1. Challenge in this writ petition is the proceedings initiated for the Assessment Year 1990-91 under Section 21 (2) of the U.P. Trade Tax Act, 1948 (hereinafter referred to as 'the Act') by issuing a notice (Annexure-4 to the writ petition) dated 19.03.2002.
2. The brief facts necessary for deciding this writ petition are that the petitioner-M/s Commercial Motor Limited is a 'registered dealer' under the Act. During assessment year 1990-91, the petitioner was authorized dealer of scooters manufactured by M/s Bajaj Auto Ltd. and has sold the same during the said assessment year to the State employees of the State Government through U.P. Government Employees Welfare Corporation as well as Canteen of the Stores Department amounting Rs.5,23,93,337.57. During the course of assessment, the petitioner submitted the certificates, which was required to be issued for claiming exemption in terms of notification No.7037 dated 31.01.1985. The Assessing Officer (in short 'the AO') on the basis of these 270 certificates granted exemption on the sale of scooters to the U.P. Government Employees and Canteen Stores Department for an amount of Rs.5,23,93,337.57 vide its assessment order (Annexure-1 to the writ petition) dated 25.03.1995. The AO accepted the book version of the petitioner while making 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 reasons recorded by the assessing authority, is satisfied that it is just and expedient so to do, authorizes the assessing authority in that behalf, such assessment or re-assessment may be made after the expiration of the period aforesaid, but not after the expiration of six years from the end of such year or March 31, 2002 which ever is later, notwithstanding that such assessment or re-assessment may involve a change of opinion."
3. It was further stated in the reply that so far as, the words "or 31st March 2002 which ever is later" means upto 31.03.2002, but it shall not enhanced the limitation beyond six years and, therefore, the notice issued is beyond limitation and without jurisdiction.
4. And Secondly, the books of account were examined in original during assessment proceedings by the AO as is evident from the assessment order of year 1990-91 (Annexure-1 to the writ petition) and therefore, it is evident that on the basis of material already considered by AO while making the original assessment the notice has been issued for reopening the assessment already completed which does not fall within the ambit of section 21(1) of the Act.
5. After considering the reply submitted by the petitioner, the petitioner was directed to appear on 18.03.2002 with documents for clarifying the position. Aggrieved by the aforesaid notice, which was received by the petitioner on 19.03.2002, this writ petition has been filed.
6. On filing of this writ petition, this Court vide its order dated 21.03.2002 passed the following interim order:
"Three weeks time is allowed to file counter affidavit, one week for rejoinder affidavit thereafter.
List thereafter.
In the meantime, the assessment may go on but no final order he passed under Section 21(2) of the Trade Tax Act for the Assessment Year 1990"
7. Counter affidavit has been filed by the department stating therein that the amendment incorporated on 05.03.2001 has retrospective effect and the assessment and the reassessment can be made till 31st of March, 2002. The period has been commenced in terms of the statute, therefore, the case is squarely covered under amended provisions and the proceedings initiated are in accordance with law and thus, initiated within the time. It has also been stated in the counter affidavit that this case is squarely covered under Section 21(1) of the Act and the authority 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 permitted to change its opinion and on that basis have no right to reopen the assessment under sub-section (2) of Section 21 of the Act. In support of this contention, he relied upon the judgements rendered in M/s Binani Industries Ltd., Kerala Vs. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore and others; 2007 UPTC 870, Commissioner of Income Tax Vs. Kelvinator of India Ltd.; (2010) 320 ITR 561 (SC) and M/s Super Chemicals, Seo Ka Bazar, Agra Vs. Additional Commissioner, Grade-I, T. Tax, Agra Zone, Agra and others; 2010 NTN (Vol.42) 163 (Alld).
10. On the contrary, learned Additional Chief Standing Counsel relying upon the judgements Kalpana Kala Kendra Vs. S.T.O.; 1989 UPTC 597 and Shyam Babu Vaish and Company Vs. Assistant Commissioner, Trade Tax; 2004 UPTC 2010 has submitted that in view of these authorities, it cannot be said that the assessment under Section 21(2) of the Act is time barred.
