REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2692    OF 2011 [Arising out of SLP (C) No. 33853  of 2010]

Assistant Commercial Taxes Officer      ….  Appellant

Versus

M/s Makkad Plastic Agencies        ….  Respondent

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. Leave granted.

2. This appeal is directed against the judgment and  

order dated 03.05.2010 passed by the Rajasthan  

High Court, Jodhpur Bench, in S.B. Civil [Sales-

Tax] Revision No. 74 of 2010, whereby the High  

Court  dismissed  the  said  Revision  Petition  

preferred by the appellant herein and upheld the  

order dated 22.01.2009 passed by the Rajasthan  

Taxation  Board,  Ajmer,  wherein  the  Taxation

Board interfered and modified its earlier order  

dated 13.05.2008.

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.  

7. Being aggrieved by the aforesaid order passed by  

the  Taxation  Board  a  Revision  Petition  was  

preferred by the appellant before the High Court

of Rajasthan, Jodhpur Bench under Section 86 of  

the Act of 1994. The High Court, however, held  

that no question of law arises out of the order  

passed by the Taxation Board for consideration  

and,  consequently,  the  Revision  Petition  was  

dismissed.  The  present  appeal,  as  stated  

hereinbefore, is directed against the aforesaid  

two orders passed by the High Court as also by  

the Taxation Board.

8. From  the  aforesaid  narration  of  facts  it  is  

crystal  clear  that  the  earlier  order  dated  

13.05.2008  passed  by  the  Taxation  Board  was  

interfered  with  and  modified  by  the  Taxation  

Board itself under its order dated 22.01.2009.  

The said order dated 22.01.2009 is practically  

challenged  in  the  present  case  on  the  ground  

that the said order was passed by the Taxation  

Board in excess of its jurisdiction. The said  

order dated 22.01.2009 was passed on the basis  

of  an  Amendment  Application  filed  by  the  

assessee-respondent under Section 37 of the Act  

of 1994. In the said order dated 22.01.2009, the  

Taxation Board proceeded on the ground that the  

said application was in the nature of Amendment  

Application  praying  for  amendment  of  its  

judgment and order dated 13.05.2008.

9. Contention raised on behalf of the appellant is  

that  the  Taxation  Board  committed  a  

jurisdictional  error  in  amending  and  reviewing  

its  earlier  order  dated  13.05.2008  while  

exercising  the  power  of  rectification  of  a  

mistake apparent on the face of the record.

10.It may be stated herein that despite service of  

notice, none appears for the assessee-respondent  

and, therefore, we proceed to dispose of this  

appeal on the basis of the submissions made by  

the counsel appearing for the appellant and also  

on the perusal of the records placed before us.

11.In order to appreciate the aforesaid contention,  

we are required to extract the relevant part of  

Section 37 of the Act of 1994, which was the  

power  exercised  by  the  Taxation  Board  for  

passing the order dated 22.01.2009: -

“Section 37: Rectification of a Mistake –  

(1) With a view to rectifying any mistake apparent  from  the  record,  any  officer  appointed  or  any  authority constituted under the Act may rectify suo  motu or otherwise any order passed by him.  

Explanation: A mistake apparent from the record shall  include an order which was valid when it was made and  is subsequently rendered invalid by an amendment of  the  law  having  retrospective  operation  or  by  a  judgment  of  the  Supreme  Court,  the  Rajasthan  High  Court or the Rajasthan Tax Board.

…………………………………………………………………………………………………………………………………………… …………………………………………………………………….”

