M/S Paswara Petrochem Ltd. vs Deputy Commissioner, Commercial ...
2012 Latest Caselaw 1215 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 32
 

 
Case :- WRIT TAX No. - 119 of 2012
 

 
Petitioner :- M/S Paswara Petrochem Ltd.
 
Respondent :- Deputy Commissioner, Commercial Tax And Another
 
Petitioner Counsel :- Rakesh Ranjan Agrawal,Suyash Agarwal
 
Respondent Counsel :- C.S.C.
 

 
Hon'ble Ashok Bhushan,J.

Hon'ble Prakash Krishna,J.

(per Hon'ble Ashok Bhushan, J.)

By this writ petition, the petitioner has prayed for a writ of certiorari quashing the order dated 25.11.2011, passed by the Deputy Commissioner Commercial Tax under section 22 read with Section 21 of the U.P. Trade Tax Act and Section 9(2) of the Central Sales Tax Act for the Assessment Year 1999-2000 Central.

Brief facts of the case as emerged from the pleadings in the writ petition are; the petitioner deals in manufacture and sale of organic composite solvent (OCS). The petitioner is a public Ltd. Company registered both under the U.P. Trade Tax Act and Central Sales Tax Act. For the assessment year 1999-2000 (Central), assessment order dated 10.3.2003 was passed by the respondent no. 1. The order dated 23.4.2004 was passed by the Additional Commissioner giving permission for re-assessment under section 21(2) of the U.P. Trade Tax Act, 1948 (hereinafter referred to as '1948 Act'). The order of the Additional Commissioner stated that certain forms -C which were submitted by the petitioner could not be verified resulting non imposition of tax on full rates in the earlier assessment. A similar order dated 27.4.2007 was passed under section 21(2) with regard to assessment year 1999-2000 (U.P.). The petitioner filed writ petition in this Court being writ petition Nos. 635 (Tax) of 2004 and 636 (Tax) of 2004, challenging the orders dated 23.4.2004 and 27.4.2004 in which interim order was passed by this Court. Ultimately vide judgment and order dated 15.7.2010 both the writ petitions were dismissed. Subsequent to the dismissal of the writ petition, a composite notice dated 20.11.2010 was issued for re-assessment both under U.P. and Central. The petitioner again filed writ petitions being Writ Tax No. 192 of 2011 and Writ Tax No. 193 of 2011 seeking a direction to supply the relevant documents to the petitioners as prayed for by means of an application. The said writ petitions were disposed of by order dated 9.2.2011. Notices were issued again on 13.1.2011 asking the petitioner for compliance. The petitioner filed detailed objections on 13.1.2011. The Deputy Commissioner passed order dated 24.2.2011 referring to the permission dated 27.4.2004 of the Additional Commissioner for re-assessment, by which order notices issued for re-assessment for the year 1999-2000 was withdrawn. After the order dated 24.2.2011, another notice under sections 22/21 of 1948 Act and Section 9(2) of the Central Sales Tax Act was issued asking the petitioner as to why the order dated 24.2.2011 be not modified on the basis of facts as mentioned in the permission order dated 23.4.2004. The notice mentioned that the order dated 24.2.2011 was passed taking into consideration the approval order dated 27.4.2011 (Provincial), whereas the permission order dated 23.4.2004 was not referred to and the order dated 24.2.2011 was passed mistakenly, which needs to be rectified under section 22. The petitioner filed a reply to the notice under section 22. After considering the reply of the petitioner, the order dated 25.11.2011 has been issued rectifying the earlier order dated 24.2.2011. A re-assessment order has been passed with regard to Central by which re-assessment has been made for the year 1999-2000 and demand of balance tax of Rs. 1,14,31,729/- has been issued. This writ petition has been filed challenging the order dated 25.11.2011.

We have heard Sri Rakesh Ranjan Agrawal, learned Counsel for the petitioner and Sri S.P. Kesharwani, learned Additional Chief Standing Counsel for the State.

