADE TAX, U.P

Citation: [2007] 12 S.C.R. 893

Court: Supreme Court of India

Bench: ARIJIT PASAYAT, P. SATHASIVAM

Case summary

M-S. DEVA METAL POWDERS PVT. LTD. v. COMMISSIONER, TRADE TAX, U.P.pdf

Judgment text

( MIS. DEVA METAL POWDERS PVT. LTD. v. COMMISSIONER, TRADE TAX, U. P. DECEMBER 4, 2007 -· [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ. ] UP. Sales Tax Act, 1948: s. 22-Rectification ofmistake-When permissible-Held: Permissible when mistake is apparent and its discovery is not dependent on argument or elaboration-Where error isfarfrom self-evident, it ceases to be apparent-Decision on debatable point oflaw or fact or failure to apply the law to set offacts which remains to be investigatedcannot be corrected by way ofrectification. t Words andphrases: 'mistake ', 'apparent '-Meaning of Assessce was dealing with Aluminium powder. In the original assessment order, Aluminium powder was treated as metal and accordingly taxed@2. 2%. Assessing Officer initiated proceedings under s. 22 of the U. P.

Sales Tax Act, 1948 on the ground that the Supreme Court had in Hindustan Aluminium Corporation*, considered the entry'All kinds ofminerals, ores, metals and alloys including sheets and circles' and held that under this entry only the primary metal is covered. Assessing officer accordingly rectified the assessment orders under s. 22 and levied tax treating the Aluminium powder as an unclassified item. The first appellate authority held that s. 22 had no application and the assessments were set aside. Tribunal dismissed the appeal filed by revenue. High Court held that action under s. 22 was clearly sustainable. In appeal to this Court, the assessee contended that this is case where s. 22 had no application; that s. 22 is only applicable to case where the error is apparent on the face ofthe record and where a matter is disputable there can be no order under s. 22 ofthe Act. Allowing the appeal, the Court HELD: 1. 1. A bare look at s. 22 ofthe U. P.

Sales Tax Act, 1948 makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of s. 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 ofbeing 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 s. 22 is one which is patent, which is obvious and its discovery is not dependent on argument or elaboration. (Para 10) (898-G; 899-AJ 1. 2. Rectification ofan order does not mean obliteration ofthe order originally passed and its substitution by a new order.

What the Revenue intended to do in the present case was precisely the substitution ofthe order which is not permissible under the provisions ofs. 22 and, therefore, the High Court was not justified in holding that there was mistake apparent on the face ofthe record. S. 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 ofthe 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 ofbeing rectified under s. 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 ofinvestigation, argument or proof. A decision on a debatable point oflaw or fact or failure to apply the law to a set offacts which remains to be investigated cannot be corrected by way of rectification. The High Court's order is clearly unsustainable.

This Court has not expressed any opinion on the issue as to whether Aluminium powder can be regarded "metal in primary form" for the purpose ofpayment oftax. There is no need to adjudicate that aspect in view ofthe fact thatthe rectification done in purported exercise ofs. 22 is clearly impermissible. [Paras 10, 11and13) [899-B, C, D, G; 900-A, C, DJ Mis. Karam Chand Thapar and Bros. (Coal Sales) Ltd. v. State ofUttar Pradesh andAnr. , [1976) 4 SCC 257, held inapplicable. .. / Hindustan Aluminium Corporation Ltd. v. State ofUttar Pradesh andAnr. , *[1981] 3 SCC 578; Mis. Thungabhadra Industries Ltd. (in all the Appeals) v. The Government ofAndhra Pradesh represented by the Deputy Commissioner ofCommercial Taxes, Anantapur, AIR (1964) SC 1372; Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tiruymale, AIR (1960) SC 137 and Master Construction Co. (P) Ltd. v. State ofOrissa, (1966) 17 STC 360, referred to. CIVIL APPELLATE JURISDICTION :Civil Appeal No. 5607 of 2007.

From the Judgment and final Order dated 20. 10. 2005 ofthe High Court ofJudicature at Allahabad in Trade Tax Revision No. 1055 & 1070 of 1998. Shail Kumar Dwivedi, AAG. , T. L. Viswanath Iyer and Dinesh Dwivedi, Y. Raja Gopala Rao, Y. Ramesh, Y. Vismai Rao, B. V. Niren, Ritesh Agrawal, Vishwajit Singh, Vibha Dwivedi, Manoj Dwivedi and Vandana Mishra for the Appearing parties. The Judgment ofthe Court was delivered by DR ARI. UT PASAYAT, J. 1. Leave granted. 2. Challenge in this appeal is to the judgment ofa Division Bench of the Allahabad High Court allowing the Trade Tax Revision Case Nos. 1055 and 1070of1998 filed by the respondent. The two revisions were filed under Section 11 ofthe Uttar Pradesh Sales Tax Act, 1948 (in short the 'Act) and the Central Trade Tax Act, 1956 (in short the 'Central Act'). 3. Factual background in a nutshell is as follows: Appellant hereinafter also referred to as the Assessee was dealing with Aluminium powder.

