Full Judgment Text
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PETITIONER:
COMMISSIONER OF TRADE TAX, U.P.
Vs.
RESPONDENT:
M/S UPPER DOAB SUGAR MILLS LTD.
DATE OF JUDGMENT: 15/03/2000
BENCH:
S.R.Babu, S.N.Phukan
JUDGMENT:
RAJENDRA BABU, J. :
In these batch of cases, the question for
consideration is the interpretation of Section 39 of the
Uttar Pradesh Sales Tax (Amendment) Act, 1995 [U.P.Act No.31
of 1995] [hereinafter referred to as the Amendment Act].
The turnover in respect of rectified spirit and denatured
spirit was held to be non-taxable under the U.P. Sales Tax
Act, 1948 [hereinafter referred to as the Principal Act]
by the Trade Tax Tribunal, Muzaffar Nagar [hereinafter
referred to as the Tribunal] in respect of assessment
years 1974-75 to 1983-84, except 1977-78, as there was no
levy on such items at the relevant point of time. An
application was filed by the Department before the Tribunal
for review on the basis of the amendment of Sections 3-A and
Section 4 of the Principal Act as amended by the Amendment
Act. By amendment to Section 3-A of the Principal Act, a
specific clause was added to bring the turnover of alcohol
as defined under the United Provinces Sale of [Motor
Spirits, Diesel Oil and Alcohol] Taxation Act, 1939, amongst
other goods, at such point and at such rate not exceeding
twenty six percent, as the State Government may, by
notification declare. The result is that in the Principal
Act sale of alcohol as defined in the U.P. Sale of [Motor
Spirits, Diesel Oil and Alcohol] Taxation Act, 1939 became
taxable. The review applications filed on behalf of the
Revenue was oppossed by the respondents on various grounds.
The Tribunal, however, rejected the contentions raised on
behalf of the respondents and allowed the review application
of the Department and levied the tax on the turnover of the
respondents.
The matter was carried in revision to the High Court.
The learned Single Judge took the view that the provisions
of Section 39 of the Amendment Act merely enabled the
Assessing, Appellate or Revising Authority to rectify the
orders passed prior to the commencement of the said section
in conformity with the amendment made in the Principal Act
within a time frame. It was observed that Section 39(2) of
the Amendment Act made abundantly clear that an application
has to be filed by September 30, 1995 and orders of review
or rectification are to be made either within one year from
the commencement of Section 39 or within the period
prescribed in Section 22 of the Principal Act, that is,
three years from the date of the order sought to be
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rectified and proviso to Section 22 has no application to
such a case. The period prescribed by Section 22(1) is
three years and there is no other period and, therefore, the
learned Single Judge held that the question of extension of
the period of limitation for the passing of the order as
provided under the proviso to Section 22 has no relevance
while interpreting the provisions of Section 39 of the
Amendment Act. He took the view that such orders of review
or rectification should have been passed on or before March
14, 1996 and not beyond that time. In the present case the
orders of the Tribunal had been passed on March 22, 1997, as
such, the same were held to have been made beyond time as
prescribed under Section 39 of the Amendment Act. This
order is called in question in these appeals.
For purposes of clear understanding, we may set out
the relevant provisions here under: Section 22 of the
Principal Act:
Section 22. Rectification of mistakes. (1) The
Assessing, Appellate or Revising Authority or the Tribunal
may, on its own motion or on the application of the dealer
or any other interested person rectify any mistake in its
order, apparent on the record within three years from the
date of the order sought to be rectified:
Provided that where an application under this
sub-section has been made within such period of three years,
it may be disposed of even beyond such period:
Provided further that no such rectification as has the
effect of enhancing the assessment, penalty, fees or other
dues shall be made unless reasonable opportunity of being
heard has been given to the dealer or other person likely to
be affected by such enhancement.
(2) Where such rectification has the effect of
enhancing the assessment, the authority shall serve on the
dealer a revised notice of demand in the prescribed form and
therefrom all the provisions of the Act and the Rules framed
thereunder shall apply as if such notice had been served in
the first instance.
Section 39 of the Amendment Act:
Section 39. Validation.-(1) Notwithstanding anything
in any judgment, decree or order of any court or authority,
any notification issued or anything done or any action taken
before the commencement of this section which conforms to
the provisions of the Principal Act as amended by this Act
shall be deemed to be and always to have been valid and
lawful as if the provision of this Act where in force at all
material times.
