TMI Blog2018 (8) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act, 2013 w.e.f. 01.4.2013 - Held that:- There is no reason to find the invocation of Section 25B, to be proper, after the period of limitation provided under Sections 24 and 25 has expired. The same is also hit by limitation. The power of the legislature to make an amendment, with retrospective effect, is undisputed but the requirement is that unless the same is expressed in clear language or implied, without any scope for doubt, then the amendment would only be prospective. We are of the opinion that when there is a substitution, unless the same is expressed to be prospective the Courts could always interpret it to be retrospective, looking at the scheme of the enactment, the purpose and object of the amendment, especially when the amendment by substitution, was intended at removing an obvious anomaly or correcting a blatant error or obliterating an absurdity or bringing it in consonance with any other law or the Constitution. The subject substitution which we are concerned with, relating to limitation, is not retrospective neither by reason of express words nor on grounds of intendment. Limitation, though procedural in nature, any action taken after its expiry, crea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atch of writ petitions [W.P(C) No.10979 of 2015 connected cases]. The learned Single Judge categorized these cases on the basis of the provision under which the proceedings were initiated. The first group in the impugned common judgment are cases in which notices were issued under Section 25(1) of the KVAT Act, beyond the period of limitation provided thereunder classified as Group-A. In some of these cases the assessment has been completed and the petitioners have approached this Court under Article 226, without availing the statutory remedies on the ground of the proceedings itself being without jurisdiction for reason of the limitation having kicked in. Group-B are cases in which again the proceedings were issued after the period of limitation under Section 25(1); but the Assessing Officer rely on the orders issued by the Deputy Commissioner under Section 25B; extending the period for completion of assessment. The challenge is to the notices issued or the assessment orders passed on the strength of the orders issued under Section 25B. Group-C, is similar to Group-B, but are cases in which the order passed under Section 25B is under challenge. Group-D is a single case in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under Section 25(1). Notices in all the cases coming under Group-A, were issued by the respective Assessing Authorities, after the expiry of 5 years from the last date of the assessment year. Later, there was a proviso introduced extending the period for completion of assessment till the end of the year. These amendments were made in the successive years after 2010, the benefit of which was claimed by learned Special Government Pleader (Taxes) for sustaining the notices issued. We have followed the Full Bench decision insofar as finding that the limitation was for not concluding the assessment but for initiation of proceedings. The interpretation placed on the words 'proceed to determine...' by the Full Bench, was following the earlier decision of a Division Bench which considered in pari materia provisions under the KGST Act, in Tirur Medical Stores V. State of Kerala [1978 KLT 415] . In such circumstance the action initiated by the Department after the period of limitation provided, by issuance of notices under Section 25(1) cannot be sustained. 5. The learned Special Government Pleader (Taxes) has an argument, against the impugned judgment, that the strong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of Section 25B in the KVAT Act by the Kerala Finance Act, 2013 w.e.f. 01.4.2013. By the introduction of the said provision, power was conferred on the Deputy Commissioner to extend the period of completion of assessment beyond the period specified in Sections 24 and 25 of the KVAT Act. Sections 24 and 25 respectively had limitation of 4 and 5 years for proceeding to determine inter alia the escaped turn over. The provision introduced as Section 25B definitely confers the Deputy Commissioner with powers to extend the period of limitation for completion of assessment, but as found earlier, there is no period prescribed in Sections 24 25 for completion of assessment. The limitation in Sections 24 25 was to 'proceed to determine...' , meaning thereby issuance of notice or initiation of proceedings. The attempt of the Deputy Commissioner in the writ petitions, was to extend the time for completion of assessments, after the limitation for issuance of notice stood expired. We have already held that the proviso added to Section 25 (1) cannot enable extension of the limitation period provided in Section 25(1). In such circumstances, we do not see any reason to find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from its exercise we must read this functional obligation . 8. It was held in (1981) 1 SCC 664 [Swadeshi Cotton Mills v. UOI] thus: Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle as distinguished from an absolute rule of uniform application seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o quarrel on the proposition; but whether such an exercise was carried out here, is the moot question. In Jyoti Traders , the Hon'ble Supreme Court was concerned with a proviso added to a sub-section which provided limitation for completion of assessment. The sub-section provided that no order of assessment or re-assessment under the Act shall be made after the expiration of the four years from the end of an assessment year. The proviso conferred the Commissioner with powers to permit assessment or re-assessment after the expiration of period of limitation but within 8 years from the end of assessment year. The Hon'ble Supreme Court upheld the validity of the provision and found that by implication there is a retrospective amendment made to the provision for limitation; when the Commissioner is satisfied on the basis of reasons recorded that such assessment or re-assessment is just and expedient. The language of Section 25B however, does not commend this Court to find an implication insofar as extension of the limitation period with retrospective effect. The language if worded as the proviso considered by the Hon'ble Supreme Court in Jyoti Traders, would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment under Section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be reopened up to 31- 3-1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under sub-section (1) of Section 21 have to be completed within 8 years of the particular assessment year. ... 