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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 968 OF 2003
Commissioner of Sales Tax .. Petitioner
V/s
Maharashtra Sales Tax Tribunal & Ors. .. Respondents
Ms. I. Calcuttawala, A.G.P. for the petitioner.
Mr. V.P. Patkar with Mr. M.M. Vaidya for the respondents.
CORAM : FERDINO I. REBELLO & D.G. KARNIK, JJ.
DATE : 25TH SEPTEMBER 2009
JUDGMENT : (Per D.G. Karnik, J.)
1. By this petition, the State of Maharashtra – petitioner challenges the
judgment dated 28th February 2002 passed by the Maharashtra Sales Tax
Tribunal (for short “the Tribunal”) allowing the miscellaneous application
filed by the respondent no.2.
2. The respondent no.2 is a manufacturer of a mouthwash which it
markets under the brand name “Listerine Mouthwash”. It made an
application to the Commissioner of Sales Tax under section 52 of the Bombay
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Sales Tax Act, 1959 (for short “the Act”) to get its product classified under
Entry 24 of Schedule-C Part I and also prayed that prospective effect be given
to the order by virtue of the powers under sub-section (2) of section 52. By
an order dated 20th October 1995, the Commissioner of Sales Tax held that
the product of the respondent no.2 was covered by Entry 86 Part II of
Schedule-C and was liable to tax at the rate of 15 paise in a rupee.
Aggrieved by the order the respondent no.2 filed an appeal bearing no.158
of 1995 before the Tribunal. The Tribunal heard the appeal filed by the
petitioner along with another appeal bearing no.4 of 1996 filed by M/s
Johnson & Johnson Ltd., another manufacturer of a similar product and by
an order dated 21st June 1997 confirmed the order passed by the
Commissioner. The respondent no.2 filed an application for rectification
bearing rectification application no. 73 of 1997 before the Tribunal for
modification/correction of the order. By an order dated 19th December 1998,
the Tribunal rejected the rectification application. The respondent no.2 then
filed another application, bearing misc. application no.171 of 2001 on 8th
December 2001 alleging therein that one of the points raised by the
respondent no.1 in the original appeal as well as the rectification application,
namely giving of prospective effect to the order of the Commissioner was not
considered and decided by the Tribunal and, therefore, the Tribunal should
consider the same and grant prospective effect to the order of the
Commissioner. That application was made on 8th December 2001. By an
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order dated 28th February 2002, the Tribunal allowed the application and
held that the determination made by the Commissioner on 20th October 1995
under section 52(2) of the Act would apply prospectively from the date of
the decision, namely 20th October 1995. That order is impugned in this
petition.
3. Learned A.G.P. appearing for the petitioner submitted that once an
application for rectification (Rectification Application no. 73 of 1997) of the
order was rejected by the Tribunal, the order became final. Second
application by whatever name called (numbered as Misc. Application no.171
of 2001) was not maintainable and, therefore, the order passed by the
Tribunal was without jurisdiction. In the alternative, the learned A.G.P.
submitted that assuming that the Tribunal had the power of rectification or
entertaining the second application, treating it as an application for
rectification, it could not be entertained after expiry of two years from the
date of the original order or in any event from 19 th October 2001 when the
first rectification application was decided. We find merit in the submissions
of the learned A.G.P.
