9911796707
TMI Blog2011 (9) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... have been revised under the DST Act as on 1.4.2005, the power of revision conferred under the DVAT Act cannot be exercised if the time span has expired - The writ petitions be listed before the appropriate Division Bench - W.P. (C) Nos. 8620, W.P. (C) Nos. 10287, W.P. (C) Nos. 10311, W.P. (C) Nos. 10312 of 2009, W.P. (C) Nos. 274, W.P. (C) Nos. 974, W.P. (C) Nos. 3001 of 2010 - - - Dated:- 2-9-2011 - A.K. Sikri, Manmohan, JJ. S. Ganesh, Sr. Adv. with Ruchir Bhatia, Sumit Batra, Sushil Verma, Advs. for the Petitioner Respondent Parag P. Tripathi, ASG with Shadan Farasat, S.B. Jain, Advs. for Commissioner of Trade Tax Kailash K. Ahuja, Adv. for Commissioner of VAT JUDGMENT Dipak Misra, Chief Justice 1. In this batch of writ petitions, the centripetal issue that has emerged for consideration is whether the Commissioner under the Delhi Value Added Tax Act, 2004 (for brevity, 'the DVAT Act') can exercise suo motu power of revision under Section 74A of the DVAT Act in respect of assessments that have been completed under the Delhi Sales Tax Act, 1975 (for short, 'the DST Act'). Be it noted, when these petitions were listed before the Division Bench, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that the Division Bench possibly would have upheld the action had the amendment would have come into effect w.e.f. 1.4.2005. That apart, learned Additional Solicitor General has seriously contended that the interpretation placed on Section 106 is not correct and the said submission has been seriously opposed by Mr. Ganesh, learned senior counsel for the petitioners. Ordinary, we would have proceeded to address the same but the first question, we are inclined to think, really requires to be addressed." 3. On the basis of the aforesaid order, the matters have been placed before us. 4. Keeping in view the commonality of the controversy, we think it appropriate to exposit the facts from W.P.(C) No.3001/2010. Invoking the jurisdiction of this Court under Article 226 of the Constitution of India, the petitioner, a company incorporated under the Companies Act, 1956, has called in question the legality and validity of the initiation of the revisional proceedings against the petitioner by issuance of notice dated 08.04.2010 under Section 74A read with Section 106 of the DVAT Act by the Commissioner, Trade Taxes, Delhi, the first respondent herein, purporting to revise the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision on the Commissioner. Reference has been made to Section 106 of the DVAT Act to highlight that the power rests with the Commissioner for exercise of suo motu power under the DVAT Act in respect of the orders passed under the DST Act. Quite apart from the above, various aspects have been highlighted to show how the petition is totally devoid of merit. 7. We have heard Mr. S. Ganesh, Sr. Advocate with Mr. Ruchir Bhatia, Mr. Sumit Batra, Mr. Sushil Verma, Mr. Rajesh Jain, Ms. Neetika Khanna, Mr. P.K. Sahu, Mr. Prashant Shukla, Mr. D.M. Sinha, advocates for the petitioners and Mr. Parag P. Tripathi, learned ASG with Mr. Shadan Farasat, Mr. S.B. Jain, Ms. Avinish Ahlawat and Mr. Kailash K. Ahuja, Advocates for the respondents. 8. The submission of Mr.Ganesh, learned senior counsel appearing on behalf of the petitioner, is that the DST Act was repealed on 01.04.2005 and the DVAT Act was brought into force and in the absence of any provision in the Act especially Section 106 which deals with repeal and savings, suo motu revision under Section 74A of the DVAT Act cannot be initiated. The learned senior counsel has heavily relied on the Division Bench decisions in Internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, the learned senior counsel has submitted with immense force that the provision of Section 6 of the General Clauses Act is not applicable to Delhi. 9. It is also canvassed by Mr. S. Ganesh, learned senior counsel, that the legislature clearly intended to put the controversy that had arisen under the DST Act to rest and, therefore, the same cannot be allowed to be re-opened by taking recourse to Section 74A of the DVAT Act and further the decision in International Metro Civil Contractors (supra) has not been appositely appreciated and its ratio decidendi has been erroneously applied to mean that by making Section 74A applicable from the commencement of the DVAT Act, the power of exercise of suo motu revision is saved. The learned senior counsel would further submit that the language employed in Section 74A is absolutely restricted and confined and, therefore, the action taken under the DVAT Act does not pertain even remotely to any order of assessment that has attained finality under the DST Act. 10. To buttress his submissions on the various aspects, he has placed reliance on the decisions in Ravula Subba Rao and Anr. v. The Commissioner of Income Tax, Madras, 1956 SCR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.11.2005. Elaborating the said submission, it is contended by Mr.Tripathi that by the time Section 74A was incorporated in the statute book, if the power to initiate suo motu revision existed and the limitation did not expire, a right is accrued in favour of the revenue to do so in exercise of power under Section 