11. Learned counsel for the petitioner submits that the case of Kalpana Kala Kendra (supra) has been overruled in Aryavart Chemical Udhog and others Vs. State of U.P. And others; 2008 UPTC 881, Allahabad Lucknow Bench.
12. So far as the facts are concerned, there is no dispute regarding completion of assessment for the year 1990-91 on 25.03.1995. It is also not denied that the proceedings were initiated by issuing a notice on 13th of March, 2002 under sub-section (2) of Section 21 of the Act. The correctness of the contents of the notice were also not disputed by the petitioner.
13. In view of the above the following questions arise for determination by this Court;
1. Whether in the facts and circumstances mentioned above could a complete assessment under the Act could be reopened after prescribed period when that period has been enlarged by amending the law?.
2. Whether any case for reopening the assessment relying upon the Section 21(1) is made out and whether it is a case of change of opinion?.
Question No.1
14. The Apex Court In Addl. Commissioner (Legal) and Anr. Vs. Jyoti Traders and Anr. (1999) 2 SCC 77 dealt with the case of Commercial Tax Officer v. Biswanath Jhunjhunwalla, AIR1997 SC 357,and observed as under:
"13.--------in Commercial Tax Officer v. Biswanath Jhunjhunwalla, AIR 1997 SC 357. In this case, which is under the Bengal Finance (Sales Tax) Act, 1941, the respondent, a registered dealer under this Act, 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 from November 1, 1971, and in relevant part now it reads 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 six years previously."
15. After this amendment to Rule 80(5) as aforesaid Commercial Tax Officer issued notices on November 7, 1974 re-opening the completed assessments for the years Chaitra Sudi 2023 and 2024. These notices were challenged in the Calcutta High Court by writ petition questioning the legality of the notices. High Court upheld the contention of the respondent-assessee that, by the amendment of the Rule, assessments which had been completed could be revised within six years of the date of such completion, but when the right to revise the assessments under the unamended provision of the rule stood barred on the date of the amendment, such assessments could not be re-opened or revised. High Court said that the notification did not either expressly or necessary implication confer any power of revision of assessment which stood barred on the date on which it was issued. After referring to decision of this Court in the cases of ITO v. S. K. Habibullah, [1962] 44 ITR 809 (SC), S. S. Gadgil ITO v. Lal and Co. [1964] 53 ITR 231 (SC) and J. P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC) this Court held as under:
"12. What, therefore, we have to seek is the clear meaning of the said Notification. If there be no doubt about the meaning, the amendment brought about by the said Notification must be given full effect. If the language expressly so states or clearly implies, retrospectivity must be given with effect from 1-11-1971, so as toencompass all assessments made within the period of six years theretofore, whether they have become final by reason of the expiry of the period of four years or not."
