TMI Blog2023 (11) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed by the legislation. Accordingly, when it has extended the last date from 01.02.2021 to 30.09.2021, it can only extend the deadline but cannot introduce a new concept of eligibility as on 01.02.2021 which is not there in the Act itself. Writ of declaration, declaring the amendment to the Income Tax Act in Section 245-A by inserting Sub-Clause (da), (ea) and (eb), 245B, 245BC,245BD, proviso to 245C, 245D, 245DD, 245F, 245G, 245H and insertion of new Section 245AA and 245M by way of Sections 54 to 65, Finance Act, 2021 with retrospective effect from 01.02.2021 as arbitrary, illegal and void and infringing the fundamental rights conferred under Article 14,19(i)(g), 20, 20 (2) and 21 of the Constitution of India, 1950, thus unenforceable and unconstitutional - Scope of circular 28.09.2021 in as much as it restricted the filing of the application before the Interim Board for Settlement only by the assesses who were eligible to file the application for settlement on 31.01.2021. According to the petitioners, they are eligible and their cases are complex in nature and it would be uncertain to pursue the regular remedies and it would be beneficial for them to settle th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no application shall be made under the Section on or after the first day of February, 2021. The right to file application before ITSC is very much existent and has been exercised till 31.03.2021. The retrospective legislation by way of legal fiction attempts to make it as if it is unavailable. When we consider the instant case, the purpose of the retrospective legislation is to make the ITSC inoperative right from the date of the introduction of the Bill and to send all the pending applications to the Interim Board. Therefore, fixing the last date for filing the applications alone travels beyond the purpose and results in more retrospectivity than which is needed and thus, runs counter to the other parts of the Act . As a matter of fact, as per the principle of lex prospicit non respicit (law looks forward not back) it can be seen that the purport of the legislation is only to do away with the policy of resolution through ITSC. As a matter of fact, the Central Government has to make a Scheme for the purposes of Settlement in respect of pending applications by the Interim Board as per Section 245D(11) and such scheme had to be placed before the Parliament. Thus, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 31.01.2021. All miscellaneous applications shall stand closed. - W.P.Nos.4928, 4935, 5252, 5255 of 2022; W.P.Nos.23856, 23867, 23874, 24537, 25550, 25854, 25859, 26004, 26007 27528 of 2023 And WMP.Nos.14329, 14330, 14331, 14425, 14426, 14427, 15321,15323, 15325, 16296, 16297, 16302, 22869, 22876, 22878, 25483, 25486, 25489 of 2021; WMP.Nos.5076, 5077, 5080, 5081, 5343,5344,5349, 5350 of 2022; WMP.Nos.23370, 23371, 23378, 23379, 23383, 23384, 23954, 23956, 24939, 24940, 25859, 25297, 25301,25304, 26007, 25426, 25431, 25436, 26968, and 26969 of 2023 Hon'ble Mr. Sanjay V. Gangapurwala, Chief Justice And Hon'ble Mr.Justice D.Bharatha Chakravarthy For the Petitioner(s) : Mr. J.D. Mistry, Senior Counsel, Assisted by Mr. R. Sivaraman M/s.Vandana Vyas (in W.P.No.13445 of 2023) For the Petitioner(s) : Mr. R. Sivaraman, Assisted by M/s.Vandana Vyas (for rest of the W.P's) For the Respondent (in all cases) : Mr. A.R.L. Sundaresan, Additional Solicitor General of India. Assisted by Mr. Rajesh Vivekanathan, Deputy Solicitor General of India. (for R1), Mr. A.P. Srinivas, Senior Standing Counsel. and Mr. ANR. Jayaprathap, Junior Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after the first day of February 2021 Section 245C(5) inserted by the Act , mandated that no application shall be made under this section on or after the first day of February, 2021, which reads thus:- (5). No application shall be made under this section on or after the 1st day of February 2021. 5. The Finance Act, 2021, was made retrospective in operation with effect from 01.02.2021. The reason which was mentioned for the said cut-off date is that the Bill was introduced in the Parliament on the said date. However, as per the existing provisions, in the month of February and March, 2021, in respect of their cases the petitioners had made applications before the ITSC . 