74A of the Act. It is urged by him that when a repeal is followed by re-enactment and unless a different intention bears, the applicability of Section 6 of the General Clauses Act is protected even when the re-enactment has a saving clause of its own. The learned counsel for the revenue has submitted that by virtue of the notification dated 31st May, 1951 issued by the Ministry of Home Affairs, the provisions of the Bengal General Clauses Act, 1891 have been made applicable to the State of Delhi and Section 8 of the said Act is pari materia to Section 6 of the General Clauses Act. 13. It is further submitted that the decision rendered in International Metro Civil Contractors (supra) does not lay down the correct law as it concludes that the intention of the legislature was to do away with the right of the Department to revise any erroneous order of assessment as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, after the DVAT Act came into force, the Revenue could issue the show cause notice dated July 18, 2007 seeking to revise the assessment order dated March 31, 2003. To answer this question, we would need to consider the following three issues: "1. Whether any proceedings for revising the assessment order were at all initiated by the Revenue before March 31, 2005 when the DST Act and the Works Contract Act were repealed? If not, the impact thereof. 2. If the answer to the above question is in the affirmative, whether the proceedings initiated by the Revenue were saved by the DVAT Act on the repeal of the DST Act and the Works Contract Act on March 31, 2005? 3. What is the effect (if any) of the omission, in the DVAT Act, of the power to revise an assessment that was available to the Commissioner under Section 16 of the Works Contract Act read with Section 46 of the DST Act." 16. While dealing with the first question, the Bench referred to the decisions in Gajraj Singh (supra) and Gammon India Ltd. (supra) and opined thus: "The effect of this is, quite clearly, that the process of a revisionary proceeding, not having been initiated by the Revenue, dies a natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner had any right (assuming it to be a right) to revise the assessment order, since neither he nor his delegate ever exercised that right till 1.4.2005, the right stood extinguished when the DST Act and the Works Contract Act were repealed. 17. While dealing with the second question, namely, whether the revisionary proceedings (if they were initiated) were saved by the DVAT Act, the Bench looked into two "sub-issues" and, thereafter, addressed whether notwithstanding anything else, Section 106(3) of the DVAT Act comes to the rescue of the revenue and whether Section 106(2) of the DVAT Act saves the previous operation of the DST Act. The Division Bench referred to the decision in Indira Sohanlal (supra) and came to hold that even if revisionary proceedings had been initiated in respect of the petitioner under Section 46 of the DST Act, they would have to be dealt with under the DVAT Act, but as the Legislature would have it, the DVAT Act did not provide for revisionary proceedings in the first instance. These were introduced with effect from 16.11.2005. Consequently, even if it were to be argued that the revisionary proceedings initiated by the Revenue were somehow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue in the manner that we are concerned with." [Underlining by us] 20. Be it noted, after dealing with second issue, the Division Bench proceeded to address the third issue which pertains to the effect of omission of a provision in a legislation subsequent to the repeal of an earlier legislation. The Bench noted the fact that no revisionary proceedings were initiated by the revenue till 1.4.2005 and, thereafter further referred to the certain aspects in Gajraj Singh (supra), Kolhapur Canesugar Works Ltd. (supra), Shiv Shakti Coop. Housing Society (supra) and Gammon India Ltd. (supra) and opined that where an existing power is not conferred on the given authority by the repealing statute, it cannot survive the repeal; nor can its ghost be invoked to revive a right/power that gets closed on the repeal of an enactment. Furthermore, if a power does survive, it does so under the new statute and not under the repealed statute. 21. It is worth noting, a contention was advanced by the revenue that as the assessee had incurred a liability to pay the tax, all subsequent actions taken by the revenue to recover the tax are permissible and, hence, the initiation by revisional proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision in Gammon India Limited (Supra) which states that the proceedings which might not have culminated into a final judgment prior to the repeal would abate at the consummation of the repeal. Relying on the same, the Bench observed that the process of a revisionary proceeding, not having been initiated by the Revenue, dies a natural death. The Bench also opined that even if the Commissioner had any right to revise the assessment order, the 'right' stood extinguished when the DST Act was repealed. Reliance was placed on Indira Sohanlal (supra) and the opinion has been expressed, as has been indicated herein before, that even if a revisionary proceeding had been initiated in respect of the assessee under Section 46 of the DST Act, the said power died a legal death as the legislature did not provide for revisionary proceedings in the first instance. 