* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on : 20th April, 2011
Date of decision: 2nd September, 2011
+ WP (C) No. 274 of 2010
Dharam Pal Satya Pal Ltd. & Anr. ... Petitioner
Through: Mr. S. Ganesh, Sr. Adv. with
Mr. Ruchir Bhatia, Mr. Sumit Batra,
Mr. Sushil Verma, Advs.
Versus
The Commissioner, Value Added Tax & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
+ WP (C) No. 3001 of 2010
Reliance Infrastructure Ltd. ... Petitioner
Through: Mr. S. Ganesh, Sr. Adv. with
Mr. Ruchir Bhatia, Mr. Sumit Batra,
Mr. Sushil Verma, Advs.
Versus
Commissioner of Trade Taxes & Ors. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
W.P.(C) No.3001/2010 with connected matters Page 1 of 59
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
+ WP (C) No. 8620 of 2009
Persys Punj Lloyd Joint Venture ... Petitioner
Through: Mr.P.K. Sahu, Mr. Prashant Shukla,
Mr. D.M. Singh, Advs.
Versus
Commissioner of VAT & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
+ WP (C) No. 10287 of 2009
Persys Punj Lloyd Joint Venture ... Petitioner
Through: Mr.P.K. Sahu, Mr. Prashant Shukla,
Mr. D.M. Singh, Advs.
Versus
Commissioner of VAT & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
W.P.(C) No.3001/2010 with connected matters Page 2 of 59
+ WP (C) No. 10311 of 2009
Persys Punj Lloyd Joint Venture ... Petitioner
Through: Mr.P.K. Sahu, Mr. Prashant Shukla,
Mr. D.M. Singh, Advs.
Versus
Commissioner of VAT & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
+ WP (C) No. 10312 of 2009
Persys Punj Lloyd Joint Venture ... Petitioner
Through: Mr.P.K. Sahu, Mr. Prashant Shukla,
Mr. D.M. Singh, Advs.
Versus
Commissioner of VAT & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
W.P.(C) No.3001/2010 with connected matters Page 3 of 59
+ WP (C) No. 974 of 2010
M/s Kumagai Skanska HCC ITOCHU Group ... Petitioner
Through: Mr. Rajesh Jain, Ms. Neetika
Khanna, Advs.
Versus
The Commissioner, Value Added Tax & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. Shadan Farasat, Mr. S. B. Jain,
Advocates for Commissioner of Trade
Tax.
Mr.Kailash K. Ahuja, Adv. for
Commissioner of VAT.
Mrs. Avnish Ahlawat, Advocate for
Dy. Commissioner, GNCTD.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE MANMOHAN
1 Whether reporters of the local papers be allowed to see the judgment? Yes
2 To be referred to the Reporter or not? Yes
3 Whether the judgment should be reported in the Digest? Yes
DIPAK MISRA, CJ
In this batch of writ petitions, the centripetal issue that has emerged
for consideration is whether the Commissioner under the Delhi Value Added
Tax Act, 2004 (for brevity, „the DVAT Act‟) can exercise suo motu power
of revision under Section 74A of the DVAT Act in respect of assessments
that have been completed under the Delhi Sales Tax Act, 1975 (for short,
W.P.(C) No.3001/2010 with connected matters Page 4 of 59
„the DST Act‟). Be it noted, when these petitions were listed before the
Division Bench, the learned counsel for the assessee – petitioner contended
that in view of the decisions rendered in International Metro Civil
Contractors v. Commissioner of Sales Tax/VAT & Another, [2008] 16
VST 329 (Delhi) and LG Electronics (India) Ltd. v. Commissioner of
Trade & Taxes, New Delhi [2008] 16 VST 361 (Delhi) and also regard
being had to the terms employed under Section 106 of the DVAT Act which
deals with repeal and savings, a suo motu revisional power could not have
been exercised. Combating the said submissions, it was urged by the
learned counsel for the Department that in accordance with the law laid
down in the aforesaid decisions, an amendment had been brought into force
from the date of enactment of the DVAT Act, i.e., 1.4.2005 and, therefore,
the suo motu power of revision was kept alive at the commencement of the
statute. Hence, there is no illegality in the initiation of the revisional
proceeding. The learned counsel also contended that the interpretation
placed by the Division Bench on Section 106 of the DST Act is not correct if
the language employed in the said provision is appositely appreciated with
studied scrutiny.
2. After hearing the learned counsel for the parties at length and regard
W.P.(C) No.3001/2010 with connected matters Page 5 of 59
being had to the submissions, the Division Bench thought it appropriate to
refer the matter to a larger Bench and, accordingly, in the concluding
paragraphs, it stated as follows:
“23. From the submissions raised at the Bar, it is
noticeable that the legislature has initially introduced
Section 74A w.e.f. 24.11.2005 and after the decision was
rendered in International Metro Civil Contractors
(supra) has brought the said Section into effect from
1.4.2005. The question that emerges is whether by such
incorporation with retrospective effect the revisional
power is saved. That apart there has been a debate with
regard to the interpretation placed by the Division Bench
under Section 106 of the Act. Additionally, a further
cavil has been raised with regard to the applicability of
Bengal Act to Delhi.24. In view of the aforesaid, we are disposed to think
that the decisions rendered in International Metro Civil
Contractors (supra) and LG Electronics (India) Ltd.
(supra) require reconsideration by a larger Bench apart
from the fact that there has to be an authoritative
pronouncement of law on this score. We are disposed to
think so as the legislature has presumed that the Division
Bench possibly would have upheld the action had the
amendment would have come into effect w.e.f. 1.4.2005.
That apart, learned Additional Solicitor General has
seriously contended that the interpretation placed on
Section 106 is not correct and the said submission has
been seriously opposed by Mr. Ganesh, learned senior
counsel for the petitioners. Ordinary, we would have
proceeded to address the same but the first question, we
are inclined to think, really requires to be addressed.”3. On the basis of the aforesaid order, the matters have been placed
before us.
W.P.(C) No.3001/2010 with connected matters Page 6 of 59
4. Keeping in view the commonality of the controversy, we think it
appropriate to exposit the facts from W.P.(C) No.3001/2010. Invoking the
jurisdiction of this Court under Article 226 of the Constitution of India, the
petitioner, a company incorporated under the Companies Act, 1956, has
called in question the legality and validity of the initiation of the revisional
proceedings against the petitioner by issuance of notice dated 08.04.2010
under Section 74A read with Section 106 of the DVAT Act by the
Commissioner, Trade Taxes, Delhi, the first respondent herein, purporting to
revise the orders of the Additional Commissioner dated 14.01.2008 and
25.11.2008 and to restore the order passed by the assessing authority on
30.03.2006. It is pleaded that the orders of the assessing authority as well as
that of the first appellate authority relate to the assessment year 2004-05 to
which the DST Act is applicable and not the provisions of the DVAT Act
which came into force with effect from 01.04.2005. It is contended that the
initiation of the revisional proceedings against the petitioner is wholly
without jurisdiction and without proper authority of law inasmuch as the
power of revision engrafted in Section 74A of the DVAT Act cannot be
pressed into service in respect of orders passed under the provisions of the
DST Act. That apart, the provision of Section 74A of the DVAT Act has no
application at all to the year 2004-05 during which the said provision had not
W.P.(C) No.3001/2010 with connected matters Page 7 of 59
come into force. It is urged that the proceedings being fundamentallyunsustainable are ab initio void and, hence, deserve to be lanceted in
exercise of the inherent and equitable jurisdiction of this Court.
5. It is put forth that if Section 74A is read in conjunction with Section
106 of the DVAT Act, it is clear as day that the power of suo motu revision
does not rest any more with the first respondent and, therefore, recourse to
the same could not have been taken for initiating a suo motu revision. Be it
noted, certain aspects have been highlighted with regard to the merits of the
case or initiation which need not be adverted to while answering this
reference as we are only concerned with the existence of inherent
jurisdiction for exercise of power of the revisional authority for initiation of
the proceeding.
6. A counter affidavit has been filed by the answering respondents
contending, inter alia, that after the decisions rendered in International
Metro Civil Contractors (supra) and LG Electronics (India) Ltd. (supra),
Section 74A of the DVAT Act has been amended by the Amendment Act,
2009 whereby sub-section (5) has been inserted to the said section as a
consequence of which Section 74A has become operational with effect from
01.04.2005. It is put forth that the result of the aforesaid amendment is that
W.P.(C) No.3001/2010 with connected matters Page 8 of 59
the defect pointed out by this Court in the aforesaid two decisions standobliterated and as a fallout thereof, the legislative intention becomes clear to
confer the power of suo motu revision on the Commissioner. Reference has
been made to Section 106 of the DVAT Act to highlight that the power rests
with the Commissioner for exercise of suo motu power under the DVAT Act
in respect of the orders passed under the DST Act. Quite apart from the
above, various aspects have been highlighted to show how the petition is
totally devoid of merit.