Sri Rakesh Ranjan Agrawal, learned Counsel for the petitioner challenging the order impugned raised following submissions:

(1)The order dated 25.11.2011 is beyond the scope and jurisdiction of Section 22 of 1948 Act since under section 22 only mistake or clerical error could be rectified and the order dated 25.1.2011 is an order of re-assessment which is not covered within the scope of mistake.

(2)The petitioner was not supplied copy of the SIB report (Special Investigation Bureau) on the basis of which the notice for re-assessment was given. Hence, the re-assessment order has been passed in violation of principle of natural justice which deserves to be set aside.

(3)The petitioner moved an application before assessing officer for supply of certain documents and to cross examine some persons, on which application the assessing authority was required to pass an order as per judgment and order of this Court dated 9.2.2011 passed in Writ Tax No. 192 of 2011. Assessing Officer without deciding the application has passed the re-assessment order.

Learned Counsel for the petitioner in support of his above submissions placed reliance on several judgements of the apex Court and this Court, which shall be referred to while considering the submissions in detail.

Sri S.P. Kesharwani, learned Counsel for the State refuting the submissions of learned Counsel for the petitioner, contended that there is no error in the order dated 25.11.2011 rectifying the mistake in the order dated 24.2.2011 and making re-assessment since by order dated 24.2.2011 re-assessment notice with regard to re-assessment year 1999-2000 for Central was also wrongly withdrawn, whereas the said order ought to have confined only to re-assessment notice for State. He submits that in the order dated 24.2.2011 only consideration was made of the permission order of the Additional Commissioner dated 27.4.2004, which related to the the re-assessment for State only and by mistake notices of re-assessment for both Central and State were withdrawn. He further submitted that the petitioner was made well aware of the grounds on which re-assessment notice was given. Detailed facts as to why forms -C submitted by the petitioner could not be verified have been mentioned in the notice. The forms-C on which the petitioner claims inter-state sales were found either fictitious, not issued to the respective dealers or not issued by the respective department hence, the benefit which was given on said forms, was not admissible and tax escaped assessment which was the sufficient ground for re-assessment proceedings. Correspondences which were on the record and were basis of the show cause notice, were perused by the petitioner and the petitioner cannot allege any violation of principle of natural justice. He submits that the request of the petitioner for providing copies were substantially met since the petitioner was shown the relevant records and correspondence on the record. He submits that the question of cross examination does not arise since the basis of the show cause notice for re-assessment was documentary evidences. It is further submitted that in earlier writ petitions in which the petitioner had challenged order of Additional Commissioner for granting permission of re-assessment, all correspondences in details were brought on record in the counter affidavit on the basis of which the show cause notices were framed. Thus, the petitioner cannot complain any violation of principle of natural justice. It is further submitted that with regard to assessment year 2000-01 both State and Central, similar re-assessment order was passed on 15.12.2011 on almost similar grounds of non verification of form -C, against which order, the petitioner filed writ petition being Writ Tax No. 257 of 2012, which was dismissed by Division Bench of this Court on 29.3.2012. Hence, following the same order, this writ petition also deserves to be dismissed.

The first submission of the petitioner is that no rectification order under section 22 could have been issued on 25.11.2011 and the order dated 25.11.2011 is beyond the scope of Section 22. As noticed above, the Additional Commissioner issued two separate orders granting permission for re-assessment for the year 1999-2000 i.e. (i) order dated 23.4.2004 granting permission for re-assessment with regard to Central (ii) order dated 27.4.2004 granting permission for re-assessment for the year 1999-2000 (provincial). As noted above, against both the orders, writ petitions were filed by the petitioner in this court which were dismissed on 15.7.2010. It is useful to quote the operative portion of the order of this Court which is to the following effect:

"In the facts and circumstances of the case, we are of the view that there was sufficient material on record for the assessing authority to form a belief of escaped assessment and to initiate the proceeding under section 21 of the Act. The initiation of proceeding under section 21 are accordingly upheld.

