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M/s Amrit Banaspati Company Ltd. Versus State of Punjab and Others

2015 (8) TMI 742 - PUNJAB AND HARYANA HIGH COURT

Assessment of Tax u/s 29(2) of Punjab Value Added Tax, 2005 - Constitutional validity of amendment to section 29 - Extension of Assessment period – Whether the amendment is clarifificary in nature and retrospective or substantive and prospective - Petitioner contends that under unamended Section 29(4), assessment would have been barred by limitation as three years had elapsed after filing of annual statement whereas if amendment was held to have retrospective effect it would not be barred by lim .....

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ospective operation was generally intended – In absence of clear words indicating that amending Act was declaratory, it would not be so construed when pre-amended provision was clear and unambiguous. - Whether the amendment is harsh, unfair, arbitrary and is excessively and unreasonably retrospective and is, therefore, violative of Articles 14 and 19 of the Constitution - Held that:- If the books are not available because they were destroyed or are otherwise unavailable to the assessee prior .....

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the provio is contrary of main proviso - Held that:- The proviso does not take away any right given by the main provision. - The extended period for making the assessment in respect of the year 2006-07 is not by implication from the proviso. It arises from the plain and clear language of the proviso. The proviso clearly carves out an exception to the main provision itself. The judgment infact supports the respondents’ case. The proviso is in terms of this judgment as but for the proviso the ena .....

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herein it was held that, if the assessment period is over, the assessee acquires a vested right which cannot be disturbed by retrospective amendment which extends the period for assessment or reassessment after the original period of assessment or reassessment has expired. - Thus, in any event, period of six years under amended section was to apply retrospectively – Explanation (2), therefore, was merely clarificatory – There was no inconsistency between main provision and proviso – Proviso .....

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e JUDGMENT : S.J.VAZIFDAR, ACTING CHIEF JUSTICE:- The petitioners have challenged the constitutional validity of the amendment to section 29 of the Punjab Value Added Tax Act, 2005 (hereinafter referred to as the PVAT Act) by the Punjab Value Added Tax Act, 2013 ((hereinafter referred to as the Amendment Act). They have also sought a writ of certiorari to quash a notice dated 23.09.2014. The challenge before us was restricted to the constitutional validity of Section 29 as amended. There were se .....

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cturing vanaspati and other edible oils in the State of Punjab. It is registered under the PVAT Act . Prior thereto the petitioner was also registered under the Punjab General Sales Tax Act, 1948 (PGST Act) and the Central Sales Tax Act, 1956. The PVAT Act was enacted inter-alia to provide for the levy and collection of Value Added Tax (VAT) and turnover tax on the sales or purchases of goods and for the repeal of the PGST Act. Upon the PVAT Act coming into force, the petitioner made an applicat .....

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9(2) of the Central Sales Tax Act, 1966 by the Excise and Taxation Officer. The facts leading to the issuance of the impugned notice are as follows. A notice dated 12.08.2011 was addressed to the petitioner by the Excise and Taxation Inspector under Section 29(2) of the PVAT Act and under Section 9(2) of the Central Sales Tax Act stating that upon examination of the petitioner s tax return for the accounting year 2006-07, it was found that the returns were incorrect and incomplete; that there w .....

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he Excise & Taxation Inspectorcum- Designated Officer realized that the assessment could not be made for the accounting year 2006-07 as it was beyond the period of three years after the date when the annual statement was filed and that there was no extension of time to make the assessment granted by the Commissioner. The officer, therefore, did not pursue the matter any further. The petitioner contends that it has in any event been paying the tax in accordance with law. We are, however, not .....

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1.2013 was issued stating that the Amendment Act received the assent of the Governor of Punjab on 15.11.2013. Section 1(2) states that it shall come into force on and with effect from the date of its publication in the Official Gazette . It was published in the official gazette on 15.11.2013. 5(A) It would be convenient to juxtapose section 29 as it originally stood and as amended with effect from 15.11.2013:- Before amendment on 15.11.2013 Section 29(4) After amendment from 15.11.2013 Section 2 .....

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d person after three years, but not later than six years, from the date, when annual statement was filed or due to be filed by such person, whichever is later. PROVIDED THAT the assessment under sub section (2) or sub-section (3), in respect of which annual statement for the assessment year 2006-07 has already been filed, can be made till the 20thday of November, 2014. EXPLANATIONS: (1) The limitation period of six years for an assessment under sub-section (2) or sub-section (3), shall also appl .....

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section (4) prior to commencement of the Punjab Value Added Tax (Second Amendment) Act, 2013, shall not be invalid on the ground of prior service of notice or communication of such order to the concerned person. It is pertinent to note that there is no provision in the amended section 29(4) corresponding to the proviso to section 29(4) prior to the Amendment Act. (B) The statement of objects and reasons in respect of the said amendment reads as follows:- Amendment in Section 29 of the Punjab VAT .....