24. Reliance was placed on Hari Shanker (supra) wherein a distinction between an appeal and a revision was drawn stating that the right of appeal carries with it a right of rehearing on law as well as fact, unless the statute conferring the right of appeal limits the rehearing in some way but the power to hear a revision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est the power of revision in respect of assessments framed under the DST Act with the Commissioner. 27. To appreciate the controversy, it is apposite to refer to Section 46 of the DST Act, which reads as follows: "46. Revision of orders prejudicial to revenue. - The Commissioner may call for and examine the records of any proceeding under this Act and if he considers that any order passed therein by any person appointed under sub-section (2) of section 9 to assist him is erroneous in so far as it is prejudicial to the interests of Revenue, he may, after giving the dealer an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment and penalty (if any) imposed or canceling the assessment and penalty (if any) imposed and directing fresh assessment: PROVIDED that a final order under this section shall be made before the expiry of five years from the date of the order sought to be revised." 28. On a plain reading of Section 46 of the DST Act, it is manifest that the said provision confers power on the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interest of the dealer. The said provision confers a right on the dealer to apply for revision within two years from the date of communication of the order of assessment, subject to conditions stipulated in the said provision. It also conferred a power on the Commissioner to revise the order suo motu. For the said purpose, the period fixed was two years from the date of the order that was sought to be revised. Thus, there was a clear distinction between Sections 46 and 47 of the DST Act. 30. The DVAT Act came into force on 1.4.2005 repealing the DST Act, as has been stated hereinbefore. Initially there was no provision within the DVAT Act conferring power of revision on the Commissioner. Section 74A was inserted in the DVAT Act with effect from 16.11.2005. The said provision has been further amended making it effective from 1.4.2005 when the DVAT Act came into force. 31. The Division Bench in International Metro Civil Contractors (supra) dealt with a case which arose within a period from 1.4. 2005 till 16.11.2005 and came to the conclusion that the power of revision did not exist at that time. It is apt to note that the decision in International Metro Civil Contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is filed, then, whether or not the issues involved in the examination have been decided or raised in the objection or the appeal, the Commissioner may, within five years of the end of the year in which the said order passed by the subordinate officer has been served on the dealer, make a report to the said objection hearing authority or the appellate authority including the Tribunal regarding his examination or the report or the information received by him and the said appellate authority including the Tribunal shall thereupon, after giving the dealer a reasonable opportunity of being heard, pass an order to the best of its judgment, where necessary. (3) If the Commissioner has initiated any proceeding before an appropriate forum against an issue which is decided against the revenue by an order of the Tribunal, then the Commissioner may, in respect of any order, other than the order which is the subject matter of the order of the Tribunal, call for the record, conduct an examination as aforesaid, record his findings, call for the said books of account and other evidence and pass an order as provided for under this section as if the issue was not so decided against the revenue, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amounts due at the commencement of this Act may be recovered as if they had accrued under this Act." [Emphasis supplied] 35. The aforesaid provision is required to be scrutinized and understood from a proper perspective. The Division Bench in International Metro Civil Contractors (supra) and L.G. Electronics (India) Ltd. (supra) has expressed the view that when the provision of Section 74A came into force on 16.11.2005, no revisionary jurisdiction could have been invoked prior to the said date, as the said provision was not there when the Act came into force on 1.4.2005. That apart, the Bench also opined that where existing power is not conferred on the given authority by the repealing statute, it cannot survive and the introduction of Section 74A in the Act cannot also resurrect the said power. Thus, the test would be whether a right had accrued or vested in favour of the assessee and whether in law there was any obligation or any liability had been acquired, accrued or incurred under the DST Act and further the impact and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to law; the condition of one who is subject to a charge or duty which may be judicially enforced." 