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TMI Blog2008 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations suggesting that the State is trying to overreach the process of the Court. There is also a severe indictment of a functionary of the State, by this Court, of interpolations and manipulations in an official order. This is perhaps what makes the stage show enacted by the State in this litigation a little distasteful and unpalatable if not sordid and tragic. 2. To make matter worse, if we were to include the initiation of contempt proceedings, this is the fifth time that the Petitioner has had to approach this Court for relief that was due to it as far back as in April, 2003 such is the irony of this litigation, which has twice reached the Supreme Court already. 3. Add to this the fact that when we requested learned counsel for the parties to let us know the expenses incurred by their clients so that meaningful costs could be awarded to the successful party, as laid down by the Supreme Court, we were shocked to learn that this litigation alone (not to mention the earlier forays in this Court or the Supreme Court) has cost the parties almost half a crore of rupees so much for access to inexpensive and affordable justice! 4. With this preface, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14 th August, 2003. The Assessing Officer also did not communicate the order dated 14 th August, 2003 to the Petitioner. Instead, on 4 th September, 2003 a notice was issued to the Petitioner seeking to reopen the assessment in respect of the assessment year 2001-2002. The reassessment proceedings continued and culminated in an order of reassessment dated 15 th January, 2004 The first writ petition: 8. Feeling aggrieved by the rejection of its refund application preferred under Section 30(1) of the DST Act (by the order dated 14 th August, 2003) as well as the order of reassessment dated 15 th January, 2004, the Petitioner filed in this Court WP No.869 of 2004 (the first writ petition). In that writ petition, which was decided on 28 th July, 2004 the following conclusions were arrived at by the Division Bench: (1) The order dated 14 th August, 2003 passed by the Assessing Officer was the following:- Dealer is asked to file the present addresses of sub-contractor and sales tax wards, tax deposited figures of each. But he refused to sign and left office. Application is not kept in abeyance and is rejected. (2) The underlined words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterests 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 cancelling the assessment and penalty (if any) imposed and directing a 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. 11. Feeling aggrieved by the failure of the Commissioner to comply with the mandamus issued by this Court in the matter of refund, and instead, attempting to revise the assessment order dated 31 st March, 2003 the Petitioner filed a miscellaneous application in the first writ petition seeking appropriate orders from this Court. 12. On 20 th September, 2004 an order came to be passed on the miscellaneous application directing the Revenue to deposit the entire refundable amount with interest, in the Registry of this Court, within one week. The order dated 12 th August, 2004 passed by the Commissioner was also stayed by this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words, the power of revision conferred upon the Commissioner under the DST Act was omitted under the DVAT Act and conferred on the Commissioner only on 16 th November, 2005. 16. Given this factual background, it is necessary at this stage to pause and take stock of the facts as they existed on 1 st April, 2005 when the DVAT Act came into force. The important facts are: 1. The Works Contract Act and the DST Act were repealed by the DVAT Act. Section 106 of the DVAT Act dealt with repeal and savings. 2. Under the DVAT Act, on 1 st April, 2005 the Commissioner of Value Added Tax did not have the power to revise an assessment order which was erroneous or prejudicial to the interest of the Revenue. [Such a power was conferred on him much later only on 16 th November, 2005]. 3. The power of revision earlier available with the Commissioner under the DST Act was omitted under the DVAT Act. 4. An order dated 12 th September, 1994 issued by the Commissioner was in existence delegating powers of revision under Section 46 of the DST Act to the Assistant Commissioner. 5. The order dated 12 th August, 2004 passed by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006, an office order was issued by which the Commissioner transferred the jurisdiction concerning the assessment of the Petitioner to the Special Zone in respect of all proceedings, whether commenced, pending or to be initiated. 20. Pursuant thereto, the Joint Commissioner, Special Zone issued a notice dated 21 st February, 2006 to the Petitioner in exercise of powers delegated to him under Section 46 of the DST Act. It was stated in the notice that the assessment order dated 31 st March, 2003 was erroneous and prejudicial to the interest of the Revenue and therefore the Petitioner may show cause why the assessment order be not revised. Although no reference was made to the order dated 12 th August, 2004 it is quite clear that the notice was pursuant to that order passed by the Commissioner of Sales Tax. 21. A few days earlier, on or about 17 th February, 2006, the Petitioner had filed WP No.2355 of 2006 (the second writ petition) in this Court in which it was prayed that the order dated 12 th August, 2004 passed by the Commissioner of Sales Tax be quashed. The writ petition was heard for admission by a Division Bench of this Court on 20 th February, 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with law, but not before disposing of the refund claim. 