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in a particular case, the limitation period of 3 years is near to end. The Commissioner has the power to extend the period of assessment upto 6 years. By exercising this power, limitation periods were extended by the Commissioner in respect of various years which led to a lot of litigation. The Hon ble High Court and the Hon ble VAT Tribunal have quashed many such extension orders on technical ground of no prior service of notice to the concerned person before passing an order of such extension .....

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the assessment would have been barred by limitation whereas if the amendment is held to have retrospective effect it would not be barred by limitation. The petitioner has, therefore, challenged the constitutional validity of the amendment introduced by section 6 of the Amendment Act. This brings us to the grounds of challenge to section 29(4) as amended by the Amendment Act. I. The first contention is that section 29(4) as amended and sub section (10-A) of section 29 are prospective and not ret .....

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ice and is, therefore, constitutionally invalid and void. V. Explanation (2) has no relevance to the main section and is, therefore, invalid. VI. The amendment is harsh, unfair, arbitrary and is excessively and unreasonably retrospective and is, therefore, violative of Articles 14 and 19 of the Constitution. VII. The proviso to the amended section 29(4) is contrary to the main section and, therefore, illegal and void. VIII. The amendment is invalid as it extends the period of reassessment even w .....

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that judgment and to two other related judgments. A.B.Sugars Ltd. v. The State of Punjab and others was a case under the PGST Act. Under Section 11(3) of the PGST Act, the assessment of a dealer could be framed within three years from the last day prescribed for filing the returns. The Assistant Excise and Taxation Commissioner issued a notice to frame the assessment. The petitioner contended that the matter had become time barred. The assessment, however, was framed. The Assessing Authority ob .....

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for passing an order of assessment for such further period as he deemed fit. Section 11(10) of the PGST Act reads as under:- Section 11 Assessment of Tax (1) to (9) - (10) The Commissioner may for reasons to be recorded in writing, extend the period of three years, for passing the order of assessment for such further period as he may deem it. The Division Bench held that although the Commissioner was empowered to extend the period of limitation, he had to record the reasons for passing the order .....

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t. As in that case, the assessee had not been afforded an opportunity of being heard, it was held that the order extending the period of limitation could not be relied upon by the respondent-department. The impugned notice and the order extending the time were, therefore, set-aside. Although the judgment in A.B.Sugars Ltd. (supra) was under the PGST Act, the provisions are similar to Section 29(4) of the PVAT Act. The PGST Act stands repealed by the PVAT Act. The ratio, therefore, would apply to .....

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& Taxation Commissioner (Appeals). A large number of cases were selected for reassessment by invoking Section 29(4) of the PVAT Act. As the period of three years provided for reassessment had expired, it was proposed to invoke the extended period of three years in exercise of the powers under the proviso. This was done by a public notice uploaded on the website of the department informing the assessees in general that the department proposed to invoke the extended period of three years. As n .....

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ing notices namely, by hand and through courier to the addressee or to any agent duly authorized by him or to a person regularly employed by the addressee in connection with the business in respect of which he is registered as a person and by e-mail. The Division Bench held that the rule did not envisage the service of a general notice or by publication on the website of the Department. The Division Bench held that the extension of time in that case was contrary to the judgment in A.B.Sugars Ltd .....

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bed for furnishing the last return in respect of any period. Sub section (10) of Section 11 of the PGST Act entitled the Commissioner, for reasons to be recorded in writing to extend the period of three years, for passing the order of assessment for such further period as he may deem fit. The Division Bench held that the power of extension of time for completing assessment has to be exercised before the assessment becomes time barred. 10. The provisions of section 29(4) prior to the amendment an .....

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oners is that the opening part of Section 29(4) is prospective and not retrospective. This is clearly not so. The opening part of section 29(4) as amended read by itself would suggest that the provision is not retrospective and is only prospective. The opening part, however, cannot be read alone. The entire section must be read and so read it is clear beyond doubt and for more than one reason that the section is retrospective. 12. Firstly, the proviso establishes this. It infact goes a step furt .....

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islature intended by the amendment to extend the date for making the assessment only in respect of the assessment year 2006-07. There was nothing special about the assessment year 2006-07. Obviously, therefore, the opening part of the section applied also to the years 2007-08 onwards. Thus the proviso itself establishes that the opening part of section 29(4) is retrospective. 13. This becomes clearer with the first explanation which provides that the limitation period of six years for an assessm .....

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ender the proviso and explanation (1) otiose. 14. Faced with this, it was submitted that the opening part of Section 29(4) is prospective and that the proviso and explanation (1) relate only to Section 29(4) prior to the amendment. 15. The submission is unsustainable as it would render the words the aforesaid period of six years in explanation (1) meaningless. There was no period of six years in Section 29(4) as it originally stood. The period of six years is mentioned only in the amended Sectio .....

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the Commissioner and in the manner provided therein. More important, the word aforesaid can only refer to the section in which it is used which is the amended section. It is inconsistent with anything but the section in which it is used. 16. In support of the contention that the amendment to Section 29(4) operates only prospectively, learned counsel for the petitioner then relied upon Section 1 of the Amendment Act which reads as under:- 1. (1) This Act may be called the Punjab Value Added Tax ( .....