39. Thus, the term "liability" is of large and comprehensive signification, and when construed in its usual and ordinary sense, it expresses the state of being under obligation in law or in justice. 40. In First National Bank Ltd. v. Seth Sant Lal, AIR 1959 Punjab 328, it has been held thus: "14. According to Bouvier's Law Dictionary "Liability" is "the state of being bound or obliged in law or justice." According to Anderson's Law Dictionary, "liability" means "the state of being bound or obliged in law or justice to do, pay or make good something; legal responsibility". According to Oxford English Dictionary, "liability" means "the condition of being liable or answerable by law or equity". "Liability" as defined in Black's Law Dictionary means, "the state of being bound or obliged in law or justice to do, pay or make good something; legal responsibility." Webster defines liability to be the state of being bound or obliged in law or justice; responsibility. 15. The term "liability" is of large and comprehensive signification, and when construed in its usual and or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll-known that, under the Indian Income-tax Act, liability to pay income-tax arises on the accrual of the income and not from the computation made by the taxing authorities in the course of assessment proceedings, and that it arises at a point of time not later than the close of the year of account, that assessments particularise the total income of an assessee and the amount of tax payable." 45. In Commissioner of Income Tax, Bhopal v. Shelly Products, (2003) 5 SCC 461, the Apex Court has opined thus: "We find considerable force in the submission of the Revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides inter alia for payment of tax in advance or deduction of tax at source. The Act provides for the manner in which advance tax is to be paid and penalises any assessee who makes a default or delays payment thereof. Similarly the deduction of tax at source is also provided for in the Act and failure to comply with the provisions attracts the penal provisions against the person responsible for making the payment. It is, therefore, quite apparent that the Act itself provides for payment of tax in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e survival of liability incurred on the backdrop of limitation. In M/s Shah Sadiq and Sons (supra), it has been held that the 'savings' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever rights are expressly saved by the 'savings' provision stand saved, but, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. It has been further held that rights which have been accrued are saved unless they are taken away expressly. After so stating, their Lordships have opined thus: "The right to carry forward losses which had accrued under the repealed Income Tax Act of 1922 is not saved expressly by Section 297 of the Income Tax Act, 1961. But, it is not necessary to save a right expressly in order to keep it alive after the repeal of the old Act of 1922. Section 6(c) saves accrued rights unless they are taken away by the repealing statute. We do not find any such taking away of the rights by Section 297 either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration of all the relevant provisions of the new statute and the mere absence of a saving clause is by itself not material. 51. In Jayantilal Amrathlal v. The Union of India, (1972) 4 SCC 174, the Constitution Bench, while dealing with the interpretation of Section 115(2) of the Gold (Control) Act, 1968, dealt with the submission that the notice issued under the said Act could no more be operative because under the said statute, there are no provisions for making a declaration relating to the possession of primary gold. The contention was founded on the stand that the period had expired long before the 1968 Act came into force. It was contended that the provisions in the Rules requiring a declaration to be made in respect of the possession of primary gold were inconsistent with the provisions of the Gold (Control) Act, 1968 and, therefore, notice issued under the Rules cannot be considered as being continued under the provisions of the Act. While dealing with the said stand, their Lordships observed that it is true that the Gold (Control) Act, 1968 does not purport to incorporate into that Act the provision of Section 6 of the General Clauses Act, but the provisions therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te back and cover a period of five years from the date jurisdiction under the rule is invoked. The provision is, therefore, retrospective in operation. It is not the stand of the learned counsel for the appellant that only when a period of five years has elapsed from the date of introduction of the rule, jurisdiction under the rule can be exercised in respect of that preceding period of five years. Once the rule comes into existence and jurisdiction under the rule is invoked, it has got to cover a period up to five years preceding the date of issue of notice. The Tribunal has endorsed such action of the departmental authorities. The plea of limitation has no force." [Underlining is ours] 53. In Income-tax Officer, V Circle, Madras and another v. S.K. Habibullah, AIR 1962 SC 918, their Lordships have opined that the orders of assessment are final, subject