On the facts and circumstances of the case, we are not incline to interfere in the matter. However the petitioner is directed to participate in the re-assessment proceedings and submit its reply before the assessing authority. It is expected from the assessing authority to consider the submissions of the petitioner on merits and in accordance with law while passing orders on re-assessment proceedings.

Both the writ petitions are, accordingly, dismissed. Interim orders are discharged."

Subsequent to the dismissal of the aforesaid writ petitions, a composite notice dated 20.11.2010 was issued by the Deputy Commissioner for re-assessment of 1999-2000 provincial/ Central. With regard to re-assessment Central, specific grounds were given including the ground that forms-C as claimed by the petitioner were fictitious and unverified. The Deputy Commissioner passed the order dated 24.2.2011 by which the notice dated 20.11.2010 was withdrawn. A photocopy of the order dated 24.2.2011 has been filed as Annexure-9 to the writ petition. A perusal of the order dated 24.2.2011 indicates that the said order only refers to the order of the Additional Commissioner dated 27.4.2004 which related to the re-assessment of the year 1999-2000 for provincial, whereas there was no mention of the order dated 23.4.2004 which was noticed for re-assessment for Central nor detailed facts regarding ground for re-assessment of Central have been referred to or noticed. When the notice was discharged, the composite notice for 1999-2000 stood discharged, which was obvious mistake. Since the order did not refer to the permission order dated 23.4.2004 and the facts which were given in the notice was intended by order dated 24.2.2011 was to discharge notice for re-assessment for provincial hence, notice under section 22 for rectification was issued on 31.10.2011 mentioning the facts that order dated 24.2.2011 was issued under mistake. Withdrawing the re-assessment notice both for provincial and central whereas there was no reference of order dated 23.4.2004 in the said notice hence, the order deserved to be rectified. The said notice issued under section 22 read with Section 21/9(2) were replied by the petitioner in detail by letter dated 11.11.2011 and thereafter impugned order has been passed. The submission of the petitioner is that no rectification could have been made under section 22. Section 22 of the U.P. Trade Tax Act is as follows:

"22. Rectification of mistakes.-(1) Any officer of authority, or the Tribunal or the High Court may on its 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 been 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 therefrom all the provisions of the Act and the Rules framed thereunder shall apply, as if such notice had been served in the first instance."

From the facts as noticed above, it is clear that two separate orders were passed for re-assessment for Central and Provincial i.e. 23.4.2004 and 27.4.2004 which were challenged by the petitioner in this Court and when writ petitions were decided, a composite notice was issued on 20.11.2010 both for Central and State. The composite notice was replied and thereafter it was withdrawn on 24.2.2011. The contents of the letter dated 24.2.2011 clearly indicate that what was considered in the order was the order dated 27.4.2004 regarding provincial but notice as a whole was withdrawn. There being no consideration of the facts as mentioned in the order of Additional Commissioner dated 23.4.2004 as well as the specific facts and grounds as noted in the composite notice pertaining to re-assessment of central, the withdrawal of the notice in whole was clearly a mistake. Had in the order dated 24.2.2011 after consideration of the order dated 23.4.2004 and papers pertaining to the assessment of Central were given and thereafter notice was withdrawn, the result would have been a different. There being mistake on the part of the Deputy Commissioner in withdrawing notice in so far as Central is concerned, the same has been rightly rectified within the meaning of section 22 and present is not a case of any review or reconsideration of the order dated 24.2.2011 which could have been out of the scope of section 22. Learned Counsel for the petitioner has placed reliance on (2008) 2 SCC 439 Deva Metal Powders (P) Ltd. Vs. Commissioner, Trade Tax, Uttar Pradesh. The apex Court had occasion to consider the scope of Section 22 and laid down that mistake which is rectifiable under section 22 is the mistake which is apparent from the record. Following was laid down in paragraph 12 of the judgment.

"12. 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."