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ve as sub section (2) of Section 1 expressly states that it shall come into force on and with effect from the date of its publication in the official gazette i.e. 15.11.2013. 17. This argument is misconceived. It confuses the date on which the Amendment Act comes into force for the date with effect from which it comes into force. It confuses the date of the enactment or the date of the commencement of the enactment with the date of the operation thereof. Sub section (2) of Section 1 of the Amend .....

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date from which it operates. Thus, the Punjab Value Added Tax (Second Amendment) Act, 2013 came into force to wit it was enacted on 15.11.2013 but with retrospective effect. The extent to which it is retrospective must be determined in terms of the provisions of the Amendment Act. 18. In Additional Commissioner (Legal) and another v. Jyoti Traders and another, (1999) 2 SCC 77, it was held:- Commencement of the Act can be different than the operation of the Act though sometimes, both may be the .....

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) of the Act does not control its retrospective operation. Earlier the assessment/reassessment could have been completed within four years of that particular assessment year and now by the amendment adding the proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after the satisfaction of the Commissioner of Sales Tax. The proviso is operative from 19-2-1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses bac .....

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came into force and the date with effect from which the provisions thereof operate. As held in this judgment, the date of commencement does not control its retrospective operation. 19. It was then contended that the proviso to sub Section (2) of Section 1 of the Amendment Act made it clear that when the legislature wanted to make the enactment retrospective it did so specifically. Section 5 of the Amendment Act was relied upon to illustrate this point as it specifies the date from which it is t .....

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retrospective but only from a particular date. That does not imply that every other provision/amendment operates only prospectively. Each provision must be examined to determine the date from which it operates. 21. The contention that the Section applies only prospectively and in any event applies only in respect of the assessment years in respect whereof the period of limitation for making the assessment under the unamended section has not expired, is, therefore, rejected. 22. The submissions o .....

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r rule the judgments of this Court and are, therefore, unconstitutional. 24. It was contended, however, that Section 29 as amended is unconstitutional for it permits the reopening of time barred assessments. It is also submitted that assuming that it is permissible by legislation to reopen time barred assessments by enacting a retrospective law, the same can be done only by curing the defect. The amendment to section 29(4) does not cure the defect and infact over rules the judgments of this Cour .....

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. It is important, however, at the outset to note that the amendment to Section 29 does not validate an invalid statute. Section 29(4) prior to the amendment had never been struck down as being invalid on any ground whatsoever. It had been interpreted in the judgments which we have already referred to. It was held that the power to extend the time under the proviso could not be exercised after the expiry of the period of three years; that the rules of natural justice must be read into the unamen .....

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s on validating Acts apply equally to the amendments/legislation that validate retrospectively the acts of the authorities pursuant to and in implementation of the Act. We will assume, therefore, that even such amendments/legislation would be valid only if the basis of the judgments that quashed such acts is altered so fundamentally that in the altered circumstances the judgment could not have been delivered. Indeed if an ineffective statute can be validated retrospectively, we see no reason in .....

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are excessive and unreasonable. 27. This brings us to a consideration of the judgments on validating Acts and in respect of the power of the legislature to over rule judgments of Courts. We will refer to all the judgments in considerable detail, though the ratio of these judgments is clear as the petitioners emphasized the importance of each of them in support of their contentions at considerable length. On the question of validating statutes, the general principle is that the legislature has t .....

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same ineffective by enacting a valid law within its legislative field fundamentally altering or changing its character retrospectively. As noted in the judgment we will refer to, a changed or altered condition must be such that the previous decision would not have been rendered by the Court if those conditions had existed at the time of declaring a law as invalid. The amendments to Section 29 are not contrary to the ratio of any of these judgments. 28. In Shri Prithvi Cotton Mills Ltd. and anot .....

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t the word rate meant a tax for local purposes imposed by the local authorities. The rule was declared ultra vires the Act itself. The legislature of Gujarat passed the Validation Act seeking to validate the imposition of the tax as well as to avoid any future interpretation of the Act on the lines on which the Rule was construed. Paragraph 4 of the aforesaid judgment reads as under:- 4. Before we examine Section 3 to find out whether it is effective in its purpose or not we may say a few words .....

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it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the Legislature does not possess or exercise. A court s decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the sta .....

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ax already collected to stand under the re-enacted law. Sometimes the Legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the le .....

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d in the existing law and makes adequate provisions in the Validating Law for a valid imposition of the tax. (emphasis supplied). 29. As we mentioned earlier, the validity of a validating law was held to depend inter-alia upon whether in making the validation it removes the defect which the Courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax. We will apply the ratio of this judgment to the case before us after referring to th .....

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a direct inroad into the judicial powers of the State that the legislature can remove the basis of a decision rendered by the competent Court thereby rendering the decision ineffective but the legislature does not have the power to ask the instrumentalities of the State to disobey or disregard the decisions given by the Courts. The judgment refers to the observations of the Supreme Court in Mahal Chand Sethia v. State of West Bengal, Cr.A.No. 75 of 1969 decided on 10.09.1969 that a Court of law .....

