TMI Blog1999 (11) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated in the notice that since the documents were not produced, the turnover will be determined to the best of judgment. Petitioner gave reply to exhibit P1 by means of exhibit P2. In exhibit P2, it is stated that the accounts for the years from 1974-75 to 1976-77 were with the Income-tax Department as a result of search and seizure made by it. The Income-tax Department had taken away all the records such as bills, invoices, vouchers, agreements, etc. Petitioner does not have the account records up to the year 1988-89. Petitioner brought to the notice of the authorities rule 32(21) of the Kerala General Sales Tax Rules, 1963 (hereinafter referred to as "the Rules"), which reads thus: "Accounts maintained by dealer together with all vouchers, bills, declarations, way bills, and delivery notes relating to stocks, deliveries, purchases, output and sales shall be preserved by them for a period of four years after the close of the year to which they relate and shall be kept at the place of business mentioned in the certificate of registration." Exhibit P3 reply was given in addition to exhibit P2. Subsequently, by exhibit P4 dated December 13, 1993, the petitioner was again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the first respondent, viz., by the Assistant Secretary (Law), Office of the Deputy Commissioner (Law), Board of Revenue (Taxes), Ernakulam. So far as the present case is concerned, we are concerned with three assessment years, viz., 1974-75, 1975-76 and 1976-77. The counter-affidavit states that the petitioner had filed returns for the year 1974-75 on April 29, 1975. Form 50 notice was issued to the petitioner on October 28, 1975 requesting the petitioner to produce the books of accounts in support of the return filed by it. On November 6, 1975 another notice was issued posting the case for hearing on November 14, 1975. The accounts were produced on November 20, 1975 by the petitioner's authorised representative C.V. Kuruvila. A notice was again issued on February 9, 1976 calling the petitioner to file certain statements. The notice was served on Kuruvila on February 12, 1976. On February 20, 1976 he applied for 10 days time and accordingly, the case was adjourned to March 7, 1976. The statements were filed on March 7, 1976, but the assessments could not be completed. The counter-affidavit further states that again form 50 notices were issued on February 11, 1987, January 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dictum of the aforesaid division Bench decision. According to the petitioner, the second proviso can be made applicable only to those proceedings, which were validly pending. Those proceedings, which have become barred in view of the decision reported in Iswara Bhat v. Commissioner of Agricultural Income-tax [1993] 200 ITR 238 (Ker); 1992 (1) KLT 568 cannot be salvaged by way of amendment. Petitioner had, in fact, produced the accounts for the year 1974-75. But no effective steps were taken till 1993. There was no delay on the part of the petitioner. Respondents would have completed the proceedings within a reasonable time. 7.. We heard Shri P.C. Chacko, Senior Counsel for the petitioner and Shri V.V. Asokan, learned Government Pleader for the State of Kerala. Shri Chacko contended that the assessment proceedings have been pending for nearly 16 to 18 years when the Finance Act, 1993 came into force. According to him, it was because of the inaction on the part of the department that the assessments were not completed. There was no violation on the part of the petitioner. It is one of the cardinal principles that the proceedings should be concluded within a reasonable time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 17(1) of the Act, every dealer, who is liable to pay tax under this Act shall submit such return or returns relating to his turnover in such manner and within such period as may be prescribed. Under subsection (2) of section 17, if the assessing authority is satisfied that any return submitted under sub-section (1) is correct and complete, it shall assess the dealer on the basis thereof. Sub-section (3) of section 17 speaks of a situation when no return is filed or the assessing authority is not satisfied with the return filed. In that case, the assessing authority can assess to the best of its judgment after making such enquiries and taking into account all relevant materials. Before finalising the assessment, an opportunity has to be given to the assessee. Thus, if the returns filed by the assessee are complete, the assessments can be completed immediately. According to the officer, the assessment is not enabled to make enquiries and pass assessment orders. Normally this proceeding need not take much time, unless the assessee protracts the matter. So far as the facts of this case are concerned, we don't find any conduct on the part of the assessee, which has protracted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revision to the Commissioner. It held that the power has to be exercised within a reasonable time. Bharat Steel Tubes Ltd. v. State of Haryana [1988] 70 STC 122 (SC); (1988) 3 SCC 478* was a case under the Medicinal and Toilet Preparations (Excise Duties) Rules. The question was whether rule 12 of the Rules which gives power of assessing the escaped assessments enables the authority to exercise that power at any time. The court held that the power has to be exercised within a reasonable time. In another decision reported in Dr. Thomas Varghese v. State of Kerala [1997] 226 ITR 365 (Ker); (1996) 13 LTR 61, a division Bench again reiterated the proposition and held that the revisional power under section 34 has to be