6. Be that as it may, considering the difficulty of the assessees, on account of the sudden and retrospective amendment, in exercise of its powers under Section 119(2) of the Act , a press release was issued on 07.09.2021 and thereafter an Order in the nature of a Trade Circular was issued on 28.09.2021 extending the time limit for filing applications before the Interim Board upto 30.09.2021. However, paragraph (4) of the said Order reads thus:- 4. The above relaxation is available to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h vested right. Retrospectivity by itself will not invalidate the law. As a matter of fact, the bill was introduced as of 01.02.2023, from which date itself everyone concerned was aware of the move to abolish the ITSC and therefore, the Interim Board is constituted only to deal with applications pending as of 01.02.2023. Beyond the said point, nobody can have any right. The right to file an application before the ITSC would itself arise only if proceedings were pending as of 31.01.2023 and if the proceedings were initiated after the cut-off date, there was no question of approaching ITSC . In that view of the matter, while extending the time limit, which was again a concession only to mitigate the hardship, due care was taken and the extension of last date was made conditional upon their right being crystallised as on 31.01.2023 as the intention was only to extend the last date not the operation of the provisions of ITSC beyond the date of its abolition. 10. We have heard the Learned Counsel Appearing on behalf of the Petitioners. Mr. J.D.Mistry , the Learned Senior Counsel led the arguments on behalf of the petitioners in detail, while the other Learned Counsel adopted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 245M, he would submit when the Board had to transfer all the pending applications to the Interim Board, nowhere any date of eligibility or a cut-off date is mentioned. Therefore he would submit that the circular while extending the time for making the applications upto 30.09.2021, ought not to have introduced a new condition of eligibility and to the said extent, the circular has to be read down as discriminatory and violative of the Act . 15. In support of his submissions, the Learned Senior relied upon the Judgment of the Bombay High Court in, Tata Iron and Steel Co. Ltd -Vs- N.C. Upadhyay [(1974 (96) ITR 1)] , more specifically on paragraph 23 which reads as follows:- 23. . While so holding, we must, however, strike a note of caution that the binding nature of the circular issued by the central board of revenue must be confined to tax laws and that also for the purpose of giving administrative relief to the taxpayer and not for the purpose of imposing a burden on him. . 16. The Judgment of the Supreme Court of India in, Reliance Jute Industries Ltd -Vs- Commissioner of Income Tax [1979 2 TAXMAN 417 SC] , was relied upon, referring to paragraph 6 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht vested in the writ petitioners. The legislature while doing away with the ITSC ought not to have taken away these vested rights. In support of the said submission, the Learned Senior Counsel would rely upon the Judgment of the Supreme Court of India in, Commissioner of Income Tax -Vs- Shah Sadiq Sons [1978 31 TAXMAN 498 SC] . Relevant portion of paragraph 14 relied upon is extracted hereunder ready reference:- 14. A right which had accrued and had become vested, continued to be capable of being enforced, notwithstanding the repeal of the statute under which the right accrued unless the repealing statute took away the right expressly or by necessary implication. This is the effect of Section 6 of the General Class Act, 1897. 20. The Learned Senior Counsel further relied upon the Judgment of the Supreme Court of India in, Punjab State Cooperative Agriculture Development Bank Limited -Vs- The Registrar of Cooperative Society and others (Civil Appeal Nos. 297-298 of 2022, dated 11.01.2022) , and the relevant paragraph 47 reads as under :- 47. The exposition of legal principles culled out is that an amendment having retrospective operation, which has the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial year starting from the first April of that year. Therefore, the date of introduction of the Bill as such has no nexus whatsoever regarding the purposes of the Act . The purpose of the Finance Act, 2021 was to do away with the ITSC which was made by the recommendation of the Wanchoo Committee and therefore the cut-off date is Arbitrary. 