JUDGMENT
1. Heard Sri Ashok Kumar, learned Counsel for the petitioner and Sri Harsh-vardhan and Sri Rakesh Bajpai for the respondents.
2. The petitioner, a private limited company incorporated under the Indian Companies Act, 1956 having its registered office at New Delhi and factory at Noida, established a new unit in pursuance of the scheme of exemption notified by the State Government for the manufacture of soap and detergents. The petitioner was granted eligibility certificate on January 18, 1985. The aforesaid certificate was at one point of time cancelled by the Area Chief Executive Officer, Noida, whereupon the petitioner filed a writ petition in the High Court which was allowed on June 3, 1989 and the order cancelling the eligibility certificate was quashed. The petitioner, thus, possessed a valid eligibility certificate on the basis of which the exemption has been granted to the petitioner from payment of sales tax (now trade tax) for the assessment years 1984-85, 1985-86, 1986-87, 1987-88 and 1988-89.
3. It appears that despite the aforesaid eligibility certificate being in force, the assessing authority took some different view in the assessment proceedings and, therefore, the petitioner filed one more writ petition bearing No. 462 of 1989 Manak Tala Chemicals (P) Ltd. v. State of U. P. [1991] UPTC 913, which was also allowed after holding that the assessing authority has no jurisdiction to sit in judgment over the grant of eligibility certificate granting exemption from payment of trade tax.
4. The petitioner again felt aggrieved when a notice under Section 21 of the Sales Tax Act dated March 22, 1993 was issued and received on March 30, 1993 fixing March 31, 1993 for appearance and hearing. This notice related to the assessment years 1984-85 and 1985-86. As per the averments made in the writ petition, the petitioner appeared before the assessing authority and apprised him that the notice has been issued beyond limitation which period has already expired but without giving any adjournment or considering the aforesaid objections, the assessing authority proceeded to make the assessment ex parte. The petitioner received the ex parte order of assessment for the year 1984-85 and 1985-86 in which it was for the first time mentioned that the Commissioner/Additional Commissioner, Sales Tax, U. P., Lucknow on March 29, 1993 had granted permission to initiate the proceedings under Section 21 of the Act for the aforesaid assessment years.
5. Assailing the aforesaid proceedings, the present writ petition has been filed in which the court passed an interim order on May 6, 1993 staying the operation of the order of Commissioner dated March 29, 1993 by means of which the sanction for proceeding under Section 21 was granted and it was also directed that the tax reassessed for these years shall not be recovered.
6. Sri Ashok Kumar challenges the issuance of notice under Section 21 on the grounds that it was barred by limitation and the assessing authority could not have issued such notice in the presence of eligibility certificate and also on the ground that if a notice under Section 21 is issued after expiry of the period of limitation normally prescribed which was four years in this case from the date of last assessment year, the permission/sanction of the Commissioner has to be obtained before the notice is issued to the dealer, during the extended period of limitation which was eight years. It has also been urged that the Commissioner while granting permission to proceed under Section 21 after the normal period stands expired, has to give an opportunity to the dealer also before granting sanction.
7. Learned Counsel for the State, however, refutes the aforesaid arguments and says that since there was an interim order passed on March 28, 1989 which was in operation till April 15, 1991, therefore two years delay occurred. The interim order of stay, the reference of which is being given by learned Counsel for the State, and the period of the same is of no consequence in the present controversy inasmuch as the sanction by the Commissioner under Section 21(2) has not been granted on the ground that the delay has been caused because of the interim order passed by the High Court. Even otherwise the period consumed during subsistence of interim order, will automatically stand excluded, and in that case no such sanction would be required but it is not the case of the State that after exclusion of the said period, limitation would fall within four years.