(2) Where before the commencement of this section any
authority or court, in any proceeding made any assessment,
levy or collection of any tax or passed any order imposing
any penalty or making any other demand under the Principal
Act, or passed any other modifying, setting aside or
quashing (wholly or in part), such assessment levy,
connection, penalty or demand and such assessment or other
order becomes inconsistent with the provisions of the
Principal Act as amended by this Act then, subject to the
provisions of sub-section (3), any party to the proceeding
or the Commissioner of Trade Tax may by September 30, 1995,
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make an application to such authority or court for review of
the assessment order and thereupon such authority or Court
may review the proceeding make such order, varying or
revising the order previously made, as may be necessary to
give effect to the provisions of the Principal Act as
amended by this Act.
(3) the assessing, appellate or revising authority, as
the case may be, may within the period specified in Section
22 of the Principal Act, whichever expires later, make any
rectification in any order passed by it where such
rectification becomes necessary in consequence of the
amendment of the Principal Act :
Provided that no rectification which has the
assessment, penalty or other dues, shall be made unless the
authority concerned has given notice to the dealer or person
concerned of his intention to do so and has allowed him a
reasonable opportunity of being heard.
It is the contention of the Department that the view
taken by the High Court is erroneous and does not correctly
interpret the provisions of Section 39(2) of the Amendment
Act. It is submitted that the whole object of Section 39(2)
is that any order passed, modified, set aside or quashed by
the assessing, appellate or revising authority or by a court
will have to be brought in conformity with the provisions of
the Principal Act as amended by the Amendment Act. The
expression subject to the provisions of sub-section (3)
would only provide for rectification also. Otherwise, if
the provisions relating to rectification alone will be
applicable and there is no need to have provided for a
specific provision for review at all. Review or
rectification in this case would arise only to bring in
conformity an order with the amended provisions, and either
of these powers is distinct and separate though they have
certain restrictions which have to be adhered to.
The respondents would, however, contend that Section
39(2) and (3) have to be read together and it would mean
that an application made under Section 39(2) can be disposed
of only within one year from the date of enforcement of the
Amendment Act or within three years of the order sought to
be reviewed, whichever is later. It was further submitted
that proviso to Section 22(1), which does not prescribe any
limitation for passing an order on an application for
rectification, is not applicable to the application made
under Section 39(2) of the Amendment Act and that otherwise
the whole purpose of providing limitation under Section
39(3) becomes superfluous. On that basis, the respondents
sought to support the view taken by the High Court. On
behalf of the respondents, certain other additional grounds
were raised to which we shall advert later.
A validating Act can render ineffective judgments and
orders of a competent court or an authority provided it by
retrospective legislation removes the cause of invalidity or
the basis which had led to those judgments. In the present
case, the provisions have been made in the Amendment Act to
remove certain defects, which had been pointed out by the
Tribunal or other authorities on earlier occasions. Thus,
it enabled the turnover relating to alcohol to be brought to
taxation. Section 22 of the Principal Act provides for
rectification of mistakes. Proviso to Clause (1) makes it
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very clear that where an application under sub-section (1)
has been made within the period of three years from the date
of the orders sought to be rectified, such an application
could be disposed of even beyond such period. In clause (3)
of Section 39, with which we are concerned now, it is made
clear that the Assessing, Appellate or Revising Authority,
as the case may be, may within a period of one year from the
date of commencement of this section or within a period
specified in Section 22 of the Principal Act, whichever
expires later, make any rectification in any order passed by
it where such rectification becomes necessary in consequence
of the amendment to the Principal Act. Section 39(2)
enables the Authority, Tribunal or the Court to review as
may be necessary to give effect to the provisions of the
Principal Act, the requirement being that an application
should be made before to that effect September 30, 1995. A
specific date has been prescribed within which the
application has to be made for review and no time limit has
been fixed to dispose of such an application. While in
Section 39(3), specific period is mentioned for purposes of
rectification.
It is well known that the scope of rectification is
different from the scope of review though sometimes they may
overlap. From the scheme of the Amendment Act, it is clear
that both the powers of review and rectification were
conferred upon different authorities to modify the earlier
order to give necessary effect to the provisions of the
Principal Act as amended by the Amendment Act. When two
specific and independent powers have been conferred upon the
authorities, both the powers can be exercised alternatively.
In the present case, if the interpretation adopted by the
High Court is to be accepted then the provision for review
becomes totally redundant or otiose and there will be no
difference between the power of review and power of
rectification. As stated earlier, the scheme of the
Amendment Act is that an application will have to be made to
an authority within the specified date for review of the
assessment order or such other order, as the case may be,
for varying the same to bring it in terms with the Amendment
Act while the period of making the order pursuant to
rectification is coalesced with Section 39 of the Amendment
Act imposing certain limitations of time. Those limitations
cannot be read into sub-section (2) of Section 39 of the
Amendment Act.
In that view of the matter, we have no hesitation in
setting aside the order made by the High Court and restoring
that of the Tribunal. The appeals are allowed accordingly.
In the circumstances, there shall be no orders as to costs.