4. Section 52 of the Sales Tax Act confers power on the Commissioner to
decide the matters mentioned in clauses (a) to (e) of sub-section (1) thereof,
one of which is the rate of tax payable. Sub-section (2) of section 52 states
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that the Commissioner may direct that his order shall not affect the liability
of any person in respect of any sale or purchase effected prior to the
determination. Thus, the Commissioner specifically conferred a power to
make his decision prospective. Order passed by the Commissioner is
appealable to the Tribunal under section 55 of the Act. Section 62(1) of the
Act confers a power on the Commissioner to rectify any mistake apparent
from the record either on his own motion or on the same being brought to
his notice by any person affected by such order. Sub-section (2) of section
62 confers the same power on the Tribunal as that of the Commissioner for
rectification of a mistake in its order. Thus, the Tribunal has a power to
rectify any mistake in its order. However, the section itself provides that the
power of rectification can be exercised within two years. In the present case,
the Commissioner passed the order on 20th October 1995. The Tribunal
passed the order in appeal on 21st June 1997. An application for rectification
was made within two years and was rejected by the Tribunal on 19 th
December 1998. Once the application was rejected, there could be no
second application for rectification of a mistake appearing in the first
appellate order. In our view, successive applications for rectification would
not be maintainable as there is no such power specifically conferred by
section 62 of the Act. Assuming however that the second application for
rectification is maintainable, it cannot be filed after two years. In the present
case, second application under the caption “Misc. Application” was filed on
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8th December 2001. That clearly after two years of the appellate order and
even after two years of the rejection of the first rectification application on
19th October 1998. The second application, assuming second application lay,
was clearly barred by limitation. Therefore, the Tribunal had no power to
entertain it. The impugned order therefore has to be set aside.
5. Though we have set aside the order, in our view, ends of justice require
further order to be passed as indicated below. It was the contention of the
petitioner that the Commissioner should have given a prospective effect to
his order which he was entitled to under section 52(2) of the Act. The
ground that prospective effect should be given to the order of the
Commissioner was specifically urged before the Tribunal. Such a ground is
also found in the appeal memo, a copy of which is handed over to us.
However, that ground was not dealt with by the Tribunal at all in its order
dated 21st June 1997. Perhaps, this happened because the Tribunal had
heard and disposed off the two appeals, one filed by the respondent and the
other filed by Johnson & Johnson, by a common order and therefore only the
common point raised in the two appeals were considered by the Tribunal.
The specific ground of giving prospective effect to the order of the
Commissioner was not considered by the Tribunal. Two separate
rectification applications, one bearing no.73 of 1997 by the respondent no.2
and another bearing no. 71 of 1997 by Johnson & Johnson Ltd. filed before
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it, were decided by the Tribunal by a common judgment. Though the
respondent no.2 specifically raised a ground that the Commissioner ought to
have given specific prospective effect to his order under section 52(2) of the
Act and had pointed out that the said point was not dealt with by the
Tribunal in the first order, it was not dealt with by the Tribunal even in the
application for rectification. Again this mistake appears to have occurred
because the Tribunal was dealing with the two separate appeals
simultaneously and appears to have considered only the common grounds
raised in the two rectification applications which were decided by a common
order. The ground of giving of prospective effect of the order of the
Commissioner was required to be decided by the Tribunal first while
deciding the appeal at the first instance and, in any event, while deciding the
rectification application filed by the present respondent no.2. As the said
issue was not decided, the respondent no.2 was required to make the second
application. As the second application was allowed, the respondent no.2 had
no occasion to challenge the first appellate order passed by the Tribunal in
rectification application no.73 of 1997. We are therefore of the view that the
matter be remanded back to the Tribunal for rehearing rectification
application no.73 of 1997 filed by the respondent no.2 but only regarding
the contention of the respondent no.2 that the Commissioner and the
Tribunal ought to have given prospective effect to the order of the
Commissioner under section 52(2) of the Act. We make it clear that the
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points already decided in rectification application no.73 of 1997 shall stand
concluded and would not be reopened, but on remand the Tribunal would
only consider the issue regarding prospective effect to be given to the order
of the Commissioner under section 52(2) of the Act. The Tribunal shall
consider the same independently and without being in any way influenced
by any of the observations in the impugned order dated 28th February 2002
which is hereby set aside.
6.
For these reasons, Rule is made absolute to the extent indicated above.
The impugned order dated 28th February 2001 is set aside. However, the
matter is remanded back to the Tribunal to decide the rectification
application no.73 of 1997 afresh as regards the issue of prospective effect to
be given to the order of the Commissioner under section 52(2) of the Act. In
the facts and circumstances of the case, the parties shall bear their own costs.
(D.G. KARNIK, J.) (FERDINO I. REBELLO, J.)
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