8. Before proceeding to discuss the points involved, it would be necessary to put on record that the limitation for issuing notice under Section 21 was enhanced from two years to four years by means of Act No. 28 of 1991 with effect from February 19, 1991. The extended period of limitation was prescribed as eight years during which period before the proceedings could be initiated sanction or permission of the Commissioner was necessarily to be obtained. The retrospective operation of the period of limitation prescribed by Act No. 28 of 1991 became the subject-matter of challenge in Chopra Diesel Sparre v. State of U. P. [Writ Petition No. 1156 of 1992(M/B) decided on February 22, 1993-Allahabad High Court], wherein a division Bench of this Court declared that such amendment could not have effect with retrospective date, vide orders dated February 22, 1993. However, in a subsequent judgment pronounced by the apex court in the case of Additional Commissioner (Legal) v. Jyoti Traders , the apex court upheld the said amendment. Thus the judgment of Chopra Diesel stands overruled. The admitted position, therefore, is that on relevant date, the limitation period of 4 years was prescribed under Section 21(2) for initiating the proceedings under Section 21(1) and in case the proceedings were to be initiated beyond the period of 4 years but within 8 years, then necessary sanction was to be obtained before issuing notice.
9. Section 21(2) though specifically does not say that opportunity is to be afforded to the dealer before granting the sanction by the Commissioner but the principle is well recognised, that even if there is no specific provision in the Statute, such opportunity need be given, to make the action taken or order passed in consonance with the principles of natural justice; unless, of course, the statute specifically excludes the applicability of principle of natural justice, such an opportunity is deemed to be inbuilt in the provision, in case any action taken or order passed would affect the rights of any person adversely. In the case of Indian Oil Corporation Ltd., Agra v. Commissioner of Trade Tax reported in [1999] UPTC 365, a division Bench of this Court after holding the circular issued on July 7, 1992 binding on the assessing authority held that the dealer should have been given a hearing in the matter before any reassessment order could have been passed, and since such an opportunity was not given, the order of approval granted by the higher authority was quashed.
10. There is one more reason for holding that the opportunity has to be given to the assessee or the dealer by the Commissioner before he grants/ approval for initiating proceedings under Section 21 in the extended period of limitation which stands spelt out from the language used in the first proviso attached to Sub-section (2).
The proviso confers power and gives jurisdiction/authority to the Commissioner if he is 'satisfied' either on his own or on the basis of the reasons recorded by the assessing authority that it is just and expedient to either assess or reassess the dealer, only then, he would authorise the assessing authority to make such assessment or reassessment within the extended period of limitation. The plain and simple meaning of the aforesaid proviso is that the permission/ approval for such reassessment of alleged escaped turnover is to be granted by the Commissioner only on being satisfied either on his own or on the basis of the reasons recorded by the assessing authority that it is just and expedient to reopen the assessment.
11. Once the proviso postulates recording of reasons by the assessing authority, it necessarily obligates the Commissioner or the Additional Commissioner to consider such reasons and make them known to the assessee, before he finally forms his satisfaction and even if the Commissioner or the higher authority on his own reasons feels satisfied that it is just and expedient to reopen the assessment, it would still require that such reason must be made known to the dealer also so that before the assessment is reopened he may have an opportunity to satisfy the higher authority that the reasons assigned by the assessing authority are not relevant or they are incorrect or they do not make out a legal ground for reopening of the assessment and likewise if the Commissioner or the higher authority proposes to authorise the assessing authority for reopening the assessment on his own, then also reasons for such satisfaction have to be supplied to the dealer, so that he may have a say to convince the higher authority for not authorising the assessing officer for reopening the assessment.
12. Whether the Commissioner or the higher authority permits the assessing officer to proceed under the extended period of limitation either on his own or on the reason recorded by the assessing authority, in both cases, the dealer would have a right to put forward his defence for not reopening the assessment. This opportunity, if is excluded or shredded out from the aforesaid proviso, it would leave the dealer with no opportunity/remedy to challenge the very authority of the assessing officer to reopen the assessment nor there would be any opportunity to challenge the approval granted by the Commissioner under any of the remedies under the Act.
