KARAM CHAND THAPAR & BROS. (COAL SALES) v. STATE OF UTTAR PRADESH & Anr.

In the present case, it is submitted that the view of the Sales Tax Officer, Moradabad who passed the original assessment order dated 27th March, 1971 following the decision of the Allahabad High Court dated the 24th July, 1970 in Civil Miscellaneous Writ No. 4356 of 1969 (pages 71 to 78) was not patently erroneous. As a matter o[ fact the correctness of the subsequent decisions of the Allahabad High Court is being doubted in the present Appeal and there is no pronouncement of your Lordships on the question viz., interpretation of the proviso to s. 9 (1). Besides, it cannot be said that at the time when the original assessment order was passed there was a manifest error. Moreover, even as a result of the subsequent decisions of the Allahabad High Court it cannot be said that what was not an error on 27th March, 1971 became an error on 26th March 1974 (the date of the rectification order under s. 22). In any event, even assuming that there was fill error, that error is not apparent on the face of the record of the original assess ment-it is a matter in which the arguments, to say the least, are evenly balanced and a decision of the Highest Court is now awaited. In the circumstances there was no jurisdiction in the Sales Tax Officer, Moradabad to rectify and set aside vhe original order of assess ment. IV. Re: Whether the order of rectification passfd under Seetion 22 of the U.P. Sales Tax Act on 26th March, 1974 (for the assess ment year 1966-67) and communicated to the Appellants on 31st March, 1974 was barred by limitation as it could not be said to be "within three years from the date. of" the original assess ment order dated the 27th March, 1971 ? It is submitted that the period of limitation under s. 22 of the U.P. Sales Tax Act, 1948, runs from the date on which the order of recti fication is communicated to the assessee-which would enable the B c D E F G H A B c D E F G H 32 SUPREME COURT REPORTS (1977] 1 S.C.R. assessee to file an appeal under s. 9 of the U.P. Sales Tax Act, 1948. The period of limitation for filing an appeal is 30 days from the date of service of the copy of the order appealed against. It is submittd that an order of rectification is not complete as against the assessee unless it is duly "communicated to him. The order of rectification affects the rights and liability of an assessee and it is essentially fair and just that it should be communicated to the party as stated by Your Lordships in a case under the Land Acquisition Act where the phrase "date of the Collector's award" was being considered. Your Lordships observed : " .... If the award is treated as an administrative decision taken by the Collector in the matter of the valuation of the property sought to be acquired it is clear that the said decision ultimately affects the rights of the owner of the property and in that sense, like all decisions which affect persons, it is essen tially fair and just that the said decision should be communi cated to the said party. The knowledge of the party affected by such a decision, either actual or constructive, is an essential element which must be satisfied before the decision can be brought into force. Thus considered the making of the award cannot consist merely in the physical act of writing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party concerned either actually or constructively. If the award is pronounced in the presence of the party whose rights are affec ted by it it can be said to be made when pronounced. If the date for the pronouncement of the award is communicated to the party and it is accordingly pronounced on the date pre viously announced the award is said to be communicated to the said party even if the said party is not actually present on the date of its pronouncement. Similarly if without notice of the date of its pronouncement an award is pronounced and a party is not present the award can be said to be made when it is communicated to the party later. The knowledge of the party affected by the award, either actual or constrnctive, being an essentia~ requirement of fair-play and natural justice the expression 'the date of award' used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively. In our opinion, it would be unreasonable to construe the words from the date of the Collector's award used in the proviso to s. 18 in a literal or mechanical way." therefore, (A.l.R. 1961 S.C. 1500, 1503-(1962] 1 S.C.R. 676, 683- 684). ·-,~-:r-r It is submitted that on an analogy of reasoning the words "the date of any order passed by him" ins. 22( 1) of the U.P. Sales Tax Act, 1948 must be construed to mean the effective date of an order of rectification viz. the date when it is communicated. In the instan~ case the order was communicated after three years from the date of the assessment order and, therefore, the order of rectification is vitiated as being barred by time. KARAM CHAND V. U.P. 33 V. Jn Civil Appeal No. 929 of 1975 the only question that arises is A Whether in the facts and circumstances of the case the proviso to s. 9(1) of the Central Sales Tax Act, 1956, was applicable so as to enable the State of Uttar Pradesh to levy and collect central sales tax in respect of the subsequent sales of coal efjected by the appellants to consumers in the State of U.P.? indication to whether the sales effected The assessment year in question is 1969-70 and the Appellant adopts the arguments urged in Civil Appeal No. 928 of 1975. With regard to whether the sales by the appellants (in 1969-1970) during the course of the movement of the goods from State to State were ta registered record dealers or to consumers, there is no registered dealers or consumers or unregistered dealers. In the event of Your Lordships holding that declared goods are not covered by the proviso to s. 9 ( 1) this would make no difference because it is admitted that the subsequent sales effected by the appellants were of declared goods namely coal. But in the event of Your Lordships· coming to the conclusion that the proviso to s. 