In the original assessment order passed under Section 7(3) of the Act and Section 9 of the Central Act, Aluminium Powder was treated as metal and accordingly held liable to tax at the rate of2. 2%. Assessing officer initiated proceedings under Section 22 of the Act on the ground that this Court had in Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh and Anr. , [1981] 3 SCC 578 considered the entry "All kinds ofminerals, ores, metals and alloys including sheets and circles" and held that under this entry only the primary metal is covered. It was also held that sheets and circle ofAluminium would not be covered under the entry "Metal" Assessing officer accordingly rectified the assessment orders under Section 22 and levied tax treating the Aluminium powder as an unclassified item. The First appellate authority in the appeals filed by the assessee held that Section 22 of the Act had no application and the assessments were set aside.

The present respondent filed appeals before the Sales Tax Tribunal, Varanasi Bench (in short the 'Tribunal') which were also dismissed. In the revision petitions filed, as noted above, the High Court held that action under Section 22 ofthe Act is clearly sustainable. It referred to a decision of this Court in Mis. Karam Chand Thapar & Bros. (Coal Sales) Ltd. v. State ofUttar Pradesh & Anr. , [1976] 4 SCC 257 and held that a decision ofthis Court can be a ground for rectification oferror in terms ofSection 22 ofthe Act. The High Court did not accept the"tand ofth~ appellant that Aluminium powder in the powder form remains Aluminium in its primary form and in any case this is a debatable issue and, therefore, Section 22 ofthe Act does not apply. 4. Learned counsel for the appellant submitted that this is a case where Section 22 of the Act had no application.

The said provision is only applicable to a case where the error is apparent on the face ofthe record; Where the issue can not be decided in a undisputable manner, Section 22 has no application; and where a matter is disputable there can be no order under Section 22 of the Act. 5. Learned counsel for the respondent on the other hand submitted that in view of this Court's decision in Hindustan Aluminium Corporation's case (supra) there is no scope for taking a different view and, therefore, Section 22 clearly had application. 6.

Section 22 ofthe Act reads as follows: ( "Rectification ofMistakes: (I) Any officer or authority, or the Tribunal or the High Court may, on it's own motion or on the application ofthe 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 ofeven 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 ofbeing 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 ofdemand in the prescribed form and there from all the provisions ofthe Act and rules framed there under shall apply as if such notice had been served in the first instance. " (Underlined for emphasis) 7. The Deputy Commissioner (Appeal) held that Section 22 ofthe Act did not contemplate rectification ofdebatable issues and therefore, this was not a case where Section 22 ofthe Act applies. Similar was the view taken by the Tribunal. It has been submitted by the appellant that the Notification considered in Hindustan Aluminium Corporation's case (supra) was dated 30. 5. 1975. Subsequently, there has been an amendment by Notification dated 7. 9. 1981 by which "scrap" has also been included in the entry.

It is, therefore, submitted that the ratio in Hindustan Aluminium Corporation's case (supra) applied as scrap has always been produced as a result ofprocessing ofthe original metal. 8. This Court in Mis. Thungabhadra Industries Ltd (in all the ) Appeals) v. The Government ofAndhra Pradesh represented by the Deputy Commissioner ofCommercial Taxes, Anantapur, AIR (1964) SC 1372 held as follows: 'There is adistinction which is real, though it might not always be capable ofexposition, between a mere erroneous decision and a decision which could be characterized as vitiated by "error apparent". Areview is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error.

Where without any elaborate argument one could point to the error and say here is a substantial point oflaw which states one in the face and there could reasonably be no two opinions entertained about it, a clear case oferror apparent on the face ofthe record would be made out. " 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 Tiruyma/e, 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 ofthe 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 ofcertiorari according to the rule governing the powers ofthe 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 ofthe order is intended. "Mistake" means to take or understand wrongly or inaccurately; to make DEVAMETAL POWDERS PVT. LTD. v. COMMISSIONER, 899 an error in interpreting; it is an error, a fault, a misunderstanding, a misconception. "Apparent" means visible; capable ofbeing seen, obvious; plain.

It means "open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming. " Amistake 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 ofthe order which according to us is not permissible under the provisions ofSection 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 ofthe 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 ofbeing 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 ofinvestigation, argument or proof. As observed by this Court in Master Construction Co. (P) Ltd. v. State ofOrissa, (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 offact 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 ajudicious 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 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 andjudiciously instructed mind can find out from the record. In order to attract the power to rectify under Section 22, it is not sufficient ifthere 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 debatable point of law or a disputed question of fact is not a mistake apparent from the record. The plain meaning ofthe word "apparent" is that it must be something which appears to be so ex facie and it is incapable ofargument or debate. It, therefore, follows that a decision on 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. 12. In the Hindustan Aluminium Corporation's case (supra) the dispute did not relate to Aluminium Powder.

What the assessing officer and the High Court did was to inferentially apply the ratio of the said decision to Aluminium powder. The ratio in Karam Chand's case (supra) has, therefore, no application. 13. Above being the position, the High Court's order is clearly unsustainable and is set aside. We make it clear that we have not expressed any opinion on the issue as to whether Aluminium powder can be regarded "metal in primary form" for the purpose ofpayment oftax. There is no need to adjudicate that aspect in view ofthe fact that the rectification done in purported exercise ofSection 22 ofthe Act is clearly impermissible. 14. The appeal is allowed without any order as to costs. D. G. Appeal allowed.