13. When an order is passed on the basis of the reasons recorded, it naturally means that the reason must be rationale, genuine and relevant. Any reason which cannot be termed as rationale, genuine or relevant would not make out a case for reopening of the assessment and for that matter also, the dealer has to be associated in the proceedings initiated seeking approval from the Commissioner or the Additional Commissioner, as case may be.
14. Admittedly, the Commissioner before granting sanction/approval did not give any opportunity to the petitioner and obviously he has not recorded any reason for being satisfied that it is just and expedient to reopen the assessment while granting sanction on March 29, 1993. The order passed by the Commissioner simply reproduces the language used in the aforesaid proviso but it does not disclose any reason for reaching the said conclusion. The order, thus, granting approval itself is liable to be quashed on the aforesaid ground alone.
15. Apart from the above factual and legal position, the notice in question was issued on March 22, 1993 by the assessing authority, whereas the approval of Additional Commissioner was granted on March 29, 1993, i.e., after issuance of the notice. It is a different matter that the notice was actually served on the petitioner on March 30, 1993. The aforesaid facts call for no ambiguity that the assessing authority without sanction/approval of the Commissioner/Additional Commissioner issued the notice under Section 21 on his own though the period of four years had already expired and such notice could not have been issued without sanction/approval of the Commissioner/Additional Commissioner. The mere fact that the notice was served on the petitioner on March 30, 1993 would not cure the inherent lack of the authority of the assessing authority to issue notice without sanction of the Commissioner or the Additional Commissioner. It is also to be taken note of that it has not been brought on record nor it has been disclosed that on what date the assessing authority has sent its request for approval to the Commissioner, i.e., whether he has sent the request before issuance of the notice on March 22, 1993 or after issuance of the notice but since the approval admittedly has been granted on March 29, 1993, i.e., after issuance of the notice, it is hardly relevant as to when such a request has been made by the assessing authority.
16. The assessing authority, on one hand, has issued the notice under Section 21 without any authority and, on the other hand, has passed an ex parte order of reassessment though the notice was served only on March 30, 1993 upon the petitioner apparently because thereafter the matter would have become barred by limitation, after March 31, 1993.
17. It may be that in a case when limitation is to expire, the assessing authority has to complete the assessment before expiry of the limitation but where a notice under Section 21(1) has been issued without authority, such assessment made shall be wholly without jurisdiction and absolutely illegal and without authority.
18. On merits, the claim of the petitioner for exemption on both items "washing soap" and "detergent" in view of the eligibility certificate granted under Section 4A also stands established in view of the fact that the assessing authority in his ex parte assessment on March 31, 1993 did not give benefit of such exemption to the "detergent cakes" holding that the eligibility certificate was confined only to "washing soap" the benefit of which would not extend to "detergent cake", whereas the petitioner has brought on record an order passed by the Commissioner under Section 4-A(3) of the Act which shows that the proceedings for cancellation of eligibility certificate were initiated on the same ground but the Commissioner vide his order dated September 7, 1994 found that the petitioner was entitled to exemption on both items, i.e., washing soap and detergents under the same eligibility certificate.
19. It is, therefore, established beyond doubt even on merits, that the assessment for the years 1984-85 and 1985-86 under the U. P. Sales Tax Act, 1948 and Central Sales Tax Act, 1956 was rightly made and there was no occasion for issuing notice under Section 21 and the issuance of notice under Section 21 was, thus, bad besides being without jurisdiction and authority, in view of the findings recorded hereinabove. The subsequent proceedings taken as a result of the aforesaid notice resulting into ex parte order/assessment are also without jurisdiction and cannot be sustained.
20. In view of the findings aforesaid, we quash the impugned order of sanction passed by the Additional Commissioner on March 29, 1993 and also the notice issued under Section 21 dated March 22, 1993 and consequently also the ex parte assessment order dated March 31, 1993 passed on the basis of the aforesaid notice.
21. The writ petition is allowed. Costs easy.