Similar view was taken by the apex Court in Mepco Industries Ltd. Vs. Commissioner of Income-Tax and another [2009] 319 ITR 208 (SC), wherein the apex Court referring to Deva Metal Powders (supra) laid down following:

"Before concluding, we may state that in Deva Metal Powders (P) Limited vs. Commissioner, Trade Tax, Uttar Pradesh, reported in 2008 (2) S.C.C.439, a Division Bench of this Court held that a `rectifiable mistake' must exist and the same must be apparent from the record. It must be a patent mistake, which is obvious and whose discovery is not dependant on elaborate arguments.

To the same effect is the judgement of this Court in the case of Commissioner of Central Excise, Calcutta vs. A.S.C.U. Limited [2003] 151 E.L.T. 481, wherein it has been held that a `rectifiable mistake' is a mistake which is obvious and not something which has to be established by a long drawn process of reasoning or where two opinions are possible. Decision on debatable point of law cannot be treated as "mistake apparent from the record."

Other judgements of this Court relied by learned Counsel for the petitioner are reported in 2005 NTN (Vol. 26)-230 Commissioner of Trade Tax, U.P. Lucknow Vs. M/s Dhampur Sugar Mills Ltd. Dhampur , 2005 U.P.T.C-180 Commissioner of Sales Tax Vs. M/s. Abdul Gani Banney Miyan, Chandpur, 1988 U.P.T.C.-428 M/s. Matwala Ram Kishan Chand Vs. Commissioner of Sales Tax, U.P., 1997 (Vol.26) STR 453 M/s. Shree Bhagwati Flour Mills, Mainpuri Vs. Commissioner of Sales Tax and [1971] 082 ITR 0050-Balram (T.S.), ITO Vs. Volkart Brothers, where the same proposition has been laid down as laid down in Deva Metal Powders (supra).

From the proposition as laid down in the above cases, it is clear that to attract the application of section 22, mistake must be apparent on the record and obvious mistake. Coming to the facts of the present case, it is clear that mistake existed since the Deputy Commissioner withdrew the notice for re-assessment both for Central and State by order dated 24.2.2011, whereas in the order dated 24.2.2011 only the re-assessment of provincial i.e. 27.4.2004 was considered and neither the facts, grounds given in the order dated 23.4.2004 for re-assessment of Central were adverted to nor the grounds given in the composite notice dated 20.11.2010 were adverted hence, the mistake was there and it was apparent on the record. Thus, we are of the view that no error was committed by the Deputy Commissioner in rectifying the mistake. It is also relevant to note that while rectifying the mistake, the Deputy Commissioner proceeded to complete the re-assessment 1999-2000 for Central for which notices were already issued to the petitioner and reply was submitted by the petitioner. Thus, the order dated 25.11.2011 is a composite order where mistake in dropping the notice for re-assessment for central was corrected and Deputy Commissioner proceeded to complete the re-assessment.

The second and third submissions made by learned Counsel for the petitioner are inter-connected and are being considered together. The submission which has been much pressed by learned Counsel for the petitioner is that petitioner was not supplied the SIB report on the basis of which show cause notice was issued with regard to re-assessment of Central. Sri S.P. Kesharwani, learned Counsel for the State refuting the submissions contended that all facts and allegations against the petitioner were clearly noted in the order of the Additional Commissioner dated 23.4.2004. Thus, the petitioner was made well aware of the grounds on which the respondents proceeded to reassess the assessee. It is submitted that the principle of natural justice were fully followed since the petitioner was made well aware the facts and grounds. A perusal of the order dated 23.4.2004 which has been filed as Annexure-2 clearly indicates that details pertaining to each form-C on the basis of which re-assessment was proposed, were mentioned including the shortcomings/defects in the forms. Sri Kesharwani also pointed out that in the earlier writ petitions which were filed by the petitioner challenging the orders dated 23.4.2004 and 27.4.2004 being writ petition Nos. 635 (Tax) of 2004 and 636 (Tax) of 2004, detail counter affidavit were filed in which correspondences received from the different tax authorities out side the State were brought on record on the basis of which the petitioner was communicated that forms -C which were claimed by the petitioner were not available for the benefit. Sri Keshwarwani also referred to various correspondences received from outside the State which were filed along with earlier counter affidavits. The petitioner was thus, substantially made aware of all correspondences and allegations on the basis of which re-assessment proceedings were initiated.