9(1) may include also subsequent sales of declared goods, then the submission urged is (as in Civil Appeal No. 928 of 1975) that in any view of the matter it is only subsequent sales to registered dealers which would attract jurisdiction of the State authorities under the pro viso to s. 9(1) and not subsequent sales by -the appellants to unregis tered dealers or consumers. The fact would be easy of ascertainment by the Sales Tax Officer and it is submitted that in that event a direc tion ought to be given that the State of U.P. could levy and collect central sales tax under proviso to s. 9 ( 1) in respect of subsequent sales of coal effected by the appellants only to registered dealers--and not to unregistered dealers or consumers. RESPONDENTS : In A. Contention No. 1. This is the! main contention and is a short It is as to which State has jurisdiction to tax subsequent sales one. made by a registered dealer. instant case, admittedly the appellant is a dealer registered in U.P. both under the Central and the U .P. Act. Therefore, the short questioll' which arises for consi deration is as to whether in the instant case the State of U.P. would have the jurisdiction to tax such subsequent sales effected by enforcement of documents to parties 'in U.P.? Thete is a specific provision in the Act, which is proviso to s. 9 (1), to cover cases such as the present case. Section 9 ( 1) reads : "The tax payable by any dealer under this Act on sales of goods effected by him in the course of interstate trade or commerce, whether such sales fall within clause (a) or clause (b) of s. 3, shall be levied by the Government of India and the tax so levied shall be collected by that govern ment in accordance with the provisions of sub-section (2) in the State from which the movement of goods commence : Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subse quent to the first sale in respect of the same goods, the tax B c D E F G H A B c D E F G H 34 SUPREME COURT REPORTS [1977] 1 S.C.R. shall, where such sale does not fall within sub-section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or! as the case may be, could have obtained, the form pres cribed for the purposes of clause (a) of sub-section ( 4) of section 8 in connection with the purchase of such goods." Sub-s. (2) of s. 9 merely provides In the case of al first sales, the appropriate State on behalf of the Government of India shall assess, re-assess, collect and enforce payment of tax under the Act as if the tax under the Act was a tax payable under the general sales tax law of State. Therefore, it is that the tax to be collected under the Act is the appropriate State for and on behalf of the Government of India. the substantive provisions of s. 9(1) are clear and unequivocal. Section 9(1) selects out of several States one particular State and empowers it to levy' and collect C.S.T. That State alone ha~ the power to levy the tax and all other States by implication are debarred. This was a simple device adopted in order to fix the forum and jurisdiction of the particular State to make the assessment in respect of first sales. A simple test was evolved to avoid multiplicity of imposition of tax by more than one State in respect of the same goods and that was to link the tax with the commencement of the physical movement of the goods on their journey from one State to another. This was simple to COJ:l1"prehend -and execute. Therefore, the appropriate State was the one from where the movement of goods started on their interstate journey. That problem does not concern us here as the States of Bihar and Bengal from where the movement of coal commenced have duly assessed the tax u/s 9(1) of the Act. The question, however, is which is the State which can tax subsequent sale in the instant case. For this purpose the proviso had to be enacted as admittedly CST is multipoint in nature and there is no provision for a single point tax. . The only exemption is to be transaction found in s. 6(2) which is the charging section and if the does not satisfy all (a) the purchaser is a registered dealer, (b) who by a certificate of regis tration is authorised to purchase his goods, and ( c) the selling dealer furnishes to his assessing authority : - three conditions of s. 6(2), viz., (i) a certificate duly filled and signed by the registered dealer from whom the goods were purchased contain ing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (ii) a declaration in C Form duly filled and signed by the registered dealer to whom the goods were sold. (see Chaturvedi's 3rd edition, page 383). No attempt has been made by the appellant-assessee in the instant case even to allege, what to say of proof, tha~ the afo~esaid three con~itioI?s were satisfied. Therefore, s. 6(2) which provides for exempt10n m respect of subselJUent sales, albeit of declared or undeclared goods, will have no application. The position therefore would be that the KARAM CHAND V. U.P. 35 subsequent sales in the instant case would not be exempt u/s 6(2). Therefore, the subsequent sales have to be taxed and the only ques tion is which State would have jurisdiction to assess the subsequent It was fairly conceded that the subsequent sales - would be sales. assessable u/ s 9 ( 1) , except sales of declared goods. The argument was built up merely on the omission of cl. (a) from s. 8 (3) Qf Act with effect from 1-4-1963. Prior to that date section 8(3) ran as follows : "The goods referred to in clause (b) of sub-section (1)- ( a) in the case of declared goods or goods of the class or classes specified in the certificate or registration of registered dealer purchasing the goods as being intended for resale by him .. " The above was omitted by s. 2(iii) (a) of the C.S.T. Amendment Act (No. 8 of 1963) with effect from 1st April, 1963. From this omission it was assumed that it was no longer necessary for declared goods to be specified in the declaration prescribed under rule 12 and the Form C. This assumption is wholly unwarranted and is contrary to the provisions of the Amending Act (No. 8 of 1963), The omission of cl. (a) and