Full Judgment Text
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 622-623 OF 2015
[Arising out of SLP(C) Nos. 17323-17324 of 2014]
Commercial Motors Ltd. ... Appellant
Versus
Commissioner of Trade Tax U.P.,
Lucknow & Others ...Respondents
J U D G M E N T
Dipak Misra, J.
The appellant is a registered dealer under the U.P. Trade Tax
Act, 1948 (for brevity, ‘the Act’) and authorised to deal with scooters
manufactured by M/s. Bajaj Auto Limited, and during the
assessment year 1990-91, had sold the two wheelers to the
Signature Not Verified
government employees through U.P. Government Employees Welfare
Digitally signed by
Chetan Kumar
Date: 2015.09.11
16:36:52 IST
Reason:
Corporation as well as canteen of the Stores Department amounting
to Rs.5,23,93,337.57. During the course of assessment, the appellant
2
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 certificates
and on the basis of the same he was granted exemption on the sale of
scooters for the aforesaid amount by the Assessing Officer vide
assessment order dated 25.3.1995. As claimed by the revenue, at a
later stage it discovered that the total sale amount of the scooters in
question was in fact Rs.4,26,94,276.59 instead of Rs.5,23,93,337.57
and hence the assessee was liable to pay tax on the sale of scooters to
the extent of Rs.97,02,050.65 on which it had earlier been granted
sales 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) of the Act could
not be initiated against it as the same was barred by limitation being
initiated after lapse of six years from the date of end of assessment
year i.e. 31.3.1997 in the light of the proviso to sub-section 2 of
3
Section 21 of the Act and (ii) the books of accounts were examined
during the original assessment proceeding by the Assessing Officer as
is manifest from the assessment order of the year 1990-91 and,
therefore, the material having already been considered by the
Assessing 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 be
passed.
5. The contentions raised in the reply were advanced in the writ
petition and they were resisted by the Department by filing counter
affidavit contending, inter alia, that the amendment incorporated in
Section 21(2) of the Act has retrospective effect and the steps taken
for reopening the assessment was within time and there was no
justification for invocation of the writ jurisdiction. The High Court,
after noting the rival submissions of the parties formulated the
following two questions for determination:-
4
“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. Jyoti
1
Traders and Anr. in extenso, referred to the pronouncement in
Binani Industries Ltd. v. Assistant Commissioner of Commercial
2
Taxes and the decision referred therein i.e. Ahmedabad
3
Manufacturing & Calico Printing Co. Ltd. v. S.G. Mehta, ITO ,
and opined thus:-
“Under Sub-section (1) of Section 21 of the Act before its
amendment, the assessing authority may, after issuing
notice to the dealer and making such inquiry as it may
consider 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 after 8 years
from the end of such year notwithstanding that such
assessment or reassessment may involve a change of
1 (1999) 2 SCC 77
2 JT 2007 (5) SC 311
3 AIR 1963 SC 1436
5
opinion. The proviso came into force w.e.f. February 19,
1991. This proviso was further amended and “six years
from the end of such year or March 31, 2002 whichever is
later” were substituted in place of words “eight years from
such year”. In view of IInd proviso the assessment or
reassessment for the year 1987-88 may be made till
31.3.1993 and as per IVth proviso 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-section (2) of
Section 21 before the addition of the said proviso had
expired. Read as it is, these provisions would mean that
the assessment for the year 1987-88 could be reopened up
to March 31, 1993. 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 6 years of the particular assessment year or till
31.3.2002 whichever is latter. Notice to the assessee
follows the authorisation by the Commissioner 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 operation.
7. After so stating the High Court proceeded to understand the
intention of the legislature in enacting the provision and in that
context noted that the date of commencement of the proviso to
6
Section 21(2) of the Act does not control its retrospective operation;
that after the amendment after substitution of the proviso to Section
21(2) of the Act, it is six years of the particular assessment year or till
31.3.2002 whichever is later; and that bare reading of the proviso
makes it clear that 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
4
others v. Additional Commissioner of Trade Tax and Anr . 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 came to hold that
initial opinion while passing the original assessment order was to
grant exemption on sale of scooters had not been changed while
issuing the notice but the revenue had found that exemption had
been wrongly allowed to the extent of Rs. 97,02,050.65 which ought
to have been taxed and accordingly did not find any substance on the
second ground. Being of this view, the High Court dismissed the writ
petition. Hence, the present appeal by special leave.
