M/s. Tamil Nadu Traders v. Joint commissioner (SMR)Office of the Special Commissioner & Commissioner of Commercial Taxes

IN THE HIGH COURT OF JUDICATURE AT MADRASDate:- 16.12.2011CoramThe Honourable Mr. Justice P. JYOTHIMANIandThe Honourable Mr. Justice P.P.S.JANARTHANA RAJAWrit Petition Nos. 14826 and 14827 of 2002M/s. Tamil Nadu Traders,43, Vallalar Street, Erode.3 ... Petitioner in both W.Ps .Vs..Joint commissioner (SMR)Office of the Special Commissioner & Commissioner of Commercial Taxes, Chepauk, Chennai.5 ... Respondents in both W.PsPRAYER: Writ Petitions filed under Article 226 of the Constitutionof India praying for the issuance of a writ of Certiorari calling forthe records of the respondent pertaining to the proceedings dated17.09.2001 in SMR Nos.321 and 323 of 1997 respectively and quash thesame as illegal. . . .For Petitioner : Mr. P.Rajkkumar For Respondent : R.Sivaraman, Spl. Govt. Pleader . . . https://hcservices.ecourts.gov.in/hcservices/ C O M M O N O R D E R (Order was made by P. JYOTHIMANI, J.) These writ petitions have been filed by the assessee challengingthe order passed by the respondent in exercise of its suo motu powerof revision, in respect of the business of the petitioner relating tocirculation sales for the assessment year 1974-75 and 1975-76.Regarding the assessment year 1974-75, the Assessing Authority haspassed orders on 24.06.1976, imposing tax on the turnover. On appealby the assessee to the Appellate Assistant Commissioner, the same wasallowed on 27.04.1977 in favour of the assess. Likewise, in respectof the assessment year 1975-1976, as against the levy of tax by theAssessing Officer on circulation sales, by order dated 15.02.1977,the appeal of the assessee filed before the Appellate AssistantCommissioner was allowed on 27.4.1977.2. Admittedly, at the relevant point of time, there was nofurther right of appeal available to the revenue against the order ofthe Appellate Assistant Commissioner. In fact, the AppellantAssistant Commissioner while passing the orders in the appeal infavour of the assessee has relied upon the judgment of this Courtdated 03.03.1976 in Sri Srinivasa Sales Circulation VS State of TamilNadu reported in(1976) Vol.38 STC page 359. As against the saidjudgment of the Madras High Court dated 03.03.1976, an appeal hasbeen filed to the Supreme Court in the year 1977 and ultimately, theHon'ble Apex Court has allowed the appeal filed by the Government byjudgment dated 04.10.1996 reported in (1996) Vol.103 STC page 485,holding against the assessee. 3. In the meantime, as per the original Section 34(2) of theTNGST Act, the period of limitation to pass orders expired on27.04.1982, in respect of both the assessment years. In themeanwhile, an amendment Act 22 of 1982 was brought in, by which, anamendment was effected to Section 34 of the TNGST Act with effectfrom 01.11.1982. Under the amended provision to Section 34, insteadof the period of limitation of five years being given for the purposeof passing orders, the term 'initiation' has been used. In additionto it, a proviso has been incorporated under the amended Act to theeffect that the period from the date of judgment of the High Courttill the date of judgment by the Supreme Court should be excludedfor the purpose of calculating the limitation, while passing orders. 4. The Government has issued a show cause notice after thejudgment of the Supreme Court in reversing the judgment and theshow cause notice in both the cases was issued against the petitioneron 03.06.1997. Ultimately, the impugned order came to be passed bythe respondent by suo motu revising the earlier order of theAppellant Assistant Commissioner dated 27.04.77 and imposing the tax https://hcservices.ecourts.gov.in/hcservices/ liability on the assessee and that has been challenged by thepetitioner in these writ petitions on various grounds, including theone that the proviso which has come into effect from 01.11.1982cannot be given effect to in respect of the petitioner's case, sincethe assessment has already been completed before the expiry of theperiod of limitation of five years, i.e. on 27.04.1982, andtherefore, based on the judgment of the Supreme Court, the showcause notice would not apply to the petitioner's case in respect ofthese two assessment years. It is with the above said averments, these writ petitions have been filed challenging the impugned ordersof the respondent, which has been passed in exercise of the suo motupowers, in revising the assessment. 5. The learned Special Government Pleader would contend thatwhen the amendment has come into effect, in as much as the provisomakes it clear that the period from the date of judgment of the HighCourt till the date of judgment of the Supreme Court has to beexcluded, the period between 03.03.1976 and 04.10.1996 has to beexcluded and therefore, the issuance of show cause notice on09.04.1997 is well within the period stipulated even under theamended Act. In effect, it is his contention that even in cases wherethe assessment has already been completed, the same can be reopenedby the virtue of the proviso, which has been effected by way ofamended Act 22 of 1982. 