exercised within a reasonable time. Learned Government Pleader cited before us the decision in Sales Tax Officer v. Sankaran [1986] 61 STC 370 (Ker); 1984 KLT 968. That was a case of remand and hence, according to us, that decision does not apply to the facts of this case. Bharat Steel Tubes Ltd. v. State of Haryana [1988] 70 STC 122 (SC); (1988) 3 SCC 478 is another case where question arose whether the assessment proceedings should be completed within a reasonable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e completed within a period of four years from the expiry of the year to which the assessment relates: Provided that this time-limit shall not apply in the case of dealers who, being liable to get themselves registered as provided for under the Act and the Rules made thereunder have failed to do so: Provided further that all assessments pending as on the 1st day of April, 1993 shall be completed within a period of four years from the date of publication of the Kerala Finance Act, 1993." Subsequently, the second proviso was amended directing that all assessments relating to the years up to and including the year 1994 shall be completed on or before September 30, 1998. This amendment was made in the Finance Act of 1998, which came into force on July 29, 1998. Counsel for the petitioner submitted that so far as the proceedings in question in the present case are concerned, they cannot be saved by the second proviso. Learned counsel submitted that the proviso does not revive the assessments which have already become barred in view of the long delay taken in disposing of the same. Learned counsel also submitted that it does not appear from the proviso that it has got retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though remedial, is substantive in nature. (iii) Every litigant has a vested right in substantive law, but no such right exists in procedural law. (iv) A procedural statute should not generally speaking be applied retrospectively, where the result would be to create new disabilities or obligations, or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates a new rights and liabilities, shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." 15. In Statutory Interpretation by Francis Bennion, 8th Edition, at page 443, it has been held as follows: "Unless the contrary intention appears, an enactment is presumed not to be intended to have a retrospective operation. The essential idea of a legal system is that current law should govern current activities........... If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow's backward adjustment of it." At page 445, it was observed as follows: "It is a general principle of legal policy that no one should suffer detriment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the old Act and the commencement of the amending Act. The Legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to April 1, 1956 only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred." In J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC); AIR 1969 SC 778, the three-Judge Bench of the Supreme Court held as follows: "The principle is based on the well-known rule of interpretation that, unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time." In Commissioner of Income-tax v. Panampunna Estates 1997 KLJ (Tax Cases) 413, a divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Commissioner (Legal) v. Jyothi Traders [1999] 112 STC 277 (SC). In Usha Aravind v. Sales Tax Officer, Mattanchery 1994 KLJ (Tax Cases) 348, Viswanatha Iyer, J., held as follows: "The Legislature has not taken note of the delay that has occurred in the completion of the assessments and therefore the completion of the assessments which were pending as on 1st April, 1993 has to be done within a period of four years from the date of publication of the Kerala Finance Act, 1993." The learned Judge, according to us, has not taken note of the cases where this Court has held that in case the assessments are unduly delayed, they are to be quashed and the judgment has not considered whether such barred proceedings will be revived. In Commercial Tax Officer v. Biswanath Jhunjhunwalla (1996) 5 SCC 626 the question before the Supreme Court was whether the amendment of rule 80(5)(ii) of the Bengal Sales Tax Rules, 1941 was retrospective or not. Under rule 80(5)(ii) as stood before amendment, the Commissioner did not have on his own motion any assessment made or the order passed under the Act, if the assessment had been made or the order passed more than six years (sic) previously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the amendment, a proviso was added to sub-section (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of 4 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force with effect from February 19, 1991." 17.. Thus on a review of the entire decisions, we are of the view that the second proviso to section 17(6) of the Act can apply only to those assessment proceedings, which have been pending before the assessing authority for a reasonable time. Any assessment proceedings, which were pending before the assessing authority for an unreasonably long time on the date on which the Finance Act, 1993 came into force will not be saved automatically by the amendment. Learned counsel for the petitioner argued that that it is only those assessments which have been pending for not more than four years on April 1, 1993 could be saved by the second proviso. We don't accept this argument. It is true that by the amendment, the time of four years has been fixed. That does not mean that only those assessments which were pending fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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