1966 (10) TMI 137 - SC - VAT and Sales Tax

Period of limitation - Held that - Appeal dismissed. It is well-recognised that a proviso is added to a principal clause primarily with the object of taking out of the scope of that principal clause what is included in it and what the Legislature desires should be excluded. Consequently even if it be held that the effect of the Amending Act was that under the principal clause of section 19(1) the reassessment of the under-assessed or escaped turnover in the case of the respondent could be taken up within a period of five calendar years that provision became ineffective because of the continued existence of the proviso. The Amending Act had not come into force when the High Court decided the petition and consequently the High Court had no occasion to consider its effect. The second piece of legislation brought to our notice was the Madhya Pradesh General Sales Tax (Second Amendment) Act 1964 (Act 20 of 1964) by which also section 19(1) of the new Act was slightly amended. That amendment however has no bearing on the point which we are called upon to decide in this appeal and consequently needs no consideration.

Summary

Issues:
1. Interpretation of the period of limitation for reassessment under the repealed Act and the new Act.
2. Application of provisos in the new Act to cases assessed under the repealed Act.
3. Impact of subsequent amendments to the new Act on reassessment proceedings.

Detailed Analysis:

1. The main issue in this case was the interpretation of the period of limitation for reassessment under the repealed Act and the new Act. The respondent contended that the assessment had been made under the repealed Act, and thus, the period of limitation for reassessment should be governed by the provisions of the repealed Act. The High Court accepted this argument, holding that the notice for reassessment issued under the new Act was time-barred as it exceeded the three-year limitation period prescribed by the repealed Act.

2. Another crucial issue was the application of provisos in the new Act to cases assessed under the repealed Act. The respondent argued that the rights and liabilities acquired under the repealed Act, including the period of reassessment, were preserved by section 52 of the new Act. The Court agreed with this interpretation, stating that the proviso to section 19(1) of the new Act was applicable to the respondent's case, making the three-year limitation period under the repealed Act applicable for reassessment.

3. The impact of subsequent amendments to the new Act on reassessment proceedings was also discussed. The Sales Tax Officer relied on an amendment to section 19(1) introduced by the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1963, which extended the reassessment period to five years. However, the Court emphasized that the proviso to the principal clause of section 19(1) remained in force, rendering the amendment ineffective in this case. The Court affirmed the High Court's decision that the limitation period applicable to the respondent's case was that laid down by section 11A(1) of the repealed Act.

In conclusion, the Supreme Court dismissed the appeal, upholding the High Court's decision that the notice for reassessment issued under the new Act was time-barred as it exceeded the three-year limitation period prescribed by the repealed Act. The Court clarified that the subsequent amendments to the new Act did not alter the applicability of the proviso preserving the rights and liabilities acquired under the repealed Act.