13. By reason of the said Notification, with effect from 1-11-1971, Rule 80(5)(ii) has to be read as barring the Commissioner (or other authority to whom power in this behalf has been delegated by the Commissioner) from revising of his own motion any assessment made or order passed under the Act or the rules if the assessment has been made or the order has been 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 follows in para 22,23 and24 which reads as under:
"22. In The Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S. C. Mehta, Income-tax Officer,[1963] 48 ITR 154 (SC) in its assessment to income-tax for the year 1952-53, the appellant, a company, had been granted under the provisions of the Finance Act, 1952, a rebate on a portion of its profits of the previous year, that is, 1951 which it had not distributed as dividends to its shareholders. In the next assessment year 1953-54, the appellant used a part of the aforesaid undistributed profits for declaring dividends. As the law then stood, nothing could be done by the revenue authorities to withdraw the rebate earlier granted on the ground of the profits being utilised in declaring dividends in a latter year. From April 1, 1956, however, there was a change in the law as Sub-Section (10) of Section 35 of the Income-tax Act, 1922, was brought into force then. By an order made on March 27; 1958,under that Sub-section, the aforesaid re-bate was withdrawn and the appellant was called upon to refund it. The appellant then applied to the High Court at Bombay for a writ to quash the order of March 27, 1958, on the ground that Sub-section (10) was not applicable to the facts of this cask That application was dismissed by the High Court. The appeal in the Supreme Court was against this decision of the High Court at Bombay dismissing the application. Now Subsection (10) of Section 35 of the Income-tax Act was enacted by the Finance Act of 1956. That Sub-section, in so far as it is necessary to state for the purpose of this case, provided that where in any of the assessment years 1948-49 to 1955-56, a rebate of income-tax was allowed to a company under the Finance At prevailing in that year on a part of its total income "and subsequently the amount on which the rebate of income-tax was allowed as aforesaid is availed of by the company, wholly or partly, for declaring dividends in any year...the Income-tax Officer shall re-compute the tax payable by the company by reducing the rebate originally allowed."The Sub-section in substance permits a rebate duly allowed in any year before it came into force to be withdrawn if "subsequently" the amount on which the rebate was allowed "is availed of "for declaring dividends in any year". The appellant contended that the Sub-section did not apply unless the amount on which the rebate 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 was no occasion to provide for cases of such grant thereafter. All these circumstances lead me to the view that the intention of the legislature was to penalise the cases of utilisation of amounts on which rebate had been granted in payment of dividends which had happened before the Sub-section came into force. The remedy which the Subsection provided would largely fail in any other view. The general scope and purview of the Sub-section and a consideration of the evil which it was intended to remedy lead me to the opinion that the intention of the legislature clearly was that the sub section should apply to the facts that we have in this case."
23. Hidayatullah, J. who spoke for the majority said that Sub- section (10) was introduced into Section 35 of the Income Tax Act, 1922 by the Finance Act, 1956 and that if there was nothing more in the language of the Sub-section to give it operation from an earlier date it would have operated only from April 1, 1956 but the language of the Sub-section gave it additional retrospectivity and said so in such clear and unambiguous language as to leave no doubt. He then observed (Para 41 of AIR):
"In the present case, this is so. The assessee company declared dividends in the calendar year 1952. The assessment year was 1-4-1953 to 31-3-1954. The letter written on March 18, 1958, asking the assessee company to show cause was within the four years reckoned from the end of the financial year (31-3-1954) in which the amount on which rebate of Income-tax was availed of for declaring dividends. It complied with the letter of the Sub-section. Since the power commenced on 1-4-1956, the utmost reach of the Income-tax Officer would be the end of the assessment year 1952. Any declaration of dividend after 1st day of April, 1952, out of accumulated profits of any of the years in which rebate was earned would be within time for the recall of the rebate. But a declaration prior to 1-4-1952 would be beyond the power of the Income-tax Officer to recall. This meaning is the only meaning which the plain words of the section can bear. Any other meaning might make Sub-section (10) unworkable because no company, with the knowledge that rebate would be recalled, would like to declare dividends after April 1, 1956 out of amounts on which rebate was earned. If the other meaning was attributed, Subsection (10) might well be a dead letter. The 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 provision or clear implication the legislature does not intend to attribute to the amending provision a greater retrospectivity than expressly mentioned. J. P. Jani's case was concerned with the retrospective operation of the new Income Tax Act, 1961 when assessment proceedings under the old Income Tax Act, 1922 had already concluded and period to re-open the assessment under the old Act had become barred."