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f the aforesaid judgment and order passed by the High Court amounts collected by the State by way of sales tax on items of excise, health cess and education cess on arrack or special liquor from the appellant became refundable to the appellant. The impugned amendment has been passed, as the Statement of Objects which we have earlier set out clearly indicates to override the judgment of the High Court and to enable the State to hold on to the amount collected as sales tax on excise duty, health c .....

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to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess. The impugned amending Act may not, therefore, be considered to be a Validating Act. A Validating Act seeks to validate the earlier Acts declared illegal and unconstitutional by courts by removing the defect or lacuna which led to invalidation of the law. With the removal of the defect or lacuna resulting in the validation of any Act held invalid by .....

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the State of the consequences of acts done prior to the passing of the Validating Act. The retrospective operation of a Validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate. 18. In the instant case, the State instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6 per cent to 45 per cent with retrospective effec .....

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the parties. It may or may not have been competent for the State Legislature to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess; but, in any event, the State Government has not purported to do so through the Amending Act. As a result of the judgment of the High Court declaring such levy illegal, the State became obliged to refund the excess amount wrongfully and illegally colle .....

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raises the rate of duty from 6 per cent to 45 per cent and further proceeds to nullify the judgment and order of the High Court. In our opinion, the enhancement of the rate of duty from 6 per cent to 45 per cent with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the b .....

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n of tax with retrospective operation has to be justified on proper and cogent grounds. This aspect of the matter does not appear to have been properly considered by the High Court and the High Court in our view was not right in holding that by the enactment of Section 2 of the impugned Act the very basis of the complaint made by the petitioner before this Court in the earlier writ petition as also the basis of the decision of this Court in Cawasji case [(1969) 1 Mys LJ 461 : (1968) 16 Law Rep 6 .....

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pective effect from April 1, 1966 and Section 3 of the impugned Act seeking to nullify the judgment and order of the High Court are invalid and unconstitutional. It would be necessary, therefore, to test whether the Amendment Act validates the acts declared illegal by removing the basis on which the judgments were delivered and the basis on which the actions were declared or were liable to be declared as illegal. 32. In Delhi Cloth & General Mills Co. Ltd. and another v. State of Rajasthan a .....

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alidating law is inconsistent (sicconsistent) with the provisions of Chapter III of the Constitution. If these tests are satisfied, the Act can confer jurisdiction upon the court with retrospective effect and validate the past transactions which were declared to be unconstitutional. The legislature cannot assume power of adjudicating a case by virtue of its enactment of the law without leaving it to the judiciary to decide it with reference to the law in force. The legislature also is incompeten .....

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for the period 1966 to 1969. The writ petition was filed challenging the power to levy house tax and other fees. The A.P. High Court issued a mandamus prohibiting the Gram Panchayat from collecting the amounts. The High Court had held that as per the definition of the house under the Act, the factory and other building was not a house. Against the judgment an appeal was filed in this Court. Pending appeal, the legislature amended the definition of house with retrospective effect so as to elimin .....

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finition of the house by substituting a new section in the place of an old one, providing a new definition which had retrospective effect, notwithstanding anything contained in any judgment, decree or order of the court or other authority. In other words, this Court had held that the legislature removed the basis of the decision rendered by the High Court so that the decision could not have been given in the altered circumstances. 41. In I.N. Saksena v. State of M.P. (1976) 3 SCR 237, the State .....

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icial officer was compulsorily retired on his completion of 55 years. He successfully challenged the order of retirement which was upheld by this Court. A Constitution Bench of this Court had held that the distinction between legislative act and judicial act is well known. The adjudication of the rights of the parties is a judicial function. The legislature has to lay down the law prescribing the norms or conduct which will govern the parties and transactions to require the court to give effect .....

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ive by enacting a valid law on a topic within its legislative field, fundamentally altering or changing with retrospective, curative or nullifying effect, the conditions on which such a decision is based. In Hari Singh v. Military Estate Officer, 1972 RCR (Rent) 508 (SC); (1973) 1 SCR 515, prior to 1958 two alternative modes of eviction under Public Premises Act were available. When the eviction was sought of an unauthorised occupant by summary procedure the constitutionality thereof was challen .....

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defect which the court had pointed out with a deeming date. 46. …………….. It was open to the legislature under the constitutional scheme within certain limits, to amend the provisions of the Act retrospectively and to declare what the law shall be deemed to have been. But it was not open to the legislature to say that the judgment of the court properly constituted and rendered, shall be deemed to be ineffective and the interpretation of the law shall be otherwis .....

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cracy governed by rule of law, the legislature exercises the power under Articles 245 and 246 and other companion articles read with the entries in the respective lists in the Seventh Schedule to make the law which includes power to amend the law. (4) Courts in their concern and endeavour to preserve judicial power equally must be guarded to maintain the delicate balance devised by the Constitution between the three sovereign functionaries. In order that rule of law permeates to fulfil constitut .....

