STATE OF UTTAR PRADESH & Ors. v. MODI INDUSTRIES LIMITED ·January 4 & Ors.

G was thus enhanced to 6 pies per rupee. The enhancement of tax was challenged on the grouil_d that it was not permissible in case of an assessee who had taken the option to submit his return on the basis of the turnover of the sales in the previous year as he was liable to pay the tax according to tbe rates prevailing during assessment year. That case came up to this Court at the instance of the present respondent, which was then known as the Modi Sugar H Mills Limited, and it was helrl in Commissioner of Sales Tax. Uttar Pradesh v. The Modi Sugar Mills Ltd. (') that the assessee who had (I) (1961] 2 S.C.R. 189. -~ U. P. v. MODI INDUSTRIES (Shinghal, /.) 551 elected to submit his return on the turnover of the previous year wa& A liable to be assessed to sales tax at the rate in force on the first day of the year of assessment because the liability arose on that date, and any subsequent enhancement of the rate by the notificali.on under section 3-A did not alter the liability.

The Legislature however passed the Amending Act and inserted the following as section 31,-- "31 ( 1) Where any dealer has, in accordance with the provisions of Section 7, as it stood prior to its amendment by Section 7 of U.P. Act XIX of 1956, opted to be assessed to tax on the ballis of his turnover of the previous year, he shall be assessed to tax at such rates as are prevalent during the year for which the assessment is being made, and if the rates of tax on any goods or class of goods are altered during such assessment year, the dealer, in respect of turnover of such goods, shall be liable to pay tax at altered rates, as if the altered rates were in force during the previous year also proportionately for the same number of days as they are in force during the assessment year. (2) Notwithstanding any judgment, decree or order of any court, all assessments or orders made, actions or pro ceedings taken, directions issued, jurisdictions exercised or tax levied or collected by any officer or authority purporting to act under the provisions of sub-section ( 1 ) of Section 7, as it stood prior to its amendment by Section 7 of U.P. Act XIX of 1956, shall be deemed to be good and valid in law as if such assessments, orders, actions, proceedings, direc tions, jurisdictions and tax have been duly made, taken, issued, exercised, levied or collected, as the case may be, under or in accordance with the said provisions of this Act as amended by the Uttar Pradesh Bikri Kar (Sanshodhan) Adhiniyam, 1962 and as if the amendment so made had been in force on all material dates.

Explanation-For the purposes of this section "previous year" shall have the meaning assigned to it in (ii) of clause (j) of Section 2 of this Act, as it stood prior to amendment by Section 2 of the U.P. Act XIX of 1956." the expre5sion sub-clause The validity of the aforesaid section 31 of the Act came up consideration in this Court in Commissioner of Sales Tax, U.P. v Bi;li Cot.ton Mills Hathras(') and Wall upheld. It was held that as the Legislature had amended the Act and declared that notwithstand ing the option exercised by the assessee the tax would have to be computed in the light of the rates prevailing in 1948-49 as if they were projected upon the turnover of the previous; year, the Legislature had expressly stated that that rule would prevail as if it were in force during the assessment year and all assessments would be made in the It was observed that in taking that light of the amended provision. view this Court was seeking to apply a legislative provision which liability was, by express enactment, in force at the time when (1) (1964]7 S.C.R. 363.

8 c D E F G H 552 SUPREME COURT REPORTS .[1977] 2 S.C.R. B It was accordingly held that "if the law which to be A arose, for section 31 incorporated by the Amending Act was deemed to have been in operation at all material It was held fw· session of the previous rule declared by this Court. ther that this would be the position even if the laws were amended with retr.oactive operation during the pendency of a reference to the High Court. Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound decide the question in the light of the law so amended. " The validity and the retroactive operation of section 31 have therefore been placed beyond challenge by the aforesaid decision in Bijli Cotton Mills' case It and have in fact not been challenged by counsel for the dealer.. may be mentioned that in its judgment in Bijli Cotton Mills' case this Court took notice of its earlier decision in the Modi Sugar Mills' case (supra) so that it is well settled that the amendment made by section 31 is retroactive and applies to assessments pending or closed as if the Amending Act had been in force at material times.

