Retrospective tax limitation can validate assessment, but penalty fails absent clear statutory authority at the relevant time.

The phrase "three calendar years" in section 11(5) of the C.P. and Berar Sales Tax Act, 1947 was given its ordinary meaning of a year running from 1 January to 31 December, not a 36-month period from expiry of the assessment year; on that basis, the notice and assessment proceedings were within time. The retrospective amendment could validate the assessment by removing the limitation bar in fiscal matters, but it did not sustain a penalty where the proviso to the amending Act barred penalties that could not lawfully have been imposed when proceedings began. The assessment survived, while the penalty was quashed.

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Issues: (i) Whether the expression "three calendar years" in section 11(5) of the C.P. and Berar Sales Tax Act, 1947, meant three years computed from 1 January immediately following the year in which the assessment period expired. (ii) Whether the retrospective amendment to the Sales Tax Act validated the assessment but could also sustain the penalty imposed on the assessee.

Issue (i): Whether the expression "three calendar years" in section 11(5) of the C.P. and Berar Sales Tax Act, 1947, meant three years computed from 1 January immediately following the year in which the assessment period expired.

Analysis: The expression "calendar year" was held to bear its ordinary legal and dictionary meaning, namely a year commencing on 1 January and ending on 31 December. The Court rejected the construction that treated it as merely a period of 36 months from the expiry of the assessment period. On that interpretation, the notice issued to the assessee fell within the prescribed time.

Conclusion: The notice and the assessment proceedings were within time under section 11(5) as amended.

Issue (ii): Whether the retrospective amendment to the Sales Tax Act validated the assessment but could also sustain the penalty imposed on the assessee.

Analysis: The Court held that a fiscal limitation provision removes the department's right to assess, not a substantive immunity from tax, and that retrospective legislation could remove the bar of limitation and validate the assessment. However, the proviso to the amending Act barred penalty for conduct for which no penalty could have been levied before the amendment. Since the penalty could not lawfully have been imposed when proceedings were initiated, the amended law did not save it.

Conclusion: The assessment was valid, but the penalty order could not be sustained.

Final Conclusion: The petition succeeded only in part: the tax assessment stood, while the penalty was quashed.

Ratio Decidendi: In a taxing statute, a retrospectively enlarged limitation period can validate an otherwise time-barred assessment, but a penalty cannot be imposed unless the statute, as it stood when the penalty became exigible, clearly authorized it.

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