TMI Blog2013 (12) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... subsection (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. 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 This is of course subject to the exception that if under the repealed provision, the cause of action had become time barred as per the period of limitation prescribed any subsequent change or extension in period of limitation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 not yet expired but by application of the shorter period of limitation prescribed in the successor Act, the cause would stand barred by limitation. In such cases, the question would arise whether the period of limitation of the successor Act should be applied thereby taking away the right of the party to file proceedings for asserting his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Application No. 4766 of 2012, Special Civil Application No. - - - Dated:- 26-12-2012 - Akil Kureshi And Sonia Gokani,JJ. For the Petitioner : Mr. Tanvish Bhatt with Ms. Gargi Vyas Mr. Jai Kansara for M/S Wadia Ghandy Co. For the Respondent : Ms. Maithli Mehta Ms. Shruti Pathak AGPs (s) No. 1 Notice Served By DS JUDGMENT (Per : Honourable Mr. Justice Akil Kureshi) In all these writ petitions, the petitioners have challenged Notices issued by the competent officer of the Sales Tax Department of the State of Gujarat for the purpose of reopening of previously closed assessments. Such notices are challenged on two grounds Firstly, that the same were time barred, and further that the authority issuing such notices had no reason to believe that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe that the whole, or any part of the taxable turnover of such dealer has escaped assessment, or he has been underassessed, or has been assessed at a rate lower than the rate at which it is assessable, or wrongly been allowed any deduction therefrom, or wrongly been allowed any credit. Subsection (2) of Section 35 of the VAT Act, however, provides that no order shall be made under subsection (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. The first legal controversy between the parties relates to applicability of the change with respect to period of limitation prescribed under Section 35 of the VAT Act for initiating reassessment proceedings which might have arisen; as in the present group of cases prior 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 thereof. In support of the contention, counsel placed heavy reliance on the decision of Division Bench of Delhi High Court in case of Kumagai Skanska Hcc Itochu Group v. The Commissioner of Value Added Tax Anr., dated 22nd May 2012. It was a case wherein similar situation had arisen in the context of Delhi Value Added Tax Act which had replaced the earlier Delhi Sales Tax Act. The High Court ruled that the period of limitation prescribed under the Delhi Value Added Tax Act for reopening of the assessment would govern all the cases of reopening initiated after the said Act was enacted repealing the Delhi Sales Tax Act., On the otherhand, learned AGPs Ms. Maithli Mehta Ms. Shruti Pathak contended that the assessment for which the notices had been issued pertained to a period when the Sales 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven to the statute so as to affect, alter or destroy any right already acquired or revive any remedy already lost by efflux of time. In case of Thyssen Stahlunion GMBH v. Steel Authority of India Limited, reported in AIR 1999 SC 3923 wherein in the context of repeal of the old Arbitration Act of 1940 by the later Arbitration and Conciliation Act, 1996, the Apex Court observed that even after coming into force of the new Act, repealing the old Act, enforcement of the award has to be examined on the touchstone of the proceedings held under the old Act. In the context of the question as to what is right accrued or acquired, with reference to the provisions of Section 6 of the General Clauses Act, it was observed that the question that arises for consideration is whether a right has accrued to the party 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f specified sales or turnover of purchases of any goods chargeable to tax under this Act has escaped assessment or has been under-assessed or assessed at a lower rate in respect of any period in an order of assessment under Section 41, or if the Commissioner has reason to believe that any deduction has been wrongly given or any drawback, setoff or refund has been wrongly granted in any order of assessment so made, then the Commissioner may : [a] where he has reason to believe that the dealer has concealed such sales or specified sales or purchases or any material particulars relating thereto, or has knowingly furnished incorrect declaration or returns, at any time within eight years, and [b] in any other case, at any time within five years of the end of the period to which such turnover relates, serve on the 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 summ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax due from the dealer in respect of such turnover which comes to his notice subsequently, and the provisions of his Act shall, so far as may be, apply accordingly. [2] No order shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. From the above it can be seen that in the successor Act also, provision for reassessment of previously closed assessment was retained. This, however, came with significant changes. Firstly, the graded time limit of eight years for cases of concealment of material particulars etc. and five years for rest of the cases was done away