25. In view of the difference of opinion between the learned Judges in the second writ petition, the matter was referred to a third learned Judge (Mukul Mudgal, J) who passed an order on 18 th October, 2006 concurring with the view taken by B.N. Chaturvedi, J quashing the order dated 12 th August, 2004 It was held that the Revenue should first comply with the mandamus dated 20 th July, 2004 directing refund to the Petitioner. 26. After the third learned Judge rendered his opinion, the second writ petition was placed before the Division Bench on 3 rd November, 2006 for passing consequential orders. On that date, the Division Bench allowed the writ petition and quashed the order dated 12 th August, 2004 The Commissioner was directed to pass appropriate orders on the refund application in conformity with the orders of this Court dated 20 th July, 2004 in the first writ petition. The Revenue was also given liberty to pass appropriate orders, in accordance with law, in regard to the assessment order but only after disposing of the refund application. 27. The Revenue preferred Special Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January, 2007 the Commissioner stated in paragraph 10 thereof as follows: This order would, however be without prejudice to the rights and powers of the competent authority for suo-moto revision under Section 46 of the Delhi Sales Tax Act, 1975 read with section 16 of Delhi Sales Tax on Works Contract Act, 1999 which have already been initiated by the competent authority keeping in view the serious discrepancies observed in the assessment order dated 31.3.2003, passed by the assessing authority. 30. Pursuant to the order dated 8 th January, 2007 two events occurred. Firstly, the Commissioner issued two orders on 19 th April, 2007 both of which are impugned in the writ petition that we are presently concerned with. The first Order No. 29 reads as follows: OFFICE OF THE COMMISSIONER, VALUE ADDED TAX DEPTT. OF TRADE and TAXES (POLICY BRANCH) VYAPAR BHAWAN, I.P. ESTATE, NEW DELHI No.VATO/Policy-III/2005-06/29 Dated: 19-04-2007 ORDER In partial modification of order No.F.8(28)/93-PPR/ 13368-384 dated 12 th September 1994 regarding delegation of powers under section 46 of the DST Act, 1975, I, Archna Arora, Commissioner, Value Added Tax, Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be re-heard. It was then adjourned a couple of times and eventually taken up on 27 th July, 2007. 33. On 27 th July, 2007 the Division Bench noted the submission of learned senior counsel for the Revenue that the show cause notice dated 21 st February, 2006 has been withdrawn and a fresh notice dated 18 th July, 2007 has been served upon the Petitioner. Consequently, the writ petition had become infructuous. 34. Learned counsel for the Petitioner admitted receipt of the notice dated 18 th July, 2007 and sought liberty to challenge it. Liberty was granted to the Petitioner as prayed for and the third writ petition was dismissed as infructuous. 35. It is under the above circumstances that the present writ petition (the fourth writ petition) has been filed challenging the two orders dated 19 th April, 2007 and the notice dated 18 th July, 2007 whereby the Petitioner has been asked to show cause why the assessment order dated 31 st March, 2003 be not revised. 36. It is worth mentioning at this stage that the notice dated 18 th July, 2007 was issued in exercise of powers conferred by Section 16 of the Works Contract Act read with Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the D.C. (Spl. Zone) was issued on 19.4.2007, there remains scope for some confusion/ambiguity about the jurisdiction of the then Joint Commr. Special Zone/Joint Commr. V who initiated the proceedings on 21.2.2006 and also of the Deputy Commissioner (Special Zone) before 19.4.2007. Without going into the merits of the case, it may be appropriate that a fresh notice be issued to the dealer calling for revision proceedings under Section 46 and the case under Section 46 to be taken up accordingly. 41. We are unable to appreciate how the Deputy Commissioner could have withdrawn the show cause notice dated 21 st February, 2006 issued by his superior officer, the Joint Commissioner, but we leave it at that. In any event: no order was passed withdrawing the show cause notice dated 21 st February, 2006 but the withdrawal finds a mention in the fresh show cause notice dated 18 th July, 2007 and no order was passed permitting the issuance of the show cause notice dated 18 th July, 2007. Submissions and discussion: 42. At the outset, we may note two preliminary objections raised by learned counsel for the Revenue. Firstly, it was contended that on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that was available to the Commissioner under Section 16 of the Works Contract Act read with Section 46 of the DST Act 46. The answer to the first question is entirely factual and that question must be answered in the negative. The order dated 12 th August, 2004 passed by the Commissioner directed the Zonal Assistant Commissioner to revise the assessment order dated 31 st March, 2003 in exercise of powers delegated to him under Section 46 of the DST Act. However, the Zonal Assistant Commissioner took no steps to call for or examine the record relating to the assessment order; nor was any opportunity given to the Petitioner in this connection, either by issuing a show cause notice or in any other manner calling upon the Petitioner to place its case before him on or before 31 st March, 2005. 