1960 (2) TMI 44 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the Full Bench decision in Bisesar House v. State of Bombay in light of the amendment to section 11-A of the Central Provinces and Berar Sales Tax Act, 1947.
2. Whether a notice under section 11(2) of the said Act can be issued more than three years after the expiry of the period for which it is proposed to make the assessment.

Issue-wise Detailed Analysis:

1. Validity of the Full Bench Decision in Bisesar House v. State of Bombay:
The primary issue was whether the Full Bench decision in Bisesar House v. State of Bombay, which held that a notice under section 11(2) of the Act cannot be issued more than three years after the expiry of the period for which it is proposed to make the assessment, still holds good after the amendment introduced by section 6 of the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959.

The Court examined the amendment to section 11-A, which added sub-section (3) stating:
"(3) (a) Nothing in sub-sections (1) and (2)-
(i) shall apply to any proceeding (including any notice issued) under section 11 or 22-A or 22-B, and
(ii) notwithstanding any judgment, decree or order of a Court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub-sections (1) and (2)."

The respondents argued that this amendment nullified the Full Bench decision, removing the limitation period for notices under section 11(2). The petitioners contended that the Legislature had misinterpreted the Full Bench decision and that the amendment did not affect its validity.

The Court concluded that the Full Bench decision in Bisesar House was based on importing the limitation period from section 11-A into section 11(2). However, the new sub-section (3) explicitly stated that the provisions of section 11-A do not apply to proceedings under section 11, thereby nullifying the basis of the Full Bench decision. Consequently, the decision in Bisesar House could no longer be regarded as good law.

2. Issuance of Notice Under Section 11(2) Beyond Three Years:
The second issue was whether a notice under section 11(2) could be issued more than three years after the expiry of the period for which it is proposed to make the assessment.

The Court referred to the amendment which stated that the provisions of section 11-A (including the limitation period) do not apply to proceedings under section 11. The petitioners argued that vested rights had accrued to dealers, and the amendment should not affect such rights retrospectively.

The Court noted that the language of the new sub-section (3) of section 11-A, although not perfectly clear, indicated the Legislature's intention to allow notices under section 11(2) to be issued without the three-year limitation. The words "shall be deemed ever to have been applicable" suggested that the amendment applied retrospectively to all proceedings, including those initiated before the amendment.

The Court also referenced the decision in Manordas Kalidas v. V.V. Tatke, which supported the view that the amendment had a wide retrospective effect, allowing notices to be issued beyond the previously implied three-year limitation.

Conclusion:
The Court answered both questions in the affirmative:
1. The Full Bench decision in Bisesar House v. State of Bombay does not hold good in light of the amendment to section 11-A.
2. A notice under section 11(2) can be issued more than three years after the expiry of the period for which it is proposed to make the assessment.

Costs were directed to be costs in the petitions. The reference was answered accordingly.

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