(PER :
HONOURABLE MR.JUSTICE AKIL KURESHI) In all these writ petitions, the petitioners have challenged Notices issued by the competent officer of the Sales Tax Department of the State of Gujarat for the purpose of re-opening of previously closed assessments. Such notices are challenged on two grounds Firstly, that the same were time barred, and further that the authority issuing such notices had no reason to believe that the dealer has concealed any sales, or purchases, or provided inaccurate and incorrect declaration or return. In other words, the second limb of the argument of the petitioners is that the notices for reopening are invalid for want of necessary satisfaction required under the law.
We have recorded facts as arising in Special Civil Application No. 3832 of 2012 for the purpose of deciding these writ petitions. The petitioner is a Dealer and duly registered under the Gujarat Value Added Tax Act, 2003 [ VAT Act for short]. For the Financial Year 2003-04, the petitioner had filed its return under the then prevailing Gujarat Sales Tax Act, 1969 [ Sales Tax Act for short]. Long thereafter, the Sales Tax Officer issued impugned notice dated 5th March 2012 indicating that for the period between 1st April 2003 to 31st March 2004, he proposed to re-open the assessment and that therefore, the petitioner should remain present with all accounts and documents. In such notice, he indicated that turnover of Rs. 24.07 lakhs [rounded off ] had escaped assessment. Though alongwith such notice, no reasons why officer intended to re-open the assessment were supplied, from the affidavit-in-reply dated 23rd April 2012 filed by the respondents, we gather that according to the authorities, the petitioner had not produced D form either alongwith returns filed or even thereafter. This appears to be the principle reason why the assessment previously farmed is sought to be reopened.
We may notice that the Sales Tax Act contained certain provisions permitting re-assessment under certain circumstances. Section 44 of the Act in particular clothed the Commissioner with the power of re-assessment when the turnover had escaped assessment. If such escapement of assessment was for the reason of the dealer having concealed the sales or purchases, or any material particulars relating thereto, or knowingly furnished incorrect declaration or returns, the limitation for reopening such assessment was eight years from the end of the period to which such turnover related. In other cases, shorter period of limitation of five years was prescribed under the said Act. To some of the provisions pertaining to assessment and reassessment contained in the Sales Tax Act, we would advert to at a later stage. At this stage, we may notice that the Legislature framed the Gujarat Value Added Tax Act ( VAT Act for short) and in the process, repealed the Gujarat Sales Tax Act, 1969. The Gujarat Value Added Tax Act, 2003 was introduced with effect from 1st April 2006. In the VAT Act also, powers of the Commissioner to carryout reassessment were preserved, however, with significant changes. Under Section 35 of the VAT Act, the Commissioner now has the power to reassess the turnover of any dealer where he has a reason to believe that the whole, or any part of the taxable turnover of such dealer has escaped assessment, or he has been under-assessed, or has been assessed at a rate lower than the rate at which it is assessable, or wrongly been allowed any deduction therefrom, or wrongly been allowed any credit. Sub-section (2) of Section 35 of the VAT Act, however, provides that no order shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable.
The first legal controversy between the parties relates to applicability of the change with respect to period of limitation prescribed under Section 35 of the VAT Act for initiating re-assessment proceedings which might have arisen; as in the present group of cases prior to introduction of VAT Act. Case of the petitioners is that any such re-assessment would be covered by Section 35 of the VAT Act, since the Sales Tax Act has been repealed. The case of the Revenue, however, is that the VAT Act makes provision for saving of the proceedings undertaken or initiated under the Sales Tax Act.
Second controversy is with respect to the grounds of re-opening. With respect to the reason to reopen, in different petitions slightly different reasons emerge. However, principally the contention of the petitioners is that the reasons are not sufficient permitting the authorities to re-open the previously closed assessments. We may record that in majority of cases, reopening is resorted to on the ground that the petitioners were subject to raids by the Excise Department during which proceedings, statements were recorded and evidence collected resulting into issuance of show cause notices by the Excise Department seeking recovery of unpaid excise duty and penalty.