16. After discussing the aforesaid cases their Lordships concluded in Jyoti Traders Case (Supra) in para 25 which reads as under:
"25. The two decisions in the cases of The Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S.G.Mehta, ITO, [1963] 48 ITR 154 (SC) : AIR 1963 SC 1439 and CTO v. Biswanath Jhunjhunwalla 1996 AIR SCW 3721, are more closer to the issue involved in the present case before us. They laid down that it is the language of the provision that matters and when meaning is clear, it has to be given full effect. In both these cases this Court held that the proviso which amended the existing provision gave it retrospectivity. When the provision of law is explicit, it has to operate fully and there could not be any limits to its operation. This Court in Biswanath Jhunjhunwalla case said that if the language expressly so states or clearly implies, retrospectivity must be given to the provision. Under Section 34 of the Income Tax Act, 1922, it is the service of the notice which is sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under Sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in this section no order for any assessment year shall be made after the expiry of 4 years from the end of such year. However, after the amendment, a proviso was added to Subsection (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of 8 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force w.e.f. February 19, 1991. We do 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 interpretation given by the respondents, the proviso added to Sub-section (2) of Section 21 of the Act becomes redundant. Commencement of Act can be different than the operation of the Act though sometimes both may be the same. 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. One has to see the language of the provision. If it is clear, it has to be given its full effect. To reassure oneself, one may go into the intention of the legislature in enacting such provision. The date of commencement of the proviso to Section 21(2) of the Act does not control its retrospective operation. Earlier the assessment/reassessment could have been completed within four years of that particular assessment year and now by the amendment adding proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after satisfaction of the Commissioner of Sales Tax. The proviso is operative from February 19, 1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to previous eight assessment years. We need not refer to the provisions of Income Tax Act to interpret proviso to Section 21(2) language of which is clear and unambiguous and so is the intention of Legislature. We are, thus, of the view that High Court was not right in quashing the sanction given by the Commissioner of Sales Tax and notices issued by the Assessing Authority in pursuance thereto."
17. It is necessary to reproduce the provisions of Section 21 of the Act which were considered by the Apex Court in Jyoti Traders case (Supra) which were given in para 8, 9 and 10 of the Judgement:
"8. Relevant provisions of Section 21 of the Act are as under:
"Section 21. Assessment of tax on the turnover not assessed during the year.
(1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax, at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof the assessing authority may, after issuing notice to the dealer 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 21 which was further amended vide amending Act of 2001 came into effect w.e.f 5.3.2001, whereby the words" six years from the end of such year or march 31,2002" were substituted in place of words "eight years from such year". The amended section 21is reproduced herein below:
"Section 21. Assessment of tax on the turnover not assessed during the year.
(1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess 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-- : Nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgement.
Explanation-II-- : For the purposes of this section and of section 22, "assessing authority" means the officer or authority who passed the earlier assessment order, if any, and includes the officer or authority having jurisdiction for the time being to assess the dealer.
Explanation-III--:Notwithstanding the issuance of notice under this sub-section, where an order of assessment or re-assessment is in existence from before the issuance of such notice it shall continue to be effective as such, until varied by an order of assessment or re-assessment made under this section in pursuance of such notice.
(2) Except as otherwise provided in this section, no order of assessment or re-assessment under any provision of this Act for any assessment year shall be made after the expiration of two years from the end of such year or march 31, 1988, whichever is later :
Provided that if the Commissioner on his own or on the basis of reasons recorded by the assessing authority, is satisfied that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or re-assessment may be made after the expiration of 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 :
"...it is the language of the provision that matters and when the meaning is clear, it has to be given full effect. In both these cases, this Court held that the proviso which amended the existing provision gave it retrospectivity. When the provision of law is explicit, it has to operate fully and there could not be any limits to its operation. This Court in Biswanath Jhunjhunwalla case said that if the language expressly so states or clearly implies, retrospectivity must be give to the provision."
20. In view of the above legal position as settled herein above that it is the language of the provision that matters and when meaning is clear, it has to be given full effect. When the provision of law is explicit, it has to operate fully and there could not be any limits to its operation. Under Sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in this section no order for any assessment year shall be made after the expiry of 2 years from the end of such year or till 31.3.1988 which ever is later . However, after the amendment, a proviso was added to Subsection (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of aforesaid period but not after 8 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force w.e.f. February 19, 1991. This proviso was further amended and six years from the end of such year or March 31,2002 which ever is later" were substituted in place of words "eight years from such year. In view of IInd proviso the assessment or reassessment for the year 1987-88 may be made till 31.03.1993 and as per IVth proviso the assessment or reassessment for the year 1989-90 may be made till 31.03.1995. We do not think that Sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the amended proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment after the expiration of 6 years from such year, i.e upto 31.03.1999 or March 31,2002 which ever is later. 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. 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 Section 21 (2) of the Act does not control its retrospective operation. Earlier the assessment/ reassessment could have been completed within two years of that particular assessment year or till 31.03.1988 which ever is later and now by the amendment adding proviso to Section 21(2) of the Act it is six years of that particular assessment year or till 31.03.2002 which ever is later . The only safeguard being that it is after satisfaction of the Commissioner of Sales Tax. The proviso is operative from February 5.03.2001 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to previous six assessment years or 30.03 2002. We are, thus, of the view the impugned notice issued is well with in time.