47. The Joint Commissioner, Special Zone took the first step only on 21 st February, 2006 when he issued a notice to the Petitioner requiring it to show cause (somewhat indirectly though) why the assessment order dated 31 st March, 2003 be not revised. The Petitioner was asked to appear before him on 27 th February, 2006 along with relevant records for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd so the interim stay continued till 18 th November, 2005 by which time the DST Act and the Works Contract Act were repealed. 53. In other words, as on 1 st April, 2005 there was no operative order as far as the Petitioner is concerned. It was submitted by learned counsel for the Revenue that the order dated 12 th August, 2004 nevertheless existed. As far as a theoretical and academic existence is concerned, learned counsel may be correct but the existence was purely academic and theoretical, since the order dated 12 th August, 2004 was set aside by this Court in the 3 rd November, 2006 in the second writ petition. The effect of such a setting aside is explained in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, (1992) 3 SCC 1 wherein it is held in paragraph 10 of the Report: Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. 54. Therefore, whichever way one considers the matter, the inevitable conclusion is that no proceedings for revising the assessment order were pending on 1 st April, 2005. 55. What existed, if at all, was a dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of the powers conferred by or under this Act, as if this Act were in force on the day on which such thing was done or action was taken. 58. In Indira Sohanlal v. Custodian of Evacuee Property, AIR 1958 SC 77 the Constitution Bench of the Supreme Court divided the above provision into two parts, namely, the first part (which it described as being in negative terms) whereby the previous operation of the repealed statute survived the repeal. The second or positive part of the provision deemed that the repealing statute was in force at an earlier date. 59. The Supreme Court drew a very important distinction between the previous operation of the repealed law and the future operation of the previous law . Amplifying this, in the context of the second part of Section 58(3) of the Ordinance, it was held in paragraph 15 of the Report: Broadly speaking, the second portion of section 58(3) refers to the whole range of things that may be done, or action that may be taken, under the previous Ordinance and the rules framed thereunder, while the first portion of section 58(3) relates to the legal consequences resulting under the Ordinance or the rules from certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose statutes. Thereby matters and transactions past and closed remain operative. 63. What this simply means (in so far as we are concerned) is that in respect of the previous operation of the repealed statutes, a legal fiction is created as a result of which it must be deemed that the repealed statutes never existed, except as to transactions past and closed. 64. This is made explicit in Gajraj Singh. In paragraph 22 of the Report, it is said: Whenever an Act is repealed it must be considered, except as to transactions past and closed, as if it had never existed. The effect thereof is to obliterate the Act completely from the record of Parliament as if it had never been passed; it never existed except for the purpose of those actions which were commenced, prosecuted and concluded while it was an existing law. Legal fiction is one which is not an actual reality and which the law recognizes and court accepts as a reality. Therefore in case of legal fiction the court believes something to exist which in reality does not exist. It is nothing but a presumption of the existence of the state of affairs which is actuality is non-existent. The effect of such a legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Revenue relied upon a decision of the Bombay High Court in Siemens India Ltd. v.State of Maharashtra, [1986] 62 STC 40 but that decision did not even note the earlier decisions of the Supreme Court and was even otherwise rightly distinguished by the Punjab and Haryana High Court. Moreover, the observations made by the Bombay High Court (relied on by learned counsel for the Revenue) are obiter and not binding. We are, therefore, not adverting to that decision in any detail. 68. The sum and substance of the contention of learned counsel for the Petitioner was (and we agree with him) that the power of revision is not a right and, therefore, it is not saved by the second part of Section 106(2) of the DVAT Act. 69. In Hari Shankar v. Rao Girdhari Lal Chowdhury, AIR 1963 SC 698 the Supreme Court held in paragraph 7 of the Report: The distinction between an appeal and a revision is a real one. A 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 as, we find, has been done is second appeals arising under the Code of Civil Procedure. The power to hear a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to review the evidence unless the statute expressly confers on it that power. Purely by way of academic interest, it may be mentioned that the broad interpretation given to the scope and extent of the power of revision by J.C. Shah and S.M. Sikri, JJ in Charia Abdullah was upheld in Swastik Oil Mills Ltd. v. H.B. Munshi, AIR 1968 SC 843 without disturbing the distinction drawn between an appeal and a revision. 