1966 PLP 183 (PTD)

MUHAMMAD FAZLE GHANI, J.‑Under section 17(I) of the Sales‑tax Act of 1951, the Appellate Tribunal has referred the following question for decision to this Court:‑ "Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that the order passed by the Sales‑tax Officer under section 30 of the Sales‑tax Act, was appeal able under section 14 of the said Act?"

2. The relevant facts are that for the assessment year 1956‑57 original assessment was made on the 13th of March 1961, when the assessee was allowed credit for Rs. 5,950 paid by Messrs Valika Woollen Mills on purchase of yarn and this credit resulted in a refund of Rs. 4,768 to the assessee. In 1962, Mr. Iqbal Ahmad, Examining Officer, Sales‑tax, discovered that the yarn for which the refund was allowed was used by the assessee for manufacture of shawls which being handloom product were exempt from sales tax, therefore, the refund of sales tax allowed to the assessee was considered to be inadmissible. Considering it to be a mistake apparent on the face of the record, the above‑named Officer purporting to act under section 30 of the Sales‑tax Act issued a notice to the assessee on the 27th of April 1962, to show cause why the rectification should not be made.

3. The assessee contended that section 30 of the Sales‑tax Act was not applicable as it was a mistake of law and could not be rectified under that section. This plea was rejected by the Sales‑tax Officer and appeal by the Appellate Assistant Commis sioner was dismissed on the preliminary objection that no appeal was competent under section 14 of the Sales‑tax Act against an order under section 30 of the Act for correcting a mistake apparent on the face of the record. The Tribunal accepted the appeal relying on an unreported decision of this Court in the matter of Messrs Sajjad Nabi Dar & Co. (Writ Petition No. 476‑1962). In that case the High Court refused to interfere in the exercise of its writ jurisdiction on the ground that the petitioner should have gone in appeal tinder the provisions of section 14 of the Sales‑tax Act to the Appellate Assistant Commissioner, against the order of the Sales‑tax Officer under section 30 of the said Act.

4. For the proper appreciation of the law, it is necessary to reproduce the provisions of section 30 of the Sales‑tax Act and the relevant rules:‑ "30 (1) The Commissioner, the Appellate Assistant Commis sioner or the Sales Tax Officer may, at any time within four years from the date of any order passed by him, ‑of his own motion rectify any mistake apparent on the face of the record or proceeding connected with that order and shall within the like period rectify any such mistake which has been brought to his notice by an assessee: Provided that no such rectification shall be made so as to enhance an assessment or reduce a refund unless notice accordingly has been given to the assessee and he has been given a reasonable opportunity of being heard. (2) . . . . . . . . . . . . (3) . . . . . . . . . . . . (4) Where any such rectification has the effect of enhancing an assessment, or reducing a refund, the Sales Tax Officer shall serve on the assessee a notice of demand as provided in subsection (2) of section 12." Sales‑tax Rules of 1951 were framed under section 39 of the Sales‑tax Act. Rule 45 (1) lays down: that the notice of demand under subsection (2) of section 12 shall be in Form SS. T. 8 and the Rule Making Authority has also prescribed the form which has been appended as a part of the Rules. In this case a notice of demand was issued to the assessee on the said form on the 27th of April 1962, and column 7 of the notice reads as under:‑ "

7. If you intend to appeal against the assessment/penalty you may present an appeal under subsection (1) of section 14 of the Sales Tax Act, 1951, to the Appellate Assistant Commissioner of Sales Tax at . . . . . within thirty days of the receipt of this notice, in the form prescribed under sub section (2) of section 14, duly stamped and verified as laid down in that form."

5. On behalf of the Commissioner reliance is placed on Commissioner of Income‑tax, Madras v. Vellingiri Gounder and Brothers ((1953) 24 I T R 166) in which it has been held that in cases of rectification of mistake under section 35 of the Income‑tax Act no appeal lies to the Appellate Assistant Commissioner against the order of Income‑tax Officer but the provisions of section 30 of the Income‑tax Act providing appeals to the Appellate Assistant Commissioner are not in pari materia with the provisions of section 14 of the Sales Tax Act of 1951. Section 30 of the Income tax Act enumerates various orders which have been specifically made appeal able while no such restriction has been imposed on the scope of appeals under section 14 of the Sales‑tax Act. It brings within its fold all orders of assessment whether made in the first instance under section 10 or section 28 and orders made subsequently under section 30 of the Act.

6. Under subsection (4) of section 39 rules made, when published in the official Gazette, shall have effect as if enacted under the Act. It, therefore, follows that if an order of rectification has the effect of enhancing an assessment or reducing a refund and a notice of demand is served on the assessee, it gives him a right of appeal as provided in the form of notice, reproduced above. It was contended on behalf of the Department that an appeal is the creation of the statute and inasmuch as an appeal under section 14 lies from an order of assessment an order of rectification having the effect of enhancing an assessment and reducing a refund is not appeal able. The right of appeal depends upon the real nature of the order. Section 14 provides that an assessee objecting to an assessment made or penalty imposed on him may within 30 days of the date on which‑he was served with notice of assessment or penalty appeal to the Appellate Assistant Commissioner. "Assessee" is defined in subsection (3) of section 2 as a person from whom tax is payable under the Act. Accordingly, for the purposes of section 14 a person from whom tax is payable under an order of rectification will be an `assessee' and the order to the extent it has enhanced the tax reduced the amount' of refund will be an order of assessment. The right to appeal from that order would not, therefore, be taken away merely because it is made by way of rectification under section 30 of the Act.

7. As a result of the above discussion, our answer to the question raised in the reference is that the Tribunal was right in holding that the order passed by the Sales Tax Officer under section 30 of the Sales Tax Act was appeal able under section

14. The reference is answered accordingly: The costs of these proceedings will be borne by the Commissioner of Sales Tax. S. Q.