21. The learned Counsel for the petitioner relied upon para 8 of the decision in M/S Prag Ice and oil Mills and other Vs. Additional Commissioner of Trade Tax and another, (VSIT 2008..B92). In para 8 the division bench without discussing the provisions of amended Ist proviso vide amendment dated 5.3.2001 and without taking into note of decisions of the Apex Court, discussed herein above, observed that the amendment brought in Ist proviso on 5.3.2001 would not be applicable whatsoever to limitations which have already run out before 5.3.2001. without considering the retrospectivity of the amended portion. Hence the same could not be made applicable in the present case and on fact, will not extend any help to the petitioner and seem to be per in curiam.
22. What would be the effect if a judgment is per in curiam is the question now to be considered.
23. This question has been dealt with in State Vs. Ratan Lal Arora (2004) 4 SCC 590, the Hon'ble Supreme Court held that where in a case the decision has been rendered without reference to statutory bars, the same cannot have any precedent value and shall have to be treated as having been rendered per in curiam.
24. In N. Bhargavan Pillai Vs. State of Kerala, AIR 2004 SC 2317, the Hon'ble Supreme Court held that in view of the specific statutory bar, the view, if any, expressed without analysing the statutory provision cannot, in our view, be treated as a binding precedent, and at the most is to be considered as having been rendered per in curiam.
25. A similar view has been reiterated in Mayuram Subramanian Srinivasan Vs. CBI, AIR 2006 SC 2449, wherein the 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 proviso added to section 21(2) of the Act and the amended Ist proviso added on 5.3.2001 by amending Act of , 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 in curiam have no binding force and therefore, are not binding precedent.
27. Question No.1 is accordingly answered in favour of Revenue.
Question No.2
28. Perusal of the notice issued under section 21 of the Act reveals that basis has been referred therein on the basis of which the believe was formed. Additional standing Counsel has very fairly conceded that no fresh material is available on record on the basis of which believe was formed that the exemption/deduction has wrongly been allowed. On these facts it is to be examined whether the initiation of the proceeding is legally justified or not.
29. Section 21 (1) of the U.P. Trade Tax Act contemplates assessment or reassessment relates to the assessment of the escaped assessment to tax. In this section the proceeding can be initiated only if the assessing authority "has a reason to believe" that there is escaped assessment in the following contingencies;
I) that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax, or II) has been under assessed or III) has been assessed to tax at a rate lower than that at which it is assessable under this Act, or IV) any deductions or exemptions have been wrongly allowed in respect thereof,
30. Section 34 of the Income Tax Act, 1922 is almost similar to the provision of Section 21 of the U.P. Sales Tax Act. The belief entertained by the Assessing Officer must not be arbitrary or irrational. It must be reasonable and based on reasons, which are relevant. It must be in good faith and not in mere pretence, should have a rational connection and relevant bearing on the formation of the belief, and should not be extraneous or irrelevant. The material should be relating to the particular year for which the assessment is sought to be reopened. It is not any and every material, howsoever vague and indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to escaped income as held in Income Tax Officer Versus Lakhani Mewal Dutt, (1976) 103 ITR 437, 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. Daykatran Rawatmal v. Income Tax Officer, (1960) 38 I.T.R. 301 (Cal);
v. C.M. Rajgharia v. Income Tax Officer, (1975) 98 I.T.R., 486 (Pat) vi. Ganga Saran and Sons P. Ltd. v. Income Tax Officer, (1981) 130 I.T.R. 1 (SC).