12. The above extracted paragraph from Jyoti Traders answers the contention raised by the Revenue against them and supports the assessee. Against the revenue it has to be stated that the language of the proviso as available in Jyoti Traders , given its full effect, would cloth the Commissioner with the power to permit assessment or re-assessment even after the expiry of limitation provided in the sub-section, however, within 8 years from the last date of assessment year. Section 25B is a non obstante clause overriding Section 24 and 25; but the language used confers power on the Deputy Commissioner, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y substitution to Section 25(1) by which the period for proceeding to determine was made 6 years. When a substitution is made as distinguished from addition, deletion or insertion then, the substituted provision would relate back to the date of the enactment unless otherwise specified. Strong reliance was placed on AIR 2014 Karnataka 120 (Full Bench) [Hassan Co-operative Milk Producers Societies Union Limited v. State of Karnataka] to urge the position. At least the notices issued within the six year period has to be sustained argues the Special G.P. In Hassan Co-operative Union the Full bench considered the issue of a substitution made, changing the term of an elected committee of a cooperative society from five co-operative years to five years from the date of election . The State sought to appoint an Administrator as per the pre-amended provision deeming the term of the committees elected prior to the substitution, as having expired at the end of the cooperative year. The Full Bench was considering the issue as referred by a Division Bench (D.B) doubting the decision of another D.B in Shankarappa Mallappa Kelagiri Vs. The Co-operative Election Commissioner. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d object of the amendment, especially when the amendment by substitution, was intended at removing an obvious anomaly or correcting a blatant error or obliterating an absurdity or bringing it in consonance with any other law or the Constitution; as was the case in Hassan Co-operative Union. On the other hand an amendment other than by substitution would be retrospective only if it is so expressed or it follows from necessary intendment, as is implicit from the language employed. Otherwise there is no requirement for the legislature to express the retrospectivity; it could very well make a substitution, which would operate from the inception of enactment. 17. Coming back to the Karnataka case, the Full Bench, in considering the specific substitution made, extending the period of an elected committee of a co-operative society, to five years from the date of election, noticed the Constitution (Ninety-seventh) Amendment Act, 2011, to understand whether by implication it could be found that the substitution was intended by the legislature to be retrospective. We pause here to say, with due respect, that the same was unnecessary and irrelevant if all substitutions were retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expired board till the end of the co-operative year, since their term had expired and the substantive right of the newly elected members to be sworn into office, would be taken away. We hence respectfully follow the declaration on substitution made by the Division Bench in S.M. Kelagiri but, with equal respect, agree with the conclusion of the Full Bench, interpreting the provision, to inure to the benefit of the boards of those co-operative societies who were in office at the time of amendment, whose term stands extended to the date of expiry of five years from their election date. We now examine the Supreme Court decisions referred to by the Full Bench of the Karnataka High Court for completeness. 19. In AIR 1952 SC 324 Shamrao V. Parulekar Vs. D.M. Thana the question was whether the detention order, initially passed under a Preventive Detention Act, the validity of which Act was to end before the period of the detention, could prolong the period of detention. The argument was that dehors the period of detention the order would end with the Act and the prolongation of the enactment cannot revive the expired order. Section 3 of the amended act clearly provided that de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt should take into account the amendment. In other words when an appeal or other proceeding is pending from the decree of the first court if the right is taken away, then the higher Court should reject the claim of pre-emption. The Constitution Bench agreed with the first two set of decisions and disagreed with the third set; despite the amendment taking away the right was by way of substitution. What follows is that a substitution does not invariably result in a retrospective application. 21. The Constitution Bench in disagreeing with the third set of decisions garnered support from a number of decisions, which were also cited by the Full Bench of the Karnataka High Court, which we will now look into. AIR 1957 SC 540 Garikapati Veeraya Vs. N. Subbiah Choudhry spoke on the vested right accrued to a party to a suit at its inception, of an appeal, which remains unaltered by the raising of the pecuniary jurisdiction of that appellate court; being a substantive right. The Constitution Bench, by a majority asserted the principle that the vested right can be taken away only by a subsequent enactment, by express words or necessary intendment. AIR 1966 SC 1423 [Dayawati Vs. Inder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Shyam Sunder : We are further of the view that there is a presumption against the retrospective operation of a statute and further a statute is not to be construed to have a greater retrospective operation than its language renders necessary, but an amending Act which affects the procedure is presumed to be retrospective, unless amending Act provides otherwise. We have carefully looked into new substituted S.15 brought in the parent Act by Amendment Act, 1995 but do not find it either expressly or by necessary implication retrospective in operation which may effect the right of the parties on the date of adjudication of suit and the same is required to be taken into consideration by the appellate Court. In Shantidevi (Smt) v. Hukumchand (1996) 5 SCC 768 : (1996 AIR SCW 3680 : AIR 1996 SC 3525) this Court had occasion to interpret the substituted S.15 with which we are concerned and held that on a plain reading of S.15 it is clear that it has been introduced prospectively and there is no question of such section affecting in any manner the Judgment and decree passed in the Suit for pre-emption affirmed by the High Court in the second appeal. We are respectfully in agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. The State Legislature of Haryana intended to impose a disqualification with effect from 5-4-1994 and that was done. Any person having more than two living children was disqualified on and from that day for being a member of municipality. However, while enacting a