We may at this stage examine the applicability of Section 35 of the VAT Act to the impugned re-assessment proceedings which were initiated by issuing notices, after the VAT Act was enacted and the Sales Tax Acct was repealed. Learned counsel Shri Tanvish Bhatt leading the challenge on behalf of the petitioners submitted that with the introduction of the Gujarat Value Added Tax Act, 2003 and repeal of the Gujarat Sales Tax Act, 1969, the Department cannot rely on the provisions contained under section 44 of the Sales Tax Act to initiate any re-assessment proceedings.
Counsel further submitted that the limitation being a procedural aspect, the period prescribed under the successor Act for initiating or completing the re-assessment must be applied to all cases pending on the date of repeal, or those which may arise subsequent to introduction of the VAT Act. In support of the contention, counsel relied on the decision of the Supreme Court in case of Thirumalai Chemicals Limited v. Union of India & Ors., reported in [(2011) 6 SCC 739] wherein, in the context of repeal of the Foreign Exchange Regulation Act, 1973 by the Foreign Exchange Management Act, 1999, the Apex Court held that the appeal provisions made in the FEMA would apply, being a procedural provision. In particular, it was held that the manner of filing of the appeal and the limitation provided therein would be applicable to the cases arising after the FEMA was introduced, even though such cases had originated under the FERA Act.
Counsel further submitted that till the Sales Tax Act was repealed and the VAT Act was introduced, in case of the present petitioners, no notice was issued for the purpose of reassessment. Such proceedings, therefore, must necessarily be governed by the VAT Act and in particular Section 35 thereof. In support of the contention, counsel placed heavy reliance on the decision of Division Bench of Delhi High Court in case of Kumagai Skanska Hcc Itochu Group v. The Commissioner of Value Added Tax & Anr., dated 22nd May 2012. It was a case wherein similar situation had arisen in the context of Delhi Value Added Tax Act which had replaced the earlier Delhi Sales Tax Act. The High Court ruled that the period of limitation prescribed under the Delhi Value Added Tax Act for reopening of the assessment would govern all the cases of reopening initiated after the said Act was enacted repealing the Delhi Sales Tax Act., On the other-hand, learned AGPs - Ms. Maithli Mehta & Ms. Shruti Pathak contended that the assessment for which the notices had been issued pertained to a period when the Sales Tax Act was in operation. Such proceedings must therefore, be governed by the said Act. It was submitted that Section 100 of the VAT Act specifically saves action taken under the Sales Tax Act, as also the rights or liabilities accrued, or acquired under the Sales Tax Act. Heavy reliance was also placed on Section 6 of the General Clauses Act to contend that even upon repeal of the Sales Tax Act, any existing right or liability would not get extinguished. In support of their contentions, counsel relied on the following decisions.
In case of the Sales Tax Officer, Circle-I, Jabalpur v. Hanuman Prasad, reported in AIR 1967 SC 565, wherein the assessment of the sales-tax was carried out under the Central Provinces & Berar Sales Tax Act, 1947. New Act viz., the Madhya Pradesh General Sales Tax Act was framed in the year 1958 and the old Act was repealed. Thereafter, on 23rd October 1962, the Sales Tax Officer reopened the assessment on the ground that part of the turnover of the assessee had escaped assessment. The assessee contended that the assessment had been completed under the old Act wherein the period of limitation of three years was prescribed, re-assessment had thus become time-barred. The High Court held that the period of limitation laid down in the old Act would apply and thereby quashed the notices. The Supreme Court upheld the decision of the High Court holding that though the assessment of escaped turnover was being done after the new Act was introduced, the rights and liabilities between the parties would be governed under the old Act.
In case of Shah Bhojraj Kuverji Oil Mills & Ginning Factory v. Subhash Chandra Yogiraj Sinha, reported in AIR 1961 SC1596 wherein, the Apex Court observed that a provision of law may be prospective in some parts and retrospective in other parts. It was further observed that while it is the ordinary rule that substantive rights should not be held to be taken away except by express provisions or clear implication, many acts though prospective in form, have been given retrospective operation, if the intention of the Legislature is apparent. This is more so, when Acts are passed to protect the public against some evils or abuse.
