- (1.) THE following questions have been referred to us - (1) Whether a rectification u/s 17 of Rajasthan Sales Tax Act can be made on the basis of subsequent judgment of a High Court or Supreme Court. (2) Whether second application under sec. 17 of the Rajasthan Sales Tax Act can be sustained on the same point on which previous application had been rejected by the Board. (3) Whether a mistake committed by the authorised representative of a party by not citing a ruling in existence at the time of hearing, can be a good ground for rectification under sec. 17.
(2.) THE facts leading to the reference have been stated by the Division Bench, making the reference, as follows: - "the facts of this case in brief are that the Board of Revenue had in the three revision petitions filed by the State against this applicant firm accepted the revisions on 1-3-1968 and declared that the applicant firm was liable to pay tax on the sale of tin containers of oil. THE applicant firm thereupon presented a rectification application on 2-8-1968 against this revisional order of the Board on the plea that the Hon'ble High Court of Rajasthan had in the case of M/s Ghasi Ram Mangilal vs. State decided on 13-7 68 (and reported in 1968 Tax Reporter Vol. II page 179) held that no sales-tax was leviable on such tin containers. THE Board vide its order dated 19 10-68 rejected the rectification application of the firm on the ground that the judgment of the High Court dated 18-7-68 was not in existence when the revision petitions were accepted on 1-3-68 and subsequent judgment dated 18-7-68 of the High Court could not be a good or valid ground for rectification. THE firm has again come to the Board with a fresh application for seeking rectification of the order of the Board dated 19-10-68. " During arguments before the Division Bench conflicting rulings were cited as to whether a subsequent binding judgment can be ground for rectification of an order. The questions as quoted in para 1 were, therefore, framed and referred to us. Learned counsel for the assessee first drew our attention to the fact that a Division Bench of the Board had held in a judgment dated 29-3-68 in the case of Ghasiram Mangilal vs. State (1968 RRD 268) that where, in the light of a Supreme Court judgment an assessment order is found to be erroneous, it should be rectified under sec. 17 of the Rajasthan Sales Tax Act, even though the judgment may be subsequent to the assessment. The rectification application cannot, it was held, be rejected on the plea that the judgment was subsequent to the assessment order. In the case of the present assessee, however, in their judgment dated 10-10-68, another Division Bench of the Board, took a contrary view and refused to rectify an order with reference to judgment of the Rajasthan High Court, on the plea that the judgment was subsequent to the order sought to be rectified, although in this case the High Court judgment: pertained to the same notification as was in question in the impugned assessment. Learned counsel argued that it was an established principle that a later Division Bench should not differ from an earlier Division Bench and if a later Division Bench is inclined to take a view contrary to that of the earlier Division Bench, reference to a larger Bench must necessarily be made. This salutary principle he said was not followed by the Division Bench which passed the judgment dated 10-10-68 A second application was, therefore, submitted on 34-69 for rectification of the judgment dated 19-10 68 on the ground - (i) that it had taken a view of law contrary to that of an earlier Division Bench judgment and, (ii) that it was against the High Court judgment in respect of the notification in question declaring it unconstitutional. It is this application which has occasioned the present reference. Learned counsel drew our attention to the provisions of Order 47, R. 1 of the C. P. C. pertaining to review and those of sec. 17 of the Rajasthan Sales Tax Act pertaining to rectification of mistakes. The words in the former are "mistake or error apparent on the face of the record while in the latter they are 'mistake apparent from the record'. These expressions, he said, are not to be equated. The latter gave a much greater latitude. He cited the following rulings pertaining to sec. 35 of the old Indian Income Tax Act, 1922 which is similar to sec. 17 of the Rajasthan Sales Tax Act, in support of his contention - (i) 1957 XXXII I T. R. 350 Bombay High Court Arvind N. Mafatlal vs. I. T. O. North Satara. (ii) 1961 XLI I. T. R. 732 - Supreme Court - Income Tax Officer, Always vs. Asok Textiles Ltd. He proceeded to argue that the scope of rectification in S. 17 of the Rajasthan Sales Tax Act (which as already stated is comparable to sec. 35 of the Indian Income Tax Act, 1922) extended to mistakes of law. The mistake of law must, of course, be apparent from the record. This fact of appearance from the record has to be on the date on which the concerned authority is required to apply its mind to the record. The record as on that date would include the law applicable to the case, including the effect of valid retrospective legislation, and binding rulings of the Supreme Court and the High Court of the State. Where the Supreme Court or the State High Court interprets a law the position is similar to what it would be as result of a retrospective amendment. A law declared invalid or unconstitutional by a binding judgment, was at no time good and was a dead law. Any order based on such a law cannot but be rectified. Such rectification is obligatory and unavoidable. In support of his contentions, he cited the following rulings - (i) 1958 XXXIV I. T. R. 143 Supreme Court M. K. Venkatachalan I. T. O. and another vs. Bombay Dying and