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TMI Blog2013 (12) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... at the dealer has concealed any sales, or purchases, or provided inaccurate and incorrect declaration or return. In other words, the second limb of the argument of the petitioners is that the notices for reopening are invalid for want of necessary satisfaction required under the law. We have recorded facts as arising in Special Civil Application No. 3832 of 2012 for the purpose of deciding these writ petitions. The petitioner is a Dealer and duly registered under the Gujarat Value Added Tax Act, 2003 ["VAT Act" for short]. For the Financial Year 200304, the petitioner had filed its return under the then prevailing Gujarat Sales Tax Act, 1969 ["Sales Tax Act" for short]. Long thereafter, the Sales Tax Officer issued impugned notice dated 5th March 2012 indicating that for the period between 1st April 2003 to 31st March 2004, he proposed to reopen the assessment and that therefore, the petitioner should remain present with all accounts and documents. In such notice, he indicated that turnover of Rs. 24.07 lakhs [rounded off ] had escaped assessment. Though alongwith such notice, no reasons why officer intended to reopen the assessment were supplied, from the affidavitinreply dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to introduction of VAT Act. Case of the petitioners is that any such reassessment would be covered by Section 35 of the VAT Act, since the Sales Tax Act has been repealed. The case of the Revenue, however, is that the VAT Act makes provision for saving of the proceedings undertaken or initiated under the Sales Tax Act. Second controversy is with respect to the grounds of reopening. With respect to the reason to reopen, in different petitions slightly different reasons emerge. However, principally the contention of the petitioners is that the reasons are not sufficient permitting the authorities to reopen the previously closed assessments. We may record that in majority of cases, reopening is resorted to on the ground that the petitioners were subject to raids by the Excise Department during which proceedings, statements were recorded and evidence collected resulting into issuance of show cause notices by the Excise Department seeking recovery of unpaid excise duty and penalty. We may at this stage examine the applicability of Section 35 of the VAT Act to the impugned reassessment proceedings which were initiated by issuing notices, after the VAT Act was enacted and the Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Tax Act was in operation. Such proceedings must therefore, be governed by the said Act. It was submitted that Section 100 of the VAT Act specifically saves action taken under the Sales Tax Act, as also the rights or liabilities accrued, or acquired under the Sales Tax Act. Heavy reliance was also placed on Section 6 of the General Clauses Act to contend that even upon repeal of the Sales Tax Act, any existing right or liability would not get extinguished. In support of their contentions, counsel relied on the following decisions. In case of the Sales Tax Officer, CircleI, Jabalpur v. Hanuman Prasad, reported in AIR 1967 SC 565, wherein the assessment of the salestax was carried out under the Central Provinces & Berar Sales Tax Act, 1947. New Act viz., the Madhya Pradesh General Sales Tax Act was framed in the year 1958 and the old Act was repealed. Thereafter, on 23rd October 1962, the Sales Tax Officer reopened the assessment on the ground that part of the turnover of the assessee had escaped assessment. The assessee contended that the assessment had been completed under the old Act wherein the period of limitation of three years was prescribed, reassessment had thus become t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or it is merely an inchoate right. Reliance is also placed on the decision in case of Messrs. Allied Exports & Imports Gudur Nellore District v. State of Andhra Pradesh, represented by State representative Sales Tax, reported in AIR 1971 AP 218 wherein the Full Bench of the Andra Pradesh High Court observed that change in substantive law does not affect substantive right unless made explicit in that behalf, while change in procedural law is retrospective unless it has an effect of disturbing the right of action. In the context of Sales Tax Act of the State and the changes made therein, it was observed that it is only the right of the Department to recover tax and dealers' liability to pay tax that are saved and the procedure prescribed for quantification of tax or its recovery and time limited fixed for exercise of this power are not portions for substantive right. Reliance is also placed on the decision of the Apex Court in case of State of Punjab v. Mohar Singh Pratap Singh, reported in AIR 1955 SC 84 wherein, it was observed that, "whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer liable to pay tax in respect of such turnover, a notice containing all or any of the requisitions which may be included in a notice in the prescribed manner and assess, not later than three years from the date of service of the notice, the amount of tax due from such dealer to the best of his judgment." From the above statutory provisions, it can be briefly summarized that even though previously, on the return and declaration filed by the dealer, the Commissioner had either accepted the same as true and assessed the tax on such basis or had carried out further inquiry before passing an order of assessment, it would still be open for the Commissioner to reassess the tax if he had reason to believe that any turnover or sales or purchases chargeable to tax has escaped assessment, or has been underassessed or assessed at a lower rate, or that any deduction had been wrongly given or any draw back, set off or refund has been wrongly granted in any order of assessment so made. Such power to reassess, however, came with a time limit. In cases where the Commissioner had reason to believe that the dealer had concealed sales or specified sales or purchases or any material particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing of final order on turnover escaping assessment. The central question is whether such modified time limit would apply to all cases which were not instituted by the time the Sales Tax Act was repealed and the VAT Act was enacted. Section 100 of the VAT Act provides for "Repeal and Savings" and reads as under :" 100. Repeal and savings - (1) The [Gujarat Sales Tax Act, 1969, the Bombay Sales of Motor Spirit Taxation act, 1958] and the Gujarat Tax on Sugarcane Act, 1989 are hereby repealed : Provided that such repeal shall not affect the previous operation of the said Acts of any right, title, obligation or liability already acquired, accrued or incurred three under and subject thereto, anything done or any action taken including any appointment, notification, notice, order rule, form or certificate in exercise of any powers conferred by or under the said Act shall be deemed to have been done or taken in exercise of the powers, conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amount due at the commencement of this Act maybe recovered as if they had accrued under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute regarding the period of limitation is ordinarily applied