In case of J.P Jani, Income Tax Officer, Circle IV, Ward-G, Ahmedabad & Anr. vs. Induprasad Devshanker Bhatt, reported in AIR 1969 SC 778, wherein, in the context of the Income-tax Act, 1961 replacing the earlier Income-tax Act, 1922, the Apex Court held that the Income-tax Officer has no right to re-open the assessment which had already become barred under the old Act. It was observed that this is so because of well known rule of interpretation that unless the terms of the statute expressly so provide, or there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or revive any remedy already lost by efflux of time.
In case of Thyssen Stahlunion GMBH v. Steel Authority of India Limited, reported in AIR 1999 SC 3923 wherein in the context of repeal of the old Arbitration Act of 1940 by the later Arbitration and Conciliation Act, 1996, the Apex Court observed that even after coming into force of the new Act, repealing the old Act, enforcement of the award has to be examined on the touchstone of the proceedings held under the old Act. In the context of the question as to what is right accrued or acquired, with reference to the provisions of Section 6 of the General Clauses Act, it was observed that the question that arises for consideration is whether a right has accrued to the party or it is merely an inchoate right.
Reliance is also placed on the decision in case of Messrs. Allied Exports & Imports Gudur Nellore District v. State of Andhra Pradesh, represented by State representative Sales Tax, reported in AIR 1971 AP 218 wherein the Full Bench of the Andra Pradesh High Court observed that change in substantive law does not affect substantive right unless made explicit in that behalf, while change in procedural law is retrospective unless it has an effect of disturbing the right of action. In the context of Sales Tax Act of the State and the changes made therein, it was observed that it is only the right of the Department to recover tax and dealers liability to pay tax that are saved and the procedure prescribed for quantification of tax or its recovery and time limited fixed for exercise of this power are not portions for substantive right.
Reliance is also placed on the decision of the Apex Court in case of State of Punjab v. Mohar Singh Pratap Singh, reported in AIR 1955 SC 84 wherein, it was observed that, whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears.
To be able to appreciate the rival contentions, we may notice the relevant statutory provisions contained in the Sales Tax Act as well as the Value Added Tax Act. Chapter V of the Sales Tax Act, 1969 pertains to Declarations, Returns, Assessments, Payments, Penalty, Recovery and Refund of Tax. This chapter contains provisions for assessment and collection of tax and penalties. Section 40 pertains to declarations and returns that the registered Dealers would have to furnish. Section 41 pertains to Assessment of taxes. Sub-section (2) thereof provides that if the Commissioner is satisfied that the declarations or returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such declarations or returns. Sub-section (3) of Section 41, however, authorizes the Commissioner, if he was not so satisfied that the declarations or returns furnished in respect of any period are correct and complete and he thinks it necessary to require the presence of the dealer or production of further evidence and thereafter, considering the evidence which may be produced, assessee the amount of tax due from the dealer. Section 42 of the Sales Tax Act provides time-limit for completion of assessment. Section 44 which is of utmost importance for us pertains to reassessment of turnover escaping assessment, and reads as under :-
44. Reassessment of turnover escaping assessment :
If the Commissioner has reason to believe that any turnover of sales or turnover of specified sales or turnover of purchases of any goods chargeable to tax under this Act has escaped assessment or has been under-assessed or assessed at a lower rate in respect of any period in an order of assessment under Section 41, or if the Commissioner has reason to believe that any deduction has been wrongly given or any drawback, set-off or refund has been wrongly granted in any order of assessment so made, then the Commissioner may :
[a] where he has reason to believe that the dealer has concealed such sales or specified sales or purchases or any material particulars relating thereto, or has knowingly furnished incorrect declaration or returns, at any time within eight years, and [b] in any other case, at any time within five years of the end of the period to which such turnover relates, serve on the dealer liable to pay tax in respect of such turnover, a notice containing all or any of the requisitions which may be included in a notice in the prescribed manner and assess, not later than three years from the date of service of the notice, the amount of tax due from such dealer to the best of his judgment.