certain words in cl. (b) of s. 8(3) was necessitated as the legislature probably wanted to do away with the distinction between declared goods and undeclared goods for purposes of s. 8(3). Hence it deleted clause (a) in its entirety and the words "in the case of goods other than declareclgoods" from cl. (b) of s. 8(3). Thus with effect from 1-4-63 so far as mentioning of goods in the certificate of registra tion of purchasing dealer for purpose of re-sale etc. are concerned they made only one category and specified the same rate of tax as was applicable u/s 8 ( 1) both for declared and undeclared goods, provided Form C was duly submitted. The above interpretation also finds support from Chaturvedi's Central Sales Tax Law, 3rd edition, 1973 at page 325, paras 7 and 8, which read as : - "Clause (a) of s. 8(3) was omitted by s. 2(iii) (a) of the Amendment Act, 1963 with effect from 1-4-63. Before that the rate of tax for sales covered in sub-section ( 1) was 1 p.c. and all the sales or purchases of declared goods under the said Act could be subjected to tax at the rate upto 2 % by virtue to s. 15 of the principal Act. "Sales covered under sub.-s. ( 1} could enjoy a conces sional rate of 1 p.c. instead of th<l state rate of 2 p.c. But when by the CST Amendment Act (No. 8 of 1963) the rate of tax for sales covered by sub-s. ( 1) was enhanced also to 2 p.c. there was no1 use of cl. (a) of sub-s. (3) and it was omitted. "In cl. (b) of sub-s. (3), the opening words 'in case of goods other than declared goods' were omitted by . s. 2(iii) (b) of the C.S.T. Amendment Act, 1963 with effect from 1-4-63." A B c D E F G H A B c D E 36 SUPREME COURT REPORTS (1977) 1 S.C.R. Thus it. is manifest tha~ t.hc argument laboriously built up had no foundation and the om1ss1on of sub-cl. (a) from s. 8(3) if any thing, goes against the contention of the assessee and fully 'supports the contention of the Department as that vividly demonstrates if there was ever any intention of the legislature to make any distinc tion between declared and undeclared goods insofar as the sale of such goods was made to government or to a regd. dealer that was done away with after 1-4-63. The contention for the Department was that there was never any distinction made between declared and undeclared goods e\'en in the Act and the Rules prior to 1963-64 in the matter of specification of the class or classes of goods application under Form A, the certificate under Form B and requisite declaration under Form C under rr. 5 and 12 oi the CST Rules. The only place where the words "declared goods" occur section 8 (2) (a) which merely provides the rate of tax applicable for sales without furnishing Form C and not for any other reason. Thus the Act, the Rules and the Forms make no distinction between declared and undeclared goods whatsoever. The main argument, therefore, has no force and in the absence of the condition u/s 6(2) having been satisfied, declared goods are taxable and the assessee being a regd. dealer registered in U.P. both under the Central Act and the U.P. Act and the subsequent sale having been effected by such registered dealer in the State of U.P. the proviso to s. 9(1) is clearly attracted. To sum up, in the instant case the State of U.P. would have jurisdiction to assess, levy and collect C.S.T. on subsequent effected by the assessee under the proviso to s. 9 (1), provided followin~ conditions are satisfied : ( 1) The sale is a subsequent sale made during the movement of goods from the States of W. Bengal and Bihar to the State of U.P. This condition was fairly conceded by the- learned counsel asscssee to he satisfied. F (2) The subsequent sale is in respect of the same goods. This was also conceded. (3) That the goods do not fall within s. 6(2), that is, the sale was to a registered dealer other than Government, if the goods are of the description referred to in Sub-section (3) of S. 8. Such subse- quent sale would be exempt provided the necessary certificate Form C is produced. ( 4) The registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for purposes of cl. (a) of sub.-s. ( 4) of s. 8, that is, Form C. The last two conditions according to the learned counsel do not require to be satisfied in case of declared goods. As already stated there is no express warrant nor does the scheme of the Act support any distinction for C.S.T. between declared and undeclared goods except in the concessional rate applicable. G H -{ ·~ ' 1 ... _. ' KARAM CHAND V. U.P. 37 Section 15 only places restrictions and conditions in intra-state sales of declared goods. This has no application to state sales and, therefore, the single point tax provided in s. 15 cannot be imported into the other provisions of the Act. Therefore, C.S.T. is multipoint in the absence of any specific provision to make it single point. regard to A The relevant sections are section 3 which artificially determines inter- when sale cf goods can be said to take place in the course of state trade or commerce. · Section 6 is the charging section. It is significant that it charges tax on all sales. Therefore unless there is a specific exemption, sales It is well of both declared and undeclared goods would be taxable. settled that the burden of proof lies heavily on the person who claims such exemption. S.:ction 6(2) deals with the charge to be levied in respect of a subsequent sale effected by transfer of documents to a regd. dealer which would be exempt provided the conditions specified in the proviso thereto are satisfied. These conditions undoubtedly have not been satisfied. The case of the assessee is that they do not require to be satisfied in the case of declared goods. S. 7(3) requires in the certificate of registration under r. 5 and for the purposes of s. 8 ( 1) the class or classes of goods to be specified and it is only in respect of those goods so specified that the exemption or concessional rate is available and not otherwise. B c D S. 8 merely provides the rates of tax on inter-state sales. There E is a concessional rate of 3 % for sales to regd. dealers provided goods are of the description