24. The Learned Senior Counsel would rely upon the Judgment of the Supreme Court of India in the case of D.S. Nakra -Vs- Union of India [1983 AIR SC 130] , to contend that the cut-off date discriminates between the class of homogeneous persons. The classification if it is made on the cut-off date of 01.02.2021, would only be artificial and the pending applications will have to be read as not pending and as such, the classification is capricious, whimsical and thus violative of Article 14 of the Constitution of India. Relevant portion of paragraph 42 of D.S. Nakara , is extracted hereunder :- 42. If it appears to be undisputable, as it does to us that the pensioners for the purpose of pension benefits form a class, would its upward revision permit a homogeneous class to be divided by arbitrarily, fixing an eligibility criteria un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged and the scope of judicial review in respect of the same is very limited. 29. In support of his submissions, the Learned Additional Solicitor General of India, relied upon the Judgment of the Supreme Court of India in, State of Madhya Pradesh -Vs- Rakesh Kohli another [2012 (6) SCC 312], more specifically on paragraphs 16, 17 and 32, and the relevant portions as under:- 16. The statute enacted by Parliament or a State Legislature cannot be declared unconstitutional lightly. The court must be able to hold beyond any iota of doubt that the violation of the constitutional provisions was so glaring that the legislative provision under challenge cannot stand. Sans flagrant violation of the constitutional provisions, the law made by Parliament or a State Legislature is not declared bad 17. This Court has repeatedly stated that legislative enactment can be struck down by Court only on two grounds, namely (i), that the appropriate Legislature does not have competency to make the law and(ii), that it does not take away or abridge any of the fundamental rights enumerated in Part - III of the Constitution or any other constitutional provisions.. 32. While deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repeal, the former is preserved by the Interpretation Act. The latter is not. (emphasis supplied) It must be mentioned that the object of Section 31(2)(i) is to preserve only the things done and action taken under the repealed Ordinance, and not the rights and privileges acquired and accrued on the one side, and the corresponding obligation or liability incurred on the other side, so that if no right acquired under the repealed Ordinance was preserved, there is no question of any liability being enforced 31. Mr. A.R.L.Sundaresan , the Learned Additional Solicitor General of India would submit that even assuming that there was a right to approach ITSC , the parliament which conferred the right has the power to take away the same. Reference was made to the Judgment in, Commercial Tax Officer -Vs- Viswanathan Junjunwala and others [1996 5 SCC 626] , whereby the amendment by which the suo moto power of the Assessing Authority was taken away was held to be valid. Further reliance was made to R.C. Tobacco Pvt. Ltd. -Vs- Union of India [2005 7 SCC 725] , to contend that not only there is power to amend, repeal or supersede, such powers can be exercised retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the officers of the department. For this purpose, he would rely upon the Judgment, in Commissioner of Central Excise, Bolpur -Vs- M/s.Ratan Melting and Wire Industries [(2008) 231 ELT 2 SC] , more specifically referring to paragraph No.6. Finally, the Learned Additional Solicitor General of India would conclude his arguments by submitting that these are matters relating to policy of taxation and economy. Once the decision has been taken to do away with the ITSC with effect from 01.02.2021, thereafter, no right whatsoever can be claimed otherwise by making technical arguments. Therefore, he would submit that all these Writ Petitions may be dismissed. 34. We have considered the rival submissions made on either side and perused the material records of the cases. The following three questions arise for consideration in the present cases :- (i) Whether or not paragraph No.4(i) of the Circular, dated 28.09.2021 is bad in law inasmuch as it imposes a condition of eligibility to file application for settlement as on 31.01.2021 ? (ii) Whether or not the Finance Act, 2021 is unconstitutional inasmuch as it has given retrospective application with effect from 01.02.2021? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext, when paragraph No.4 categorically states that only those assessees who are eligible to file an application for settlement as on 31.01.2021, it cannot be said that it introduces an additional clause of eligibility which is not found in the statute. On the other hand, if only such clause 4(i) is not there, it would render violence to the Finance Act, 2021. Therefore, we are unable to accept the contentions on behalf of the writ petitioners that the circular imposes an additional condition of eligibility which is not there in the statute. Even though there is no specific provision regarding eligibility, the right to approach the ITSC can be exercised so long as the ITSC is operational in law. When ITSC itself has been made inoperative with effect from 01.02.2021, it cannot be said that clause 4(i) of the circular runs counter or imposes an additional condition to the statute. Accordingly, Question No.i is answered. Question No.ii : 37. The basic ground of attack on the constitutionality of the impugned enactment is that it is retrospective in nature and that it takes away the vested rights of the petitioners. The further submission is that the vested rights are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution. 38. But, at the same time, the ITSC did exist legally and factually until 31.03.2021. Every eligible assessee had a right to approach the ITSC , if they had a case pending against them. The definition of ' case ' as per Section 245-A(eb) is also extracted above. Therefore, even if any proceeding for assessments/reopening is issued after 01.02.2021 upto 31.03.2021, the assessee had a case to approach the Commission and if they had submitted an application and if no final order has been passed under Sub-Section 4 of 245(D) on or before 31.01.2021, then the said application is treated as a pending application . The very purpose of the legislation was to abolish the ITSC and to establish an Interim Board to deal with the pending applications. It can be seen that in respect of the case of the petitioners whose matters had arisen before the notification of the Act on 01.04.2021, but, after the cut-off date of 01.02.2021, were also very much eligible to approach the ITSC . The decisions relied upon by both sides in respect of retrospective legislation referred to supra, unequivocally hold that if the retrospective legislation takes away a vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is unavailable. In this regard, useful reference can be made to the Judgment of the Hon ble Supreme Court of India in Karnataka State Road Transport Corpn., -Vs- B.A. Jayaram [1984 Supp SCC 244], and the relevant portion of paragraph 17 reads as follows:- 17. Even if sub-section (8) of Section 57 can be viewed as creating a legal fiction, the question which would arise would be for what purpose such legal fiction was created. As was observed by Lord James in Ex Parte Walton, In re Levy[(1881) 17 Ch D 746, 756 : (1881-85) All ER Rep 548 : 45 LT 1 (CA)] : When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. This passage was quoted with approval by the House of Lords in Hill v. East West India Dock Co.[(1884) 9 AC 448, 456 : 51 LT 163 : 32 WR 925 (HL)] This principle of statutory interpretation has been accepted by this Court. In Bengal Immunity Co. Ltd. v. State of Bihar[AIR 1955 SC 661 : (1955) 2 SCR 603, 646 : 1955 SCJ 672] it was held that a legal fiction is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applications in respect of the petitioners even in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed as pending applications for the purposes of consideration by the Interim Board; (ii) Wherever they are rejected on the ground that they did not have a case pending as on 31.01.2021, such orders shall stand set aside and the applications shall be deemed to be pending applications for the consideration by the Interim Board, if otherwise in order and eligible, and shall be dealt with in accordance with law on merits in accordance with the scheme that may be framed by the Central Government as in respect of the other cases which arose prior to 31.01.2021. The Result : 42. In the result, these writ petitions are partly allowed and are disposed off on the following terms :- (i) Section 245C(5) of the Income Tax Act, 1961 (as amended by the Finance Act, 2021) is read down by removing the retrospective last date of 1st date of February, 2021 as 31st day of March, 2021; (ii) Consequently the last date of eligibility mentioned paragraph 4(i) of the impugned circular dated 28.09.2021 shall also be read as 31.03.2021; (iii) all the applications ..... X X X X Extracts X X X X X X X X Extracts X X X X
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