9. We have heard Mr. Pawanshree Agrawal, learned counsel for the
4 VSIT 2008.. B92
7
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 as-
sessed 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 expira-
tion of two years from the end of such year or March 31,
1998, whichever is later:
Provided that if the Commissioner, on his own or on the
basis of reasons recorded by the assessing authority, is
satisfied that it is just and expedient so to do, authorises
the Assessing Authority in that behalf, such assessment or
re-assessment may be made after the expiration of the pe-
riod aforesaid, but not after the expiration of [six years
from the end of such year or March 31, 2002, whichever is
later] notwithstanding that such assessment or re-assess-
ment 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 Com-
missioner 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 cancelling the aforesaid cer-
tificate or by March 31, 1995, whichever is later:
8
Provided also that the assessment or re-assessment for the
assessment year 1989-90 may be made by March 31,
1995.
[underlining is ours]
11. Regard being had to the anatomy of the aforesaid amended
provision, the singular question that arises for consideration is
whether the show cause notice issued under Section 21(2) of the Act
seeking to reassess the assessee in respect of the assessment year
1990-91 of which the assessment 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 assessment year in
question or till 31.3.2002 whichever is later, therefore, the notice is
valid and within the prescribed period of limitation. The learned
counsel for the appellant would submit that by virtue of the
amendment, the assessment or reassessment cannot be made after
expiry of six years and it would not mean that the assessment can be
9
made by March 31, 2002 irrespective of the assessment year, for that
would be contrary to the requisite intent of the legislature. Learned
counsel for the revenue, 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 cause has rightly not been
interfered with by the High Court in exercise of the writ jurisdiction in
view of the judgments rendered in State of U.P. v. Anil Kumar
5
Ramesh Chandra Glass Works , State of Orissa v. Sangram
6
Keshari Misra , and Ministry of Defence v. Prabhash Chandra
7
Mirdha .
12. First, we shall refer to the decision in Jyoti Laboratories
(supra). In the said case, the assessment in respect of the
assessment year 1985-86 under the Act was completed on
27.11.1989 and in respect of Jyoti Traders, the assessment for the
5 (2005) 11 SCC 451
6 (2010) 13 SCC 311
7 (2012) 11 SCC 565
10
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 provisions of the amending Act. Section 21 of the
Act that underwent an amendment and the court was concerned with
the relevant provision which came into force w.e.f. 19.2.1991. On the
basis of the amendment, the Sales Tax Officer, after taking sanction
from the Commissioner of Sales Tax, issued notices to the assessee
for reassessment. The orders granting sanction and the issuance of
notices for reassessment were challenged before the High Court and
the writ court quashed the same. This court took 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
11
of Section 21 by the High Court, if accepted, would make the
provision prospective in nature which will make the proviso
redundant. It was also contended that proviso in fact operated after
expiry of the four years period prescribed under the sub-section and
the notice had to follow after the order was obtained from the
Commissioner and not prior to that. Reliance was placed on the
8
authority in CTO v. Biswanath Jhunjhunwalla .
13. The decision in Biswanath Jhunjhunwalla (supra) dealt with
Bengal Finance (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 under the Act or
the rule thereunder if the assessment had been made or the order
had been passed more than six years previously. The show cause
notices being issued, the High Court was moved for quashment of the
same and it ruled that by the amendment of the rule, assessment
8 (1996) 5 SCC 626
12
which had been completed could be revised within six years of the
date of such completion, but when the right to revise the assessment
under the unamended provision of the rule stood barred on the date
of the amendment, such 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
9 10
v. S.K. Habibullah , S.S. Gadgil, ITO v. Lal and Co. and ITO v.