referred to in s. 8 (3) which refers s. 7 (3) and the application in Form A and the certificate in Form B issued under rr. 3 and 5 of the Rules. Section 8 (2) refers specifically to the concessional rate for declared goods vis-a-vis undeclared goods. For declared goods it is 3% being the rate in the appropriate State, and 10% for undeclared goods. Beyond this concessional rate there is no other distinction made between declared and undeclared goods. F S. 8(3) refers back to s. 7(3), rr. 3 and 5 and Forms A and B and only those goods, declared and undeclared, which find a place in the certificate are entitled to the concessional rate and none others. The proviso to s. 9 ( 1) specifically covers the instant case. The G assessee is a regd. dealer, and the sales do not fall within the exemp- tion u/s 6(2) and being a regd. dealer in U.P. he could have obtained the Foon C from the Sales Tax Officer of his Circle. therefore, follows that in the instant case there can be no doubt whatsoever that the admitted subsequent sales are taxable in the State of U.P. for and on behalf of the Government of India u/s 9(1) of C.S.T. It, B. Contentions 2 and 3. These may be dealt with together. The argument of the learned counsel for the assessee in short was there was no error apparent on the face of the record and, therefore, H A B c D E F G H 38 SUPREME COURT REPORTS (1977] 1 S.C.R. s. 22 of the U.P. Act read withs. 9(2) of the Central Act could not It must g'e remembered that this point is taken in a writ be invoked. under Art. 226 when there was no possibility of the appeal or revisional In these circumstances the courts going into the facts of the case. facts as found by the Sales Tax Officer in his order u/s 22 and by the High Court in its judgment dismissing the writ petition will have to be taken as sacrosanct. At page 92 of volume II is the order u/s 22. At page 94, line 4, it is stated - ''The assessee is registered in this office under C.S.T. Act and their Central regn. No. is 2931 which had been in exis tence since 4-12-65. · In the case of M/s Karam Chand Thapar & Bros. for the year 1965-66 the High Court had held that sales made by them were exempt from C.S.T. or U.P. Sales Tax and the authorities of Bihar or West Bengal only could assess the. tax. Thereafter the Hon'ble High Court of Allahabad in many cases held that if the assessee was registered under the CST the authority of that State had the S.T.0. jurisdiction to make assessments. Therefore, In the Moradabad has jurisdiction, to assess the assessee. meanwhile the High Court of Allahabad held in several cases that only dealers who are registered under the C.S.T. are liable to be assessed under the Act as for example ........ " At page 96, line 2 "In the present case of the assessee this error is apparent because if this fact that it was registered under the C.S.T. had been placed before the High Court . . . . . . . . . . for the year 1965-66, the decision would have been against them as happened in the above mentioned two cases." At page 97, line 4 - JS clear "In the above mentioned case the error of law because u/ s 9 ( 1) · the jurisdiction of assessment of tax only with that State where from the dealer has received their Central Regn. No. and wherefrom receives C Form." the dealer Similarly, the judgment of the High Court is at page 1, of volume I and at page 2, last paragraph, the finding is : The petitioner claimed that the turnover of Rs. 30.07 lakhs was exempt from tax and that of Rs.· 5.59 lakhs could not be taxed the State of U.P. The S.T.O. relying upon the observations made by the High Court in petitioner's own assessment case for the year 1965-66 accepted his case that his turnover amounting to Rs. 5.59 lakhs could not be taxed in U.P. Subsequently in a number of cases this Court ruled that in a case where a dealer effecting a secorid sale in the course of inter-state trade is a registered dealer, sales tax on the turnover of such goods is 'to be realised in the State where the dealer effecting the sale. is registered." ·r ~- ~ '-- -1. ~ j... KARAM CHAND V. U.P. 39 ~ Page 7, para 2 : "In the instant case we find that while making the assess- mcnt order of 27-3-71 and holding that petitioner's turnover amounting to Rs. 5.59 lakhs was not liable to tax in U.P., the S.T.O. relied upon a decision of this Court which, as subsequently clarified in the case of Shinghal Bros. & Co. v. State . ................... did not lay down that even in the case of a registered dealer effecting a subsequent sale in the course of inter-state trade or commerce would not be liable to be taxed in the State where he is registered. Accor- dingly, the S.T.O. applied tl!.e law laid down in this Court's earlier judgment to the facts of the present case under s&ne in subsequent misapprehension and.it is not disputed that cases this Court has very clearly laid down that in the cas_e of a subsequent sale effected dliring the course of interstate trade and commerce by a regd. dealer the turnover of such sale is to be assessed in the State where the dealer is regis- It is thus clear that there was a mistake in the assess- tered. ment order dt. 27-3-71. The mistake was apparent on the face of the record inasmuch as the S.T.O. applied the obser- vations made by this Court in a case which had been decided on the footing that the concerned dealer was an unregistered dealer to a case where the dealer was admittedly a registered dealer. This mistake did not require any elaborate argu- merit or prolonged debate on the1 merits or on the questions of law involved in the case." A B c D In view of these categorical findings by. two courts that there was a clear and obvious mistake resulting from a mistake which had crept into the judgment of the High Court in the assessee's own case for the A/year 1965-66 which the S.T.O. was bound to follow and could not ignore, the mistake in the subsequent assessments could be rectified u/s 22 within the period of limitation of 3 years. Action could also have been taken u/s 21 under the U.P. Act assessment where the period of limitation is 4 years. is