From the above statutory provisions, it can be briefly summarized that even though previously, on the return and declaration filed by the dealer, the Commissioner had either accepted the same as true and assessed the tax on such basis or had carried out further inquiry before passing an order of assessment, it would still be open for the Commissioner to re-assess the tax if he had reason to believe that any turnover or sales or purchases chargeable to tax has escaped assessment, or has been under-assessed or assessed at a lower rate, or that any deduction had been wrongly given or any draw back, set off or refund has been wrongly granted in any order of assessment so made. Such power to re-assess, however, came with a time limit. In cases where the Commissioner had reason to believe that the dealer had concealed sales or specified sales or purchases or any material particulars relating thereto, or had knowingly furnished incorrect declaration or returns, the Commissioner had time of eight years for issuance of notice for re-assessment from the end of the period to which the turnover related. In all other cases, shorter time limit of five years was prescribed for such purpose. In either case, the Commissioner had the time of 3 years to complete the reassessment from the date of service of the notice.
The Gujarat Sales Tax Act, 1969 was replaced by the Gujarat Value Added Tax Act, 2003 with effect from 1st April 2006. In the VAT Act, Chapter V pertains to Returns, Payment of Tax, Assessment, Recovery of Tax and Refund. Here also, similar provisions have been made for filing of returns and scrutiny of such returns. Section 35 pertains to turnover escaping assessment and reads as under :-
35. Turnover escaping assessment -
[1] Where after a dealer has been assessed under section 32, 33, 34 for any year or part thereof, the Commissioner has reason to believe that the whole or any part of the taxable turnover of the dealer in respect of any period has :-
(a) escaped assessment, or
(b) been under-assessed, or
(c) been assessed at a rate lower than the rate at which it is assessable, or
(d) wrongly been allowed any deduction there from; or
(e) Wrongly been allowed any credit therein, the Commissioner may serve a notice on the dealer and after giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover which comes to his notice subsequently, and the provisions of his Act shall, so far as may be, apply accordingly.
[2] No order shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable.
From the above it can be seen that in the successor Act also, provision for reassessment of previously closed assessment was retained. This, however, came with significant changes. Firstly, the graded time limit of eight years for cases of concealment of material particulars etc. and five years for rest of the cases was done away with. Uniformly, for all cases an outer time limit of five years was prescribed. More importantly, such time limit pertains not for issuance of notice for re-assessment but for passing of final order on turnover escaping assessment.
The central question is whether such modified time limit would apply to all cases which were not instituted by the time the Sales Tax Act was repealed and the VAT Act was enacted.
Section 100 of the VAT Act provides for Repeal and Savings and reads as under :-
100. Repeal and savings
-
The [Gujarat Sales Tax Act, 1969, the Bombay Sales of Motor Spirit Taxation act, 1958] and the Gujarat Tax on Sugarcane Act, 1989 are hereby repealed :
Provided that such repeal shall not affect the previous operation of the said Acts of any right, title, obligation or liability already acquired, accrued or incurred three under and subject thereto, anything done or any action taken including any appointment, notification, notice, order rule, form or certificate in exercise of any powers conferred by or under the said Act shall be deemed to have been done or taken in exercise of the powers, conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amount due at the commencement of this Act maybe recovered as if they had accrued under this Act.
Notwithstanding the repeal of the [Gujarat Sales Tax Act, 1969, the Bombay Sales of Motor Spirit Taxation act, 1958], or as the case may be, the Gujarat Purchase Tax on sugarcane Act, 1989, (hereinafter in this section referred to as the said Act )
(a) all rules, regulation, orders, notifications, forms and notices issued under the said Act and iv force immediately before the appointed day shall continue to have effect for the purposes of the levy, assessment, reassessment, collection, refund or set-off of any tax, or the granting of a drawback in respect thereof or the imposition of any penalty, which levy, assessment, reassessment, collection, refund, set-off, drawback or penalty relates to any period before the appointed day or for any other purpose whatsoever connected with or incidental to any of the purposes aforesaid.
