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2015 (9) TMI 780 - SUPREME COURT

2015 (9) TMI 780 - SUPREME COURT - [2015] 86 VST 1 (SC) - Validity of reassessment - limitation period of 6 years as reduced from 8 years - whether the amendment and introduction of the words "six years from the end of such year or March 31, 2002 whichever is later" either expressly or by necessary implication can be regarded as retrospective - Section 21(2) of the UPTT - Held that:- For the purpose of limitation under Section 21(1) and the first proviso, the period of limitation is to be counte .....

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sh assessment or reassessment, where notice is issued or after the date the proviso came into force. It has to be borne in mind that law of limitation when affects substantial rights of a party, such subsequent amendment should not be read as retrospectively unless the amendment so stipulates or requires so by necessary implication.

It has been held in Biswanath Jhunjhunwalla [1996 (8) TMI 511 - Supreme Court of India] when the intendment of the legislature is clear and the language .....

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r part of the proviso is to save such pending assessments and that is why a specific date, that is, March 31, 2002 has been incorporated. While reducing the period from eight years to six years, time has been specified to complete the assessment or reassessment by 31.3.2002. The making of assessment is an extremely material facet. Had the said date, that is, 31.3.2002, is not treated as a saving factor, the pending reassessment cases covered by eight years period would have come under the sunset .....

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he stand of the revenue is to be accepted, then the effect of 2001 amendment would empower and authorise reopening of cases without reference to the financial year, provided the assessment order was made on or before 31.3.2002. Such an interpretation would be contrary to the legislative intendment for the reason, the same amendment has reduced the limitation period from eight years to six years.

The appeals are allowed and the judgment and order passed by the High Court are set aside .....

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ed by M/s. Bajaj Auto Limited, and during the assessment year 1990-91, had sold the two wheelers to the government employees through U.P. Government Employees Welfare Corporation as well as canteen of the Stores Department amounting to ₹ 5,23,93,337.57. During the course of assessment, the appellant had submitted certificates which were required to be issued for claiming exemption in terms of the exemption notification no. 7037 dated 31.1.1985. The assessee had produced 270 sale certificat .....

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s tax waiver in view of the circular dated 16.4.1994. 2. Treating the original assessment as defective, a show cause notice dated 13.3.2002 was issued to the appellant fixing the date of 18.3.2002 requiring the assessee to show cause to offer explanation why a proceeding under Section 21(2) of the Act should not be initiated against it and the tax component should not be realised. 3. The assessee filed its reply on 18.3.2002 taking two grounds, namely, (i) that the proceedings under Section 21(2 .....

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Officer while making the original assessment, steps could not be issued for reopening of the assessment. 4. The competent authority considering the reply submitted by the appellant required the assessee to appear with the documents to clarify the position. At that juncture, the appellant preferred Writ Petition No. 1513 of 2002 and the High Court entertained the writ petition, issued notice and as an interim measure, directed that the assessment proceeding may continue but no final order should .....

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ions for determination:- "1. Whether in the facts and circumstances mentioned above could a complete assessment under the Act could be reopened after prescribed period when that period has been enlarged by amending the law? 2. Whether any case for reopening the assessment relying upon the Section 21(1) is made out and whether it is a case of change of opinion?" 6. As far as the first issue is concerned, the High Court referred to the decision in Addl. Commissioner (Legal) and Anr. v. J .....

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r necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in this section no order for any assessment year shall be made after the expiry of 2 years from the end of such year or till 31.3.1988 whichever is later. However, after the amendment, a proviso was added to Sub-section (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of aforesaid period but not .....

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viso the assessment or reassessment for the year 1989-90 may be made till 31.3.1995. 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 amended proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment after the expiration of six years from such year, i.e. upto 31.3.1999 or March 31, 2002 whichever is later. It is immaterial if a period for assessment or reassessment under sub-secti .....

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ner of Sales Tax. 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 providing limitation up to 31.3.2002 becomes redundant. Proviso now added to Sub-section (2) of Section 21 of the Act does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, as prescribed earlier, had expired before the proviso came into operati .....

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the notice issued by the department to the assessee was within time. The Division Bench declared another Division Bench decision rendered in M/s. Prag Ice and Oil Mills and others v. Additional Commissioner of Trade Tax and Anr. VSIT 2008.. B92 as per incuriam on the ground that it had not taken note of amended provision and the decision of this Court in Jyoti Traders (supra). 8. After answering the issue of limitation, the High Court proceeded to deal with the other question and in that context .....

