2015 (9) TMI 780 - SC - VAT and Sales Tax

Validity of reassessment - limitation period of 6 years as reduced from 8 years - 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 - Section 21(2) of the UPTT - Held that - 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 1998 (11) TMI 531 - SUPREME COURT OF INDIA , there can be no iota of doubt that period of six years would have the full effect in respect 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 1996 (8) TMI 511 - Supreme Court of India 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. 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 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 appeals are allowed and the judgment and order passed by the High Court are set aside. Resultantly, the initiation of the re-assessment proceeding is set aside being barred by limitation - Decided in favor assessee.

Summary

Issues Involved:

1. Validity of reopening the assessment after the prescribed period due to an amendment in the law.
2. Whether the case for reopening the assessment constitutes a change of opinion.

Detailed Analysis:

1. Validity of Reopening the Assessment After the Prescribed Period Due to an Amendment in the Law:

The appellant, a registered dealer under the U.P. Trade Tax Act, 1948, was initially granted a tax exemption on the sale of scooters based on certificates submitted during the assessment year 1990-91. However, the revenue later discovered discrepancies in the total sale amount, leading to a show cause notice issued on 13.3.2002 for reassessment under Section 21(2) of the Act. The appellant contended that the reassessment proceedings were barred by limitation as they were initiated after six years from the end of the assessment year (31.3.1997). The Department argued that the amendment to Section 21(2) had a retrospective effect, allowing reassessment within six years or by March 31, 2002, whichever is later.

The High Court referenced the decision in *Addl. Commissioner (Legal) and Anr. v. Jyoti Traders and Anr.* (1999) and ruled that the amendment allowed reassessment within the extended period, making the notice valid. The High Court interpreted that the proviso added to Section 21(2) did not restrict the Commissioner from reopening assessments if the earlier limitation period had expired before the proviso came into operation.

The Supreme Court, however, emphasized that the law in force during the assessment year should be applied unless an amendment explicitly states or implies retrospective operation. The Court scrutinized the amendment, which reduced the limitation period from eight years to six years but allowed reassessment by March 31, 2002, to protect pending cases under the previous eight-year limitation. The Court concluded that the amendment was partly retrospective, safeguarding the revenue's interest for cases within eight years and six years if reassessments were completed by March 31, 2002. Thus, the notice issued on 13.3.2002 was beyond the permissible period, rendering the reassessment barred by limitation.

2. Whether the Case for Reopening the Assessment Constitutes a Change of Opinion:

The High Court addressed whether the reopening of the assessment was a result of a change of opinion. It held that the initial opinion during the original assessment was to grant exemption on the sale of scooters, and the reassessment notice was issued because the exemption was wrongly allowed to the extent of Rs. 97,02,050.65. The High Court found no substance in the appellant's argument that the reassessment was due to a change of opinion, as the revenue had discovered an error in the original assessment.

The Supreme Court did not find it necessary to delve into this issue in detail, as the reassessment proceedings were already deemed barred by limitation.

Conclusion:

The appeals were allowed, and the judgment of the High Court was set aside. The initiation of the reassessment proceeding was declared barred by limitation, with no order as to costs.