to the provisions relating to appeals, revisions, reassessment and rectification. The right to rectify an assessment must be exercised in strict compliance with the conditions prescribed by the concerned statute. Thus, where before 1.4.1952, rectification of assessment was not permissible under clause (1) of Section 35 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1993 SC 1188, a two-Judge Bench of the Apex Court was considering Section 81 of Foreign Exchange Regulation Act (Act 46 of 1973) which repealed the Foreign Exchange Regulation Act, 1947. A contention was canvassed before the Apex Court that the Repealed Act is a dead corpse and no life into it could be blown with the aid of Section 81(2) of the said Act or Section 6 of the General Clauses Act. Their Lordships opined that though the 1973 Act repeals and obliterates the operation of that 1947 Act, yet the penalty, liability, forfeiture or prosecution for acts done while the repealed Act was in force were kept alive despite no action thereunder being taken under the repealed Act when the repealed Act was in force. It has also been expressed that the rights acquired or accrued or the liabilities incurred or any penalty, forfeiture or punishment incurred during its operation are kept alive. After so stating, their Lordships proceeded to express thus: "6. In Tiwari Kanhaiyalal v. Commr. of Income-tax, Delhi (1975) 4 SCC 101: (AIR 1975 SC 902) where prosecution was laid after the repeal of the Income-tax Act, 1922. The contentions raised was that saving clauses in Sec. 297 of 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cements in the field, the following principles can safely be culled out: (i) The concept of liability 'accrued' or 'incurred therein' and 'obligation' have different connotations. (ii) The meaning of 'right accrued' and 'vested right' will depend upon the language of the statute and the intention expressed by the Legislature. (iii) The intention of the Legislature must be absolutely clear whether it intends to destroy the old liabilities and it would depend upon the entire scheme of the Act. (iv) An order of assessment is final subject to the provisions relating to appeal, revision, reassessment and rectification. (v) A statute is not to be interpreted to be retrospective or retroactive to touch the existing final orders. (vi) Even if no action is taken under the repealed Act, the civil as well as the criminal liability that had incurred under the repealed statute are not obliterated and are kept alive if there is a saving provision. (vii) A legal proceeding which could have been initiated under the repealed Act continues to subsist if the savings and repeal provision so stipulates subject to the law of limitation. To elaborate, the right to initiate a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his section shall be passed after the expiry of four years from the end of the year in which the order passed by the subordinate officer has been served on the dealer. Section 74A (2)(c) carves out a period of five years under certain other circumstances. The right to a dealer would have attained finality and become a vested or ripened right after the expiry of the period of limitation under the DST Act and if the proceedings are initiated within the period of limitation, the exercise of the suo motu power of revision cannot be treated as illegal. In other words, if the time to exercise the revisionary power had not expired before coming into force of the DVAT Act, the said power could be exercised in respect of an order under the DST Act in terms of Section 74A of the DVAT Act read with Section 106 of that Act. 64. Turning to the previously mentioned three categories of cases, in the first category of cases, wherein assessment has been completed and already revised, by virtue of the language employed in Section 106(3) of the DVAT Act, the order passed has to be considered as an order passed under the DVAT Act. In the second category of cases, wherein assessment has been comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 74A in the DVAT Act on 16.11.2005, the suo motu revisional proceeding could not be initiated at the commencement of the DVAT Act, i.e., 1.4.2005, as the legislative intendment was clear that on the date the Act came into force the provision pertaining to exercise of suo motu revisionary power did not exist in respect of the proceedings under the DST Act as the assessment had attained finality and were closed, is incorrect. (c) The order of assessment framed under the DST Act is deemed to be an order framed under the DVAT Act and on reading of Sections 106(2) and 106(3) in a conjoint manner, it is not correct to state that once the order of assessment has been passed, the transaction is closed and, therefore, the assessment/order is not revisable under Section 74A of the DVAT Act. (d) The liability incurred or accrued under the DST Act has a larger expanse and a broader canvas and it would in view of Section 106(2) of DVAT Act include initiation of any legal proceeding which is permissible within the period of limitation and till then no final or vested right accrues in favour of the assessee. (e) The amendment brought by the legislature retrospectively incorporating ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
