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TMI Blog2019 (2) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... to 29.03.2008, is barred by limitation?" 3. Briefly, the applicant established a 'new unit' Section 4A of the Act to manufacture Industrial Composite Solvent. It applied for and was granted eligibility certificate (for the purpose of Section 4A of the Act), on 26.10.2002, for the period 30.03.2000 to 29.03.2008. It has also not disputed, for the A.Y. 2000-01 and 2001-02, the benefit of exemption was granted to the assessee in view of the eligibility certificate dated 26.10.2002. 4. It was the case of the assessee that during the A.Y. 2001-02 and 2002-03, it had manufactured Industrial Composite Solvent from the raw material 'processed waste of bulk drug' purchased from M/s Ranbaxy Laboratories Ltd., Punjab. Owing to the fact, that raw material had very high content of water, the manufacturing cost of the assessee had escalated upon process employed to remove excess water from that raw material. Therefore, the assessee started importing (from outside the country), another raw material namely 'thinner' to manufacture Industrial Composite Solvent, by the process of distillation. Also, it has come on record that the assessee had obtained the registration unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch reasoning, the Commissioner concluded that the assessee had wrongly disclosed the facts pertaining the manufacturing activity claimed by it and that it had disposed of the raw material without utilizing it in the manufacturing activity. Therefore, the assessee was held to have committed breach of the terms and conditions of exemption. Consequently, the exemption certificate was cancelled with effect from 01.04.2003. 8. The assessee carried the matter in appeal to the Tribunal. On the question of delay (on which the present revision has been admitted) the Tribunal observed, the assessment proceedings for the A.Y. 2003-04 had been finalized by the order dated 20.03.2006 which was set aside in appeal and the matter remitted to the Assessing Authority for decision afresh. In that regard, it was further observed that the matter remained pending with the Assessing Authority for 11 years and the assessment order could be passed belatedly on 27.02.2017, due to the conduct of the assessee. It was therefore concluded the conduct of the assessee estabished his intention to cause delay. As a principle of law, it was observed, there was no period of limitation prescribed under Section 4A( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frowned upon because if actions or transactions were to remain forever open to challenge, it will mean avoidable and endless uncertainty in human affairs, which is not the policy of law. Because, even when there is no period of limitation prescribed for exercise of such powers, the intervening delay, may have led to creation of third-party rights, that cannot be trampled by a belated exercise of a discretionary power especially when no cogent explanation for the delay is in sight. Rule of law it is said must run closely with the rule of life. Even in cases where the orders sought to be revised are fraudulent, the exercise of power must be within a reasonable period of the discovery of fraud. Simply describing an act or transaction to be fraudulent will not extend the time for its correction to infinity; for otherwise the exercise of revisional power would itself be tantamount to a fraud upon the statute that vests such power in an authority." 11. Then as to the computation of reasonable time, reliance has been placed on the another decision of the Supreme Court in the case of State of Punjab and others Vs. Bhatinda District Cooperative Milk Producers Union Ltd, 2007 (11) SCC 363 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple that the power to cancel the eligibility certificate being discretionary, the lapse of long period of time itself rendered the proceedings defective. Relying on the decision of another learned single judge of this Court in Janta Dal Mill, Radha Nagar, Fatehpur Vs. The Commissioner of Trade Tax, U.P., Lucknow, 1999 NTN (Vol. 15) 714, it has been submitted once it was established, the notice under Section 4A(3) of the Act had been issued more than 9 years after the expiry of the period of exemption and more than 13 years after the discovery of the alleged breach of terms and conditions committed by the assessee, the discretionary jurisdiction of the Commissioner could not have been readily invoked. Reliance has also been placed on another learned single judge of this Court in the case of M/s Bharat Steel Rolling Mill vs. The Commissioner of Trade Tax, U.P., Lucknow, 2002 NTN (Vol. 20) 1, wherein relying on the decision in the case of Janta Dal Mill, Radha Nagar, Fatehpur Vs. The Commissioner of Trade Tax, U.P., Lucknow (supra), this Court held that cancellation of the eligibility certificate well after the expiry of the period of exemption was highly improper. In that case, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be applicable, as the same has not been specifically incorporated in the provision in question. Also, reliance has been placed on a Division Bench decision of this Court in the case of M/s Bharat Pumps and Compressors Ltd., Naini, Allahabad Vs. State of U.P. and Another reported in 1995 UPTC 256. 17. Having considered the arguments so advanced by learned counsel for the parties, in the first place, it may be noted, undeniably the fact giving rise to the proceedings under Section 4A(3) of the Act came to the knowledge of the revenue authorities on 28.01.2004 (during the course of survey), and not later. That survey conducted by the SIB/revenue authorities being the foundation of the proceedings for cancellation of eligibility certificate, it is to be seen whether such proceedings could be drawn up on 10.04.2017 when the notice to cancel the eligibility certificate was first issued under section 4A(3) of the Act. 18. In this context, the ratio of the decision of the Supreme Court in the case of Joint Collector Ranga Reddy District and Another Vs. D. Narsing Rao and others (supra) is pertinent. In that case also, there was no period of limitation prescribed to exercise revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o defend. 21. Undisputedly, the survey giving rise to the proceedings was conducted on 28.01.2004 whereas the proceedings were drawn up for the first time on 10.04.2017, i.e. 13 years after the revenue allegedly came into possession of information and material that the assessee may have committed breach of the terms and conditions of the eligibility certificate. No explanation was offered for the delay of 13 years. Merely because certain assessment proceedings may have remained pending, it could never be cited as a reason to justify the delay. 22. Assuming, the delay of 11 years in the conclusion of assessment proceedings for A.Y. 2003-04 was attributable solely to the conduct of the assessee yet, it was wholly irrelevant for the purpose of initiation of proceedings under Section 4A(3) of the Act. While the assessment order was to be made by the assessing authority, the proceedings under Section 4A(3) of the Act were to be initiated by the Commissioner, Trade Tax. No legal or factual impediment has been shown to exist as may have prevented the Commissioner from initiating those proceedings. Scope and conduct of the two proceedings being completely independent of each other, mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e end of A.Y. 2003-04 during which the revenue authorities admittedly acquired knowledge of the alleged breach. In any case, in the instant case, the cancellation proceedings were initiated 9 years after the close of A.Y. 2007-08 when the exemption availed by the assessee also came to an end. Thus, in any event, the proceedings under section 4A(3) of the Act were initiated outside reasonable period of time . 27. The decision cited by the learned Standing Counsel in the case of L.S. Synthetics Mills (supra) is inapposite to the facts of the present case. In that case the Supreme Court repelled the objection as to bar of limitation claimed qua the proceedings under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, on the principle-once the offendor had been notified, he could not plead bar of limitation for acts that a court must perform. Similarly, reference to the Division Bench decision in the case of Bharat Pump Corporation Ltd (supra) is also not appropriate inasmuch as in that case, arising under section 3-B of the Act, it was reasoned, there was no quantification of liability required, but only a recovery to be made equal to the benifit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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