well the same settled that ss. 21 and 22 are not mutually exclusive and action may be taken under either of the sections provided the condi tions specilied therein are satisfied. The notice u/ s 22 was issued within the period of three years and there ·was yet another year to run for action u/s 21, and in- these circumstances a technical point of this nature raised in a writ petition should not be countenanced. The main point that the sum of Rs. 5.59 lakhs was taxable not being in dispute as stated by the High Court, no assessee has a vested right to the forum or to succeed on mere technicalities. for a It The contention that the notice u/s 22 and the order passed there under should have been communicated to the assessee within years is wholly unsupported by any authority. Section 22 merely re quires the order to be made within three years. No assessee are affected by the passing of the order and it is only when the additional demand is served upon him under the provisions rights of E F G H 40 SUPREME COURT REPORTS [1977] 1 S.C.R. A s. 22 (2) of the Act that the period of limitation for any appeal, revi sion, etc. would begin to run. Authorities Rectifkation-Glaring and obvious mistake of law B c D F G H 34 !TR 143 SC 53 Cal Weekly Notes 869 87 ITR 669 Cal 100 ITR 118 A.P. Date of order--meaning of 34 S.T.C. 257 SC 46 !TR 529 All. R6 ITR 141 SC 22 ITR 296 Pb 31 ITR 231 AIL The Judgment of the Court was delivered by GUPTA, J. The appellant in Civil Appeal No. 928 of 1975, M/s. Karam Chand Thapar and Brothers, is a limited company incor the Companies Act, (referred to hereinafter as the porated under Company), and the six branches of the Company at Allahabad, Moradabad, Kanpur, Varanasi, Gorakhpur and Lucknow are the appellants in Civil Appeal No. 929 of 1975. The Company carries on business as coal agents and is registered under the Uttar Pradesh Sales Tax Act, 1948 and the Central Sales Tax Act, 1956 with the Sales Tax Officer at Moradabad in Uttar Pradesh. We shall refer to these two statutes as the U.P. Act and the Central Act for the sake of brevity. The Company used to arrange supply of coal from collieries situate in West Bengal and Bihar to consumers in Uttar Pradesh. The collieries used to send the coal by rail and the railway receipts were prepared either in the name of the Company or in the name of the consumer in Uttar Pradesh on whose behalf the order for rnpply of coal was placed. The collieries sent the bills and invoices in respect of the coal despatched to Uttar Pradesh to the Company's head office in Calcutta; the Company forwarded the railway receipts t<:> the consu mers in cases where the receipts were in the names of the consumers and endorsed the receipts that were in the Company's name in favour of the consumers for whom the coal had been despatched. These two appeals, brought on certificates of fitness granted by the Allahabad High Court, arise out of two writ petitions filed in th(l High Court respectively by the Company and its aforesaid branches. The peti tion filed by the Company leading to Civil Appeal 928, is directed against an order made under section 22 of the U.P. Act giving to the question whether section 9 (1) of the Central Act was applicable to the case enabling the State of Uttar Pradesh to levy and collect Central sales tax in respect of subsequent sales of coal effected by the Company to consumers in Uttar Pradesh by endorsement of documents of title; in the other writ petition, filed by the Company'! six branches, the applicability of section 9 ( 1) of the Central Act was KARAM CHAND v. U.P. (Gupta,!.) one of the points raised in the High Court, but this was the only poi?t A urged before us in Civil Appeal No. 929. The assessment year m question in Civil Appeal 928 is 1966-67, and that iiyCiyil ~ppeal 9~9 is 1969-70. As the Company's appeal covers the question mvolved m the other case and raises two additional questions, we shall state only the facts of Civil Appeal 928 to indicate how these questions arise. In the assessment year 1966-67, the Company returns showing its turnover of coal in two categories : filed quarterly B (a) turnover in cases where the railway receipts had been prepared in the names of the consumers amounting to Rs. 30,07,439/02p.; and (b) turnover in cases where the railway receipts had been prepared in the name of the Coil)pany but subse quently endorsed in favour of the consumers in Uttar Pradesh amounting to Rs. 5,59,l 72/32p. c section 2 ( c) defines The dispute in this case relates to the amount of Rs. 5,59,172/32p. which according to the Company could. not be taxed in the State of Uttar Pradesh. Before we proceed further, it would be convenient to D set out the relevant provisions of the two Acts. Taking the Central Act first, the goods "declared goods" as declared under section 14 to be of special importance in inter-State trade or commerce. Section 14 which declares certain goods to be of special importance in inter-State trade or commerce mentions coal as one of them. Under section 3 a sale or purchase of goods deemed to take place in the course of inter-State trade or commerce E if the sale or purchase, (a) occasions the movement of goods Crom one State to another; or (b) is effected by a transfer of documents of title t:o the goods .during their movement from one State to another. Th~ sales we are concerned with in this case were of this second type. Sub-section (1) of section 6 provides that subject to the other provi sions of the Act, every dealer shaH be liable to pay tax under this Act on sales of goods effected by him in the course of inter-State trade or com- merce. Sub-section (2) of section 6 states that notwithstanding what is 1~rovided in sub-section ( 1), any subsequent sale of goods effected by a transfer of documents of title to the goods,·(A) to the Govern ment, or (B) to a registered dealer other than the Government, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under this Aot. There are two provisos to this sub-section, but it is not necessary to refer to 7(1) requires every dealer liable to pay tax under this Act to apply for registration. Sub-section (3) of section 7 provides that if application is in order, the prescribed authority shall register applicant and grant to him a certific; ate of registration in the prescribed form which shall specify the class or classes of goods the pur- pose of sub-section (1) of section 8. Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957, states that an applica- tion for registration under section 7 shall be made in Form A, and Form A requires the purpose or ourooses for ·which the goods or S-1003 SCJ/76 them. Section G • H A B c D E F G H 42 SUPREME COURT REPORTS [1977] 1 S.C.R. • J classes of goods are purchased by the dealer in the course pf inter State trade or commercei to be specified; as would appear from the Form, 're-sale' is one such purpose. Rule 5(1) of the Rules provides that the certificate of registration must be in Form B. Section 8(1) provides that every dealer who in the course of inter-State trade or commerce, (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section ( 3) of this section, shall be liable to pay tax under this Act at the rate of three per cent of his turnover. Sub section (2) of section 8 states that the tax payable by any dealer on his turnover relating to the sales of goods in the course of inter-State trade or commerce which does not fall within sub-section ( 1) shall be-(a) in the case of declared goods, at the rate applicable to sale or purchase of such goods inside the appropriate State, and (b) in the case of goods other than declared goods, at the rate of per cent or at the rate applicabJe to the sale or purchase of such goods inside the appropriate State, whichever is higher. The goods referred to in clause (b) of sub-section ( 1) are specified in sub-section ( 3) of this section as goods of the class or classes specified in the certificate of registration of the registered dealer purchasirig the goods as being int~nded for re-sale by him. Sub-section (4) of section 8 says the "provisions of sub-section ( 1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling goods furnishes to the prescribed authority in the prescribed mariner (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing ·the prescribed partici1lars in a prescribed form obtained from the prescribed authority;" rule 12(1) of the Rules states ,inter alia that the declaration referred to in sub section (4) of section 8 shall be in Form C. Clause (b) of sub section ( 4) is not relevant to the present purpose. Section 9 ( 1) rei;\ds : ., "9. (1) Levy and collection of tax and penalties, The tax payable by any dealer under this Act on sale~ of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced : Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subse quent to the first sale in respect of the same goods, the tax shall where such sale does not fall within sub-section (2) of secti~n 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of sec tion 8 in connection with the purchase of such goods." KARAM CHAND v. U.P. (Gupta, J.) 43 this case turns on whether the proviso to Tht< dispute section . 9(1) is applicable to the case. Reference may also be made to sec tion 15 which provides the restrictions and conditions in regard the tax on sale or purchase of declared goods within a State. The tax . -0n sale or purchase of such goods inside the State· is not to exceed three per cent of the price thereof, and such tax is not to! be levied at more than one stage. The only provision of the U.P. Act which is relevant is section 22 .which is in these terms : "22. Rectification of mistakes. (l) The assessing, appel late, revising or additional revising authority ma):, at any time within three years from the date of any order passed by it, rectify any mistake apparent on the record; Provided that no such rectification, which has the effect o~ en)1ancing the assessment shall be made unless the autho rity concerned has given notice to the dealer of his intention to do so and has allowed him a reasonable opportunity of being heard. (2) Where such .rectification has tbe effect ~f enhancing the assessment, the authority concerned shall serve on dealer a revised notice of demand in the prescribed form and therefrom aH the provisions of the Act and the rules framed thereunder shall apply as if such notice had been served in the first instance." ·The Sales Tax Officer had accepted the contention that the turnover amounting to Rs. 5,59,l 72/32p. was not taxable in Uttar Pradesh. fn taking this view the Sales Tax Officer appears to have proceeded upon the observations in a Judgment of the Allahabad High Court in the Company's own assessment case for the year 1965-66. However, in several subsequent decisions, the High Court held that in a case where a registered dealer effected a second sale in the course of inter State trade and commerce, sales tax on the turnover was to be realis In ed in the State where the dealer effecting the sale was registered. one of these cases, Mis. Singhal & Co. v. State & Ors~(') it was pointed out that the earlier decision, of the High Court had completely the Central Act. The overlooked the proviso to section 9 ( 1) of · Company being admittedly a registered dealer under the Central Act . and liable to pay tax under that Act, the Sales Tax Officer thought that there was an apparent error in the order of assessment made on March 27, 1971 exempting the turnover amounting to Rs. 5,59,172/32 to section 9(1) of the Central · p. which in view of Act was taxable in Uttar Pradesh. Accordingly, he proposed rectify the error under section 22 of the U.P. Act, and on March 21, 1974 he issued a notice to the Company requiring it to appear before In response to the notice a representative him on March 25, 1974. the proviso (1) (1973) U. P. Tax Cases 466. .. ) A B c D E F G H A B c D E F G H 44 SUPREME COURT REPORTS . [1977] 1 S.C.R. of the Company appeared, contended against the proposed rectifica tion, and also filed_a written objection. The Sales Tax Officer record ed an order on March 26, 1974 overruling the objections and rectified the order of assessment dated March 27, 