(b) any registration certificate issued under said Act and in force immediately before the appointed day shall be deemed to be the registration certificate issued under this Act, and accordingly such registration certificate shall be valid and effectual as a registration certificate under this Act until such certificate is issued, substituted, suspended or cancelled under the provisions of this Act.
any appointment, notification,order, rule, regulation, form or notice made or issued under the said Act shall, so far as it is not inco9nsistent with the provisions of this Act, continue in force, and be deemed to have been made or issued under the provisions of this Act, unless and until it is suppressed by any appointment, notification, order, rule, regulation, form or notice made or issued under the provisions of this Act;
any person entitled to appear before any authority under the said Act shall be deemed to be entitled to appear any authority under this Act, and accordingly if such person be a sales tax practitioner he shall be entitled to have this name entered in the list maintained under section 81.
(3) Without prejudice to the provisions contained in sub-section (2) and subject thereto, section 7 of the Bombay General Clauses Act, 1904 shall apply in relation to the repeal of said Act as if the said Act had been enacted within the meaning of the said section 7.
It is undoubtedly true that the provisions containing period of limitation are construed as procedural in nature, and therefore, any changes made in the statute regarding the period of limitation is ordinarily applied to all pending and future cases. In other words, amendments in the period of limitation are ordinarily considered retrospective in nature.
In case of C. Beepathuma & Ors.
vs. Velasari Shankaranarayana Kadamboliathaya & Ors., reported in AIR 1965 SC 241, it was observed that there is no doubt that the law of limitation is a procedural law and the provisions existing on the date of the suit would apply to it.
One well recognized exception, however, is when in the earlier statute, as per the previous statutory provision, a cause had become barred by limitation, the same would not be revived by amendments, providing for larger period of limitation. In case of J.P Jani, Income Tax Officer, Circle IV, Ward-G, Ahmedabad & Anr. vs. Induprasad Devshanker Bhatt [Supra], the Supreme Court considered the effect of introduction of Income Tax Act, 1961 replacing the old Income-Tax Act, 1922, on the power of re-opening of assessment. When it was found that such right in the old law was barred by limitation, introduction of Section 148 of the Income Tax Act, 1961 providing longer period of limitation cannot be resorted to for reopening the assessment. In case of S.S Gadgil v. Messrs. Lal & Company, reported in AIR 1965 SC 171 also, the Apex Court held that when the period of one year for issuing notice had expired, subsequent amendment enlarging the period of limitation would not revive the cause.
Statute of limitation is thus ordinarily made applicable with retrospective effect to apply to legal proceedings brought to the Court after the operation of such amendments, even for causes which might have accrued earlier. In cases where the cause had become barred by limitation by the time longer period of limitation is prescribed by amendment would however not be revived. There would still be some doubt whether, if the statute provides for shorter period of limitation by amendment, the same would have an effect of extinguishing right of action subsisting on the date of such amendment. Had this been the only angle, we would have further probed the legal position in this respect. In the present case, however, the situation is somewhat different. It is not a simple case of a statutory provision being amended by a subsequent legislation providing for a shorter period of limitation, as compared to the earlier statute. This is a case where the entire machinery provision has undergone significant changes.
To recall, in the Sales Tax Act, 1969, reopening of assessment was permissible when the Commissioner had a reason to believe that any turnover of sales, or turnover of purchases of goods chargeable to tax has escaped assessment, or has been under-assessed, or assessed at a lower rate. In such cases, if there was any element of concealment of sales, etc., he could issue a notice for reassessment of the escaped turnover within eight years from the end of the period to which such turnover related. In other cases, he could issue such a notice within five years from the said date and not later. The entire Sales Tax Act was repealed by the VAT Act. In the VAT Act, provision for reassessment made significant changes. Under Section 35(1), reassessment is permissible in cases of escapement of assessment or under-assessment, or application of lower rate, etc. Sub-section (2) of Section 35 of the VAT Act, however, provides that no order shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable.
Two significant changes thus in the old Act and the successor Act are that distinction between the cases of concealment of particulars, etc. providing for larger period of eight years of limitation and in other cases of five years was completely done away in the later Act. Secondly, the point of reference was shifted from the issuance of notice within the time prescribed to passing of the final order of reassessment.
This is thus not a plain case of period of limitation being substituted by the successor Act. This is a case where entire machinery is replaced by a new provision, making significant changes in the Legislative approach. We have therefore to ascertain the legislative intent to gather to what extent the previous provision was sought to be saved. In this context, one shall have to necessarily rely on and refer to Section 100 of the VAT Act which makes Repeal & Savings provisions.