Manufacturing Co. Ltd. (ii) 1959 XXXVI I. T. R. 538 Bombay High Court Bhagwan dass Kewaldas vs. N. D. Mehrotra and another. (iii) 1961 XLI I. T. R. 732 -Supreme Court Income-tax Officer Alwaye vs. Asok Textiles Ltd. (iv) 1962 XLIV I. T. R. 260 Maharashtra High Court-Walchand Nagar Industries Ltd. vs. I. T. O, Companies Circle 1 (3) Bombay and another. (All the above rulings are with reference to Sec. 35 of the Indian Income Tax Act, 1922 ). (v) 1965, 16 STC 845 Madras High Court - Gopalswami Ayer vs. Sales Tax Appellate Tribunal, Madras. (This is with reference to Rule 18 of the Madras General Sales Tax Rules, relating to rectification ). (vi) 1967 Karnatak Law Journal 125, Mysore High Court Govindaraju Chetty vs. C. T. O. Hassan (This is with reference to corresponding Rule 38 of the Mysore Sales Tax Rules.) (vii) 1968 Kerala Law Reports 694 Kerala High Court - Pathrose vs. Kuttuan (This is with reference to O. 47, R. 1 C. P. C. regarding review ). Learned counsel brought to notice that the ruling in 1959 XXXVI I. T. R. 538 was relied upon by the Rajasthan High Court in judgment dated 28-8-68 in Division Bench Civil Reference No. 15 of 1964 in the case of Shankerlal Muchhal vs. Board of Revenue, pertaining to rectification of an order under sec. 17 of the Rajasthan Sales Tax Act with reference to a provisions of law which operated retrospectively. The judgment in 1969 36, I. T. R. 538, he said, makes it unambiguously clear that what is to be seen in a rectification is "whether at the date of the petition, the petitioner is able to establish from the record that there is an error. . . . . . ". The position as on the date of the rectification application is, therefore, material. He reiterated that rectification in the present case was sought on the ground that the levy of tax in question had been struck down as unconstitutional and this was apparent from the record on the date the rectification application was made. The rulings cited by him, therefore, he said, applied with full force, the provision in sec. 17 of the Rajasthan Sales Tax Act being pari materia with sec. 35 of the Indian Income Tax Act, 1922, and the provisions in Sales Tax laws of other States to which the rulings pertain. He further argued that an application for the rectification of a mistake would be maintainable even if such rectification may result in the whole order failing to the ground. He cited in support 1969, LXXIII I. T. R. 283 Bombay High Court-Blue Star Engineering Company vs. Commissioner of Income Tax, Bombay City. (The ruling is with reference to sec. 154 of the Indian Income Tax Act, 1961 corresponding to sec. 35 of the Act of 1922 ). The rectification, he said, would of course be subject to limitation as laid down in sec. 17 Rajasthan Sales Tax Act (1962 XLIV I. T. R. 260 and 1967 Karnatak Law Journal 125 ). In cases in which an Appellate order has replaced the assessment order, limitation will run from the date of the appellate order (1965 XVI S. T. C. 854 ). In regard to the second question under reference, he said that a subsequent rectification on a different mistake, apparent from the record of the case, in not barred, subject, of course to limitation. He cited in support 1965 LVI I. T. R. 339 Allahabad High court Hiralal Sutwala Versus Commissioner of Income Tax U. P. and V. P. He then referred to Art. 265 of the Constitution which reads - "no tax shall be levied or collected except by the authority of law. " He argued that this Constitutional mandate applies to the entire process of taxation commencing from the enactment of the taxing statute right up to the stage when money is actually taken from the citizen. Where law has been retrospectively amended or laid down by a binding ruling, it is obligatory to set right an order which may not be in accordance with the law so amended or laid down. He cited the following rulings in support - (i) 1959 X S. T. C. 345 Madras High Court - Rayalseema Construction vs. Deputy Commercial Tax Officer. (ii) 1968 Tax Reporter, 61 - Rajasthan High Court Brahmdatta vs. Sales Tax Officer, Sikar. The learned Advocate General had no objection to the general proposition that rectification application would lie, subject to limitation, as prescribed to give effect to a retrospective amendment of law or a binding judgment declaring a law to be unconstitutional or interpreting the law. He was, however, anxious to ensure that the scope of rectification may not be unduly extended. He said that what can be rectified under sec. 17 of the Rajasthan Sales Tax Act is a 'mistake'. A mistake according to Black's Law dictionary is "some unintentional act, omission, or error arising from ignorance, surprise, imposition or misplaced confidence". Further, "a mistake exists when a person, under some erroneous conviction of law or fact, does, or omits to do, some act, which, but for the erroneous conviction, he would not have done or omitted. " There must, therefore, be some such patent mistake of fact or of law in order that an application for rectification may be entertained. The process of rectification must not extend to erroneous decisions or erroneous interpretation of law by the authority concerned. Secondly, he said the mistake must be 'apparent from the record. ' It should not be necessary to travel outside the record, or to enter into fresh evidence or arguments in order to determine the mistake and rectify it. He also, drew our attention to the difference between the provision for review under the Civil Procedure Code (O. 47, R. 1) and that for rectification under the Rajasthan Sales Tax Act (Sec. 17.) While the scope of the latter he said is simply "rectifying any mistake apparent from the record," (i) discovery of new and important matter or evidence, (ii) mistakes or errors apparent on