7. We have heard Mr. S. Ganesh, Sr. Advocate with Mr. Ruchir Bhatia,
Mr. Sumit Batra, Mr. Sushil Verma, Mr. Rajesh Jain, Ms. Neetika Khanna,
Mr. P.K. Sahu, Mr. Prashant Shukla, Mr. D.M. Sinha, advocates for the
petitioners and Mr. Parag P. Tripathi, learned ASG with Mr. Shadan Farasat,
Mr. S.B. Jain, Ms. Avinish Ahlawat and Mr. Kailash K. Ahuja, Advocates
for the respondents.
8. The submission of Mr.Ganesh, learned senior counsel appearing on
behalf of the petitioner, is that the DST Act was repealed on 01.04.2005 and
the DVAT Act was brought into force and in the absence of any provision in
the Act especially Section 106 which deals with repeal and savings, suo
motu revision under Section 74A of the DVAT Act cannot be initiated. The
W.P.(C) No.3001/2010 with connected matters Page 9 of 59
learned senior counsel has heavily relied on the Division Bench decisions inInternational Metro Civil Contractors (supra) and LG Electronics (India)
Ltd. (supra). It is urged by him that Section 106(3) of the DVAT Act refers
to the power conferred under the DST Act and Section 106(2) refers to the
term “right” and the said term cannot be interpreted to include the “power”
to vest jurisdiction upon the Commissioner to exercise the suo motu power
of revision. Section 106 of the DVAT Act is an exhaustive provision on the
subject of savings and on a keen scrutiny of the said provision, it would be
quite vivid that the same does not save the exercise of power of suo motu
revision. The learned senior counsel has canvassed that after the decision
rendered in International Metro Civil Contractors (supra), the legislature by
the subsequent amendment has made Section 74A of the DVAT Act
retrospectively applicable with effect from 01.04.2005 and as a consequence
of which the power to exercise suo motu revisional power gets extended in
respect of orders passed under the DVAT Act from 1st April, 2005 but
definitely it does not confer power upon the Commissioner to initiate suo
motu revisional proceeding that stood concluded under the DST Act. It is
his further submission that Section 6 of the General Clauses Act, 1897 has
no application to the instant case as the same only applies to the repeal of
central enactment and not to the repeal of a state enactment. That apart,
W.P.(C) No.3001/2010 with connected matters Page 10 of 59
contends Mr.Ganesh, when there is a saving clause in the repealingenactment, Section 6 of the General Clauses Act would have no application
and the matter has to be decided exclusively on the interpretation of the
saving provision. The language employed under Section 106 of the DVAT
Act excludes the applicability of the provision enshrined under Section 6 of
the General Clauses Act as the language employed in the said section clearly
intends to the contrary. Section 6 creates a fiction to the effect that for the
purpose of savings, the provision of the repealed act would apply as if the
repealing act had not been passed but in the instant situation, in contrast,
Section 106 of the DVAT Act creates a fiction for the purpose of saving that
the provisions of the repealing act would apply as if the provisions of the
repealing act were in force and, therefore, there is a complete scheme
inherent under the said provision and nothing else can be allowed into the
said realm. Quite apart from the above, the learned senior counsel has
submitted with immense force that the provision of Section 6 of the General
Clauses Act is not applicable to Delhi.
9. It is also canvassed by Mr. S. Ganesh, learned senior counsel, that the
legislature clearly intended to put the controversy that had arisen under the
DST Act to rest and, therefore, the same cannot be allowed to be re-opened
W.P.(C) No.3001/2010 with connected matters Page 11 of 59
by taking recourse to Section 74A of the DVAT Act and further the decisionin International Metro Civil Contractors (supra) has not been appositely
appreciated and its ratio decidendi has been erroneously applied to mean that
by making Section 74A applicable from the commencement of the DVAT
Act, the power of exercise of suo motu revision is saved. The learned senior
counsel would further submit that the language employed in Section 74A is
absolutely restricted and confined and, therefore, the action taken under the
DVAT Act does not pertain even remotely to any order of assessment that
has attained finality under the DST Act.
10. To buttress his submissions on the various aspects, he has placed
reliance on the decisions in Ravula Subba Rao & Anr. v. The
Commissioner of Income Tax, Madras, 1956 SCR 577, Deputy
Commissioner of Sales Tax (Law Board of Revenue (Taxes), Ernakulam
v. Janatha Expeller Company, (2001) 121 STC 80 (Ker), Indira Sohanlal
v. Custodian of Evacuee Property, Delhi & Ors., (1955) 2 SCR 1117,
Thyssen Stahlunion Gmbh v. Steel Authority of India Ltd., (1999) 9 SCC
334, Hari Shankar v. Rao Girdhari Lal Chowdhary, AIR 1963 SC 698,
State of Kerala v. K.M. Cheria Abdullah & Co., AIR 1965 SC 1585,
Kailash Nath Agarwal & Ors. v. Pradeshiya Industries & Inv.
W.P.(C) No.3001/2010 with connected matters Page 12 of 59
Corporation, UP & Anr., AIR 2003 SC 1886, Ram Kanai Jamini RanjanPal Pvt. Ltd. v. Member, Board of Revenue, West Bengal, (1976) 3 SCC
369, Kolhapur Canesugar Works Ltd. v. Union of India & Ors., (2000) 2
SCC 536, Shiv Shakti Co-op. Housing Society v. Swaraj Developer & Ors.,
(2003) 6 SCC 659, G.K. Choksi & Co. v. Commissioner of Income Tax,
Gujarat, (2008) 1 SCC 246 and Hindustan Construction Co. Ltd. v. State
of Haryana, (2005) 141 STC 119 (P&H).
11. Mr. N.K. Kaul, learned senior counsel, Mr. P.K. Sahu and the other
learned counsel appearing for the petitioners have supported the contentions
raised by Mr.Ganesh. Additionally, in certain cases, it has been urged that
there is no justification for exercising the suo motu power of revision.
12. Mr. Parag Tripathi, learned Additional Solicitor General appearing for
the respondents, per contra, submitted that this Court in International Metro
Civil Contractors (supra) and LG Electronics (India) Ltd. (supra) interfered
as Section 74A was brought in the statute book on 16.11.2005 and,
therefore, when the amendment was brought with effect from 1.4.2005, it
would convey that the intention of the legislature became quite clear that the
exercise of suo motu power of revision was kept alive at the time of
commencement of the statute. The learned counsel for the revenue further
W.P.(C) No.3001/2010 with connected matters Page 13 of 59
submitted that Section 106 has to be read in conjunction with theamendment and the conjoint reading of the said provisions would make it
clear as crystal that the legislature intended that the suo motu power of
revision would be applicable to the proceedings under the DST Act. It is
also canvassed by him that the Division Bench in International Metro Civil
Contractors (supra) has not correctly interpreted Section 106 of the DVAT
Act regard being had to the fact that Section 74A of the Act had already
been brought on the statute book with effect from 16.11.2005. Elaborating
the said submission, it is contended by Mr.Tripathi that by the time Section
74A was incorporated in the statute book, if the power to initiate suo motu
revision existed and the limitation did not expire, a right is accrued in favour
of the revenue to do so in exercise of power under Section 74A of the Act.
It is urged by him that when a repeal is followed by re-enactment and unless
a different intention bears, the applicability of Section 6 of the General
Clauses Act is protected even when the re-enactment has a saving clause of
its own. The learned counsel for the revenue has submitted that by virtue of
the notification dated 31st May, 1951 issued by the Ministry of Home
Affairs, the provisions of the Bengal General Clauses Act, 1891 have been
made applicable to the State of Delhi and Section 8 of the said Act is pari
materia to Section 6 of the General Clauses Act.
W.P.(C) No.3001/2010 with connected matters Page 14 of 59
13. It is further submitted that the decision rendered in International
Metro Civil Contractors (supra) does not lay down the correct law as it
concludes that the intention of the legislature was to do away with the right
of the Department to revise any erroneous order of assessment as there was
no intention of the legislature to preserve the same and further it has erred in
holding that Section 106(3) creates a deeming fiction to the effect that
anything done or any action taken under the repealed Act is to be deemed to
have been done or taken under the DVAT Act and as revision is neither an
enabling power nor a substantive right, it is not protected under Section
106(2) of the DVAT Act.
14. The learned Additional Solicitor General, to bolster his submissions,
has placed reliance on T.S. Baliah v. T.S. Rangachari, Income Tax Officer,
(1969) 72 ITR 787 (SC), Director of Settlements, Andhra Pradesh & Ors.
v. M.R. Apparao & Anr., (2002) 4 SCC 638, Commissioner of Income Tax,
UP v. M/s Shah Sadiq and Sons, (1987) 3 SCC 516, Bansidar & Ors. v.