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aw to find out: (a) whether the vice pointed out by the court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the legislature has competence to validate the law; © whether such validation is consistent with the rights guaranteed in Part III of the Constitution. (7) The court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation o .....

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nged or altered conditions are such that the previous decision would not have been rendered by the court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The legislature can change the character of the tax or duty from impermissible to permissible tax but the tax or levy should answer such character and the legislature is competent to recover th .....

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gh all the decisions of this Court is that the legislature cannot directly overrule the decision or make a direction as not binding on it but has power to make the decision ineffective by removing the base on which the decision was rendered, consistent with the law of the Constitution and the legislature must have competence to do the same. 34. In National Agricultural Cooperative Marketing Federation of India Ltd. and another v. Union of India and others (2003) 5 Supreme Court Cases 23, the Sup .....

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1989) 3 SCC 488 at p. 517, para 65:- A competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating infractors noticed in the declaratory judgment are removed or cured. Such a validating law can also be made retrospective. If in the light of such validating and curative exercise made by the legislature • granting legislative competence - the earlier judgment becomes irrelevant and unenforceable, that cannot be called .....

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icatory or declaratory in nature. Such statutory provisions are labelled as declaratory statutes . The circumstances under which provisions can be termed as declaratory statutes are explained by Justice G.P. Singh in the following manner: Declaratory statutes The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and approved by the Supreme Court. For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to .....

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ratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is to explain an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meani .....

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rovision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law which the Constitution came into force, the amending Act also will be part of the existing law. The above summing up is factually based on the judgments of this Court as well as English decisions. 34. It would also be pertinent to mention that assessment creates a vested right and an assessee cannot be subjected to .....

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p. 914, para 11) 11. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and .....

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ssed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. (emphasis supplied) 36. In Controller of Estate Duty v. M.A.Merchant and others 1989(1) SCC 499, the Supreme Court reiterated the same principle with the same qualification. Paragraph-8 of the judgment relied upon by the petitioners reads as follow:- 8. The new Section 59 came into force from 1-7- 1960. Much earlier, on 26-2-1960 the assessment on the accountable person had already be .....

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uty assessment consequent upon the insertion of the new Section 59 of the Estate Duty Act was held infructuous. (emphasis supplied). The sentence emphasized illustrates our observation. 37. In S.T.Sadiq v. State of Kerala and others 2015 SCC online 99, the Supreme Court held that it is settled law that the legislature cannot directly annul a judgment of a Court and that the legislative function consists in making a law and not in declaring what the law shall be. In the words of R.F.Nariman J.:- .....

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on permits a legislature to make laws retrospectively which may alter the law as it stood when a decision was arrived at. It is in this limited circumstance that a legislature may alter the very basis of a decision given by a court, and if an appeal or other proceeding be pending, enable the Court to apply the law retrospectively so made which would then change the very basis of the earlier decision so that it would no longer hold good. However, if such is not the case then legislation which tre .....

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The emphasis on behalf of the petitioners on these observations was unnecessary for it is not even the petitioner s case that the amendment seeks to set-aside an individual decision inter-parties or that it seeks to affect their rights and liabilities alone. In the case before the Supreme Court it was found that the provisions impugned therein aimed only on directly upsetting a final judgment of the Supreme Court inter-parties. 39. Relying upon these judgments, several submissions were made to c .....

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es the legislature gives its own meaning and interpretation of law under which the tax was collected and by legislative fiat makes the new meaning binding on Courts. It was held that this was one of the methods that the legislature may follow to neutralize the effect of the earlier decision of the Court which becomes ineffective after the change of the law. By providing its own meaning and interpretation of the law, the legislature does not say what the provision meant when the Court had interpr .....

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egislation leaves Parliament it is the Courts and the Courts alone that can interpret the provisions thereof. This rule is not inconsistent with what we have just said. Parliament cannot interpret the legislation except by exercising its legislative powers. Interpreting legislation is the domain of the Courts and to enact laws is that of Parliament. Thus Parliament cannot interpret the law enacted by it except by legislative fiat. There is, therefore, no conflict between the two principles. Infa .....

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ved upon the assesse for the Commissioner to decide whether or not to allow assessment of a taxable person or a registered person after three years from the date when the annual statement was filed or was due to be filed by the assessee. The basis of this judgment has been neutralized. The legislature has given its own meaning and interpretation of Section 29 prior to the amendment. This it has done by explanation (2) to sub section (4) of Section 29 and by sub section (10-A) of Section 29. 44. .....

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e legislature has not overruled the judgments of this Court. It has removed the basis on which the judgments were delivered. 45. In A.B.Sugars Ltd. case (supra), the Division Bench held that the rules of natural justice must be read into the proviso to Section 29. This was in view of the fact that the proviso was silent on the issue and the rules of natural justice were not excluded either expressly or by necessary intendment. By explanation (2) and sub section (10-A) of the amended Section, the .....