71. All these decisions came up for consideration in Shiv Shakti Coop.Housing Society v. Swaraj Developers, (2003) 6 SCC 659. In that decision, the Supreme Court was dealing with the power of revision. It was noted, in paragraph 13 and 14 of the Report that the right of appeal is a substantive right, but there is no substantive right in making an application for revision. Section 115 of the Code of Civil Procedure is essentially a source of power to supervise a subordinate Court and it does not confer any right on a litigant to have an erroneous order corrected. The scope for making a revision under Section 115 is not linked with a substantive right. In paragraph 33 of the Report, it was categorically stated: Section 6 of the General Clauses Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confer the power of revision under the DVAT Act. 75. In paragraph 32 of the Report in Gajraj Singh the effect of an omission in a subsequent legislation is discussed in the following words: Existence of the corresponding provisions similar to the repealed provisions is a condition precedent. If the operation of the provisions in the Act is inconsistent and incompatible, it gets obliterated and the earlier provisions no longer revive or survive. If analogous provision in the Repealed Act does not find place in the Act, the rights accrued or acquired thereunder would not continue under the Act unless fresh rights are acquired under the Act. 76. Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 is far more categorical. In paragraph 34 of the Report, it is held: It is our considered view that the court is to look to the provision in the rule which has been introduced after omission of the previous rule to determine whether pending proceedings will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the repealing statute, it cannot survive the repeal; nor can its ghost be invoked to revive a transaction 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. 79. Learned counsel for the Revenue, however, contended that the taxable event is when the Petitioner incurs a liability. Reliance was placed on Tata Iron and Steel Co. Ltd. v. State of Bihar, AIR 1958 SC 452 and The Kedarnath Jute Manufacturing Co. Ltd. v. The Commissioner of Income Tax, (1972) 3 SCC 252 and T.K. Khadar Mohiuddin v. State of Andhra Pradesh, [1968] 21 STC 45. It was submitted that since the Petitioner had incurred a liability to pay tax, all subsequent actions taken by the Revenue to recover the tax are permissible and survive. We do not think this is correct for two reasons. The question of the liability of the Petitioner to pay tax had come to an end on the passing of the assessment order, which gave it an entitlement to a refund. The liability of the Petitioner to tax would have arisen (if at all) only after the revision of the assessment order - until then the Revenue was liable for a refund. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse to purposive construction. It is also a well-settled principle of law that casus omissus cannot be supplied. (See J. Srinivasa Rao v. Government of Andhra Pradesh, (2006) 12 SCC 607). 83. The consequence of this is that the repeal of the DST Act and the Works Contract Act coupled with the omission of the revisionary power of the Commissioner under the new enactment, that is, the DVAT Act completely obliterated or effaced that power such that it did not survive after 1 st April, 2005. There is nothing in the DVAT Act to suggest that the power was intended to survive or be acted upon. 84. It is true that a fresh power of revision was conferred on the Commissioner by an amendment brought about to the DVAT Act on 16 th November, 2005 when Section 74A was inserted in that Act but this did not resuscitate or resurrect the long-dead revisionary power conferred on the Commissioner under Section 46 of the DST Act. It had no retrospective effect. 85. What is the consequence of all this as on 1 st April, 2005 There were no pending proceedings for revision of the assessment order. The power of revision earlier available with the Commissioner had suffered a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15 th June, 2007. He was aware that the revisionary power had been delegated to the Assistant Commissioner by the order dated 19 th September, 1994. The show cause notice dated 21 st February, 2006 was issued by the Joint Commissioner while the hearing was being conducted by him as the Deputy Commissioner. It is for this reason that he stated in his order dated 15 th June, 2007 that there was scope for some confusion/ambiguity about the jurisdiction of the then Joint Commr. Special Zone/Joint Commr. V who initiated the proceedings on 21.2.2006 and also of the Deputy Commissioner (Special Zone) before 19.4.2007. This was quite an understatement and under these circumstances, the Deputy Commissioner withdrew the show cause notice dated 21 st February, 2006 issued by an officer superior to him and issued a fresh show cause notice dated 18 th July, 2007 without reserving any right to do so and without having the power to do so. The Revenue created a chakravyuh and found itself trapped in it. 90. This being so, we have no option but to allow the writ petition and quash both the orders dated 19 th April, 2007 and the show cause notice dated 18 th July, 2007. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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