2015 (8) TMI 742 - HC - VAT and Sales Tax

Assessment of Tax u/s 29(2) of Punjab Value Added Tax, 2005 - Constitutional validity of amendment to section 29 - Extension of Assessment period Whether the amendment is clarifificary in nature and retrospective or substantive and prospective - Petitioner contends that under unamended Section 29(4), assessment would have been barred by limitation as three years had elapsed after filing of annual statement whereas if amendment was held to have retrospective effect it would not be barred by limitation Petitioner challenges constitutional validity of Section 29 of PVAT Held that - opening part of section 29(4) as amended read by itself would suggest that provision was not retrospective Period of six years, in place of three years, was mentioned only in amended Section 29(4) Extended period under unamended section was not as of right but was dependent upon discretion of Commissioner Settled position of law that if statute was curative or merely declaratory of previous law retrospective operation was generally intended In absence of clear words indicating that amending Act was declaratory, it would not be so construed when pre-amended provision was clear and unambiguous. Whether the amendment is harsh, unfair, arbitrary and is excessively and unreasonably retrospective and is, therefore, violative of Articles 14 and 19 of the Constitution - Held that - If the books are not available because they were destroyed or are otherwise unavailable to the assessee prior to the amendment, it would always be open to the assessee to bring this to the notice of the Assessing Authority who must take the same into consideration. It would be open to the assessee to take this factor as a defence and a justification for not having preserved the books. Obviously, in such cases, an adverse inference cannot be drawn against the assessee. The validity of the amendment, therefore, cannot be struck down on the ground that it is unconstitutional for this reason. Whether the provio is contrary of main proviso - Held that - The proviso does not take away any right given by the main provision. - The extended period for making the assessment in respect of the year 2006-07 is not by implication from the proviso. It arises from the plain and clear language of the proviso. The proviso clearly carves out an exception to the main provision itself. The judgment infact supports the respondents case. The proviso is in terms of this judgment as but for the proviso the enacting part of the section would have included the subject matter of the proviso by disallowing the assessment in respect of the year 2006-07. The proviso was enacted to take this part out of the purview of the main/enacting part of the section. The proviso expressly qualified the enacting part of the section and created an exception to it. In the present case, since the assessment were not complete, the various decisions of the Supreme Court relied upon by the assessee are not applicable wherein it was held that, if the assessment period is over, the assessee acquires a vested right which cannot be disturbed by retrospective amendment which extends the period for assessment or reassessment after the original period of assessment or reassessment has expired. Thus, in any event, period of six years under amended section was to apply retrospectively Explanation (2), therefore, was merely clarificatory There was no inconsistency between main provision and proviso Proviso merely grants further period for making assessment Purpose and effect of entire amendment was to obviate consequences of proviso to unamended section In view of aforesaid, appeal dismissed Decided against Assesse.

Summary

Issues Involved:
1. Constitutional validity of the amendment to Section 29 of the Punjab Value Added Tax Act, 2005.
2. Whether the amendments to Section 29(4) and the newly added sub-section (10-A) are retrospective or prospective.
3. Whether the amendments cure or remove previous defects and validate defective actions.
4. Whether the amendments reverse or overrule previous judgments and are therefore unconstitutional.
5. Whether Explanation (2) is contrary to the rules of natural justice and is constitutionally invalid.
6. Whether Explanation (2) is relevant to the main section.
7. Whether the amendment is harsh, unfair, arbitrary, and excessively retrospective, violating Articles 14 and 19 of the Constitution.
8. Whether the proviso to the amended Section 29(4) is contrary to the main section.
9. Whether the amendment extends the period of reassessment even where the original period for assessment has expired.
10. Whether Explanation (1) makes the old proviso redundant and is therefore invalid and irrational.

Issue-wise Detailed Analysis:

1. Constitutional Validity of the Amendment to Section 29 of the PVAT Act:
The petitioners challenged the constitutional validity of the amendment to Section 29 of the PVAT Act by the Punjab Value Added Tax Act, 2013. They sought a writ of certiorari to quash a notice dated 23.09.2014. The court confined itself to the challenge to the constitutional validity of Section 29 as amended.

2. Retrospective or Prospective Nature of Amendments:
The court held that the amendments to Section 29(4) and sub-section (10-A) are retrospective. The proviso and Explanation (1) to the amended section establish that the limitation period of six years applies retrospectively to cases where the period had not yet expired. The court clarified that the date of the enactment of the Amendment Act (15.11.2013) does not control its retrospective operation.

3. Amendments Cure or Remove Previous Defects:
The court noted that the amendments were introduced to undo the effect of previous judgments, particularly the judgment in A.B. Sugars Ltd. v. The State of Punjab. The amendments aimed to remove the defects pointed out in the previous judgments and validate the actions taken under the PVAT Act.

4. Amendments Reverse or Overrule Previous Judgments:
The court held that the amendments do not merely reverse previous judgments but fundamentally alter the conditions on which the judgments were based. By providing its own meaning and interpretation of the law, the legislature has removed the basis on which the judgments were delivered.

5. Explanation (2) and Rules of Natural Justice:
The court acknowledged that Explanation (2) clarifies that prior to the amendment, the Commissioner was not required to issue notice before extending the limitation period. Even if Explanation (2) were held unconstitutional, the retrospective nature of the opening part of Section 29(4) would still allow the extended period for assessment.

6. Relevance of Explanation (2) to the Main Section:
The court found that Explanation (2) is relevant to the main section as it clarifies the legislative intent and removes the basis of previous judgments. The explanation was necessary to validate actions taken under the unamended section.

7. Harshness, Unfairness, and Arbitrariness of the Amendment:
The court rejected the contention that the amendment is excessively and unreasonably retrospective. It noted that if the books are not available due to statutory destruction before the amendment, the assessee can bring this to the notice of the Assessing Authority, who must consider it.

8. Proviso to the Amended Section 29(4):
The court held that the proviso to the amended Section 29(4) is not contrary to the main section. The proviso grants a further period for making the assessment for the year 2006-07, which is consistent with the main section's intent.

9. Extension of the Period of Reassessment:
The court upheld the amendment, allowing the extension of the period for assessment even where the original period had expired. The court referred to the judgment in Additional Commissioner (Legal) v. Jyoti Traders, which supported the retrospective extension of the assessment period.

10. Redundancy of the Old Proviso:
The court acknowledged that the amendment rendered the old proviso redundant. The purpose of the amendment was to obviate the consequences of the old proviso, which required notice and extension within the original assessment period.

Conclusion:
The petition was dismissed. The court clarified that all contentions on merits are kept open for the petitioners in connected writ petitions, and they are granted four weeks to adopt appropriate proceedings. Coercive steps shall not be taken until 21.09.2015.