COMMISSIONER INLAND REVENUE vs MEHRAN BUSINESS INTERNATIONAL (PVT — 2023 PTD 1687 LAHORE-HIGH-COURT-LAHORE

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COMMISSIONER INLAND REVENUE VS MEHRAN BUSINESS INTERNATIONAL (PVT.) LTD. S. 57 [as substituted by Finance Act (XXII of 2013)]---Rectificational jurisdiction---Nature and scope---Review---Scope---Correction of clerical errors---Mistake---Conditions---Expression "apparent on the face of record"---Scope---By allowing the application for rectification filed by the tax-payer, Appellate Tribunal Inland Revenue ('Tribunal') reversed its order and accepted the appeal preferred by the tax-payer---Applicant /Department filed reference before the High Court contending that the Tribunal unlawfully assumed jurisdiction of review in the garb of rectification which was confined to correction of any clerical or arithmetical error apparent on the face of record whereas review entailed re-consideration of the matter on discovery of new facts or patent error of law occurring in the order or judgment sought to be reviewed---Validity---While exploring the nature and scope of jurisdiction qua rectification under S. 57 of the Sales Act, 1990 ('the Act, 1990'), it would be advantageous to mention that the said section was substituted by the Finance Act, 2013 ; so the comparison of the text of provisions of S. 57 of the Act, 1990 prior and after its substitution by the Finance Act, 2013, envisaged that the scope of rectification, which was previously confined to correction of clerical or arithmetical errors in any assessment, adjudication, order or decision, had been enlarged to rectify any mistake in the order which was apparent from the record---However, the essential condition for the exercise of such power was that such mistake should be apparent from the record i.e. the mistake which might be seen floating on the surface and did not require investigation or further evidence---Any mistake in the order which was not patent and obvious from the record , could not be termed to be rectifiable---Although the power of the rectification visualized under S.57 of Sales Tax, 1990, might not cover a full-fledged review of an order on discovery of new evidence or fresh legal ground becoming available after the decision sought to be corrected---However, the failure to adjudicate upon a substantial plea taken or controversy raised, when materially affects outcome of the case, it does constitute a mistake apparent from the record which is rectifiable under S.57 of the Sales Act, 1990, subject to satisfaction of other conditions and limitations specified therein---Mistake is not rectifiable when the decision sought to be rectified is already assailed in appeal or Tax Reference which merged into the final decision of that higher forum ---In the present case, relevant paragraph of the impugned order, revealed that the respondent raised a categorical plea that 10% unadjusted input tax was available for adjustment in the very next tax period which, being a substantial right of the taxpayer, could not be denied---This being a substantial plea, materially affecting outcome of the case i.e. determination of tax liability of the respondent, was required to be adjudicated upon and failure to do so by the Tribunal constituted a mistake obvious and apparent from the record, thus was rectifiable, which prompted the respondent to file an application for rectification under S.57 of the Sales Act, 1990---Tribunal had allowed said application of rectification while recording valid reasons---Applicant /Department could not point out any illegality or infirmity in the impugned order passed by the Tribunal---Reference filed by the Department was dismissed, in circumstances.

COMMISSIONER INLAND REVENUE vs MEHRAN BUSINESS INTERNATIONAL (PVT — 2023 PTD 1687 LAHORE-HIGH-COURT-LAHORE

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