to all pending and future cases. In other words, amendments in the period of limitation are ordinarily considered retrospective in nature. In case of C. Beepathuma & Ors. vs. Velasari Shankaranarayana Kadamboliathaya & Ors., reported in AIR 1965 SC 241, it was observed that there is no doubt that the law of limitation is a procedural law and the provisions existing on the date of the suit would apply to it. One well recognized exception, however, is when in the earlier statute, as per the previous statutory provision, a cause had become barred by limitation, the same would not be revived by amendments, providing for larger period of limitation. In case of J.P Jani, Income Tax Officer, Circle IV, WardG, Ahmedabad & Anr. vs. Induprasad Devshanker Bhatt [Supra], the Supreme Court considered the effect of introduction of Income Tax Act, 1961 replacing the old IncomeTax Act, 1922, on the power of reopening of assessment. When it was found that such right in the old law was barred by limitation, introduction of Section 148 of the Income Tax Act, 1961 providing longer period of limitation cannot be resorted to for reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thus in the old Act and the successor Act are that distinction between the cases of concealment of particulars, etc. providing for larger period of eight years of limitation and in other cases of five years was completely done away in the later Act. Secondly, the point of reference was shifted from the issuance of notice within the time prescribed to passing of the final order of reassessment. This is thus not a plain case of period of limitation being substituted by the successor Act. This is a case where entire machinery is replaced by a new provision, making significant changes in the Legislative approach. We have therefore to ascertain the legislative intent to gather to what extent the previous provision was sought to be saved. In this context, one shall have to necessarily rely on and refer to Section 100 of the VAT Act which makes "Repeal & Savings" provisions. It is well recognized that upon repeal of the Statute, all actions pending on the date of repeal do not survive. To obviate such unpleasant consequences, the successor statute ordinarily provides for "Repeal & Savings" clauses. In any case, Section 6 of the General Clauses Act contains a plenary provision of savin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut a presumption of the existence of the state of affairs which in actuality is non-existent. The effect of such a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances. Therefore, when section 217 (1) of the Act repealed Act 4 of 1993 w.e.f July 1, 1989, the law in Act 4 of 1939 in effect came to be non-existent except as regards the transactions, past and closed are saved." From the above what emerges is that ordinarily period of limitation is considered as a procedural provision and any change in the period of limitation by an amendment in the Act or by enactment of a new statute repealing the original one, is made applicable also retrospectively. This is of course subject to the exception that if under the repealed provision, the cause of action had become time barred as per the period of limitation prescribed any subsequent change or extension in period of limitation would not revive such a cause. Another area where the Courts have taken slightly different view is where in the successor statute, a shorter period of limitation is prescribed and by virtue of the existing provisions of the earlier Act, the limitation has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would therefore be necessary to ascertain for ourselves whether it can be stated that by the time VAT Act was enacted, the petitioners had under the Sales Tax Act acquired, accrued or incurred any obligation or liabilities. If the case of the petitioners fall within such expression, the Department would be justified in pursuing such cases under the VAT Act with reference to period of limitation contained in the Sales Tax Act despite repeal of the Sales Tax Act. We may recall that the petitioners had filed the returns at the relevant time under the Sales Tax Act. Such returns were also processed as per the provisions of the said Act. Till the Sales Tax Act was repealed by the VAT Act, no further action was taken by the Department. To be precise, no notices for reopening such assessment were issued till the Sales Tax Act was repealed. It is true that the Sales Tax Act permitted period of eight years from the end of the period to which such turnover related for issuance of notice of reassessment, if the Commissioner had reason to believe that the dealer had concealed such sales or any material particulars thereof or knowingly furnished incorrect declaration or returns. However, in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Relief Act, 1877, so far a it is material for the purpose of this case provided that where a decree for specific performance of a contract of sale or of a contract to take a lease has been made and the purchaser or lessee makes default in payment of the purchase money, which the Court has ordered him to pay, the decree may be rescinded as regards the party in default either by a suit or by an application. The right to rescind the decree under the section can arise only if the purchaser makes default in paying the purchase money ordered to be paid under the decree. Before the lapse of a reasonable time from the date of the decree, the appellant could have no right to have the decree rescinded on the ground of default of the purchaser. To put it in other words, the right of the appellant to have the decree rescinded was dependent upon the default of the purchaser in paying the purchase money. Such a default had not occurred when the Specific Relief Act, 1877, was repealed, as a reasonable time for the performance of the obligation under the decree had not elapsed from the date of the decree. The more important reason why there was no default in this case was that the execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and from 01.04.2005. Secondly, the power of revision under Section 46 of the Delhi Sales Tax Act, 1975 and that under Section 74A of the DVAT Act do not co-exist. Because, the two cannot have simultaneous existence. The death of one (Section 46 of the Delhi Sales Tax Act, 1975) has ushered in the birth of the other (Section 74A of the DVAT Act). Thirdly, in view of Section 106(2) and (3) of the DVAT Act as interpreted by the Full Bench, an order of assessment passed under the Delhi Sales Tax Act, 1975 shall be deemed to be an order under the DVAT Act. Thus, after the repeal of the Delhi Sales Tax Act, 1975 and introduction of the DVAT Act, it is the power of revision encapsulated in Section 74A thereof which holds the field. It the power of revisions invoked, it has to be under Section 74A of the DVAT Act and in terms thereof. The provisions of Section 46 cannot be applied to post 01.04.2005 revisions".. ... .. .. .. "Sixthly, the legislature consciously altered the limitation clause insofar as the power of revision is concerned. Having expressly provided for a different scheme in Section 74A(2)(b), it could not have been the intention of the legislature to continue the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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