Learned Counsel for the petitioner, submitted that S.I.B. Report has not been supplied to the petitioner. Replying which Sri Kesharwani submits that SIB report received from the Tax Department was nothing but compilation of correspondences, actual informations and verifications received from outside the State to which the petitioner was made well aware. A perusal of the impugned order also indicates that a finding has been recorded by the Deputy Commissioner that all materials pertaining to inquiry of forms- C relating to the petitioner are available on record to which information the assessee was made aware by means of show cause notice as well as during hearing, the said finding has been specifically recorded in the impugned order. The aforesaid finding recorded in the order dated 25.11.2011 has not been specifically challenged in the writ petition. As the materials pertaining to inquiry and investigation of Forms-C and the result of inquiry were on the record of file, to which the petitioner was made aware, he cannot complain the violation of principle of natural justice. In so far as passing of specific order on the application of the petitioner to provide copy of the SIB report and to permit cross examination is concerned, although there is nothing on record to show as to whether any specific order has been passed on the said application, however, in view of the findings that the assessee was made aware of materials on record, the said complaint was substantially dealt with.

Learned Counsel for the petitioner in this context has relied on the Division Bench judgment of this Court reported in 2008 UPTC 1133 M/s Vehalana Steels and Alloys Pvt. Ltd., Muzaffar Nagar Vs. State of U.P. and others. In the said case Deputy Commissioner SIB, Muzaffar Nagar called the petitioner for producing the accounts. The petitioner participated in the proceedings before the Deputy Commissioner (SIB) and a report was submitted to the said inquiry and thereafter notice for provisional assessment was issued to the petitioner. The petitioner complained that despite request, the report submitted by the Deputy Commissioner was not supplied. Writ petition was filed by the petitioner for restraining the provisional assessment proceedings till the supply of the said report. The said facts of the case have been noted in paragraph 1 of the judgment which is quoted below:

" It is alleged by the petitioner that after the survey on 12.07.2007 by the team of the Respondent-Department, the petitioner was called upon by the Deputy Commissioner (SIB) Trade Tax, Muzaffar Nagar (hereinafter referred for short as DC SIB) for producing the accounts, which the petitioner claims to have produced. The petitioner also claims to have participated in the proceedings before the said DC SIB. Further, according to the petitioner, the DC SIB submitted a report as a result of the said inquiry, whereafter notice for provisional assessment has been issued to the petitioner. The petitioner further submits that despite request of the petitioner copy of the report submitted by the DC SIB has not been supplied to the petitioner. The prayer in this writ petition is to restrain the provisional assessment proceedings till the supply of the said report of the DC SIB."

The Division Bench in the said case noticed that assessing officer declined to supply copy of the report on the ground of confidentiality particularly when inference drawn from the said report has already been noticed in the show cause notice, and held that the decision of the Assessing Authority cannot be sustained Following was laid down by the Division Bench in paragraphs 6 and 7:

" 6. The Assessing Authority has declined to supply copy of the report by his letter dated 15.12.2007 on the ground that the same is confidential and, therefore, need not be furnished to the petitioner particularly when inference drawn from the said report has already been noticed in the show cause notice. In our view the aforesaid decision of the Assessing Authority cannot be sustained. There does not appear any logical reason to hold the report of the DC SIB to be confidential and accordingly for not supplying the same, if it is proposed by the department to rely upon that report in the provisional assessment.

