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TMI Blog2014 (3) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... e said proviso had expired - Notice to the assessee follows the authorisation by the CST - A fiscal statute can have retrospective operation - If we accept the interpretation given by the respondents, the proviso added to Section 21(2) providing limitation up to 31.03.2002 becomes redundant - Proviso now added to Section 21(2) does not put any embargo on the CST not to reopen the assessment if period had expired before the proviso came into operation - To reassure oneself, one may go into the intention of the legislature in enacting such provision –thus, the impugned notice issued is well within time. While delivering the judgment the DB in M/s Prag Ice and Oil Mills and others Vs. Additional Commissioner of Trade Tax, Aligarh Zone and another; 2008 have not noticed the retrospectivity of the provisions contained in the proviso added to section 21(2) and the amended Ist proviso added on 5.3.2001 as a whole as interpreted by Apex Court in M/s Binani Industries Limited case(Supra) and Jyoti Traders case (Supra) as such the judgment in Prag Ice and Oil Mills case (Supra) being per incuriam have no binding force and are not binding precedent - Decided against assessee. The notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment on 25.03.1995. Thereafter a notice dated 13.03.2002 was received by the petitioner which was issued from the office of opposite party no.2, Additional Commissioner fixing 18.03.2002 to show cause as to why the proceedings under Section 21(2) of the Act may not be initiated against him for the sale of two wheeler scooters to the government employees through U.P. Government Employees Welfare Corporation vide 270 forms submitted by the petitioner has a total of only Rs.4,26,94,276.59 which shows that the exemption has been granted in excess of Rs.97,02,050.65, which ought to be taxed. Therefore, the aforesaid amount of Rs.97,02,050.65 is liable to be taxed. The petitioner filed its reply (Annexure-3 to the writ petition) dated 18.03.2002 wherein he has taken two grounds against the said notice. Firstly, that the proceedings under Section 21(2) of the Act cannot be initiated against him as the same has become barred by time after lapse of six years from the date of end of assessment year i.e. after 31.03.1997 in the light of proviso to sub-section (2) of Section 21 of the Act, which reads as under: Provided that if the Commissioner, on his own or on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is competent to initiate proceedings under Section 21(2) of the Act. 8. We have heard Sri Pradeep Agarwal, learned counsel for the petitioner and Sri H.P. Srivastava, learned Additional Chief Standing Counsel for the respondent-State. 9. Learned counsel for the petitioner would submit that the amendment was incorporated in the statute book came into effect on 5th of March, 2001. The limitation of 8 years to commence the proceedings before the amendment has already been expired much earlier to the commencement of the proceedings, therefore, the amendment could not extend the limitation because the limitation, which has already been gone out before the date of amendment, cannot be revived by way of amendment in the statute book. In support of his contention, he relied upon the judgement of Apex Court in the case of Additional Commissioner (Legal) Vs. M/s Jyoti Traders and others; 1999 UPTC 45 SC and M/s Prag Ice and Oil Mills and others Vs. Additional Commissioner of Trade Tax, Aligarh Zone and another; VSTI 2008 B-92. Learned counsel further submitted that what has been considered by the AO while making the original assessment, could not be considered against and AO cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed for the assessment years Chaitra Sudi 2023 and 2024. The assessments were completed on February 17, 1969 and March 26,1969 respectively. Under Rule 80(5) of the Bengal Sales Tax Rules, 1941 made under that Act. The assessment could have been reopened only within a period of four years. The relevant part of this Rule 80(5) is as under: 80(5) The Commissioner or any other authority to whom power in this behalf has been delegated by the Commissioner, shall not, of his own motion, revise any assessment made or order passed under the Act or the rules thereunder if -- (ii) the assessment has been made or the order has been passed more than four years previously. 14. Bengal Sales Tax Ordinance, 1973 was promulgated which was later replaced by the Bengal Finance (Sales Tax) (Third Amendment) Act, 1974. This amending Act substituting Section 26(1) of the Principal Act under which now the State Government was empowered to mate rules, with prospective or retrospective effect for carrying out the purposes of the Act. With this new power conferred on the State Government Rule 80(5) was amended by notification issued on March 30, 1974 amending the same with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed more than six years previous to 1-11-1971. Put conversely, with effect from 1 -11 -1971, Rule 80(5) (ii) permits the Commissioner (or other authority) to revise of his own motion any assessment made or order passed under the Act or the rules provided the assessment has not been made or the order passed more than six years previously. This being the plain meaning, the said Notification must be given full effect. Full effect can be given only if the said Notification is read as being applicable not only to assessments which were incomplete but also to assessments which had reached finality by reason of the earlier prescribed period of four years having elapsed. Where language as unambiguous as this is employed, it must be assumed that the legislature intended the amended provision to apply even to assessments that had so become final; if the intention was otherwise, the legislature would have so stated. 