11
Induprasad Devshanker Bhatt , opined thus:-
“ 12 . What, therefore, we have to seek is the clear meaning
of the said Notification. If there be no doubt about mean-
ing, the amendment brought about by the said Notification
must be given full effect. If the language expressly so states
or clearly implies, retrospectivity must be given with effect
from 1-11-1971, so as to encompass all assessments made
within the period of six years theretofore, whether they
have become final by reason of the expiry of the period of
four 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 revis-
ing 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
9 (1962) 44 ITR 809 = AIR 1962 SC 918
10 (1964) 53 ITR 231 = AIR 1965 SC 171
11 (1969) 72 ITR 595 = AIR 1969 SC 778
13
from 1-11-1971, Rule 80(5)( ii ) permits the Commissioner
(or other authority) to revise of his own motion any assess-
ment made or order passed under the Act or the rules pro-
vided the assessment has not been made or the order
passed more than six years previously. This being the plain
meaning, the said Notification must be given full effect. Full
effect can be given only if the said Notification is read as
being applicable not only to assessments which were in-
complete but also to assessments which had reached final-
ity by reason of the earlier 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 leg-
islature 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 Manufactur-
ing & Calico Printing Co. Ltd and Biswanath Jhunjhunwalla
are more closer to the issue involved in the present case
before us. They laid down that it is the language of the pro-
vision that matters and when the meaning is clear, it has
to be given full effect. In both these cases, this Court held
that the proviso which amended the existing provision gave
it retrospectivity. When the provision of law is explicit, it
has to operate fully and there could not be any limits to its
operation. This Court in Biswanath Jhunjhunwalla case
said that if the language expressly so states or clearly im-
plies, 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 req-
uisite, for the initiation of assessment or reassessment pro-
ceedings 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 assessing authority
may, after issuing notice to the dealer and making such in-
14
quiry as it may consider necessary, assess or reassess the
dealer according to law. Sub-section (2) provided that ex-
cept as otherwise provided in this section, no order for any
assessment year shall be made after the expiry of 4 years
from the end of such year. However, after the amendment,
a proviso was added to sub-section (2) under which the
Commissioner of Sales Tax authorises the assessing au-
thority to make assessment or reassessment before the ex-
piration of 8 years from the end of such year notwithstand-
ing 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 assessment year. It is immaterial if a period
for assessment or reassessment under sub-section (2) of
Section 21 before the addition of the said proviso had ex-
pired. Here, it is the completion of assessment or reassess-
ment under Section 21 which is to be done before the expi-
ration 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 com-
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 dif-
ferent than the operation of the Act though sometimes,
both may be the same. The proviso now added to sub-sec-
tion (2) of Section 21 of the Act does not put any embargo
on the Commissioner of Sales Tax not to reopen the assess-
ment if the period, as prescribed earlier, had expired before
15
the proviso came into operation. One has to see the lan-
guage of the provision. If it is clear, it has to be given its
full effect. To reassure oneself, one may go into the inten-
tion of the legislature in enacting such provision. The date
of commencement of the proviso to Section 21(2) of the Act
does not control its retrospective operation. Earlier the as-
sessment/ reassessment 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 af-
ter 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 interpretation was placed by this Court on
the amendment appended to sub-section (2) of Section 21 by the
amending provision that came into force w.e.f. 19.2.1991, the Court
relied on the authority in Biswanath Jhunjhunwalla (supra), as
thought by the Court, was a proximate ruling. In the earlier case
Rule 80(5) (ii) was interpreted to have conferred express power and
clearly by implication that retrospectivity must be given to the
notification so that it can have full effect. The Court opined that plain
meaning 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
16
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 must be assumed that the legislature intended the
amended provision to apply even to assessments that had become
final, for if the intention was otherwise, the legislature would have so
stated.
16. In the case at hand the proviso that has been amended on
30.4.2001 and the previous provision that contained the words “eight
years from the end of such year” have been substituted by “six years
from the end of such year or March 31, 2002 whichever is later”. It is
apt to note here 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 notice is saved by the expression “six
years from the end of such year or March 31, 2002. In the backdrop
of the ratio laid down in Jyoti Traders (supra), there can be no iota
of doubt that period of six years would have the full effect in respect
17
of fresh 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 (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 discernible, is to the following effect:-
“The legislature may affect substantial rights by enacting
laws which are expressly retrospective or by using lan-
guage which has that necessary result. And this language
may give an enactment more retrospectivity than what the
commencement clause gives to any of its provisions. When
this happens the provisions thus made retrospective, ex-
pressly or by necessary intendment, operate from a date
earlier than the date of commencement and affect rights
which, but for such operation, would have continued
undisturbed.”