State of Rajasthan & Ors., (1989) 2 SCC 557, Gajraj Singh & Ors. v. State
Transport Appellate Tribunal & Ors., (1997) 1 SCC 650, Kolhapur
Canesugar Works Ltd. (supra), Shiv Shakti Co-Housing Society (supra),
Gammon India Ltd. v. Special Chief Secretary & Ors., (2006) 3 SCC 354,
W.P.(C) No.3001/2010 with connected matters Page 15 of 59
Kalawati Devi v. CIT, West Bengal & Ors., (1967) 66 ITR 680 (SC) andM/s Maheshwari Agencies v. St ate of U.P. & Ors., (2010) UPTC 872 (All).
15. First we shall advert to the analysis made and the view expressed by
the Division Bench in International Metro Civil Contractors (supra) which
has been followed in LG Electronics (India) Ltd. (supra). The Division
bench in the first case came to hold that on the repeal of the DST Act
coupled with the omission of the revisionary power of the Commissioner
under the DVAT Act, the said power got completely obliterated and effaced
and did not survive after 1.4.2005 and hence, no action could be taken
against the assessee. The Bench, taking note of the fact that Section 74A of
the DVAT Act was inserted on 16.11.2005, held that the same did not
resuscitate or resurrect the long-dead revisionary power conferred on the
Commissioner under Section 46 of the DST Act as it had no retrospective
effect and the legislature, by amendment, having brought Section 74A of the
DVAT Act, could not have really bestowed on the Commissioner the
revisionary power. It is worth noting that the Division Bench referred to
Section 46 of the DST Act and Section 106 of the DVAT Act and addressed
the meat of the matter as follows:
“Coming to the meat of the matter, we are required to
consider whether, after the DVAT Act came into force,W.P.(C) No.3001/2010 with connected matters Page 16 of 59
the Revenue could issue the show cause notice dated
July 18, 2007 seeking to revise the assessment order
dated March 31, 2003. To answer this question, we
would need to consider the following three issues:
“1. Whether any proceedings for revising the
assessment order were at all initiated by the
Revenue before March 31, 2005 when the DST
Act and the Works Contract Act were repealed? If
not, the impact thereof.2. If the answer to the above question is in the
affirmative, whether the proceedings initiated by
the Revenue were saved by the DVAT Act on the
repeal of the DST Act and the Works Contract Act
on March 31, 2005?3. What is the effect (if any) of the omission, in the
DVAT Act, of the power to revise an assessment
that was available to the Commissioner under
Section 16 of the Works Contract Act read with
Section 46 of the DST Act.”16. While dealing with the first question, the Bench referred to the
decisions in Gajraj Singh (supra) and Gammon India Ltd. (supra) and
opined thus:
“The effect of this is, quite clearly, that the process of a
revisionary proceeding, not having been initiated by the
Revenue, dies a natural death on the repeal of the DST
Act and the Works Contract Act – unless the right of the
Revenue is otherwise saved by the DVAT Act; an issue
that we will presently consider.X X X X
“Applying the law laid down by the Supreme Court, it
must be held that by virtue of section 106(2) of theW.P.(C) No.3001/2010 with connected matters Page 17 of 59
DVAT Act since the previous operation of the DST Act
and the Works Contract Act was saved, the assessment
order being a transaction past and closed under those
statutes, was also saved. As far as section 106(3) of the
DVAT Act is concerned, the deeming provision only
means that an order passed under the repealed statute
would have to be dealt with as if the repealing Act was in
force on that day and the powers and jurisdiction of the
authorities under the repealing Act must also be deemed
to have been in force on the date when that order was
passed. But, it must be remembered that the DVAT Act
did not provide for any revisionary power and so, no such
power or jurisdiction was available on the date of the
assessment order, if the deeming fiction is taken to its
logical conclusion. However, it is not necessary for us to
go to that extent, because the next issue that we are
required to consider is the right or entitlement (if any) of
the Revenue to revise the order of assessment. Is that
saved by the provisions of the DVAT Act, even if
everything is assumed in favour of the Revenue?”Thereafter, the Bench came to hold that since before the order dated
12.8.2004 could be acted upon, its operation had been stayed by the Court
on 20.9.2004 in a miscellaneous application filed by the petitioner in the first
writ petition and the revenue did not take any steps to have that stay lifted or
vacated which, therefore, continued till 18.11.2005 by which time the DST
Act and the Works Contract Act were repealed, there was no operative order
as on 1.4.2005 as far as the petitioner was concerned. Further, relying upon
the decision in Shree Chamundi Mopeds Ltd. v. Church of South India
Trust Association, (1992) 3 SCC 1, the Bench opined that as the order dated
W.P.(C) No.3001/2010 with connected matters Page 18 of 59
12.8.2004 was set aside by the Court on 3.11.2006 in the second writpetition, no proceedings for revising the assessment order were pending on
1.4.2005 thereby resulting in restoration of the position as it stood on the
date of the passing of the order which has been quashed. As a consequence,
it was eventually held that even if the Commissioner had any right
(assuming it to be a right) to revise the assessment order, since neither he nor
his delegate ever exercised that right till 1.4.2005, the right stood
extinguished when the DST Act and the Works Contract Act were repealed.
17. While dealing with the second question, namely, whether the
revisionary proceedings (if they were initiated) were saved by the DVAT
Act, the Bench looked into two “sub-issues” and, thereafter, addressed
whether notwithstanding anything else, Section 106(3) of the DVAT Act
comes to the rescue of the revenue and whether Section 106(2) of the DVAT
Act saves the previous operation of the DST Act. The Division Bench
referred to the decision in Indira Sohanlal (supra) and came to hold that
even if revisionary proceedings had been initiated in respect of the petitioner
under Section 46 of the DST Act, they would have to be dealt with under the
DVAT Act, but as the Legislature would have it, the DVAT Act did not
provide for revisionary proceedings in the first instance. These were
W.P.(C) No.3001/2010 with connected matters Page 19 of 59
introduced with effect from 16.11.2005. Consequently, even if it were to beargued that the revisionary proceedings initiated by the Revenue were
somehow or the other “saved”, they died a legal death because they could
not be dealt with under the DVAT Act since no revisionary jurisdiction was
provided for under the DVAT Act when enacted and enforced on 1.4.2005.
18. After so stating, the Bench referred to the decisions in Bishambhar
Nath Kohli v. State of Uttar Pradesh, AIR 1966 SC 573 and Gajraj Singh
(supra) and expressed the view that by virtue of Section 106(2) of the DVAT
Act since the previous operation of the DST Act and the Works Contract Act
was saved, the assessment order being a transaction past and closed under
those statutes, was also saved. As far as Section 106(3) of the DVAT Act is
concerned, the deeming provision only means that an order passed under the
repealed statute would have to be dealt with as if the repealing Act was in
force on that day and the powers and jurisdiction of the authorities under the
repealing Act must also be deemed to have been in force on the date when
that order was passed. Thereafter, the Bench proceeded to lay down that it
must be remembered that the DVAT Act as originally enacted did not
provide for any revisionary power and so, no such power or jurisdiction was
W.P.(C) No.3001/2010 with connected matters Page 20 of 59
available on the date of the assessment order, if the deeming fiction is takento its logical conclusion.
19. After so stating, the Bench adverted to three kinds of revisionary
powers and referred to the decisions in Siemens India Ltd. v. State of
Maharashtra, [1986] 62 STC 40 (Bombay), Hari Shankar (supra), Swastik
Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, [1968]
21 STC 383 (SC): AIR 1968 SC 843, Shiv Shakti Coop. Housing Society
(supra) and Hindustan Construction Company Ltd. (supra) and eventually
held thus:
“The power of revision is an enabling power available to
a superior authority to correct an error committed by a
subordinate authority. Shiv Shakti (supra) is not limited
in its application to Section 115 of the Code of Civil
Procedure but follows the law earlier laid down,
generally, on the revisionary power of an authority.
The power of revision being only an enabling power and
not a substantive right, it is not saved by Section 106(2)
of the DVAT Act, which only saves a “right” or an
“entitlement”, both being synonymous. Consequently,
whichever way one considers the problem, the
assessment order dated March 31, 2003 could not have
been re-opened by the Revenue in the manner that we are
concerned with.”[Underlining by us]
20. Be it noted, after dealing with second issue, the Division Bench
proceeded to address the third issue which pertains to the effect of omission
W.P.(C) No.3001/2010 with connected matters Page 21 of 59
of a provision in a legislation subsequent to the repeal of an earlierlegislation. The Bench noted the fact that no revisionary proceedings were
initiated by the revenue till 1.4.2005 and, thereafter further referred to the
certain aspects in Gajraj Singh (supra), Kolhapur Canesugar Works Ltd.
(supra), Shiv Shakti Coop. Housing Society (supra) and Gammon India
Ltd. (supra) and opined that where an existing power is not conferred on the
given authority by the repealing statute, it cannot survive the repeal; nor can
its ghost be invoked to revive a right / power that gets closed on the repeal of
an enactment. Furthermore, if a power does survive, it does so under the new
statute and not under the repealed statute.
