Assistant Commercial Taxes Officer vs M/S Makkad Plastic Agencies

3. The assessment of the assessee-respondent for the Assessment Year 2001-02 was completed by the Assessing Officer under Section 29(7) of the Rajasthan Sales Tax Act, 1994 [for short "the Act of 1994"] holding that the tax on "thermo ware" and "vacuum ware", which were the articles sold by the assessee-respondent during the relevant assessment year, should be levied Sales Tax at 10 per cent instead of 8 per cent, treating them as separate articles from plastic goods/products. Consequently, the liability of difference of tax at 2 per cent along with surcharge, interest and penalty was also levied.

4. The aforesaid order of the Assessing Officer was challenged by the assessee-respondent before the Deputy Commissioner [Appeals], Commercial Tax Department, Bikaner under Section 84 of the Act of 1994, which was allowed by the Appellate Authority by order dated 29.03.2005 by setting aside the demand for difference of tax imposed at 2 per cent as also the penalty and interest.

5. Aggrieved by the aforesaid order dated 29.03.2005 of the Deputy Commissioner [Appeals], Bikaner the appellant herein preferred an appeal before the Rajasthan Taxation Board, Ajmer, which was heard and disposed of by the Taxation Board by allowing the same vide its order dated 13.05.2008. The Taxation Board considered various documents placed on record including invoices and, thereafter, on appreciation thereof, it was held that "plastic goods" and "thermo ware" are two different articles as was indicated from the invoice itself. It was also held that the conclusion arrived at by the Tax Assessing Officer is well-considered and reasonable, whereas the order passed by the Deputy Commissioner [Appeals], Bikaner is contrary to facts and law. Having held thus, the Taxation Board allowed the appeal and order dated 29.03.2005 passed by the Deputy Commissioner [Appeals], Bikaner was set aside and order passed by the Tax Assessing Officer was restored.

6. The assessee-respondent thereafter filed a rectification/amendment application purportedly under Section 37 of the Act of 1994, which was decided by the Rajasthan Taxation Board, Ajmer by passing an order dated 22.01.2009. By the aforesaid order the Taxation Board modified its earlier order to the extent of holding that as the assessee-respondent had declared all his sales in the books of accounts, in that situation, in order to levy penalty, department has to also prove additionally, that there was a mala fide intention on the part of the assessee- respondent for tax evasion, which is not revealed in the present case. It was further held that as the mala fide intention of the assessee-respondent for tax evasion has not been proved and since no such evidence is available on record from which it could be established that the assessee-respondent had the mala fide intention behind recovering the tax at the rate of 8 per cent, the order of levying penalty is not justiciable. After recording the aforesaid findings, the Taxation Board passed an order dated 22.01.2009 to the extent of amending its previous order dated 13.05.2008 and set aside the order passed by the Deputy Commissioner [Appeals], Bikaner dated 29.03.2005 on the issue of tax evasion only, however, maintained the finding on the issue of penalty.

13. The aforesaid well-reasoned order came to be interfered with by the Taxation Board itself while exercising the purported powers under Section 37 of the Act of 1994, which empowers the Board only to rectify a mistake apparent on the face of the record. The issue, therefore, is whether, while exercising such power vested under Section 37 of the Act of 1994, the Taxation Board could re-appreciate the evidence on record and review its earlier order by holding that there was no mens rea on the part of the assessee-respondent and, therefore, no penalty is leviable on them. The aforesaid exercise of power by the Taxation Board in the present case by interfering with its earlier order was submitted to be a jurisdictional error and also purportedly to be an exercise of power in excess to what is provided in the statute.

19.Thus, the orders passed by the Taxation Board on 22.01.2009 as also the impugned order and judgment passed by the High Court upholding the said order of the Taxation Board are hereby set aside and quashed and the original order passed by the Assessing Officer is restored.

20.In terms of the aforesaid observations, the present appeal is allowed but without costs.

............................J [ Dr. Mukundakam Sharma ] .............................J [ Anil R. Dave ] New Delhi, March 29, 2011.