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urts said it meant but has furnished its own meaning and interpretation of the section and has made that meaning and interpretation applicable retrospectively. By virtue of the amendment, therefore, the judgments of this Court have not been reversed. The basis on which the judgments were delivered has, however, been removed. 46. Explanation (2) could have been enacted in the original section itself if the legislature had contemplated the ratio of the said judgment. It could have been enacted in .....

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ing an assessment within six years after the date when the annual statement was filed or due to be filed whichever is later stands extended under the opening part of the section itself as it is retrospective. We held that it was retrospective in view of the proviso and explanation (1) to the amended Section. Thus, in any event, the period of six years under the amended section was to apply retrospectively. Explanation (2) is, therefore, merely clarificatory. Even if Explanation (2) and sub-secti .....

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mode or manner of enacting it may not be. The invalid mode of implementing the object does not even reflect adversely upon the legality and validity of the intention or the object. Even if the enactment is invalid it can nevertheless disclose the object of the legislation. In that event the purpose would be equally served by the opening part of section 29(4) as amended and by Explanation (1). 48. It was contended that sub section (10-A) of section 29 is nothing but a validating provision though .....

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the unamended section 29(4) was implemented is removed. Explanation (2) removes the defect as by legislative fiat the legislature provided that the Commissioner was not required to issue any notice to the concerned person before extending the limitation period of assessment prior to the commencement of the amendment Act. Further, as we have also held the opening part of section 29(4) is itself retrospective in any event. 49. It is also contended that time for making the assessment under the old .....

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n the judgment of the Supreme Court in Union of India v. Tulsiram Patel and others 1985(3) SCC 398, it was contended that the explanation (2) being contrary to the rule of natural justice is constitutionally invalid. Even assuming this to be so, it would make no difference. As we mentioned earlier, even the opening part of the amended section 29(4) is retrospective. In the result, it would make no difference to the respondent s right to complete the assessment within the time specified in the am .....

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continued existence of the old law in the same terms. There may yet arise the need to validate an Act or the acts performed thereunder. The need to do so may well be the same as the need that exists where the original provision is retained. In the present case, for instance, the legislature decided against permitting any extension of time to make the assessment. The question of the original proviso continuing in the amended provision, therefore, did not arise. It was necessary to introduce the .....

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el for the petitioners relied upon the following observation of the Supreme Court in Sulochana Amma v. Narayanan Nair 1994(2) SCC 14:- 8. It is settled law that explanation to a section is not a substantive provision by itself. It is entitled to explain the meaning of the words contained in the section or clarify certain ambiguities or clear them up. It becomes a part and parcel of the enactment. Its meaning must depend upon its terms. Sometimes it would be added to include something within it o .....

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ve provision. VI. The amendment is harsh, unfair, arbitrary and is excessively and unreasonably retrospective and is, therefore, violative of Articles 14 and 19 of the Constitution. 55. It was contended that the amendment must be struck down as unconstitutional on the ground that it is unreasonable, excessive and harsh. In support of this contention, two judgments were relied upon on behalf of the petitioners which we will now refer to. 56. In National Agricultural Cooperative Marketing Federati .....

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s the Court may have considered the amendment to be excessively and unreasonably retrospective violating the appellant s fundamental rights under Articles 19(1)(g) and 14 of the Constitution. But in fact the grievance is unfounded. (emphasis supplied. 57. In R.C.Tobacco (P) Ltd. and another v. Union of India and another (2005) 7 Supreme Court Cases 725, the Supreme Court held:- 21. A law cannot be held to be unreasonable merely because it operates retrospectively. Indeed even judicial decisions .....

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discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, courts would be justified in striking down the impugned statute as unconstitutional. In such cases, the character of the material provisions of the impugned statute is such that the court would feel justified in taking the view that, in substance, the taxing statute is a cloak adopted by the legislature for achieving its confiscatory purposes. (See Rai Ramkrishna v. State of Bihar .....

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any unforeseen or unforeseeable financial burden imposed for the past period. (emphasis supplied). The validity of the amendment Act, therefore, must be tested on the basis of the tests laid down in the above judgments. We will presume, therefore, that if an amendment is found to be excessive and unreasonably retrospective, unduly oppressive and confiscatory, plainly discriminatory, violating the appellant s fundamental rights, it would be open to challenge. As we will demonstrate, the amendmen .....

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sessment can be framed both before and after the Amendment Act of 15.11.2013 in respect of the assessment years 2006-07, 2007-08 and 2008- 09. The said dates were also stated in respect of the year 2009-10. The dates were based on Sections 28(3), 29(4), 44 of the Punjab Value Added Tax Act, 2005, Rules 36(1),41 and 47 of the Punjab Value Added Tax Rules, 2005 and Rule 6 of the Central Sales Tax (Punjab) Rules, 1957. 59. It is not necessary to set out the accurate, illustrative and well prepared .....