with. Uniformly, for all cases an outer time limit of five years was prescribed. More importantly, such time limit pertains not for issuance of notice for reassessment but for passing 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and until it is suppressed by any appointment, notification, order, rule, regulation, form or notice made or issued under the provisions of this Act; (d) any person entitled to appear before any authority under the said Act shall be deemed to be entitled to appear any authority under this Act, and accordingly if such person be a sales tax practitioner he shall be entitled to have this name entered in the list maintained under section 81. (3) Without prejudice to the provisions contained in sub-section (2) and subject thereto, section 7 of the Bombay General Clauses Act, 1904 shall apply in relation to the repeal of said Act as if the said Act had been enacted within the meaning of the said section 7. It is undoubtedly true that the provisions containing period of limitation are construed as procedural in nature, and therefore, any changes made in the 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been underassessed, or assessed at a lower rate. In such cases, if there was any element of concealment of sales, etc., he could issue a notice for reassessment of the escaped turnover within eight years from the end of the period to which such turnover related. In other cases, he could issue such a notice within five years from the said date and not later. The entire Sales Tax Act was repealed by the VAT Act. In the VAT Act, provision for reassessment made significant changes. Under Section 35(1), reassessment is permissible in cases of escapement of assessment or underassessment, or application of lower rate, etc. Subsection (2) of Section 35 of the VAT Act, however, provides that no order shall be made under subsection (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. Two significant changes 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AIR 1997 SC 412, the Apex Court held and observed that effect of repeal of the Act would be that the repealed Act stands completely obliterated from the record of the Parliament; except for actions past and closed or those which are saved. It was observed as under : 23. Whenever an Act is repealed it must be considered; except as to transactions past and closed, as if it had never existed. The effect thereof is to obliterate the Act completely from the record of the Parliament as if it had never been passed it, it never existed except for the purpose of those actions which were commenced, prosecuted and concluded while it was existing law. Legal fiction is one which is not an actual reality and which the law recognizes and the Court accepts as a reality. Therefore, in case of legal fiction the Court believes something to exist which in reality does not exist. It is nothing but 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation but made significant other changes as well. In that view of the matter, it would be of considerable importance for us to ascertain what the repeal and savings provision of the VAT Act provides. Under subsection Section 100 of the VAT Act, as already noted, the Sales Tax Act was repealed. Proviso to Section 100 of the VAT Act however makes certain provisions for saving and provides that such repeal shall not affect the previous operation of the said Act or any right, title, obligation or liability already acquired, accrued or incurred there 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 the VAT Act. In the present case, it 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 Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right acquired or accrued . It was observed that ever since the leading case of Abbot Vs. Minister for Lands, 1895 AC 425 that a mere right to take advantage of the provisions of an Act is not an accrued right . In case of Hunger Ford Investment Trust Limited V. Haridas Mundhra Ors., reported in AIR 1972 SC 1826, the Apex Court once again had an occasioned to consider what is an accrued or acquired right. It was observed that : 19. We do not think that the appellant had an accrued right for the rescission of the contract or the decree for specific performance under Section 35 of the Specific Relief Act, 1877, when the Act was repealed by the Specific Relief Act, 1963, on March 1, 1964. It may be recalled that the decree in suit NO. 600 of 1961 was passed on February 25, 1964 and that the application for rescission of the decree was filed on March 21, 1967. Section 35 of the Specific 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for such purpose in the successor Act i.e. the VAT Act. We are fortified in our view by the decision of with this view in case of Kumagai Skanska Hcc Itochu Group Vs. The Commissioner of Value Added Tax Another decided on 22.05.2012, wherein the Devision Bench of Delhi High Court was considering the effect of enactment of Delhi Value Added Tax Act, 2004 replacing the Delhi Sales Tax Act, 1975. In such Successor Act also, similar provisions of repeal and savings were made. The Court was confronted directly with the issue of effect of shorter period of limitation prescribed in the successor Act for taking orders of assessment in revision. It was held and observed as under : 26. First of all, once the provisions of Section 46 of the Delhi Sales Tax Act, 1975 were repealed and replaced by the provisions of Section 74A of the DVAT Act qua revision, it would be the latter provision which would apply 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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