33. If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Assessing Officer could not have reason to belief. In such a case, the notice issued by him would be liable to be struck down as invalid. It is also settled principle of law that in a writ jurisdiction under Article 226 of the Constitution of India, this Court can not look into the sufficiency of the material on the basis of which a believe has been formed and notice under Section 21 of the Act has been issued. This Court can only examine whether there was any material and whether the material is relevant to form the believe of escaped income. as held in the case of Indra Prastha Chemicals Pvt. Ltd., Versus Commissioner of Income tax reported in 2005 UPTC, 53.
34. In the case of Kalpana Kala Kendra, Kanpur Versus Sales Tax Officer, Circle 20, Kanpur, reported in [1989 U.P.T.C.-597], the Division Bench of this Court held as follows:
"Section 21 of the Act is based upon the theory that the taxes must be collected by the statutory machinery. The escapement from assessment whether it results on account of a concealment practised or fraud played by the assessee or as a result of negligence or ignorance of the assessing authority, in our opinion, is of no consequence, provided the action to reopen the assessment is otherwise justified and the assessing officer is not acting arbitrarily or in a capricious manner. The escapement of assessment contemplated under that section may be due to various reasons. The term 'turnover has escaped assessment to tax' which includes under assessment, may as well be result of lack of care on the part of the assessing officer or by reason of his inadvertence on his part. Section 21 does not prohibit obtaining of information from investigation of material on record of the original assessment. The scope of that section is not circumscribed by a rider like the one that exists in Section 147 (a) of the Income Tax Act, 1961, namely the Income Tax Officer has reason 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 inadvertent mistake or omission, if it is found that the view taken earlier was wrong. It would be a case of change of opinion, but if it is not so, then it would be a case of non-application of mind and an action would be justified under Section 21 of the Act.
36. The division bench of this Court in Gaya Deen Kailash Chand Vs. State of U.P. and Others, (2013) 59 VST 144 (All) in para 21 held as under;
"21. The argument is attractive but on deeper scrutiny, we find that it does not hold the water. The reason is that the notice under section 21 of the Act in the case of Aryaverth Chawal Udyog [2009] 22 VST 10 (All) is differently worded. The court held that the notice was issued on account of change of opinion. Whether reassessment notice has been issued on account of change of opinion, will depend on the facts of individualcases and may differ from case to case."
37. The perusal of the notice impugned issued reveals that material has been referred on the basis of which believe was formed to reopen the case under section 21 (1) of the Act. In the original assessment order the tax exemption was granted to the petitioner on the bases of 270 certificates on the turnover of sale of scooters to the State employees of the State Government through U.P. Government Employees Welfare Corporation as well as Canteen of the Stores Department amounting Rs.5,23,93,337.57. However it was later found that the total of these 270 certificate is not Rs.5,23,93,337.57. but is only of Rs.4,26,94,276.59. It 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 notice under section 21 of the Act has been issued without any fresh material but not on account of change of opinion. Initial opinion while passing the original assessment order was to grant exemption on such sale of scooters has not been changed while issuing the notice but on the same principles it was found that exemption has wrongly allowed to the extent of Rs. 97,02,050.65 which ought to be taxed. So far as this calculation of total amount of 270 certificates are concern, the correctness of the same has not been disputed by the petitioner. In view of the factual matrix of this case the Additional Commissioner was having well founded reason to believe for issuing impugned notice and the notice impugned is valid and fall within the ambit of section 21(1), in limb-IV, as mentioned herein above.
38. The initiation of proceeding under section 21 (1) of the Act , thus, was not on account of change of opinion and as such are permissible and, therefore, the initiation of proceeding under section 21 of the Act in the case of the petitioner is in accordance with law. Re-assessment proceedings and orders passed under section 21 of the Act are hereby affirmed.
39. In the result, the writ petition sans merit and is accordingly dismissed. However there shall be no order as to the costs.
Dated: 3rd March, 2014 akverma