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its books of account under the unamended section. For the year 2006-07, the assessee is not bound to keep the books after 31.03.2013. The amendment, however, extends the period of assessment to 20.11.2014. For the year 2007-08, the assessee is bound to keep the books upto 31.03.2014. The amendment, however, extends the period of assessment to 20.11.2014. Thus, if a notice under Section 29(2) is given even on the basis of the amendment before 31.03.2014, an assessee would have kept the books but .....

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ed to produce on the specified date and time accounts and documents as mentioned in the notice. The petitioners contend that for the years 2006-07 and 2007-08 it is possible that the assessee may not have preserved the books beyond the period that they were statutorily bound to. The petitioner in this petition for instance submits that it had sold its edible oil business and the manufacturing facility to another entity as an inseparable whole and as a going concern on slump sale basis with effec .....

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that event, they may be subjected to a best assessment for no fault of theirs. This, it is contended, is unfair, arbitrary and unduly excessive. 60. This may well be a difficulty in the way of an assessee. It is not, however, such an insuperable difficulty as to render the enactment unconstitutional. If the books are not available because they were destroyed or are otherwise unavailable to the assessee prior to the amendment, it would always be open to the assessee to bring this to the notice of .....

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and void. 61. It was contended on behalf of the petitioner that the proviso introduced by the amendment is contrary to the main section and is therefore, illegal and unconstitutional. In support of this contention, the petitiones relied upon the following observation of the Supreme Court in J.K.Industries Ltd. and others v. Chief Inspector of Factories and Boilers and others, 1996(6) Supreme Court Cases 665:- 33. A proviso to a provision in a statute has several functions and while interpreting .....

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ction and the proviso thereto must be construed as a whole, each portion throwing light, if need be, on the rest. A proviso is normally used to remove special cases from the general enactment and provide for them specially. 34. A proviso qualifies the generality of the main enactment by providing an exception and taking out from the main provision, a portion, which, but for the proviso would be a part of the main provision. A proviso must, therefore, be considered in relation to the principal ma .....

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construe the provisions together without making either of them redundant or otiose. Even where the enacting part is clear, it is desirable to make an effort to give meaning to the proviso with a view to justify its necessity. 36. While dealing with proper function of a proviso, this Court in CIT v. Indo Mercantile Bank Ltd. [AIR 1959 SC 713 : (1959) 36 ITR 1] opined: The proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking o .....

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be construed as a whole and the proviso is used to remove special cases from the general enactment and provide for them specially. The reliance upon the last sentence in paragraph-34 is also not well founded. In the present case, the proviso qualifies the situation that would arise out of the main section. Though an assessment under sub sections (2) and (3) of Section 29 may be made within six years, this would not be so in respect of the assessment year 2006-07. For the assessment year 2006-07, .....

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of the year 2006-07. The proviso does precisely what the judgment says it must-it removes the special case viz. the assessment year 2006-07 from the general enactment which provides for the other assessment years and provides for this assessment year specifically. 63. The judgment of a Division Bench of this Court in M/s Haryana Organics etc. v. State of Haryana 2003(1) Punjab Law Reporter 265 is of no assistance to the petitioner either. Paragraph 35 which is relied upon reads as under:- 35. I .....

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basis of the plain language used in this entry leads to some difficulty, it is for the legislature or the rule making authority to take the corrective measures. The courts can not give it an interpretation on equitable considerations or presumptions or assumptions in order to make up the deficiencies therein to overcome such difficulty. It is also well settled that an exception or a proviso must, prima facie, be read and considered in relation to the principal matter to which it is a proviso or .....

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n has, therefore, to be considered in the light of the aforesaid settled rules of construction. 64. The proviso does not take away any right given by the main provision. There is no right given in respect of the assessment year 2006-07 in the main provision which is taken away by the proviso. The proviso merely grants further time for making an assessment in respect of the year 2006-07. The proviso is infact an exception to the main section. But for this exception an assessment in respect of the .....

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As was stated in Mullins v. Treasurer of Survey [(1880) 5 QBD 170 : 42 LT 128] (referred to in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha [AIR 1961 SC 1596] andCalcutta Tramways Co. Ltd. v. Corpn. of Calcutta [AIR 1965 SC 1728] ) when one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject-matter of the proviso. The proper function of a proviso is to except and .....

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ntain the provisions which are said to occur in it you cannot derive these provisions by implication from a proviso. said Lord Watson in West Derby Union v. Metropolitan Life Assurance Society[1897 AC 647 : 77 LT 284 (HL)] . Normally, a proviso does not travel beyond the provision to which it is a proviso. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. (See A.N. Sehgal v. Raje Ram Sheoran [1992 Supp (1) SCC 304, Tribhovandas Haribhai T .....

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the earlier clause prevails…. But if the later clause does not destroy but only qualifies the earlier, then the two are to be read together and effect is to be given to the intention of the parties as disclosed by the deed as a whole (per Lord Wrenbury in Forbes v. Git [(1922) 1 AC 256 : 1921 All ER Rep Ext 770 (PC). 66. The extended period for making the assessment in respect of the year 2006-07 is not by implication from the proviso. It arises from the plain and clear language of the pr .....

