1974 (11) TMI 87 - HC - VAT and Sales Tax

Issues Involved:
1. Limitation period for initiating proceedings under section 19(1) of the M.P. General Sales Tax Act, 1958.
2. Applicability of amendments made by M.P. Act No. 20 of 1964 to the limitation period.

Issue-wise Detailed Analysis:

1. Limitation Period for Initiating Proceedings Under Section 19(1) of the M.P. General Sales Tax Act, 1958:

The main issue was whether the limitation for initiating reassessment proceedings expired on 31st October 1964, 31st December 1964, or 31st March 1965. The court scrutinized the original Section 19 of the M.P. General Sales Tax Act, 1958, which stated that the Commissioner could reassess tax within five calendar years from the expiry of the year in which the assessment was made. The term "year" was defined under Section 2(u) of the Act as the twelve months ending on the 31st day of March unless the dealer opted for a different accounting year. In this case, there was no evidence that the dealer chose a different accounting year, so the financial year ending on 31st March was applicable. Therefore, the reassessment period was from 1st April 1959 to 31st March 1960, making the five-year limitation period end on 31st March 1965. The notice of reassessment issued on 15th February 1965 was within the limitation period. The Board of Revenue's interpretation, which considered the limitation starting from 31st October 1959, was deemed incorrect.

2. Applicability of Amendments Made by M.P. Act No. 20 of 1964 to the Limitation Period:

The amendments to Section 19 by M.P. Act No. 20 of 1964 changed the limitation period to five years from the date of the order of assessment rather than the expiry of the year. However, these amendments were not retrospective and were to come into force from a date appointed by the State Government. Since the case was governed by the original Act as it stood in 1959, the amendments did not apply. The court concluded that the limitation period would not extend to 31st December 1967, as the amendments were inapplicable. The relevant period for reassessment remained five years from the end of the financial year, i.e., 31st March 1965.

Separate Judgment Analysis:

Judge SINGH, J.:

Singh, J. concurred with the opinion of the Chief Justice, emphasizing that the notice of reassessment issued on 15th February 1965 was within the limitation period even under the original Section 19 as it stood during the period of assessment. Singh, J. highlighted the significant changes in Section 19 by the amendments, which enlarged the limitation period and widened the grounds for reassessment. However, since the original period of limitation was still valid, the notice was timely. Singh, J. chose not to delve into whether the extended period of limitation under the amended Section 19 could apply or whether the changes were procedural or substantive, as the original limitation period already sufficed.

Final Reference Answer:

1. The limitation for initiating proceedings under Section 19(1) of the M.P. General Sales Tax Act, 1958, expired on 31st March 1965, and not on 31st October 1964, or 31st December 1964. The M.P. General Sales Tax (Amendment) Act No. 20 of 1964 was not applicable to the present case.
2. The period of limitation will not extend to 31st December 1967, as Section 8 of the M.P. General Sales Tax (Amendment) Act No. 20 of 1964 was inapplicable. The limitation period was five years from the end of the financial year relating to which the assessment was to be made.

The reference was returned to the Board of Revenue for passing a final order in accordance with the court's opinion, with no order as to costs.

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