It is well recognized that upon repeal of the Statute, all actions pending on the date of repeal do not survive. To obviate such unpleasant consequences, the successor statute ordinarily provides for Repeal & Savings clauses. In any case, Section 6 of the General Clauses Act contains a plenary provision of saving an action taken under the repealed statute, unless different intention appears.
In case of State of Punjab v.
Mohar Singh Pratap Singh [Supra], the Apex Court observed that whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal, there is scarcely any room for expression of a contrary opinion. But, when the repeal is followed by a fresh legislation on the same subject, the Court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of inquiry would be not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them.
In case of Keshavan Madhava Menon v. State of Bombay, reported in AIR 1951 SC 128, the Constitution Bench of the Supreme Court in the context of effect of Article 13 (1) of the Constitution held that the same can have no retrospective operation but is wholly prospective. If an act was done before the commencement of the Constitution in contravention of the provisions of any law which after the constitution become void, with respect to the exercise of any of the fundamental right, the inconsistent law is not wiped out so far as the past act is concerned.
In case of Gujraj Singh etc. vs. The State Transport Appellate Tribunal & Ors., reported in AIR 1997 SC 412, the Apex Court held and observed that effect of repeal of the Act would be that the repealed Act stands completely obliterated from the record of the Parliament; except for actions past and closed or those which are saved. It was observed as under :
23. 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 the Parliament as if it had never been passed it, it never existed except for the purpose of those actions which were commenced, prosecuted and concluded while it was existing law. Legal fiction is one which is not an actual reality and which the law recognizes and the 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 in actuality is non-existent. The effect of such a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances. Therefore, when section 217 (1) of the Act repealed Act 4 of 1993 w.e.f July 1, 1989, the law in Act 4 of 1939 in effect came to be non-existent except as regards the transactions, past and closed are saved.
From the above what emerges is that ordinarily period of limitation is considered as a procedural provision and any change in the period of limitation by an amendment in the Act or by enactment of a new statute repealing the original one, is made applicable also retrospectively. This is of course subject to the exception that if under the repealed provision, the cause of action had become time barred as per the period of limitation prescribed any subsequent change or extension in period of limitation would not revive such a cause. Another area where the Courts have taken slightly different view is where in the successor statute, a shorter period of limitation is prescribed and by virtue of the existing provisions of the earlier Act, the limitation has not yet expired but by application of the shorter period of limitation prescribed in the successor Act, the cause would stand barred by limitation. In such cases, the question would arise whether the period of limitation of the successor Act should be applied thereby taking away the right of the party to file proceedings for asserting his right.
Had the effect of VAT Act been only to modify the period of limitation, the different set of considerations would apply. In the present case, however, the entire provision for reopening of previously closed assessment has undergone significant changes. In the predecessor Act ie., the Gujarat Sales Tax Act, 1969, reassessment was permitted by issuance of a notice within eight years, if the same was based on any suppression, etc. For other class of cases, such notice could be issued within five years from the relevant date. In the successor Act ie., the Gujarat Value Added Tax Act, 2003, the period that is prescribed is uniformly of five years obliterating any distinction between the reopening being based on misrepresentation, etc., or for any other reason, of a case of turnover escaping assessment. More significantly the terminal point was shifted from issuing of notice to passing of the final order. In other words under the VAT Act, it was not enough to issue notice for reassessment within five years but that the entire re-assessment had to be completed within the said period.
Thus, the replaced statute did not only make changes in the period of limitation but made significant other changes as well. In that view of the matter, it would be of considerable importance for us to ascertain what the repeal and savings provision of the VAT Act provides. Under sub-section (1) of Section 100 of the VAT Act, as already noted, the Sales Tax Act was repealed. Proviso to Section 100 of the VAT Act however makes certain provisions for saving and provides that such repeal shall not affect the previous operation of the said Act or any right, title, obligation or liability already acquired, accrued or incurred there under and subject thereto, anything done or any action taken including any appointment, notification, notice, order, rule, form or certificate in exercise of any powers conferred by or under the said Act shall be deemed to have been done or taken in exercise of the powers conferred by or under the VAT Act.