1971. A copy of the order passed on March 26, 1974 rectifying the mistake in the earlier assess ment order was served on the Company on March 31, 1974. The Company challenged the order dated March 26, 1974 by a writ . petition in the Allahabad High Court which was dismissed giving rise to this appeal. · Mr. Nariman appearing for the appellants in these appeals pressed the following grounds : (1) the proviso to section 9(1) of the Central Act has no application to goods declared to be of special impor tance in inter-State sales or commerce under sec tion 14 of the Central Act; (2) section 22 of the U.P. Act was not applicable as there was no mistake apparent on the face of the record; (3) in any event, the order made under section 22 of the U.P. Act was barred by limitation. The argument that the proviso to sub-section ( 1) of section 9 does not apply to declared goods proceeds as follows : Sub-section (1) (b) and sub-section 2(a) of section 8 of the Central Act deal with two different types of goods. Sub-section ( 1) (b) speaks of goods of the description referred to in sub-section ( 3) , and section (2) relates to declared goods. Sub-section (3) of section 8 only mentions the goods referred to in sub-section ( 1) (b) which are goods of the class or classes specified in the certificate of registration of the dealer purchasing the goods as being intended for re-sale. Sub section ( 4) requires a declaration for the purposes of sub-section ( 1) (b), and as sub-section ( 1) (b) does not speak of declared goods, the declaration referred to in sub-section '( 4) would not be necessary in the case of sale or purchase of declared goods. We fail to see any valid distinction between declared goods and other goods for the purpose of the applicability of sub-section ( 1) of section 8. The .distinction was made by Mr. Nariman inferentially from the Central Sales Tax (Amendment) Act (8 of 1963) which omitted with effect from April 1, 1963, clause (a) from sub-section (3) of section 8 as it stood prior to that date. Sub-section (3), it may be recalled, specifies the goods referred to in section S(l)(b). Prior to April 1, 1963, section 8 ( 3) listing such goods, clause (a) - stated " (a) in the case of declared goods, are goods of the class registration or classes specified in the certificate of . . ,..., KARAM CHAND v. U.P. (Gupta, I.) 45 of the registered dealer purchasing the goods as being intended for re-sale by him." Clause (b) of section 8(3) then began with the words: "in the case of goods other than declared goods, are ........ ". By the same Amendment Act ( 8 of 1963) the opening words of clause (b), "in the case of goods other than declared goods'', were consequentially omitted, also with effect from April 1, 1963. The omission of clause (a) is the basis of the argument that declared goods are altogether outside the purview of sub-section ( 3) and, therefore, of· sub-section (1) of section 8, and, as the declaration referred to in sub-section ( 4) of section 8 was required where sub-section ( 1) of the section was applicable, it was not possible ·for the Company to obtain such a declaration. The contention seems to us untenable. Section 9(1) of the Cen tral Act contains a general rule that tax payable by any dealer under this Act shall be levied and collected in the State from which movement of the goods commenced. The proviso to section 9 ( 1 ) qualifies this rule in the case of a subsequent sale which is not exempt from tax under section 6 ( 2) , and states that the tax on such subsequent sale would be levied and collected in the State from which the regis tered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for the purposes of section 8 ( 4) (a) . No exemption under section 6(2) is claimed in this case. The declara tion referred to in section 8(4) (a) is necessary for the dealer to avail of the benefit of the rate of tax mentioned in section 8 ( 1). Under section 7 ( 3) the certificate of registration granted· to a dealer has to specify the class or classes of goods for the purposes of section 8 ( 1). Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957 requires an application for registration under section 7 to be made in Form A, and Form A requires the purpose for which goods or class of goods are purchased by the dealer to be specified; re-sale is one of the purposes mentioned in Form A. Thus section 7(3) makes no distinction between declared goods and other goods; it is impossible to argue. therefore that declared goods purchased by a dealer for re-sale need not be specified in his certificate of registration. Reading sub-section ( 1) and sub-section (3) of section 8 together, it is clear that all sales to a registered dealer other than the Govern ment, whether of declared goods or other goods, are covered by sub section (1) of section 8. Clause (a) was omitted from sub-section (3) of section 8 by the Amendment Act (8 of 1963) presumably because it was considered unnecessary to retain clause (a) to deal with declared goods when clause (b) apparently covered all goods, both declared and other than declared. The Act and the rules and the prescribed forms make no distinction between declared goods and other goods except for the purpose of the rate of tax. There is no valid reason why the Company could not have obtained a declaration in Form C as required by the proviso to section 9 (1). It follows therefore that the order of assessment dated March 27, 1971 was wrong as it held, contrary to the proviso to section 9 ( 1), that the sales in question were not taxable in the State of Uttar Pradesh where the Company was registered as a dealer under this Act. A B c D E F G H A B c D E F G H 46 SUPREME COURT REPORTS [1977] 1 S.C.R~ Another point sought to be made against the applicability of the proviso to section 9(1) was this. The proviso refers to the Form. prescribed for the purpose of section 8(4)(a) which should contain a declaration duly filled and signed by the registered dealer to whom It was argued that as the goods were sold. the declaration was required only where the sale was to a registered dealer, and