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anshree Agrawal, learned counsel for the appellant and Mr. Ravi Prakash Mehrotra, learned counsel for the respondents. 10. To appreciate the controversy it is appropriate to reproduce Section 21(2), as amended, in entirety. Section 21 - Assessment of tax on the turnover not assessed during the year (2) Except as otherwise provided in this section, no order of assessment or re-assessment under any provision of this Act for any assessment year shall be made after the expiration of two years from t .....

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sessment or re-assessment may involve a change of opinion: Provided further that the assessment or re-assessment for the assessment year 1987-88 may be made by March 31, 1993: Provided also that if the eligibility certificate granted under Section 4-A has been amended or cancelled by the Commissioner under subsection (3) of Section 4-A, the order of assessment or re-assessment may be made within one year from the date of receipt by the assessing authority of the copy of the order amending or can .....

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sment was completed on 25.3.95 is valid and acceptable in law. The stand of the assessee-appellant is that the reopening of assessment under could only be till 31.3.1997, that is, a period of six years from the end of assessment year 1991 and hence, the notice having been issued on 13.3.2002 is wholly unsustainable in law. The stand of the revenue is that as per the language employed under Section 21(2), assessment or reassessment could be done either within six years from the end of the assessm .....

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venue, per contra, would contend that the limitation has been extended up to period of six years from the assessment year 1991 or 31.3.2002 whichever is later, and hence, the pronouncement in Jyoti Traders (supra) would squarely apply inasmuch as the notice for reassessment has been sent within the stipulated period i.e. 31.3.2002 as certain errors have been discovered in the original assessment which was found to be defective. That apart, a contention has been put forth that a notice to show ca .....

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as completed on 27.11.1989 and in respect of Jyoti Traders, the assessment for the said year was completed on 28.2.1990. The period for assessment or reassessment which was four years under Section 21 of the Act for the assessment year 1985-86 expired on 31.3.1990 in respect of the assessee-Jyoti Traders. The court took note of the fact that the amending Act had received assent of the Governor of the Uttar Pradesh on 19.8.1991 and different dates were prescribed for coming into force of various .....

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ook note of the proviso to sub-section 2 of Section 21 as inserted by the amending Act 1981 which came into force w.e.f. 19.2.1991. The High Court had expressed the view that when the period for assessment or reassessment for the year 1985-86 under Section 21 of the Act before insertion of the proviso to sub-section 2 thereof had expired on 31.3.1990, the amendment had no effect. The stand of the revenue before this court was that the interpretation placed on sub-section 2 of Section 21 by the H .....

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ce (Sales Tax) (Third Amendment) Act, 1974 which substituted Section 26(1) of the principal Act which empowered the State Government to make rules with prospective or retrospective effect for carrying out the purposes of the Act. In exercise of the said power, Rule 80(5) of the Bengal Sales Tax Rules, 1941 was amended. The amended Rule provided that the Commissioner or any other authority to whom power has been delegated shall not, of his own motion, revise any assessment made or order passed un .....

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assessment could not be reopened or revised. It was also opined by the High Court that the amended notification neither expressly nor by necessary implication confer any power of revision of assessment which stood barred on the date on which it was issued. This Court after referring to the decisions in ITO v. S.K. Habibullah (1962) 44 ITR 809 = AIR 1962 SC 918, S.S. Gadgil, ITO v. Lal and Co. (1964) 53 ITR 231 = AIR 1965 SC 171 and ITO v. Induprasad Devshanker Bhatt (1969) 72 ITR 595 = AIR 1969 .....

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ur years or not. 13. By reason of the said Notification, with effect from 1-11-1971, Rule 80(5)(ii) has to be read as barring the Commissioner (or other authority to whom power in this behalf has been delegated by the Commissioner) from revising of his own motion any assessment made or order passed under the Act or the rules if the assessment has been made or the order has been passed more than six years previous to 1-11-1971. Put conversely, with effect from 1-11-1971, Rule 80(5)(ii) permits th .....

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arlier prescribed period of four years having elapsed. Where language as unambiguous as this is employed, it must be assumed that the legislature intended the amended provision to apply even to assessments that had so become final; if the intention was otherwise, the legislature would have so stated." 14. Thereafter this Court referred to number of other decisions and eventually interpreting the amendment in Section 21 opined that:- "The two decisions in the cases of Ahmedabad Manufact .....