proviso by way of an exception carving out a fact-situation from the operation of the newly introduced disqualification the draftsman's folly caused the creation of trouble. A simplistic reading of the text of the proviso spelled out a consequence which the Legislature had never intended and could not have intended. It is true that the Second Amendment does not expressly give the amendment a retrospective operation. The absence of a provision expressly giving a retrospective operation to the legislation is not determinative of its prospectivity or retrospectivity. Intrinsic evidence may be available to show that the amendment was necessarily intended to have the retrospective effect and if the Court can unhesitatingly conclude in favour of retrospectivity, the Court would not hesitate in giving the Act that operation unless prevented from doing so by any mandate contained in law or an established principle of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistency pointed out by the Court. In that context the legislature also could validate the actions taken under the earlier statute as if the defects pointed out never existed; which cannot be termed as an incursion on the judicial power. 25. AIR 1997 SC 1815 [State of Tamil Nadu v. M/s Arooran Sugars Limited] also was concerned with an enactment prescribing a ceiling limit on land holdings and the consequential vesting in the Government of the excess lands. There was also a compensation payable, which was reduced from the rate as it originally existed, by an amendment. After the rate reduction was introduced, a provision was introduced deeming the vesting to have occurred from a date prior to such reduction, with a view to make the land holder liable to, a compensation to the Government for any benefit derived from the land. The respondent who had considerable land holdings claimed compensation from the State, before the High Court, at the earlier rates, since the deeming fiction, subsequently made the vesting effective from a date when the rate of compensation as per the principal act was more; which claim stood allowed. Subsequently the State realising its folly made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The decision is also an authority for the proposition that when an enactment is challenged, as far as possible the resolution should be in favour of the legislative body, putting the most liberal construction upon the legislative entry, conferring on it the widest amplitude. Therein, an excise duty was imposed on electricity by the Parliament, to recoup which an executive order was made to impose a levy of surcharge on the consumers. Later the excise duty was withdrawn and in supersession of the executive order another was brought out to continue the levy. On a challenge by the consumers the High Court set it aside finding it to be a compulsory exaction for the benefit of the State and finding the enactment under which the order was issued not having conferred competence on the Government to levy and collect a duty of excise. A subsequent enactment revived the impost and validated the levy under the earlier order; which was held to be ultra vires by this Court. This was again challenged on the earlier grounds and the additional one of attempting to nullify and overrule the judgment of the High Court, upheld by the Apex Court. The levy subsequently made was as tax on sale of el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a case in which the completed assessment of a partner of a firm was sought to be rectified on the basis of the assessment of the firm, completed subsequently. The rectification was attempted within the four year period of limitation. However the reopening of the completed assessment against the partner was by virtue of a deeming provision incorporated into the statute permitting such rectification on the basis of the errors in the assessment of the partner, revealed on completion of assessment of the firm. The amendment made was after the completion of assessment of the partner. The Supreme Court ruled that the subject of rectification was not a rectifiable mistake as per the statute, as it originally stood and only the amendment deemed it to be rectifiable mistake. Hence there could be no retrospectvity inferred to rectify completed assessments on the basis of the deeming provision brought into the statute subsequent to the completion of assessment of the individual partner. AIR 1965 SC 171 [S.S Gadgil v. Lal and Co.] dealt with an amendment, extending the period of limitation, to make an assessment deeming a person to be an agent of a non-resident from one year to two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have attained finality under existing law due to 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. ... . 31. Union of India Others v. Uttam Steel Limited [(2015) 13 SCC 209] is again a case on point, having dealt with a substitution, which was held to be not retrospective. The provision was under the Central Excise Act, 1944, wherein a period of limitation for claiming refund was extended from six months to one year by virtue of an amendment by substitution. Before the amendment came, the respondent had filed a claim for rebate, but beyond the six months period, on 28.12.1999. On 12.05.2000, the period of six months was substituted with a period of one year. The rebate application having been filed within the period of one year, the respondent contended that they were in time as per the substituted provision. The Hon'ble Supreme Court, among others, relied on S.S Gadgil to find that the claim for rebate can only be made under Section 11B within the period of limitation stated there. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the tax payable. The assessment which came up for consideration before the learned Single Judge was of the year 2011-12. As per the earlier provision and the limitation provided of five years, the period stood expired on 31.03.2017, after which the amendment by substitution was brought into the statute book. We have already held that substitution as such would not have any retrospective effect. The learned Single Judge had also not declared the assessment to be retrospective merely for reason of a substitution having been made. There was a proviso in the substituted sub-section extending upto 31.03.2017, the period for proceeding for any assessment which expires on 31.03.2017. Hence, the proviso by necessary intendment granted retrospective effect to the six year period at least for the assessment year 2011-12. The decision has absolutely no application on the facts emanating from the appeals before us. 34. Groups- 'A', 'B' and 'C' as indicated in the common judgment dated 05.10.2016 concerned with Section 25(1) and Section 25B have already been dealt with by us in the above judgment. As far as Group 'D' 'E' in the said judgment are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