21. It is worth noting, a contention was advanced by the revenue that as
the assessee had incurred a liability to pay the tax, all subsequent actions
taken by the revenue to recover the tax are permissible and, hence, the
initiation by revisional proceeding could survive. The Bench did not accept
the submission on two counts, namely, the question of the liability of the
assessee to pay tax had come to an end on the passing of the assessment
order, which gave it an entitlement to a refund and, secondly, the liability of
the assessee to tax would have arisen, if at all, only after the revision of the
assessment order and until then the revenue was liable for a refund.
W.P.(C) No.3001/2010 with connected matters Page 22 of 59
22. After so holding, the Division Bench proceeded to state as follows:
“The intention of the legislature was clear on 1st April,
2005 that it did not wish the Commissioner to have the
power of revision, otherwise it would certainly have been
provided for. In any event, we cannot read into the
repealing statute a substantive provision that is not
provided for.”Thereafter, the Division Bench referred to the decision in to Southern
Petrochemical Industries Co. Ltd. v. Electricity Inspector and ETIO [2007] 5
SCC 447 and opined thus:
“The consequence of this is that the repeal of the DST
Act and the Works Contract Act coupled with the
omission of the revisionary power of the Commissioner
under the new enactment, that is, the DVAT Act
completely obliterated or effaced that power such that it
did not survive after 1st April, 2005. There is nothing in
the DVAT Act to suggest that the power was intended to
survive or be acted upon.It is true that a fresh power of revision was conferred on
the Commissioner by an amendment brought about to the
DVAT Act on November 16, 2005 when Section 74A
was inserted in that Act but this did not resuscitate or
resurrect the long-dead revisionary power conferred on
the Commissioner under Section 46 of the DST Act. It
had no retrospective effect.”23. The Division Bench in International Metro Civil Contractors (Supra)
placed reliance on Gajraj Singh (Supra) wherein it has been held that rights
of action which are dependent upon a statute, and which are still inchoate
W.P.(C) No.3001/2010 with connected matters Page 23 of 59
and not perfected by final judgment, are lost by the repeal of the statute fromwhich they stem. It has been observed in Gajraj Singh (Supra) that the
repeal of statute operates to divest all rights accruing under the repealed
statute and all proceedings not concluded prior to the repeal, since inchoate
rights are by definition not vested rights and are understood to arise from the
statute and fall with its repeal. The Bench also referred to the decision in
Gammon India Limited (Supra) which states that the proceedings which
might not have culminated into a final judgment prior to the repeal would
abate at the consummation of the repeal. Relying on the same, the Bench
observed that the process of a revisionary proceeding, not having been
initiated by the Revenue, dies a natural death. The Bench also opined that
even if the Commissioner had any right to revise the assessment order, the
„right‟ stood extinguished when the DST Act was repealed. Reliance was
placed on Indira Sohanlal (supra) and the opinion has been expressed, as
has been indicated herein before, that even if a revisionary proceeding had
been initiated in respect of the assessee under Section 46 of the DST Act, the
said power died a legal death as the legislature did not provide for
revisionary proceedings in the first instance.
W.P.(C) No.3001/2010 with connected matters Page 24 of 59
24. Reliance was placed on Hari Shanker (supra) wherein a distinction
between an appeal and a revision was drawn stating that the right of appeal
carries with it a right of rehearing on law as well as fact, unless the statute
conferring the right of appeal limits the rehearing in some way but the power
to hear a revision is generally given to a superior Court so that it may satisfy
itself that a particular case has been decided according to law. Eventually,
the Bench opined that the power of revision, being only an enabling power
and not a substantive right, is not saved by Section 106(2) of the DVAT
Act, which only saves a „right‟ or an „entitlement‟, both being synonymous.
On the basis of the aforesaid analysis, the Division Bench has held that the
power of revision earlier available with the Commissioner has suffered a
legal death.
25. It is seemly to note here that the aforesaid judgment was assailed
before the Apex Court in SLP(C) No. 7470/2008 titled Commissioner Value
Added Tax, New Delhi and Anr. v. M/s. International Metro Civil
Contractor and their Lordships, vide order dated 31.3.2008, had passed the
following order:
“Having regard to the facts of the present case we are of
the view that the Commissioner ought not to have
interfered with the Assessment Order under Sec.46 of the
Delhi Sales Tax Act particularly when the requirementsW.P.(C) No.3001/2010 with connected matters Page 25 of 59
of that Section do not stand complied with. We make it
clear that the larger issue regarding the applicability of
Delhi Value Added Tax Act 2004 as also question of
repeal of Delhi Sales Tax Act and related issues
discussed in the impugned judgment of the High Court
are kept open.As far as the cost is concerned we are of the view that in
the facts and circumstances of the case it would not be
proper to impose the cost of rupees twenty six lakhs on
the Department. Ultimately it is the tax payer who has to
bear the burden. The order passed by the High Court as
far as cost is concerned stands cancelled.The special leave petition is disposed of accordingly.”
In view of the aforesaid, the legal issue that has been raised by the
learned counsel for the parties has been kept open and, hence, we proceed to
dwell upon the same.
26. The heart of the matter is whether the Division Bench has correctly
interpreted Section 106 of the DVAT Act to come to the conclusion that by
insertion of Section 74A from 16.11.2005 in the DVAT Act, the same did
not resuscitate or resurrect the long-dead revisionary power conferred on the
Commissioner under Section 46 of the DST Act. That apart, the question
that emanates for consideration is whether by incorporating Section 74A
with effect from 1.4.2005 the legislature made its intendment clear to invest
W.P.(C) No.3001/2010 with connected matters Page 26 of 59
the power of revision in respect of assessments framed under the DST Actwith the Commissioner.
27. To appreciate the controversy, it is apposite to refer to Section 46 of
the DST Act, which reads as follows:
“46. Revision of orders prejudicial to revenue. – The
Commissioner may call for and examine the records of
any proceeding under this Act and if he considers that any
order passed therein by any person appointed under sub-
section (2) of section 9 to assist him is erroneous in so far
as it is prejudicial to the interests of Revenue, he may,
after giving the dealer an opportunity of being heard and
after making or causing to be made such inquiry as he
deems necessary, pass such order thereon as the
circumstances of the case justify, including an order
enhancing or modifying the assessment and penalty (if
any) imposed or canceling the assessment and penalty (if
any) imposed and directing fresh assessment :PROVIDED that a final order under this section
shall be made before the expiry of five years from the date
of the order sought to be revised.”28. On a plain reading of Section 46 of the DST Act, it is manifest that the
said provision confers power on the Commissioner to exercise suo motu
power of revision against an order passed by an officer subordinate to him
and covered by Section 9(2) of the DST Act, if the said order was prejudicial
to the interest of the revenue. It is worth noting, in the said provision, no
time limit was fixed for initiation of the proceeding. However, a period was
fixed for passing the final order on the said revision within five years. If the
W.P.(C) No.3001/2010 with connected matters Page 27 of 59
scheme of Section 46 is appositely understood, it clearly conveys that theproceeding has to be initiated and completed within a span of five years.
That would be a reasonable approach to understand the schematic import of
the provision.
29. At this juncture, we think it apt to refer to Section 47 of the DST Act.
It is as follows:
“47. Revision of other orders: (1) In the case of any
order, other than an order referred to in section 44 or to
which section 46 applies, passed by a person appointed
under sub-section (2) of section 9 to assist him, the
Commissioner may, either on his own motion or on an
application filed in accordance with such rules as may be
prescribed, call for the record of any proceeding under
this Act in which any such order has been passed and may
make such inquiry or cause such inquiry to be made and,
subject to the provisions of this Act, may pass such orders
thereon, not being an order prejudicial to the dealer, as he
thinks fit:PROVIDED that the Commissioner shall not revise any
order under this sub-section,-(a) where an appeal against the order is pending before
the appellate authority under section 43; or(b) where if such appeal lies, the time within which it
may be filed has not expired; or(c) where in the case of the second appeal, the dealer
has not waived his right of appeal.W.P.(C) No.3001/2010 with connected matters Page 28 of 59
(2) The Commissioner shall not on his own motion
revise any order under this section after the expiry of two
years from the date of the order sought to be revised.(3) In the case of an application for revision under this
section by the dealer, the application shall be made within
two years from the date on which the order in question
was communicated to him or the date on which he
otherwise comes to know of it, whichever is earlier.”On a scrutiny of the anatomy of the aforesaid provision, it is clear as
day that the said provision covers cases which are not governed by Section
46. An order under Section 47 cannot be prejudicial to the interest of the
dealer. The said provision confers a right on the dealer to apply for revision
within two years from the date of communication of the order of assessment,
subject to conditions stipulated in the said provision. It also conferred a
power on the Commissioner to revise the order suo motu. For the said
purpose, the period fixed was two years from the date of the order that was
sought to be revised. Thus, there was a clear distinction between Sections
46 and 47 of the DST Act.