6. The said contention has been retaliated by the learnedcounsel for the petitioner on the ground that inasmuch as the periodfor passing orders as per Section 34 of the Act, expires on27.4.1982 itself, any amendment which has come into effect onlysubsequently, i.e. 1.11.1982, cannot have any applicability to thefacts. According to the learned counsel, the proviso can be madeapplicable retrospectively only in pending cases and in cases wherethe tax effect has come to an end, and there is no question ofapplying the said proviso for those cases.7. We have heard the learned counsel for the petitioner and thelearned Special government Pleader and we have given our anxiousthought to the issues involved in these cases.8. On the above said admitted facts, it is relevant to find outthe position of Section 34 of the Act, before and after theamendment. The relevant section, which has to be considered in thesewrit petitions, is Sec.34 of the TNGST, which reads as follows:"Section 34:(1) Special Powers of Board of Revenue: (1) The Board ofRevenue may, of his own motion, call for and examine an order passedor proceeding recorded by the appropriate authority under Section 4-ASection 12, section 14, section 15 or sub section (1) or (2) ofsection 16 or an order passed by the Appellate Assistant Commissionerunder sub Section (3) of Section 31 or by the Deputy Commissioner https://hcservices.ecourts.gov.in/hcservices/ under sub-section (3) of Section 31-A or sub section (1) of Section32 and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon asit thinks fit.2) The Board of Revenue shall not pass any order under sub-section(1) if-If (a) the time for appeal against that order has not expired; or (b) the order has been made the subject of an appeal to theAppellate Tribunal or of a revision in the High Court; or(c)more than five years have expired after the passing of the order;(3) No order under this Section adversely affecting a person shall bepassed unless that person has had a reasonable opportunity of beingheard.(4) In computing the period referred to in clause (c) of subsection(2), the time during which the proceedings before Board of Revenueremained stayed under the order of a Civil Court other competentauthority shall be excluded."9. It was amended by Act 22 of 1982. After the amendment, by Act22 of 1982, which came into effect from 1.11.1982, Section 34 of theAct stood as follows:"Section 34: Special Powers of Joint Commissioner of CommercialTaxes:(1) The Joint Commissioner of Commercial Taxes may, of his ownmotion, call for and examine an order passed or proceeding recordedby the appropriate authority under Section 4-A, Section 12, Section12-A, Section 14, Section 15 or sub-section (1)(or (2) of Section 16or an order passed by the Appellate Assistant Commissioner under sub-section (3) of Section 31 or by the Appellate Deputy Commissionerunder sub-section (3) of Section 31-A or by the Deputy Commissionerunder sub-section 91) of section 32 and if such order or proceedingrecorded is prejudicial to the interests of revenue, may make suchinquriy or cause such inquiry to be made and, subject to theprovisions of this Act, may initiate proceedings to revise, modify orset aside such order or proceeding and may pass such order thereon ashe thinks fit. Section 34(2) The Joint Commissioner of Commercial Taxes shall notinitiate proceedings against any such order or proceeding referred toin sub-section(1) if-(a) the time for appeal against that order has not expired; or(b) the order has been made the subject of an appeal to the AppellateTribunal or of a revision in the (Special Tribunal) or (c)More than (five years have expired after the passing of the order; Provided that if the order passed or proceeding recorded by theappropriate authority. Appellate Assistant Commissioner or DeputyCommissioner referred to in sub-Section (1) involves an issue onwhich the High Court has given its decision adverse to the revenue in https://hcservices.ecourts.gov.in/hcservices/ any other proceedings, and an appeal to the Supreme Court against theorder of the High Court is pending, the period of time between thedate of the above said order of the High Court and the date of theorder of the Supreme Court shall be excluded in computing the periodreferred to in clause (c);Section 34(3) No order under this section adversely affecting aperson shall be passed unless that person has had a reasonableopportunity of being heard;34(4) In computing the period referred to in clause (c) of subsection(2), the time during which the proceedings before (the JointCommissioner of Commercial Taxes) remained stayed under the order ofa Civil Court other competent authority shall be excluded." 10. On a comparison of these two Sections before amendment andafter amendment, it is very clear that as it is seen in Section 34(1)of the Act, after it was amended, a specific clause, viz.,"prejudicial to the interests of revenue" has been included. Thatprovision was not available under the original Section 34(1). Thatapart under Section 34(2) of the Act, power was given to the Boardof Revenue for the purpose of passing orders, while under the amendedSection 34(2) of the Act, the power has been given to the JointCommissioner of Tax in respect of the "initiated proceedings". Inaddition to that, the proviso, as elicited above, has beenincorporated in the amended Act, which was not available in theoriginal Section. Therefore, on a reference to the objects ofpassing such amended Act, especially, by effecting the changes asstated above under Section 34 of the Act, the Law makers have givenreasons, which are as follows: "The Committee has recommended that Section 34 of the Act should beamended to specifically provide that suo motu revision can berestricted to cases where the order or proceeding recorded by theappropriate authority or appellate authority is prejudicial to theinterests of revenue and the exercise of suo motu revision by theCommissioner of Commercial Taxes shall not become time-barred as aresult of pendency of an appeal before the Supreme Court against thedecision of the High Court adverse to the department. The Governmenthave decided to accept the recommendations of the Committee and toamend Section 34 of the Act and to make similar amendments toSectyion32 of the Act also relating to the exercise of suo moturevision by the Deputy Commissioner." 