7.It is mentioned in Annexure-5 to the writ petition that the ''substance of the adverse inferences' has been communicated to the petitioner. But the communication of the substance of the adverse findings in that report may not always be sufficient. The reason is that the material adverse to the petitioner in the report may not have been properly or completely understood or appreciated in its proper perspective by the Officer when it read the report, and what has been understood by the Officer may not have been communicated accurately to the petitioner by that Officer. Language as a medium for communication of ideas is far from perfect, and that imperfection increases indirect communication. The inadmissibility of hearsay evidence is based on that concept. Moreover the context in which the adverse conclusion finds place in the report may, in some cases, have great importance. Again the basis of the adverse conclusion, as mentioned in the report, would also be important. Therefore, principles of natural justice would require a copy of the original report to be supplied, instead of supplying indirect information to the person against whom that report is proposed to be relied upon."

The said directions were issued by the Division Bench in the aforesaid case on the facts that proceedings for inquiry were initiated by Deputy Commissioner SIB in which proceedings, the petitioner was asked to participate. In such circumstances, there was no reason for not supplying the said report to the petitioner, whereas in the present case, the information received from tax authority of outside the State pertaining to verification of Form-C were on the record and were shown to the assessee as has been found by the Deputy Commissioner in the impugned order. Thus, in the present case, it cannot be said that non supply of SIB report which according to the respondents was nothing but compilation of the aforesaid informations, cannot be said to be fatal. More so all materials which have been relied against the petitioner were on the record and the petitioner was given opportunity to look into the record .

The apex Court in 1976 (1) SCC 124 City Corner Vs. Personal Assistant to Collector and Addl. District Magistrate , Nellore, held that it is not always necessary that documents asked for to be furnished, provided substance of the document is furnished and summary is not misleading. Following was laid down in paragraph 5 of the judgment:

"But the main ground of attack against the order of cancellation is that in making it the district Magistrate had failed to observe the principles of natural justice. The order that the District Magistrate passed is a quasi- judicial order and therefore the appellant is right in contending that the principles of natural justice should have been followed before that order was passed. It is now well established by decisions of this Court that such is the requirement of law even where the statute in question itself does not so provide. It is also well established that the principles of natural justice do not necessarily conform to a fixed formula, nor is it a procrustean bed into which all proceedings must be fitted. The principles of natural justice will always depend upon the facts of each case. The learned Judges of the High Court examined the various documents the copies of which had been asked for by the appellant and came to the conclusion that the show cause notice issued to him contained a summary of all those documents which was sufficient to enable the appellant to make his representation. We cannot say that this conclusion is wrong. It is not always necessary that the documents asked for should itself be furnished provided the substance of those documents is furnished, always provided, however, that the summary is not misleading. Such is not the case here....."

Further in the counter affidavit filed by the State in writ petition Nos. 635(Tax) of 2004 and 636 (Tax) of 2004, all necessary correspondences received from tax authority of State and outside State were already brought on record, which were basis for issuing re-assessment proceedings thus, the petitioner was made well aware of the entire materials which have been utilised against him. Thus, petitioner's complaint that principle of natural justice has been violated, cannot be accepted.

There is one more reason due to which no relief can be granted to the writ petitioner. The order of re-assessment for the year 2000-01 dated 15.12.2011, which was based on similar allegations, was challenged by the petitioner in this court by filing Writ Tax No. 257 of 2012. The said writ petition was dismissed on 29.3.2012. While dismissing the writ petition following was observed by the Division Bench:

"6. The counsel for the petitioner submits that:

The petitioner has filed an application alongwith order dated 9.2.1011. However, the SIB report was not given to him;

No re-assessment order can be passed on the basis of the same.

7. The Assessing Authority while passing the order dated 15.12.2011 has also passed order mentioning the reason as to why the SIB report can not be given. Its correctness can always be seen in the appeal. In view of this, we see no justification to interfere. It is always open to the petitioner to take objection against the same before the appellate authority.

8. With the aforesaid observations, both the writ petitions are dismissed."

Sri Kesharwani is right in his submission that against the order of re-assessment, the petitioner has statutory remedy of appeal and which was one of the grounds for dismissing the writ petition filed by the petitioner for the re-assessment 2000-01.

In view of the foregoing discussions, we are of the view that the petitioner is not entitled for any relief in this writ petition

The writ petition is dismissed.

Order Date :- 2.5.2012

LA/-