30. The DVAT Act came into force on 1.4.2005 repealing the DST Act,
as has been stated hereinbefore. Initially there was no provision within the
DVAT Act conferring power of revision on the Commissioner. Section 74A
was inserted in the DVAT Act with effect from 16.11.2005. The said
W.P.(C) No.3001/2010 with connected matters Page 29 of 59
provision has been further amended making it effective from 1.4.2005 whenthe DVAT Act came into force.
31. The Division Bench in International Metro Civil Contractors (supra)
dealt with a case which arose within a period from 1.4. 2005 till 16.11.2005
and came to the conclusion that the power of revision did not exist at that
time. It is apt to note that the decision in International Metro Civil
Contractors (supra) proceeded on the foundation that the right of revision is
distinct from the right of appeal and the right to revise is only an enabling
power and not a right and because of the aforesaid analysis, it came to hold
that sub-section (2) of Section 106 did not save the „power‟. The Division
Bench noticed that the inclusion of power in sub-section (3) of Section 106
and the absence of the expression „of the power‟ in sub-section (2) could
only lead to a singular conclusion that the power was not saved by sub-
section (2) of Section 106 of the DVAT Act.
32. At this juncture, we think it appropriate to refer to Section 74A of the
DVAT Act as it stands today. The said provision reads as follows:
“74A Revision.
(1) After any order including an order under this
section or any decision in objection is passed under this
Act, rules or notifications made thereunder, by anyW.P.(C) No.3001/2010 with connected matters Page 30 of 59
officer or person subordinate to him, the Commissioner
may, of his own motion or upon information received by
him, call for the record of such order and examine
whether: –(a) any turnover of sales has not been brought to
tax or has been brought to tax at lower rate,
or has been incorrectly classified, or any
claims incorrectly granted or that the
liability to tax is understated, or(b) in any case, the order is erroneous, insofar as
it is prejudicial to the interest of revenue,
and after examination, the Commissioner
may pass an order to the best of his
judgment, where necessary.
(2)(a) For the purpose of the examination and passing of
the order, the Commissioner may require, by
service of notice, the dealer to produce or cause to
be produced before him such books of accounts
and other documents or evidence as he thinks
necessary for the purposes aforesaid.
(b) Notwithstanding anything contained to the
contrary in section 34, no order under this section
shall be passed after the expiry of four years from
the end of the year in which the order passed by
the subordinate officer has been served on the
dealer.
(c) Notwithstanding anything contained to the
contrary in section 34, where in respect of any
order or part of the said order passed by the
subordinate officer, an order has been passed by
any authority hearing the objection or any
appellate authority including the Tribunal or such
order is pending for decision in objection or in
appeal, or an objection or an appeal is filed, then,
whether or not the issues involved in the
examination have been decided or raised in theW.P.(C) No.3001/2010 with connected matters Page 31 of 59
objection or the appeal, the Commissioner may,
within five years of the end of the year in which
the said order passed by the subordinate officer has
been served on the dealer, make a report to the said
objection hearing authority or the appellate
authority including the Tribunal regarding his
examination or the report or the information
received by him and the said appellate authority
including the Tribunal shall thereupon, after giving
the dealer a reasonable opportunity of being
heard, pass an order to the best of its judgment,
where necessary.
(3) If the Commissioner has initiated any proceeding
before an appropriate forum against an issue which is
decided against the revenue by an order of the Tribunal,
then the Commissioner may, in respect of any order,
other than the order which is the subject matter of the
order of the Tribunal, call for the record, conduct an
examination as aforesaid, record his findings, call for the
said books of account and other evidence and pass an
order as provided for under this section as if the issue
was not so decided against the revenue, but shall stay the
recovery of the dues including the interest or penalty,
insofar as they relate to such issue until the decision by
the appropriate forum and after such decision, may
modify the order of revision, if necessary.
(4) No proceedings under this section shall be
entertained on any application made by a dealer or a
person.
(5) Notwithstanding anything contained in any
judgment, decree or order of any court, the provisions of
this section shall be deemed to have come into effect
with effect from the 1st April, 2005.”
W.P.(C) No.3001/2010 with connected matters Page 32 of 59
33. The submission of Mr. Ganesh, learned senior counsel, is that the
power of revision exercised under Section 74A has to be restricted to an
order passed under the DVAT Act on certain conditions precedent being
satisfied. For the aforesaid purpose, he has laid emphasis on the words “any
decision in objection is passed under this Act, rules or notification made
thereunder” and if the said terms are read in the context of Section 106
which deals with repeal and savings, it cannot telescope its horizon to an
order under the DST Act. Per-contra, Mr. Tripathi, learned Additional
Solicitor General, would contend that a conjoint reading of Section 74A and
Section 106 would categorically convey that the power of exercise of suo
motu revision has been saved and an order passed under the DST Act is
deemed to be an order under the DVAT Act.
34. In this context, we may profitably reproduce Section 106 of the
DVAT Act. It is as follows:
“106. Repeal and savings.
(1) The Delhi Sales Tax Act, 1975 (43 of 1975), the
Delhi Tax on Entry of Motor Vehicles into Local Areas
Act, 1994 (4 of 1995), the Delhi Sales Tax on Works
Contract Act, 1999 (9 of 1999), and the Delhi Sales Tax
on Right to Use Goods Act, 2002 (13 of 2002) as in force
in Delhi (referred to in this section as the “said Acts”),
are hereby repealed.
W.P.(C) No.3001/2010 with connected matters Page 33 of 59
(2) Notwithstanding sub-section (1) of this section,
such repeal shall not affect the previous operation of the
said Acts or any right, title, entitlement, obligation or
liability already acquired, accrued or incurred thereunder.
(3) For the purposes of sub-section (2) of this section,
anything done or any action taken including any
appointment, notification, notice, order, rule, form or
certificate in the exercise of any powers conferred by or
under the said Acts shall be deemed to have been done or
taken in the 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 amounts due at the commencement of
this Act may be recovered as if they had accrued under
this Act.”
[Emphasis supplied]
35. The aforesaid provision is required to be scrutinized and understood
from a proper perspective. The Division Bench in International Metro Civil
Contractors (supra) and L.G. Electronics (India) Ltd. (supra) has expressed
the view that when the provision of Section 74A came into force on
16.11.2005, no revisionary jurisdiction could have been invoked prior to the
said date, as the said provision was not there when the Act came into force
on 1.4.2005. That apart, the Bench also opined that where existing power is
not conferred on the given authority by the repealing statute, it cannot
survive and the introduction of Section 74A in the Act cannot also resurrect
the said power. Thus, the test would be whether a right had accrued or
W.P.(C) No.3001/2010 with connected matters Page 34 of 59
vested in favour of the assessee and whether in law there was any obligationor any liability had been acquired, accrued or incurred under the DST Act
and further the impact and import of the incorporation of Section 74A in the
Act would have to be analysed.
36. In this context, we may refer with profit to the term „obligation‟
found in Ramanatha Aiyar‟s Law Lexicon, page 1335. The word
„obligation‟ has been defined as under:
“OBLIGATION” includes every duty enforceable by
law.”
37. At this juncture, we may refer with profit to the exact connotative
expanse of the terms, namely, „liability‟ and „liability incurred‟. The term
„liability‟ encapsulates the concept of one being liable/duty bound to fulfill
the obligation or obligated to satisfy a thing in law.
38. The Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edition 2005,
defines „liability‟ in the following terms:
“The condition of one who is subject to a duty which
may be judicially enforced; that for which one is liable.”
“An obligation to do a particular thing; obligation to pay
money.”
W.P.(C) No.3001/2010 with connected matters Page 35 of 59
“The term „liability‟ is one of at least double
signification. In one sense it is the synonym of duty, the
correlative of right; in this sense it is the opposite of
privilege or liberty. If a duty rests upon a party, society
is now commanding performance by him and threatening
penalties. In a second sense, the term „liability‟ is the
correlative of power and the opposite of immunity. In
this case society is not yet commanding performance, but
it will so command if the possessor of the power does
some operative act. If one has a power, the other has a
liability. It would be wise to adopt the second sense
exclusively. Accurate legal thinking is difficult when the
fundamental terms have shifting senses.” WILLIAM R.
ANSON, Principles of the Law of Contract 9 (ARTHUR
L. CORBIN ed., 3d Am. Ed. 1919).
“LIABILITY” or responsibility is the bond of necessity
that exists between the wrongdoer and the remedy of the
wrong. This vinculum juris is not one of mere duty or
obligation; it pertains not to sphere of ought but to that of
must.” JOHN SALMOND, Jurisprudence 364
(GLANVILLE L. WILLIAMS ed., 10th ed.1947).
A broad term; it may be employed as meaning the state
of being liable, that for which one is responsible or liable,
obligation in general; that condition of affairs which
gives rise to an obligation to do a particular thing to do
enforced by action; responsibility; legal responsibility.