15. The Apex Court in Addl. Commissioner (Legal) and Anr. Vs. Jyoti Traders and Anr. (1999) 2 SCC 77, dealt with another the case reported in [1963] 48 ITR 154 (SC), The Ahmedabad Manufacturing Calico Printing Co. Ltd. v. S. C. Mehta, Income-tax Officer, observed as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bate was granted was availed of for declaring dividends after the Sub-section had come into force, that is, after April 1, 1956 and, therefore, it did not apply to the present case. It was said that if it were not so, the Sub-section would be given a retrospective operation and the rule was that it was to be presumed that a statute dealing with substantive rights was not to have such operation. This Court, per majority (3: 2), held that Sub-section (10) of Section 35 was intended to have a retrospective operation and was applicable to the present case. Sarkar, J. who was in majority, in his concurring judgment, observed as under: There is no dispute that by Sub-section (10) the legislature intended to penalise a case where subsequent to its enactment, the amount on which rebate had been granted was utilised in declaration of dividends. Now is there any reason to think that the legislature did not want to impose the penalty also on those who had earlier utilised the amount in declaration of dividends? There was no special merit in these latter cases. And I also think that they formed the majority of the cases. The grant of rebate having been stopped after March 31, 1956, there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sub-section was obviously the result of noting how rebates were earned and later were being utilized to fill the pockets of the shareholders. The amendment met this situation, and did it in very clear terms. 24. We do not think that decisions in the cases of Y. Narayana Chetty v. ITO, AIR 1959 SC 213; S.S.Gadgil, ITO v. Lal and Co. [1964] 53 ITR 231 (SC) and J.R Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC) are of any help in interpreting the provisions of law now before us. In Y. Narayana Chetty's case, this Court upheld the contention of the assessee that the notice on the assessee is a condition precedent to the validity of reassessment made under Section 34 of the Income Tax Act, 1922. The Court said that notice prescribed under this section could not be regarded as a mere procedural requirement and that the Income-tax Officer gets jurisdiction to reassess only when notice is served on the assessee as required. In S.S. Gadgil's case, this Court said that in considering whether the amending statute applied, the question was one of the interpretation and that the amending provision must be read subject to the rules that in the absence of an express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not think that Sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment after the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under Sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment under Section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be re-opened up to March 31, 1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under Sub-section (1) of Section 21 have to be completed within 8 years of the particular assessment year. Notice to the assessee follows the authorisation by the Commissioner of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer and making such inquiry as it may consider necessary, assess or re-assess the dealer or tax according to law: Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assessment as the case may be. Explanation I.... Explanation II.... Explanation III.... (2) Except as otherwise provided in this Section no order of assessment or reassessment under any provision of this Act for any assessment year shall be made after the expiration of four years from the end of such year. 9. By the amending Act a proviso was added to Sub-section 2 as under: Provided that if the Commissioner of Sales Tax, on being satisfied on the basis of reasons recorded by the assessing authority that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or reassessment may be made after the expiration of the period aforesaid but not after the expiration of eight years from the end of such year notwithstanding that such assessment or re assessment may involve a change of opinion. 