11. Therefore, it is clear that the purpose of amendment whichwas brought in with effect from 01.11.1982, was to protect therevenue, and therefore, there has been a total change in the approachin respect of the implementation of Section 34 before its amendmentand after its amendment. It is patently clear that after amendment, the law makers wanted to focus upon the more powers given to theRevenue, with which background the proviso has to be read. https://hcservices.ecourts.gov.in/hcservices/

#12. On the facts and circumstances of the present case, it isnot in dispute that the assessment proceedings were initiated underthe un-amended Section 34 of the Act and the final order has alsobeen passed by the Appellate Assistant Commissioner on 27.04.1977itself. Though under Section 34(2) of the Act the limitation forpassing any further orders has been made as five years, as it hasbeen elicited above, while applying that, the expiry of five yearsperiod, as per un-amended Section 34, is admittedly on 27.04.1982.While so, the amendment of Section 34 (2), which has come into effectfrom 01.11.2000, can never be made applicable to the case of thepetitioner. The effect of proviso in which event would be that thesaving of the period from the date of judgment of the High Courttill the date of judgment by the Supreme Court i.e. from 3.3.31971to 04.10.1996, would apply only in cases where assessment has notbeen completed. The assessment process if completed, there is nopurpose in contending that the proviso would still be made applicableso as to reopen the case. This concept has been well established inthe legal parlour, as seen from the earlier judgment in RamanathanChettiar Vs Kandappa Gounder reported in 1950, 2 M.L.J. 624, whereinthe Hon'ble First Bench of this Court has held as follows:"It is well settled that the law of limitation being procedural lawits provisions operate retrospectively in the sense that they applyto causes of action which arose before their enactment and that it isequally well established that if a right to sue had become barred bythe provisions of the Act then in force on the date of coming toforce of a later enactment, then such a barred right is not revivedby the application of the new enactment." 13. The said narration of the law by this Court in the earliestjudgment squarely applies to the facts of the present case andanswers the contentions of the learned Special Government Pleader. That has been subsequently, followed in N.K.C.Syed Mohammed RavootherVs The Deputy Commercial Tax Officer, Tirukoilur reported in 1958,vol.9 STC page 1, wherein by following the judgment of the DivisionBench in 1950, 2 M.L.J. 624, as extracted supra, and also placingreliance on the judgment of the Division Bench in Muhamad HussainNachiar VS Commissioner of Income Tax, madras reported in 1956 2M.L.J.139, the Division Bench reiterated the said legal principleonce again. 14. That view has been affirmed subsequently in another DivisionBench judgment of this Court in Chettinad Corporation (P) Ltd VsCommissioner of Income Tax, Madras reported in 1983, Vol.141, I.T.R693. That was a case where there was a ratification after two yearsof assessment order by imposing penalty based on the amended lawwhich extended the time limit. It was held on the facts andcircumstances of that case that inasmuch as the amendment has comeinto existence, within a period of expiration of the limitation under https://hcservices.ecourts.gov.in/hcservices/ the original Act, the amended Act would apply by relying on thejudgment in S.C.Prashar VS Vasantsen Dwarkadas , 1963 49 ITR (SC) 1.In fact, the Bench has relied upon an earlier judgment reported in1983, Vol.141, I.T.R 693. It is appropriate to extract some of thepassages in the said judgment, which are as follows: "We considered a similar question in CWT Vs G.Savithri (T.C.Nos.165to 167 of 1975, judgment dated 17.12.1979) reported as Appendix atp.697 infra). In that case a similar amendment had been made to S.18of the W.T.Act by the Finance At of 1969. In accordance with theprovisions in force at the time when the assessment was completed, the order levying penalty could have been passed only by 26th April,1972. The penalty order was, however, made after the said date. Therewas an amendment of the law before the expiry of the period oflimitation and therefore, taking that fact into account it waspointed out (see p.699 infra) " it is now well settled that if beforethe limitation period expired, the period of limitation is extended, the limitation provision, being a procedural one, the extendedperiod of limitation would apply to such proceedings".Applying the principles laid