See also 21 Cal. 319.
“LIABILITY”, as defined in Abb. Law Dict. Means,
“amenability or responsibility to law; the condition of
one who is subject to a charge or duty which may be
judicially enforced.”
W.P.(C) No.3001/2010 with connected matters Page 36 of 59
39. Thus, the term “liability” is of large and comprehensive signification,
and when construed in its usual and ordinary sense, it expresses the state of
being under obligation in law or in justice.
40. In First National Bank Ltd. v. Seth Sant Lal, AIR 1959 Punjab 328,
it has been held thus:
“14. According to Bouvier‟s Law Dictionary
“Liability” is “the state of being bound or obliged in law
or justice.”
According to Anderson‟s Law Dictionary, “liability”
means “the state of being bound or obliged in law or
justice to do, pay or make good something; legal
responsibility”.
According to Oxford English Dictionary, “liability”
means “the condition of being liable or answerable by
law or equity”.
“Liability” as defined in Black‟s Law Dictionary means,
“the state of being bound or obliged in law or justice to
do, pay or make good something; legal responsibility.”
Webster defines liability to be the state of being bound or
obliged in law or justice; responsibility.
15. The term “liability” is of large and comprehensive
signification, and when construed in its usual and
ordinary sense, in which it is commonly employed, it
expresses the state of being under obligation in law or in
justice.: see also Feil v. Coeur D‟alene, 43 Lawyers
Reports Annotated (N.S.) 1095 (1103): Benge‟s Adm‟r v.
Bowling, 51 South Western Reporter 151.”
W.P.(C) No.3001/2010 with connected matters Page 37 of 59
41. The term „accrued‟ basically conveys an existent or a present
enforceable right, a fixed right or an assessed or determined right. Thus, the
concept of finality or vested right is inherent in it. There has to be a final
determination, a final fixation.
42. In this context, it is apposite to refer to certain authorities where the
concept of liability has been dealt with. In Kapur Chand Pokhraj v. State
of Bombay, AIR 1958 SC 993, while dealing with the concept of liability,
their Lordships opined as follows:
“The words “liability incurred” are very general and
comprehensive and ordinarily take in both civil and
criminal liability. In Criminal Law the term “liability”
covers every form of punishment to which a man subjects
himself by violating the law of the land. There is no
reason why the all comprehensive word should not carry
its full import but be restricted to civil liability alone?
The context does not compel any such limitation.
Indeed, there is no conceivable ground to impute to the
Legislature the intention to wipe out the offences
committed under the repealed Act, when it expressly
retained the same offences under the repealing Act. If
there was any justification for preserving Civil liabilities
incurred under the repealed Act, there was an equal
justification to save criminal liabilities incurred under
that repealed Act.
W.P.(C) No.3001/2010 with connected matters Page 38 of 59
43. In Superintendent and Remembrancer of Legal Affairs to Govt. of
West Bengal v. Abani Maity, AIR 1979 SC 1029, while dealing with the
term “liable”, it was stated that it does not necessarily always convey a sense
of an absolute obligation or penalty but merely importing a possibility of
attracting such obligation, or penalty, even where this word is used along
with the words “shall be”. Their Lordships have further stated that the court
must give effect to the will and inbuilt policy of the legislature as is
discernible from the object and scheme of the enactment and the language
employed therein.
44. In this context, we may reproduce with profit a passage from
Ishwarlal Girdharilal Parekh v. State of Maharashtra, (1968) 70 ITR 95
(SC):
“It is well-known that, under the Indian Income-tax Act,
liability to pay income-tax arises on the accrual of the
income and not from the computation made by the taxing
authorities in the course of assessment proceedings, and
that it arises at a point of time not later than the close of
the year of account, that assessments particularise the
total income of an assessee and the amount of tax
payable.”
45. In Commissioner of Income Tax, Bhopal v. Shelly Products, (2003)
5 SCC 461, the Apex Court has opined thus:
W.P.(C) No.3001/2010 with connected matters Page 39 of 59
“We find considerable force in the submission of the
Revenue and it must be upheld. We have earlier noticed
the scheme of the Act. Section 4 of the Act creates the
charge and provides inter alia for payment of tax in
advance or deduction of tax at source. The Act provides
for the manner in which advance tax is to be paid and
penalises any assessee who makes a default or delays
payment thereof. Similarly the deduction of tax at source
is also provided for in the Act and failure to comply with
the provisions attracts the penal provisions against the
person responsible for making the payment. It is,
therefore, quite apparent that the Act itself provides for
payment of tax in this manner by the assessee. The Act
also enjoins upon the assessee the duty to file a return of
income disclosing his true income. On the basis of the
income so disclosed, the assessee is required to make a
self-assessment and to compute the tax payable on such
income and to pay the same in the manner provided by
the Act. Thus the filing of return and the payment of tax
thereon computed at the prescribed rates amounts to an
admission of tax liability which the assessee admits to
have incurred in accordance with the provisions of the
Finance Act and the Income Tax Act. Both the quantum
of tax payable and its mode of recovery are authorized by
law. The liability to pay income tax chargeable under
Section 4(1) of the Act thus, does not depend on the
assessment being made. As soon as the Finance Act
prescribes the rate or rates for any assessment year, the
liability to pay the tax arises. The assessee is himself
required to compute his total income and pay the income
tax thereon which involves a process of self-assessment.
Since all this is done under authority of law, there is no
scope for contending that Article 265 is violated.”
[Emphasis supplied]
W.P.(C) No.3001/2010 with connected matters Page 40 of 59
46. From the aforesaid enunciation of law, it is graphically clear that the
liability to tax is not dependent on the assessment. In fact, the liability to tax
arises because of the charging section. The assessment proceedings have the
effect of quantification of the amount. To elaborate, when an order of
assessment is framed, a particular sum is determined. Framing of order of
assessment has to stand in contradiction with the phraseology “liability
accrued or incurred under the taxing statute”. Liability is always created by
the charging section. Regard being had to the aforesaid principles and
keeping in view the language employed in Section 106(2) of the DVAT Act
wherein the legislature, while repealing the DST Act, has used the terms
„liability accrued‟ or „incurred thereunder‟, it can safely be said that such
liability is subject to revision after incorporation of Section 74A in the
DVAT Act which conferred the power on the competent authority to
exercise suo motu power of revision. It is worth noting, the said provision
was brought on the statute book initially from 16.11.2005 and thereafter
from 1.4.2005.
47. Presently we shall advert to the concept of savings provision, the
words employed therein and the survival of liability incurred on the
backdrop of limitation. In M/s Shah Sadiq And Sons (supra), it has been
W.P.(C) No.3001/2010 with connected matters Page 41 of 59
held that the „savings‟ provision in the repealing statute is not exhaustive of
the rights which are saved or which survive the repeal of the statute under
which such rights had accrued. In other words, whatever rights are expressly
saved by the „savings‟ provision stand saved, but, that does not mean that
rights which are not saved by the „savings‟ provision are extinguished or
stand ipso facto terminated by the mere fact that a new statute repealing the
old statute is enacted. It has been further held that rights which have been
accrued are saved unless they are taken away expressly. After so stating,
their Lordships have opined thus:
“The right to carry forward losses which had accrued
under the repealed Income Tax Act of 1922 is not saved
expressly by Section 297 of the Income Tax Act, 1961.
But, it is not necessary to save a right expressly in order
to keep it alive after the repeal of the old Act of 1922.
Section 6(c) saves accrued rights unless they are taken
away by the repealing statute. We do not find any such
taking away of the rights by Section 297 either expressly
or by implication.”
We have referred to the aforesaid decision for the sole purpose to
understand the concept of “accrued right” and “vested right”.
48. In State of Punjab v. Mohar Singh Pratap Singh, AIR 1955 SC 84,
their Lordships have opined that when a fresh legislation comes into being, it
is required on the part of a court to look to the provisions of the new Act, but
W.P.(C) No.3001/2010 with connected matters Page 42 of 59
only for the purpose of determining whether they indicate a different
intention. Their Lordships have proceeded to state that one line of enquiry
would be, not whether the new Act expressly keeps alive old rights and
liabilities but whether it manifests an intention to destroy them.
49. In this context, we may refer with profit to a three-Judge Bench
judgment in S.S. Gadgil v. Messrs. Lal and Co., AIR 1965 SC 171 wherein
it has been held thus:
“12. In considering whether the amended statute
applies, the question is one of interpretation i.e. to
ascertain whether it was the intention of the Legislature
to deprive a tax payer of the plea that action for
assessment or re-assessment could not be commenced, on
the ground that before the amending Act became
effective, it was barred. Therefore the view that even
when the right to assess or reassess has lapsed on account
of the expiry of the period of limitation prescribed under
the earlier statute, the Income-tax Officer can exercise his
powers to assess or re-assess under the amending statute
which gives an extended period of limitation was not
accepted in Calcutta Discount Company‟s case, 1953-23
ITR 471 : (AIR 1953 Cal 721).”