18. The present case is based on amended Ist proviso to subsection 2 of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the period aforesaid but no after the expiration of six years from the end of such year or March 31, 2002, whichever is later notwithstanding that such assessment or re-assessment may involve a change of opinion: Provided further that the assessment or re-assessment for the assessment year 1987-88 may be made by March 31, 1993: Provided also that if the eligibility certificate granted under section 4-A has been amended or cancelled by the Commissioner under sub-section (3) of section 4-A, the order of assessment or re-assessment may be made within one year from the date of receipt by the assessing authority of the copy of the order amending or cancelling the aforesaid certificate or by March 31, 1995, whichever is later: Provided also that the assessment or re-assessment for the assessment year 1989-90 may be made by March 31, 1995. 19. The Apex Court in the case of M/s Binani Industries Limited Vs. Assistant Commissioner of Commercial Taxes, reported in JT 2007 (5) SC, 311 following its earlier decision in the case of Ahmedabad Manufacturing Calico Printing Co. Ltd. Vs. S.G. Mehta ITO, reported in AIR 1963 SC, 1436 and Biswanath Jhunjhunwalla has held that : . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod for assessment or reassessment under Sub-section (2) of Section 21 before the addition of the said proviso had expired. Read as it is, these provisions would mean that the assessment for the year 1987-88 could be re-opened up to March 31, 1993. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under Sub-section (1) of Section 21 have to be completed within 6 years of the particular assessment year or till 31.03.2002 which ever is latter. Notice to the assessee follows the authorisation by the Commissioner of Sales Tax. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to Sub-section (2) of Section 21 of the Act providing limitation up to 31.03.2002 becomes redundant. Proviso now added to Sub-section (2) of Section 21 of the Act does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, as prescribed earlier, had expired before the proviso came into operation. To reassure oneself, one may go into the intention of the legislature in enacting such provision. The date of commencement of the proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court has observed as under:- Incuria literally means carelessness . In practice per in curiam is taken to mean per ignoratium. English Courts have developed this principle in relaxation of the rule of stare decisis. The''quotable in law , as held in Young Vs. Bristol Aeroplane Co. Ltd., (1944) 2 All ER 293, is avoided and ignored if it is rendered, ''in ignoratium of a statute or other binding authority . Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution of India, 1950 (in short the Constitution )which embodies the doctrine of precedents as a matter of law. The above position was highlighted in State of U.P. Vs. Synthetics and Chemicals Ltd., (1991) 4 SCC 139. To perpetuate an error is no heroism. To rectify it is the compulsion of the judicial consigns. The position was highlighted in Nirmal Jeet Kaur Vs. State of M.P., (2004) 7 SCC 558. 26. On the basis of the aforesaid discussion made , we are of the view that while delivering the judgment by the Division Benches of this Court in M/S Prag Ice and oil Mills (Supra) have not noticed the retrospectivity of the provisions contained in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 1976 UPTC 809 (SC) after considering the provision of Section 34 of the said Act by the Apex Court. 31. In Commissioner of Sales Tax Versus Bhagwan Industries (P) Ltd., (1973) 31 STC 293, it was held that reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under this section. If however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the Assessing Authority would be clothed with jurisdiction to take action under this section. 32. The question whether the Assessing Officer had reasons to believe is a question of jurisdiction, a vital thing, which can always be investigated by the Court under Article 226 of the Constitution as has been held in the following cases by Apex Court and different High Courts I. Calcutta Discount Co. Ltd. v. Income Tax Officer, (1961) 41 I.T.R. 191 (SC) ii. Madhya Pradesh Industries Ltd. v. Income Tax Officer, (1965) 57 I.T.R. 637 (SC) iii. Jamna Lal Kabra v. Income Tax Officer, (1968) 69 I.T.R. 461 (All); iv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that year, income chargeable to tax has escaped assessment for that year. The escapement envisaged by Section 21 of the Act for the purposes of re- assessment need not necessarily spring from a source, extraneous to the original record. However, a second thought or a mere change of opinion, by the assessing authority on the same set of facts and material on record would not clothe the assessing authority with a valid jurisdiction. 35. We are not impressed by the argument that the instant case is a case of change of opinion. The change of opinion by the Assessing Officer contemplated, formation of two different opinions or to make two different inferences at two stages on the same set of primary facts. The distinction between an inadvertent mistake or omission and change of opinion was pointed out in Commissioner of Sales Tax, U.P. v. Madhu Chemical Works, Bareilly, 1998 UPTC 230. It was held that in a case where a particular point has been considered on merits, and a view is taken, it would not be a case of inadvert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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