down by the Supreme Court, we may statethat the period prescribed in the unamended s.275 cannot be describedas statutes of repose. The idea was to see that penalty was leviedwithout any undue delay in the case of persons who had committeddefaults in making returns or payments envisaged by the law. Whilethere was a fixed rigid time-limit under the original provision, thetime limit was altered under the amended provision so as to take intoaccount the period of pendency of the appeal. In fact, the amendmentcannot be described as one motivated in the interest of the Revenue.It was often the case previously that as soon as an assessment wasmade, penalty had to be levied, as otherwise, the period oflimitation would expire while the matter was pending on appeal. Inorder to see that any harassment to the assessee did not arise by anorder levying penalty having to be independently appealed against, the Legislature has provided a time limit which would taken intoaccount only the final order after the assessment was made. There are several decisions which have taken the view that theamended provision would alone apply so long as the period oflimitation had not expired on April 1 1971, when the new provisionswas brought into force. The decisions are too numerous and and all ofthem take a uniform view. Therefore, we do not think it necessary todetail them here." 15. In Sree Bank Ltd (in liquidation) Vs Sarkar Dutt Roy andCo., reported in A.I.R.1966 Supreme Court 1953, while dealing withSection 45(O) (1) of the Banking Companies Act, relating to filing ofthe suit or application for which the limitation has been prescribedand the effect of such limitation before enforcement of an amendmentAct, the Supreme Court has, by following the above said ratio laiddown consistently, reiterated the well settled principle thatsubsequent amendment cannot be given effect to, to an act which has https://hcservices.ecourts.gov.in/hcservices/ already been completed.16. In respect of the said Banking Act 1949, relating to thesame Section 45(O), the Supreme Court, in the subsequent judgmentrendered in Official Liquidator, Supreme Bank limited VsP.A.Tendolkar (dead) by L.Rs and others reported in (1973) 1 ,Supreme Court Cases 602 has held that retrospective effect cannot begiven effect to the amendment Act. The relevant portion reads asfollows:"In any case, the amendment of Section 45-O(2) of the BankingCompanies Act, 1949, Act had conferred a new right of counting theperiod of limitation from the first appointment of the liquidator. The exercise of that right by the liquidator, acting on behalf ofthe Company certainly took place after the commencement of Act XXXIIIof 1959. There was no question here of giving any retrospectiveoperation to any right whether procedural or substantive. We,therefore, think that the claims against the Directors, which wereprima facie made within time, were not shown to have been barred bylimitation". 17. In fact, the Hon'ble Apex Court has referred to a largenumber of English as well as Indian Cases, thereby to add suchconclusion to hold that the said legal stand is well settled.18. In a recent judgment in K.M.Sharma VS Income Tax Officerreported in (2002) Vol.254 ITR 772 the Supreme Court has held thatin a fiscal statue, the provision relating to limitation has to beconsidered strictly, by reiterating that, any subsequent amendmentcannot be made applicable to a case which has already been disposed, unless the same is pending consideration. Further, it has held asfollows:"On a proper construction of the provisions of Section 150(1) and theeffect of its operation from April 1, 1989, we are clearly of theopinion that the provisions cannot be given retrospective effectprior to April 1, 1989, for assessments which have already becomefinal due to the bar of limitation prior to April 1, 1989. Thetaxing provision imposing a liability is governed by the normalpresumption that it is not retrospective and the settled principle oflaw is that the law to be applied is that which is in force in theassessment year unless otherwise provided expressly or by necessaryimplication. Even a procedural provision cannot in the absence ofclear contrary intendment expressed therein be given greaterretrospectivity than is expressly mentioned so as to enable theauthorities to affect the finality of tax assessments or to open upliabilities, which have become barred by lapse of time. Ourconclusion, therefore, is that sub-section (1) of Section 150, asamended with effect from April 1, 1989, does not enable theauthorities to reopen assessments, which have become final due to barof limitation prior to April 1, 1989, and this position is applicable https://hcservices.ecourts.gov.in/hcservices/ equally to re-assessments proposed on the basis of orders passedunder the Act or under any other law". 19. For the reasons stated above, we have no hesitation to holdthat the orders of the respondent impugned in these writ petitionshave no legal basis. Accordingly, the Writ petitions stand allowedand the impugned orders are set aside. No costs. palSd/Asst. Registrar/true copy/Sub Asst. Registrar ToJoint commissioner (SMR)Office of the Special Commissioner & Commissioner of Commercial Taxes, Chepauk, Chennai.5 + 1 cc to Special Government Pleader SR.NO.77205+ 1 cc to Mr.K.Vaitheeswaran, Advocate SR.NO.76879 W.P.Nos.14826 and 14827 of 2002 (CO) KSK NS 25/01/2012