12.The Taxation Board by its order dated 13.05.2008  

was  disposing  of  an  appeal  filed  against  the  

order  dated  29.03.2005  passed  by  the  Deputy  

Commissioner  [Appeals].  By  the  aforesaid  order  

dated 13.05.2008 the Taxation Board upheld and  

accepted the contention of the appellant herein  

that “thermo ware” is not similar to “plastic  

product” and that rather they are two different  

products/articles, which in fact is also proved  

and established from the documents on record. It  

was, therefore, held that the conclusion arrived  

at by the Assessing Officer is well-considered  

and reasonable. It was also held that, although,  

in the appellate judgment, given by the Deputy  

Commissioner  [Appeals],  reference  was  made  to  

the use of “plastic granules” and “powder” as  

raw material for manufacturing “thermo ware” for  

treating  “thermo  ware”  as  covered  under  the  

category of plastic goods/products, but neither  

any evidence nor any reasonable and justifiable  

ground was given in the said order for doing the  

same.  After  recording  the  aforesaid  findings,  

the Taxation Board set aside the judgment of the  

Deputy  Commissioner  [Appeals]  and  restored  the  

order of the Tax Assessing Officer, who had by

his order, held that the assessee-respondent is  

liable to pay tax at the rate of 10 per cent, as  

the  product  “thermo  ware”  and  “vacuum  ware”,  

which  are  the  articles  sold  by  the  assessee-

respondent, are assessable to tax at the rate of  

10 per cent instead of 8 per cent to be levied  

on plastic wares.  

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.

14.The scope and ambit of the power which could be  

exercised under Section 37 of the Act of 1994 is  

circumscribed and restricted within the ambit of  

the  power  vested  by  the  said  Section.  Such  a  

power is neither a power of review nor is akin  

to the power of revision but is only a power to  

rectify a mistake apparent on the face of the  

record. Rectification implies the correction of  

an  error  or  a  removal  of  defects  or  

imperfections. It implies an error, mistake or  

defect which after rectification is made right.  

15.In  the  case  of  Commissioner  of  Income  Tax,  

Bhopal  v.  Ralson  Industries  Ltd.  reported  in  

(2007) 2 SCC 326 a similar situation arose for  

the interpretation of this Court regarding the  

scope and ambit of Section 154 of the Income Tax  

Act  vesting  the  power  of  rectification  as  

against the power vested under Section 263 of  

the  Income  Tax  Act,  which  is  a  power  of  

revision. While examining the scope of the power  

of  rectification  under  Section  154  as  against  

the power of revision vested under Section 263  

of the Income Tax Act, it was held by this Court  

as follows at Para 8: -

“8.  The  scope  and  ambit  of  a  proceeding  for  rectification  of  an  order  under  Section  154 and  a  proceeding for revision under Section 263 are distinct

Commissioner of Trade Tax, U.P. v. Upper Doab  

Sugar Mills Ltd. reported in (2000) 3 SCC 676,  

in which the power and scope of rectification  

was considered and pitted against the scope of  

review.  The  aforesaid  decision  was  in  the  

context of Section 39(2) of the U.P. Sales Tax  

(Amendment) Act, 1995 which provides the power  

of review. Section 22 of the said Act provides  

for  rectification  of  mistake.  In  the  said  

decision, it was held that when two specific and  

independent powers have been conferred upon the  

authorities,  both  powers  can  be  exercised  

alternatively, but, it cannot be said that while  

exercising power of rectification, the authority  

can simultaneously exercise the power of review.

17.Both  the  aforesaid  two  decisions  which  were  

rendered  while  considering  taxation  laws  are  

squarely applicable to the facts of the present  

case. It is also now an established proposition  

of law that review is a creature of the statute  

and such an order of review could be passed only  

when an express power of review is provided in  

the  statute.  In  the  absence  of  any  statutory  

provision  for  review,  exercise  of  power  of  

review  under  the  garb  of  

clarification/modification/correction  is  not

permissible. In coming to the said conclusion we  

are fortified by the decision of this Court in  

Kalabharati  Advertising  v.  Hemant  Vimalnath  

Narichania and Others reported in (2010) 9 SCC  

437.

18. Section 37 of the Act of 1994 provides for a  

power  to  rectify  any  mistake  apparent  on  the  

record. Such power is vested on the authority to  

rectify an obvious mistake which is apparent on  

the  face  of  the  records  and  for  which  a  re-

appreciation  of  the  entire  records  is  neither  

possible  nor  called  for.  When  the  subsequent  

order  dated  22.01.2009  passed  by  the  Taxation  

Board is analysed and scrutinised it would be  

clear/apparent  that  the  Taxation  Board  while  

passing that order exceeded its jurisdiction by  

re-appreciating  the  evidence  on  record  and  

holding that there was no mala fide intention on  

the part of assessee-respondent for tax evasion.  

Such re-appreciation of the evidence to come to  

a  contrary  finding  was  not  available  under  

Section 37 of the Act of 1994 while exercising  

the power of rectification of error apparent on  

the face of the records.

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.