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is Court in Biswanath Jhunjhunwalla case said that if the language expressly so states or clearly implies, retrospectivity must be given to the provision. Under Section 34 of the Income Tax Act, 1922, it 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 asses .....

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or reassessment before the expiration of 8 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force w.e.f. 19-2-1991. 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 re- assessment before the expiration of 8 years from the end of that particular as .....

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pletion of assessment or reassessment under sub-section (1) of Section 21 have to be completed within 8 years of the particular assessment year." And again:- "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 does not put an .....

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sessment 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." 15. It is noticeable the interpretatio .....

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ning was to be placed on the amendment, especially on the words "the assessment has been made or the order has been passed more than six years previously", and full effect could only be given if the said notification was read as if applicable not only to assessments which were incomplete but also to assessments which had reached finality by reason of the earlier prescribed period of four years having elapsed. The Court further opined where language was unambiguous as Rule 80(5)(ii), it .....

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e that the assessment year in question is 1990-91 or year ending 31.3.1991. Original assessment order is dated 25.2.1995 and the notice for reassessment is dated 13.3.2002. For the purpose of limitation under Section 21(1) and the first proviso, the period of limitation is to be counted from the end of the relevant assessment year i.e. 31.3.1991. Thus, the notice dated 13.3.2002 was beyond six years or even eight years of the end of assessment year i.e. 1990-91. The question is whether the notic .....

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rospectively unless the amendment so stipulates or requires so by necessary implication. It has been held in Biswanath Jhunjhunwalla (supra) when the intendment of the legislature is clear and the language is unambiguous or it impliedly follows, then full effect should be given and the provision be treated as retrospective. In this regard, reference to a Constitution Bench decision in Ahmedabad Manufacturing & Calico Printing Co. Ltd. (supra) would be apt. The majority view, as is discernibl .....

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or such operation, would have continued undisturbed." 17. In this context, a passage from National Agricultural Coop. Marketing Federation of India Ltd. v. Union of India (2003) 5 SCC 23 is worth reproducing:- "that there is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. Every legislation whether prospective or retrospective has to be subjected to the question of legislative competence. The retrospectivity is liable to be decided on a .....

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ive retrospectivity to an enactment. A validating clause coupled with a substantive statutory change is only one of the methods to leave actions unsustainable under the unamended statute, undisturbed. Consequently, the absence of a validating clause would not by itself affect the retrospective operation of the statutory provision, if such retrospectivity is otherwise apparent." 18. In Thirumalai Chemicals Ltd. v. Union of India (2011) 6 SCC 739, it has been held thus:- "Limitation prov .....

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procedural and a right which is not to be taken away pleading retrospective operation unless a contrary intention is discernible from the statute. Therefore, unless the language clearly manifests in express terms or by necessary implication, a contrary intention a statute divesting vested rights is to be construed as prospective." 19. Keeping in view the aforesaid enunciation of law, it is to be seen whether the amendment and introduction of the words "six years from the end of such ye .....

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appreciated. In Jyoti Traders (supra), the Court was dealing with the amendment where the words that were brought in "eight years from the end of such year" and the Court interpreted the legislative intent and opined that to give full effect to the intention, it has to date back to the previous assessment of eight years. In the present amendment, the words that have been substituted are "six years from the end of such year or March 31, 2002 whichever is later". We have alrea .....

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s Tax to reopen an assessment even if the limitation has expired before the proviso came into operation under the pre or post amendment period of eight or six years and the High Court is justified in holding that the assessment or reassessment could be done either within six years from the end of the assessment year in question or till 31.3.2002 whichever is later. On a first blush, the interpretation placed by the High Court, which has been assiduously supported by the learned counsel for the S .....

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erefore, the latter part of the proviso also specifying the date 31st March, 2002 has to be appositely interpreted. The amendment, as we perceive, is not only beneficial to the assessee but also intends to protect the interest of the revenue. Prior to this amendment, the period of limitation was eight years. There could be cases which were pending by virtue of issue of notice as the earlier limitation period was eight years under the pre-amended proviso. The intention of the latter part of the p .....

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mitation period would have adversely affected the interest of the revenue. Therefore, the protective provision. If such construction is not placed, it would be rather inequitable, in a way incongruous, as on the one hand the period of limitation is reduced and by fixing a determinative date, a peculiar situation is created. The legislative intent was not to enhance and increase the limitation period, regardless and notwithstanding the financial or assessment year. If the stand of the revenue is .....

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