as there was no finding in this case that the sales were to registered dealers, the proviso was not attracted. It appears, however, that the Company never claimed before the Sales Tax Officer that the sales were not to· registered dealers; in the written objection filed before the Sales Tax: 'Officer pursuant to the notice under section 22 of the U.P. Act, the: ·only ground taken was that no declaration was required to be filed in the case of declared goods. The point was taken for the first time· in the writ petitions. We do not think we should allow this question,. which is one of fact, to be raised at this stage. The next question is whether this error in the original order of assessment can be called an apparent error within the meaning of section 22 of the U.P. Act. There is no dispute that an apparent error means a patent mistake, an error which onel could point out without any elaborate argument. The order of assessment relating to the assessment year in question, 1966-67, was made on March 27, 1971 by the Sales Tax Officer relying on a Judgment of the Allahabad High Court on a writ petition made by the Company questioning the validity of the assessment in respect of the assessment year 1965-66. In that Judgment the High Court held, referring to the provisions of section 9 ( 1) of the Act, that "the Sales tax authorities in the State of U.P. had no jurisdiction to make any assessment even if there was any inter-State sale which could be liable to tax in the hands of the petiiioner Company. The only State which could levy tax could be either Bihar or West Bengal. The impugned assessment order passed is therefore clearly without by the Sales Tax Officer, Moradabad, In this Judgment there is jurisdiction and is liable to be quashed". no reference to the proviso to section 9 ( 1) . Judgment under appeal that the High Court in a number of latter in view of the proviso, tax on a subsequent decisions held sale by a registered dealer in the course of inter-State trade or com merce was to be levied and collected in the State where the dealer effecting the subsequent sale was registered. We are of the view that the order of assessment dated March 27, 1971 .was apparently errone ous in that it failed to take into consideration the proviso to section It is not that the order dated March 27, 1971 was in accor 9 (1). dance with law when it was made but the subsequent decision of the High Court took a different view of the law. For the rea~ons· we have given above, it was patently erroneous when it was made, but in view of the observations of the High Court in the case relating to the assessment of an earlier year, the Sales Tax Officer felt that he had to dispose of the assessment case for theJ year 1966-67 in .·the manner he did. The Judgment of the High Court which the Sales Tax Officer-followed in making the assessment for the year in ques tion did not concern itself with the proviso to section 9 (1). It appears KARAM CHAND v. U.P. (Gupta, !.) 47 The next, and the last, question is whether the order dated March 22, 1974 rectifying the assessment order made on March 27, 1971 was barred by limitation. Under section 22(1) of the U.P. Act any mistake apparent on the record may be rectified at any time within three years from the date of the order. It is not disputed that the other requirements of section 22 have been complied with. The Company's representative appeared before the Sales Tax: Officer pursuant to the notice served on them on March 25, 1974, and objections to the proposed rectification were heard. There is no dis pute that the order rectifying the mistake was recorded by the Sales Tax Officer on March 26, 1974, and this order was communicated to the appellant on March 31, 1974 According to Mr. Nariman, order of rectification must be held to have been made on March 31, 1974 when it was communicated to the assessee which was beyond three years from the date of the order of assessment. Mr. Nariman relied on the well-known rule of fairplay that the rights of a party cannot be affected by an order until he has notice of it. In Raja Barish Chandra Rai Singh v. The Deputy Land Acquisition Officer and another,(') this Court considering the meaning of the words "the date of the award" in s. 18 of !he Land Acquisition Act, 1894 observed. occurring "The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fairplay and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either commurucated to the party or is known by him In our opinion, therefore, either actually or co_nstructively. it would be unreasonable to construe the words "from the date of the Collector's award" used in the proviso to s. 18 in a literal or mechanical way. ...... where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the order must mean either actual or constructive communication of the said order to the party concerned." A B c D E F G Following this decision, this Court held in a subsequent case under the Indian Forest Act, 1927, Madan Lal v. State of U.P. and others,(2) that the Forest Act should be the right of appeal given by s. 17 of deemed to be the date when the party aggrieved by an order came to know of that order from which an appeal was sought to oe preferred. H But how have the Company's rights been affected this case ? (1) [1962] l S.C.R. 676. (2) (1975] 3 S.C.C. 779. 48 SUPREME COURT REPORTS [1977) 1 S.C.R. Section 9 of the U.P. Act gives a right of appeal to "any dealer objecting to any order made by the assessing authority, other than an order men tioned in S. 10-A", within thirty days from the date of service of the copy of the order. lnl this case the Company was not affected by the order under s. 22 being communicated to it after the expiry of years from the date of the order because the limitation for an appeal from that order did not begin to run before the communication of the order. The provisions of s. 9 of the U.P. Act make that clear .. The appeals therefore fail and are dismissed. Considering circumstances, we direct the parties to bear their own costs here and in the High Court. A B c V.P.S. Appeals dismissed. . L