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the section and created an exception to it. VIII. The amendment is invalid as it extends the period of reassessment even where the original period for assessment has expired. 67. The next question is whether by an amendment the legislature is entitled to extend the period for assessment even though the original period for assessment has expired. The judgment of the Supreme Court in Additional Commissioner (Legal) and another v. Jyoti Traders and another 1999(2) SCC 77 supports the respondents c .....

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t prescribed the period of eight years. Taking advantage of the amendment, the authorities issued notices to the parties for reassessment. Paragraph-25 of the judgment reads as under:- 25. The two decisions in the cases of Ahmedabad Manufacturing & Calico Printing Co. Ltd. (1963) 48 ITR 154] and Biswanath Jhunjhunwalla [(1996) 5 SCC 626] are more closer to the issue involved in the present case before us. They laid down that it is the language of the provision that matters and when the meani .....

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is the service of the notice which is the sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherw .....

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91. We do not think that sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment before the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment .....

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issioner of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub-section (2) of Section 21 of the Act becomes redundant. Commencement of the Act can be different than the operation of the Act though sometimes, both may be the same. The proviso now added to sub-section (2) of Section 21 of the Act doe .....

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ssment/reassessment could have been completed within four years of that particular assessment year and now by the amendment adding the proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after the satisfaction of the Commissioner of Sales Tax. The proviso is operative from 19-2-1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to the previous eight assessment years. We need not refer to the provisio .....

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s back to previous eight assessment years. As we noted earlier, the assessment year in the case before the Supreme Court was 1985- 86. The amendment came into force in the year 1991. The four year period originally prescribed would have expired prior to the date of the amendment.Despite the same, the Supreme Court held that the amendment was applicable to the respondents. 68. On behalf of the petitioners, several judgments were cited in support of their submission that if the assessment period i .....

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5 SC 171, the Supreme Court dealt with the case of Tomlinson v. Bullock, (1879) 4 QBD 230 and English v. Cliff, 1914-2 Ch 376. In paragraph-6, the Supreme Court observed that if the right to act under the earlier statute had come to an end it could not revived by the subsequent amendment which extended the period of limitation unless otherwise provided. The operative words are unless otherwise provided . In other words, it was not held that even if it was otherwise provided, the principle would .....

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necessary implication of the section. The Supreme Court applied 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. These observations do not support the submission that Parliament is incompetent to introduce such an amendment. The jud .....

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sessments. It was held that such a question cannot be considered as a question of procedure. 72. Mr. Mittal relied upon paragraph-8 of the judgment of the Supreme Court in Controller of Estate Duty, Gujarat I, Ahmedabad v. M.A.Merchant, Accountable person of late Shri A.G.Merchant, Majirawadi Road, Bhavnagar and others, 1989 Supp.(1) Supreme Court Cases 499, which reads as under:- 8. The new Section 59 came into force from 1-7-1960. Much earlier, on 26-2-1960 the assessment on the accountable pe .....

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reopen the estate duty assessment consequent upon the insertion of the new Section 59 of the Estate Duty Act was held infructuous. (emphasis supplied). The amendment to Section 29 clearly is retrospective. Our earlier observation based on the words emphasized by us, therefore, apply in respect of this judgment as well. 73. Paragraphs 14 and 15 of the judgment of the Supreme Court in K.M.Sharma v. Income Tax Officer, Ward 13(7), New Delhi, 2002(4) Supreme Court Cases 339, cited on behalf of the .....

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bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to subsection (1) of Section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub-section (1) of Section 150 which intends to lift the embargo of period of limitation under Section 149 to enable t .....

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t. 15. To hold that the amendment to sub-section (1) would enable the authorities to reopen assessments, which had already attained finality due to bar of limitation prescribed under Section 149 of the Act as applicable prior to 1-4-1989, would amount to giving sub-section (1) a retrospective operation, which is neither expressly nor impliedly intended by the amended subsection. Our aforesaid observations apply equally to this judgment. In this case, it was held that a retrospective operation of .....

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to a bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality . 74. The judgment of the Supreme Court in Dharappa v. Bijapur Cooperative Milk Producers Societies Union Ltd. 2007(9) SCC 109, is not relevant to the issue. The Supreme Court held where the right to file an action has come to an end on expiry of the period of limitation .....

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6 of the General Clauses Act, the repeal of an enactment will not affect any right, privilege, obligation or liability acquired or incurred under the repealed enactment, this provision cannot be resorted to if a different intention appears and therefore, Section 6 cannot be applied to every repealed provision or enactment regardless of the intention of the legislature and the language used in the repealing provision. We do not see how these observations can be of any assistance to the petitione .....

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that the amendment had not been given retrospective effect. The judgment does not support the petitioners submission. IX. Explanation (1) makes the old proviso redundant and is, therefore, invalid and irrational. 77. It was contended that if the amendment is given effect to from 01.04.2006 as is sought to be done by the proviso and explanation (1) to the amended section, the proviso in the unamended section becomes redundant.The amendment, therefore, is contrary to the law in so far as it seeks .....

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