[Emphasis supplied]
50. In T.S. Baliah v. T.S. Rangachari, Income Tax Officer, Central
Circle VI, Madras, AIR 1969 SC 701, it has been held that when the repeal
is followed by fresh legislation on the same subject, the Court would
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undoubtedly have to look to the provisions of the new Act, but only for thepurpose of determining whether they indicate a different intention. Their
Lordships have proceeded to state that the question is not whether the new
Act expressly keeps alive old rights and liabilities but whether it manifests
an intention to destroy them. Section 6 of the General Clauses Act,
therefore, will be applicable unless the new legislation manifests an intention
incompatible with or contrary to the provisions of the section. Such
incompatibility would have to be ascertained from a consideration of all the
relevant provisions of the new statute and the mere absence of a saving
clause is by itself not material.
51. In Jayantilal Amrathlal v. The Union of India, (1972) 4 SCC 174,
the Constitution Bench, while dealing with the interpretation of Section
115(2) of the Gold (Control) Act, 1968, dealt with the submission that the
notice issued under the said Act could no more be operative because under
the said statute, there are no provisions for making a declaration relating to
the possession of primary gold. The contention was founded on the stand
that the period had expired long before the 1968 Act came into force. It was
contended that the provisions in the Rules requiring a declaration to be made
in respect of the possession of primary gold were inconsistent with the
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provisions of the Gold (Control) Act, 1968 and, therefore, notice issued
under the Rules cannot be considered as being continued under the
provisions of the Act. While dealing with the said stand, their Lordships
observed that it is true that the Gold (Control) Act, 1968 does not purport to
incorporate into that Act the provision of Section 6 of the General Clauses
Act, but the provisions therein were not inconsistent with the provision of
Section 6 of the General Clauses Act and hence, it was attracted. That apart,
their Lordships opined that as the said Act did not exhibit a different or
contrary intention, the proceedings initiated under the repealed law must be
held to continue. It is worth noting that their Lordships further proceeded to
opine as follows:
“For ascertaining whether there is a contrary intention,
one has to look to the provisions of the Gold (Control)
Act, 1968. In order to see whether the rights and
liabilities under the repealed law have been put an end to
by the new enactment, the proper approach is not to
enquire if the new enactment has by its new provisions
kept alive the rights and liabilities under the repealed law
but whether it has taken away those rights and liabilities.
The absence of a saving clause in a new enactment
preserving the rights and liabilities under the repealed
law is neither material nor decisive of the question”
[Emphasis supplied]
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52. In M/s Mysore Rolling Mills (P) Ltd., v. Collector of Central Excise,
Belgaum, AIR 1987 SC 1488, the Apex Court was dealing with the
contention that a notice to show cause was issued more than a year after the
last date of the period in question and was barred by limitation. Their
Lordships took note of the fact that prior to 6.8.1977, Rule 9, which
corresponds to Section 11-A of the Central Excise and Salt Act, 1944,
provided a period of one year for taking of proceedings while Rule 10,
corresponding to the amended Section 11 of the Act, prescribed a period of
three months for such purpose. The Rules stood amended on 6.8.1977 and
by that time, the period of six months was substituted for the period of three
months and the period of five years substituted for the period of one year.
The tribunal had opined that the period of five years should be applicable to
the facts of the case. While dealing with the contention that the notice was
barred by limitation and the finding of the tribunal that would be covered by
the period of five years, their Lordships opined thus:
“5. The only other submission of the appellant which
remains for consideration is the tenability of the
contention that the period of limitation under the old
provision having expired the five year rule which has
been applied was not available to be applied.
Undoubtedly, the rule is intended to relate back and
cover a period of five years from the date jurisdiction
under the rule is invoked. The provision is, therefore,W.P.(C) No.3001/2010 with connected matters Page 46 of 59
retrospective in operation. It is not the stand of the
learned counsel for the appellant that only when a period
of five years has elapsed from the date of introduction of
the rule, jurisdiction under the rule can be exercised in
respect of that preceding period of five years. Once the
rule comes into existence and jurisdiction under the rule
is invoked, it has got to cover a period up to five years
preceding the date of issue of notice. The Tribunal has
endorsed such action of the departmental authorities.
The plea of limitation has no force.”
[Underlining is ours]
53. In Income-tax Officer, V Circle, Madras and another v. S.K.
Habibullah, AIR 1962 SC 918, their Lordships have opined that the orders
of assessment are final, subject to the provisions relating to appeals,
revisions, reassessment and rectification. The right to rectify an assessment
must be exercised in strict compliance with the conditions prescribed by the
concerned statute. Thus, where before 1.4.1952, rectification of assessment
was not permissible under clause (1) of Section 35 of the Income Tax Act,
1922 and the power of rectification was conferred for the first time by clause
(5) of Section 35 as from 1.4.1952 and where Section 35(5) does not purport
to amend clause (1) of the said provision, their Lordships held that since the
clause is left untouched by the amending statute, to uphold the exercise of
the power of rectification to the assessment of firms completed before the
date on which the power was invested would be unjustified and would
W.P.(C) No.3001/2010 with connected matters Page 47 of 59
amount to giving a larger retrospective operation than is directed and making
a larger inroad upon the finality of the assessment than is permitted by the
Legislature.
54. In M/s. Reliance Jute and Industries Ltd. v. C.I.T., West Bengal,
Calcutta, (1980) 1 SCC 139, their Lordships were dealing with a case which
raised a question involving the interpretation of Section 24(2)(iii) of the
Indian Income Tax Act, 1922. The assessee therein had claimed a vested
right under the said provision. In that context, their Lordships held thus:
“The claim is based on a misconception of the
fundamental basis underlying every income tax
assessment. It is a cardinal principle of the tax law that
the law to be applied is that in force in the assessment
year unless otherwise provided expressly or by necessary
implication. CIT v. Isthmian Steamship Lines, AIR 1953
SC 439 and Karimtharuvi Tea Estate Ltd. v. State of
Kerala, AIR 1966 SC 1385. On that principle, it is
abundantly clear that when an assessment for the
assessment year 1960-61 is to be made and Section 24(2)
is invoked, it is Section 24(2) as in force in that
assessment year which has to be applied. That is the
provision as amended by the Finance (No.2) Act, 1957.
There is no question of the assessee possessing any
vested right under the law as it stood before the
amendment.”
[Emphasis added]
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55. We have referred to the aforesaid decision to highlight whether the
assessee had a vested right. The assessment passed under the DST Act was
subject to revision. The question that would fall for consideration is whether
it had attained finality. In case it has attained finality, indubitably it
conferred a vested right in the assessee. In case it is not so, it cannot be
treated as a vested right as a consequence of which the revisional authority is
disabled to exercise the power.
57. In M/s P.V. Mohammad Barmay Sons v. Director of Enforcement,
AIR 1993 SC 1188, a two-Judge Bench of the Apex Court was considering
Section 81 of Foreign Exchange Regulation Act (Act 46 of 1973) which
repealed the Foreign Exchange Regulation Act, 1947. A contention was
canvassed before the Apex Court that the Repealed Act is a dead corpse and
no life into it could be blown with the aid of Section 81(2) of the said Act or
Section 6 of the General Clauses Act. Their Lordships opined that though
the 1973 Act repeals and obliterates the operation of that 1947 Act, yet the
penalty, liability, forfeiture or prosecution for acts done while the repealed
Act was in force were kept alive despite no action thereunder being taken
under the repealed Act when the repealed Act was in force. It has also been
expressed that the rights acquired or accrued or the liabilities incurred or any
W.P.(C) No.3001/2010 with connected matters Page 49 of 59
penalty, forfeiture or punishment incurred during its operation are kept alive.
After so stating, their Lordships proceeded to express thus:
“6. In Tiwari Kanhaiyalal v. Commr. of Income-tax,
Delhi (1975) 4 SCC 101 : (AIR 1975 SC 902) where
prosecution was laid after the repeal of the Income-tax
Act, 1922. The contentions raised was that saving
clauses in Sec. 297 of 1961 Income-tax Act did not save
the punishment incurred under the Repealed Act.
Therefore, recourse to Sec. 6 of General Clauses Act
cannot be had, was negative by this Court and held that
the repeal had not affected the liability incurred under
Sec. 52 of the Income-tax Act 1922 and it continued even
after its repeal. The same view was reiterated in the
Commr. of Income-tax, U.P. v. M/s. Shah Sadiq & Sons
(1987) 3 SCC 516 at 524: (AIR 1987 SC 1217 at p.1221).
Accordingly, we hold that despite repeal of Act 7 of 1947
by operation of Sec.6 of the General Clauses Act read
with Sec.81(2), the penalty incurred by the appellant
continued to subsist and the respondents are entitled to
institute the proceedings, conduct investigation or
enquiry and impose such penalty.”