17. In this context, a passage from National Agricultural Coop.
12
Marketing Federation of India Ltd. v. Union of India is worth
12 (2003) 5 SCC 23
18
reproducing:-
“that there is no fixed formula for the expression of legisla-
tive 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 few touchstones
such as: ( i ) the words used must expressly provide or
clearly imply retrospective operation; ( ii ) the retrospectivity
must be reasonable and not excessive or harsh, otherwise
it runs the risk of being struck down as unconstitutional;
( iii ) where the legislation is introduced to overcome a judi-
cial decision, the power cannot be used to subvert the deci-
sion without removing the statutory basis of the decision.
There is no fixed formula for the expression of legislative
intent to give 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.”
13
18. In Thirumalai Chemicals Ltd. v. Union of India , it has been
held thus:-
“Limitation provisions therefore can be procedural in the
context of one set of facts but substantive in the context of
different set of facts because rights can accrue to both the
parties. In such a situation, test is to see whether the
statute, if applied retrospectively to a particular type of
case, would impair existing rights and obligations. An ac-
crued right to plead a time bar, which is acquired after the
lapse of the statutory period, is nevertheless a right, even
though it arises under an Act which is 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 mani-
13 (2011) 6 SCC 739
19
fests in express terms or by necessary implication, a con-
trary 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 year or March 31, 2002 whichever is later”
either expressly or by necessary implication can be regarded as
retrospective. The cardinal principle which is accepted is that law in
force in the assessment year is to be applied unless there is an
amendment which comes into force having retrospective operation. In
the instant case, the Legislature has brought the amendment by
reducing the period from eight years to six years. The language
employed in the proviso has to be carefully scrutinised and
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
already stated the period of six years has to be given full effect. There
can be no trace of doubt in the same. The words “or March 31, 2002
20
whichever is later” are of immense significance. It is extremely
important to understand the intent of the legislature, for specifying
this date when the limitation period was reduced from eight years to
six years. It is the submission of the learned counsel for the revenue
that the amended proviso does not place any embargo on the
Commissioner of Sales 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 State may look
attractive, but on a closer scrutiny, the fallacy in the interpretation
becomes clear. As far as six years is concerned, as stated earlier,
there can be no difficulty. The State legislature has intentionally
reduced the period from eight years to six years. Such reduction of
period is definitely beneficial for the assessee. It is worth noting the
period was reduced to six years, however, in the language used, the
outer limit has been fixed either six years or March 31, 2002 and,
st
therefore, the latter part of the proviso also specifying the date 31
21
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 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 and reduced limitation 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
22
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
logical corollary is that the legislative intent was not to do away and
erase the limitation period, but the date “March 31, 2002” was
incorporated only to protect the cases which could be earlier governed
by a limitation period of eight years. Thus, 2001 amendment is not
fully retrospective, but it is partly retrospective. It reduces the
limitation period from eight years to six years and simultaneously
protects and safeguards the interest of the revenue in respect of cases
within eight years and six years provided the reassessments are
st
completed by 31 March, 2002. Hence, we are of the considered
opinion that the decision in Jyoti Traders (supra) is distinguishable,
regard being had to the nature of the amendment that has been
brought in and consequently, the interpretation placed by the High
Court on the amended provision is incorrect.
20. In view of the foregoing analysis, the appeals are allowed and the
judgment and order passed by the High Court are set aside.
23
Resultantly, the initiation of the re-assessment proceeding is set aside
being barred by limitation. There shall be no order as to costs.
.............................J.
[Dipak Misra]
..........................., J.
[Prafulla C. Pant]
New Delhi
September 11, 2015
24
ITEM NO.1-A COURT NO.5 SECTION IIIA
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal Nos.622-623 of 2015
COMMERCIAL MOTORS LTD. Appellant(s)
VERSUS
COMMISSIONER OF TRADE TAX U.P., Respondent(s)
LUCKNOW & ORS.
Date : 11/09/2015 These appeals were called on for pronouncement
of Judgment today.
For Appellant(s)
Mr. Pawanshree Agrawal, AOR
For Respondent(s)
Mr. Ravi Prakash Mehrotra, AOR
Hon'ble Mr. Justice Dipak Misra, pronounced the
judgment of the Bench, comprising His Lordship and Hon'ble
Mr. Justice Prafulla C. Pant.
The appeals are allowed in terms of the signed
reportable judgment.
(Chetan Kumar)
(H.S. Parasher)
Court Master
Court Master
(Signed reportable judgment is placed on the file)