C the · D E F G H The qnestion is whether the judgment of the High Court dated reference July 24, 1961 answering question No. 1 of the aforesaid by stating that the sales tax had to be charged from the dealer for the assessment year 1948-49 at the rate applicable to the various com modities on April 1, 1948, and for the assessment year 1949-50 at the rate applicable on April 1, 1949, was binding on the Additional Judge (Revisions) in spite of the amendment made by the Amending Act by insertion of section 31 in the Act? The High Court has taken the view in its impugned judgment dated February 11, 19/0 that the Revising Authority was not free to take a different view from the one expressed by it (High Court) on "any ground whatsoever", including the yound of any subsequent amendment in the law. and that it was bound to decide the case in conformity with the judgment its view as of the High Court.

The High Court has expressed follows,- "The judgment of the High Court may be said to have become erroneous as a result of the amendment but so long as 'the judgment stands, it is binding upon the parties and the revising authority has no option except to give effect to it in its order passed under section 11 ( 6)." The High Court further made the following observation,- "We however, express no opinion as course which the depa1iment should adopt in a situation like this, the amendment but we have no doubt in our mind brought about by section 31 of the Act does not make the judgment of the High Court a nullity and the Judge (Revisions) was not free to ignore it for any reason what soever.'' The question is whether this view of the High Court is correct ? The answer to the question depends on the answer further queBtion whether the proceedings for the assessment of the sales tax had become final after the High Court's judgment dated July . 24, u.

P. v. MODI INDUSTRIES (Shinghal, J.) .55.3 1961 or whether, after that judgment, something remained to be do~ by the Additional Judge (Revisions) ? · Sub-section ( 6) of section 11 of the Act provides that the High, Court, upon hearing the reference, shall decide the questiom; of . law and shall deliver its judgment thereon and shall send its copy to the Revising Authority and the Commissioner of Sales Tax, "and the Revising Authority shall thereupon pass such orders ·as are necessary to dispose of the case in conformity with such judgment. " So while the Additional Judge (Revisions) was in seisin of the case limited purpose for passing such orders as were necessary to dispose it of in conformity with the judgment of the High Court, it cannot be gain said that he was in such seisin and was required, in the facts and circumstances of this case, to make an order which would make the assessment order final and binding in all respects.

It was at that stage that section 31, which was inserted by section 7 of the Amend ing Act, was sought to be appiied to the controversy. According to sub-section (2) of that section, the assessments made at the enhanced rates, in accordance with the notification dated April 9, 1948, were to be deemed to be good and valid as if they had been duly made, and as if the amendment made by the insertion of section 31 had It was expressly provided by the been in force on all material dates. sub-section that that was to be so notwithstanding any judgment, decree or order of any court. The order of the Additional Judge (Revisions) dated December 28, 1968 had therefore the effect of recognising the restoration of the orders of assessment which were made by the Sales Tax Officer at the enhanced rates, and sub-section (2) of section 31 had the effect of making them "good and valid in It cannot be said that the Additional Judge (Revisions) erred law". in taking that view, and in not passing an order for giving effect the judgment of the High Court dated July 24, 1961 which had to be become unenforceable by the aforesaid section 31. appreciated that even if the Additional Judge (Revisions) had passed an order under sub-section (6) of section 11 of the Act as directed by the High Court, that would have been of no consequence and would have been inoperative because of the specific provisions of sub section (2) of section 31, so that the position would !i<1ve beeii same as if no such order had been passed at all.

It has if its The High Court has expressed the view judgment (dated July 24, 1961) was considered by the department to be erro- neous, it could have filed an appeal against it to this Court under article 136 of the Constitution to have it set set aside or modified. It is not clear to us how that would have been possible when Amending Act had not been passed till then, and was enacted some 1 t years thereafter. The. other suggestion of the High Court that it may have been open to the department to ask for a fresh reference to it against the order of the Revising Authority under section 11 (6) on the ground that by the amendment a fresh question of Jaw had arisen, is also untenable -because that order (dated December 28, 1968) was in favour of the department. In fact any suggestion or observation of the High Court fer seeking any other mode of redress is beside the point for the State felt aggrieved against the impugned A B c E F G H , SUPREME COURT REPORTS [1977i 2 s.c.R. A B judgment o! the High Court dated February 11, 1970 and has come up in appeal against it.