In the present case, it would therefore be necessary to ascertain for ourselves whether it can be stated that by the time VAT Act was enacted, the petitioners had under the Sales Tax Act acquired, accrued or incurred any obligation or liabilities. If the case of the petitioners fall within such expression, the Department would be justified in pursuing such cases under the VAT Act with reference to period of limitation contained in the Sales Tax Act despite repeal of the Sales Tax Act.
We may recall that the petitioners had filed the returns at the relevant time under the Sales Tax Act. Such returns were also processed as per the provisions of the said Act. Till the Sales Tax Act was repealed by the VAT Act, no further action was taken by the Department. To be precise, no notices for reopening such assessment were issued till the Sales Tax Act was repealed. It is true that the Sales Tax Act permitted period of eight years from the end of the period to which such turnover related for issuance of notice of reassessment, if the Commissioner had reason to believe that the dealer had concealed such sales or any material particulars thereof or knowingly furnished incorrect declaration or returns. However, in our opinion, mere right to issue notice within the said period cannot be equated with accrual or incurring of any obligation or liability. If notices were already issued, it may have been possible for the Department to contend that the assesses having already been visited with such notices, their liability to be so re-assessed having already accrued, any repeal of the Sales Tax Act would not obliterate such liabilities by virtue of proviso to sub-section (1) of Section 100 of the VAT Act.
In case of Kanaiya Ram & Ors.
Vs. Rajender K. Kumar & Ors. reported in AIR 1985 SC 371, the Apex Court had an occasion to interpret the term acquiring of or accrual of a right. It was the case wherein the original landholder had purportedly made an oral sale of the land in favour of his near relatives. Such sale not being registered, did not create any right or title in favour of the transferees. The tenant of the land filed application under Section 18 of the T. P. Act for purchase of their holdings. Application of the tenant was allowed by the Assistant Collector but the said order was reversed in appeal. In the meantime, the landlord had expired. His legal representatives filed a suit for declaration of title and for the declaration that the transfer was benami. Such suit was decreed. In that context, the Supreme Court observed that when the tenant made an application under Section 18, he had a mere hope of or expectation of liberty to apply for acquiring a right and not a right acquired or accrued . It was observed that ever since the leading case of Abbot Vs. Minister for Lands, 1895 AC 425 that a mere right to take advantage of the provisions of an Act is not an accrued right .
In case of Hunger Ford Investment Trust Limited V. Haridas Mundhra & Ors., reported in AIR 1972 SC 1826, the Apex Court once again had an occasioned to consider what is an accrued or acquired right. It was observed that : -
19. We do not think that the appellant had an accrued right for the rescission of the contract or the decree for specific performance under Section 35 of the Specific Relief Act, 1877, when the Act was repealed by the Specific Relief Act, 1963, on March 1, 1964. It may be recalled that the decree in suit NO. 600 of 1961 was passed on February 25, 1964 and that the application for rescission of the decree was filed on March 21, 1967. Section 35 of the Specific Relief Act, 1877, so far a it is material for the purpose of this case provided that where a decree for specific performance of a contract of sale or of a contract to take a lease has been made and the purchaser or lessee makes default in payment of the purchase money, which the Court has ordered him to pay, the decree may be rescinded as regards the party in default either by a suit or by an application. The right to rescind the decree under the section can arise only if the purchaser makes default in paying the purchase money ordered to be paid under the decree. Before the lapse of a reasonable time from the date of the decree, the appellant could have no right to have the decree rescinded on the ground of default of the purchaser. To put it in other words, the right of the appellant to have the decree rescinded was dependent upon the default of the purchaser in paying the purchase money. Such a default had not occurred when the Specific Relief Act, 1877, was repealed, as a reasonable time for the performance of the obligation under the decree had not elapsed from the date of the decree. The more important reason why there was no default in this case was that the execution of the decree in suit No.600 of 1961 was stayed by orders of the trial and appellate Court till August 26, 1964. We, therefore, agree with the finding of the Division Bench that appellant had not accrued right on the date of the repeal to file an application under Section 35 of the Specific Relief Act, 1877, which was saved under Section 6 of the General Clauses Act 1897. The mere right to take advantage of the provisions of an Act is not an accrued right (See Abbott v. The Minister for Lands, 1895 AC 425) .