58. We have referred to the aforesaid decisions to highlight three aspects,
namely, while interpreting a repeal and saving provision of a new enactment,
the intention of the legislature is to be seen whether it intends to keep alive
the old rights and liabilities or whether it manifests an intention to destroy
the same, secondly, if the provision relating to repeal and saving is clear and
the rights, obligations and liabilities accrued thereunder are saved, the
reliance on General Clauses Act is not necessary and, thirdly, how the
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liability subsists and is governed by the limitation provided under the
Repealed Act and the new Act.
59. In the present factual matrix, an order of assessment passed under the
Delhi Sales Tax Act was subject to revision under Section 46 of the DST
Act. The assessee was given a right to prefer revision under Section 47 of
the DST Act. The said order of assessment was subject to appeal and
revision under the DST Act. The core issue that has emerged in this batch of
petitions is whether by virtue of the language employed under Section 106
of the DVAT Act, the exercise of revisionary power gets totally
extinguished.
60. It would not be out of place to refer to a passage from Craies on
Statute Law, Seventh Edition, page 403, wherein it has been stated thus:
“If the three months‟ limit imposed by the Act of 1885
had expired before the commencement of the Act of
1904, the offender‟s prosecution would have been then
barred by prescription, and the new Act would not, on
coming into force, have destroyed a prescription already
acquired.”
61. From the aforesaid pronouncements in the field, the following
principles can safely be culled out:
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(i) The concept of liability „accrued‟ or „incurred therein‟ and
„obligation‟ have different connotations.
(ii) The meaning of „right accrued‟ and „vested right‟ will depend upon
the language of the statute and the intention expressed by the
Legislature.
(iii) The intention of the Legislature must be absolutely clear whether it
intends to destroy the old liabilities and it would depend upon the
entire scheme of the Act.
(iv) An order of assessment is final subject to the provisions relating to
appeal, revision, reassessment and rectification.
(v) A statute is not to be interpreted to be retrospective or retroactive to
touch the existing final orders.
(vi) Even if no action is taken under the repealed Act, the civil as well as
the criminal liability that had incurred under the repealed statute are
not obliterated and are kept alive if there is a saving provision.
(vii) A legal proceeding which could have been initiated under the repealed
Act continues to subsist if the savings and repeal provision so
stipulates subject to the law of limitation. To elaborate, the right to
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initiate a legal proceeding can only be obliterated or effaced or meet
its legal death if the period of limitation thereon has expired.
62. Regard being had to the aforesaid principles the Scheme of Section
106 of the DVAT Act is required to be scanned. The basic facet of Section
106 of the DVAT Act has to be interpreted on the touchstone of the above
culled out principles. Sub-section (1) of Section 106 of the DVAT Act, as it
clearly reveals, is a simple repeal of the DST Act. Sub-section (2) saves the
right, title, entitlement, obligation or liability already acquired, accrued or
incurred under the repealed Act. Sub-section (3) postulates that anything
done under the DST Act shall be deemed to be done or taken in exercise of
the power conferred by or under the DVAT Act. Thus, three situations,
namely, (i) assessment completed and already revised; (ii) assessment
completed and revisional power invoked but the process not completed; and
(iii) assessment completed, but no revisional power invoked, do contextually
emanate.
63. Thus, it is quite clear to us that Section 106(2) of the DVAT Act not
only saves the right, title and entitlement but also saves the obligations and
the liability. The term „obligation‟ includes every duty enforceable by law.
It is an expression which includes not only duty but something more. The
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expression “liability incurred thereunder” has a larger canvas and makes one
remain liable under law subject to statutory boundaries. The term „finality‟
has to be understood in its truest denotation and an order of assessment by
itself does not earn the status of being final unless it is totally barred by law
to be touched. Section 106(3) of the DVAT Act clearly lays a postulate that
an order passed under Section 46 of the DST Act and the process of
assessment leading to it is deemed to have been done in exercise of the
power conferred under the DVAT Act. What is provided under Section
106(2) is that the repeal shall not affect the previous operation of the DST
Act or any right, title, entitlement, obligation or liability already acquired,
accrued or incurred thereunder. On a seemly scanning of the provision
engrafted under Section 46 of the DST Act, a suo motu revision could be
initiated and concluded within five years of the order of assessment. In sub-
section (2)(b) of Section 74A of the DVAT Act, a rigor has been attached
that no order under this section shall be passed after the expiry of four years
from the end of the year in which the order passed by the subordinate officer
has been served on the dealer. Section 74A (2)(c) carves out a period of five
years under certain other circumstances. The right to a dealer would have
attained finality and become a vested or ripened right after the expiry of the
period of limitation under the DST Act and if the proceedings are initiated
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within the period of limitation, the exercise of the suo motu power of
revision cannot be treated as illegal. In other words, if the time to exercise
the revisionary power had not expired before coming into force of the
DVAT Act, the said power could be exercised in respect of an order under
the DST Act in terms of Section 74A of the DVAT Act read with Section
106 of that Act.
64. Turning to the previously mentioned three categories of cases, in the
first category of cases, wherein assessment has been completed and already
revised, by virtue of the language employed in Section 106(3) of the DVAT
Act, the order passed has to be considered as an order passed under the
DVAT Act. In the second category of cases, wherein assessment has been
completed and revisional power has been invoked though the process is not
completed, the assessee has incurred the liability of the order of the
Assessing Officer being scrutinized by the Commissioner which includes the
revisional power and sub-section (3) gets attracted. In the third category of
cases, where the assessments are completed but no revisional power is
invoked, here again sub-section (3) of Section 106 would be attracted as if
the same is deemed to be an order passed under the DVAT Act. If the order
of assessment could not have been revised under the DST Act as on
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1.4.2005, the power of revision conferred under the DVAT Act cannot be
exercised if the time span has expired. To elaborate, if an order of
assessment has attained finality in toto and a right has vested in the assessee,
no suo motu power can be exercised as the right fully accrues in favour of
the assessee without having any obligation and further having no liability.
65. Further we may note with profit that the legislature made Section 74A
retrospective from the date the DVAT Act came into existence to reaffirm its
intendment that it never intended not to confer the power of revision on the
revisionary authority. The interpretation placed by us on the language
employed under Section 106(2) and 106(3), analysis made hereinbefore on
the impact of insertion of Section 74A initially from 16.11.2005 and
thereafter to make the provision retrospective from 1.4.2005, clearly
conveys that the legislature at all point of time intended to protect the
interest of the revenue.
66. At this juncture, we may state with certitude that though a cavil was
raised by learned counsel for both the sides with regard to the applicability
of the Bengal General Clauses Act, 1891 to the Government of NCT of
Delhi, the same has not been adverted to by us because of the interpretation
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placed by us under the repeal and savings provision. The said issue is kept
open.
67. In view of our aforesaid premised reasons, we proceed to record our
conclusions in seriatim:
(a) The interpretation placed by the Division Bench in International
Metro Civil Contractors (supra) and LG Electronics (India) Ltd.
(supra) on Section 106 of the DVAT Act is not correct.
(b) The conclusion in International Metro Civil Contractors (supra) and
LG Electronics (India) Ltd. (supra) to the effect that despite
incorporation of Section 74A in the DVAT Act on 16.11.2005, the suo
motu revisional proceeding could not be initiated at the
commencement of the DVAT Act, i.e., 1.4.2005, as the legislative
intendment was clear that on the date the Act came into force the
provision pertaining to exercise of suo motu revisionary power did not
exist in respect of the proceedings under the DST Act as the
assessment had attained finality and were closed, is incorrect.
(c) The order of assessment framed under the DST Act is deemed to be
an order framed under the DVAT Act and on reading of Sections
106(2) and 106(3) in a conjoint manner, it is not correct to state that
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once the order of assessment has been passed, the transaction is closed
and, therefore, the assessment/order is not revisable under Section
74A of the DVAT Act.
(d) The liability incurred or accrued under the DST Act has a larger
expanse and a broader canvas and it would in view of Section 106(2)
of DVAT Act include initiation of any legal proceeding which is
permissible within the period of limitation and till then no final or
vested right accrues in favour of the assessee.
(e) The amendment brought by the legislature retrospectively
incorporating Section 74A with effect from 1.4.2005 has been done to
further elucidate the legislative intention and has to be given full
effect to. The said amendment has been brought in the statue book by
ex abundanti cautela and in essence, removes the anomaly and is only
curative in nature.
(f) The proceeding initiated under the DST Act is saved by the DVAT
Act and further the proceedings could be initiated under Section 74A
during the period of limitation as stipulated under Section 74A subject
to the conditions precedent stipulated therein.
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(g) The decisions in International Metro Civil Contractors (supra) and
LG Electronics (India) Ltd. (supra) are overruled to the extent
indicated hereinabove.
68. The reference is answered accordingly. The writ petitions be listed
before the appropriate Division Bench.
CHIEF JUSTICE
A.K. SIKRI, J.
SEPTEMBER 2, 2011 MANMOHAN, J.
dk/ks
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