the face of the record, and (iii) any other sufficient reason. The process of rectification under the Sales Tax Act should not be, he said, stretched to cover circumstances such as (i) and (iii ). The process must be restricted to amendment or rectification necessary on the basis of mistakes apparent on the record. Now, there can be no manner of doubt that when a law is amended retrospectively, the effect is is if the law always stood as amended. As observed by their Lordships of the Supreme Court in 1958 XXXIV I. T. R. 143 "it may appear somewhat strange that an order, which was good and valid when it was made, should be treated as patently invalid and wrong by virtue of the retrospective operation of the amending Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the amending Act. " It may be mentioned that this principle was recently incorporated in the Rajasthan Sales Tax Act itself, with the insertion of the following explanation in sec. 17 Rectification of Mistakes), by sec. 4 of the Rajasthan Sales Tax (Amendment & Validation) Act, 1960 (Act No. 13 of 1969): - "explanation - An order, which was valid when it was made, and is subsequently rendered invalid by an amendment of the law having retrospective operation, shall, for the purpose of the section, be construed as involving a mistake apparent from the record. " Similarly, when a law is interpreted by a binding judgment, the court, as observed by their Lordships of the Bombay High Court in 1959 XXXVI I. T. R 538, "what the law has always been and must be understood to have been. " The effect is akin to that of a retrospective amendment.
(3.) THEREFORE, when a law is amended retrospectively or declared unconstitutional invalid or void, or is interpreted to a certain effect by a binding judgment (of the Supreme Court or the State High Court), this state of the law must be deemed to be part of the record. If on the date on which rectification is sought, a mistake is apparent on this basis, rectification cannot be denied, even though the amendment of judgment may have been made or delivered subsequent to the order sought to be rectified The judgment must, of course, be such as clearly pertains to the law applicable, and the process of rectification must not involve entering into a discussion or debate regarding the scope of the judgment or its applicability etc. As observed by their Lordships of the Bombay High Court in 1967, 32 I. T. R. 350, "the mistake to be rectified must be a mistake patent on the record and not a mistake which may be discovered by a process of elucidation, argument or debate. " There may be a question whether the scope of rectification would extend to a complete reversal of the order sought to be rectified in consequence of retrospective amendment etc. The following observations of their Lordships of the Bombay High Court in 1960 LXXIII I. T. R. 282, cited by learned counsel for the assessee (para 9 above), provide a complete answer to the question - ". . . . . Power to rectify the order is to be exercised by correcting the error in the order and the correction, must, therefore, extend to the elimination of the error. What the effect of elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order. It may also be that the error may be such as may go to the root of the order and its elimination may result in the whole order falling to the ground. " The limitation laid down in sec. 17 will, of course, apply to a rectification on account of retrospective amendment etc. , as to all other rectifications. Where an order has been replaced or confirmed by an order in appeal or revision, and rectification is then sought, in respect of the later order, the limitation will naturally apply as from the date of such order. We would, therefore, answer the first question, referred to us, in the affirmative, subject to observations in paras 17 to 21. The result is that like a retrospective amendment of law, a judgment of the Supreme Court or the State High Court striking down or directly interpreting any provision of law, will be ground for rectification under sec. 17 of the Rajasthan Sales Tax Act, within the limitation prescribed therein, provided there is a patent mistake apparent from the record, read in the light of such judgment, and no process elucidation or argument is required to discover the mistake. The second question, we find, does not arise in the present case, as the second application dated 8-1-69 in this case was directed against the Boards's order dated 17-10-68, while the first one dated 2-8-68 was in respect of the order dated 1-3-68. There was thus no second application for the rectification of the same order. The grounds were also not wholly the same. We do not think, therefore, that it is necessary to answer this question in the present context. Answer to the third question is implied in the answer to the first question. If a judgment which is binding was not cited by the counsel for any party, it is binding all the same, and the principle accepted in the answer to the first question will apply if a rectification is sought on the basis of such a judgment. Before parting with the case, we would observe that in order, inter alia, to meet the situation arising out of the striking down of a part of the notification No. V. 5 (139) ST/57 dated 11-8-59 by the Supreme Court judgment in the case, Ghasiram Mangilal vs. The State of Rajasthan. ", the State legislature enacted the Rajasthan Sales Tax (Amendment & Validation) Act, 1969 (Act No. 13 of 1969 ). It was with reference to the Rajasthan High Court judgment in this very case that rectification was sought in the present case. The consequences of the Amendment & Validation Act will, therefore, have to be kept in view by the Bench concerned in deciding the matter. . ;