From the above, it can be seen that a mere right to take advantage of the provisions of a Act is not an accrued right . In the present case, it may be that when the Sales Tax Act was in operation, it was open for the authorities to reopen an assessment previously framed within eight years from the end of the period to which the escaped turnover related, if the commissioner had reason to believe that the dealer had concealed such sales, etc. However, mere right to issue such a notice to reopen the assessment cannot be equated with any accrued or acquired right. Correspondingly, it cannot be said that in absence of any notice having been issued, the assessees had any obligation or liability which they acquired, accrued or incurred for being subjected to reopening of the assessment as per the old provisions. Their cases therefore were, necessarily in absence of any notices having been issued when the Sales Tax was in operation to be governed by the provisions made for such purpose in the successor Act i.e. the VAT Act. We are fortified in our view by the decision of with this view in case of Kumagai Skanska Hcc Itochu Group Vs. The Commissioner of Value Added Tax & Another decided on 22.05.2012, wherein the Devision Bench of Delhi High Court was considering the effect of enactment of Delhi Value Added Tax Act, 2004 replacing the Delhi Sales Tax Act, 1975. In such Successor Act also, similar provisions of repeal and savings were made. The Court was confronted directly with the issue of effect of shorter period of limitation prescribed in the successor Act for taking orders of assessment in revision. It was held and observed as under :-
26. First of all, once the provisions of Section 46 of the Delhi Sales Tax Act, 1975 were repealed and replaced by the provisions of Section 74A of the DVAT Act qua revision, it would be the latter provision which would apply on and from 01.04.2005. Secondly, the power of revision under Section 46 of the Delhi Sales Tax Act, 1975 and that under Section 74A of the DVAT Act do not co-exist. Because, the two cannot have simultaneous existence. The death of one (Section 46 of the Delhi Sales Tax Act, 1975) has ushered in the birth of the other (Section 74A of the DVAT Act). Thirdly, in view of Section 106(2) and (3) of the DVAT Act as interpreted by the Full Bench, an order of assessment passed under the Delhi Sales Tax Act, 1975 shall be deemed to be an order under the DVAT Act. Thus, after the repeal of the Delhi Sales Tax Act, 1975 and introduction of the DVAT Act, it is the power of revision encapsulated in Section 74A thereof which holds the field. It the power of revisions invoked, it has to be under Section 74A of the DVAT Act and in terms thereof. The provisions of Section 46 cannot be applied to post 01.04.2005 revisions .. ... .. .. .. Sixthly, the legislature consciously altered the limitation clause insofar as the power of revision is concerned. Having expressly provided for a different scheme in Section 74A(2)(b), it could not have been the intention of the legislature to continue the operation of the proviso to Section 46 of the Delhi Sales Tax Act, 1975 .
Considering the discussion above, we hold that in the present group of cases for reopening the assessment, provisions contained in the VAT Act and in particular Section 35 thereof, would apply. Admittedly, when such provisions do not permit reopening beyond the period of five years from the end of the period to which the sales relate, and admittedly when no notices much less final orders were passed, the action of the authorities must be held to be lacking jurisdiction. All the cases of reassessment are, therefore, declared invalid.
When we hold and declare the notices for reopening invalid on the above ground, it is not necessary for us to go into individual questions of validity of reasons on which such notices came to be issued.
In the result, all these writ petitions are allowed in the above terms and dispose of accordingly.
At this stage, counsel for the Government prayed for stay of this judgment. We may recall that all the proceedings for reassessment were at the stages where only notices for reopening were issued. No final orders have been passed, no recoveries have been effected. We do not see how any stay of our judgment would in any manner benefit the respondents. Conversely, we do not see how not staying this judgment would in any manner adversely effect the Government s interest. Surely, once we have declared the notices as being without jurisdiction, we would not be inclined to stay this very judgment and permit the Government to proceed further with the assessments arising out of such notices for reassessment. Request is, therefore, turned down.
(AKIL KURESHI, J.) (Ms.
SONIA GOKANI, J.) Prakash* Page 30 of 30