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of <h1>Tax Amendment Prospective, Not Retrospective: Clarity in Taxation Statutes</h1> <h3>M/s. Jai Bhavani Trading Company, M/s. Vijay Enterprises, Versus State Of Karnataka, The Commissioner Of Commercial Taxes Karnataka, Dy. Commissioner of Commercial Taxes (Internal Audit And Inspection)</h3> M/s. Jai Bhavani Trading Company, M/s. Vijay Enterprises, Versus State Of Karnataka, The Commissioner Of Commercial Taxes Karnataka, Dy. Commissioner of ... Issues Involved:1. Prospective or retrospective application of the amendment to Entry No.5.2. Validity of treating a notice under Section 5(4) as issued under Section 6 of the Entry Tax Act.3. Limitation period for issuing a notice under Section 5(4) and the validity of the assessments.4. Applicability of the clarification issued by the Commissioner of Commercial Taxes to all assessees/dealers.Detailed Analysis:1. Prospective or Retrospective Application of the Amendment to Entry No.5:The amendment to Entry No.5 was brought about on 01.10.2013 and explicitly stated to come into effect from 02.10.2013. The court held that the amendment is prospective in nature, rejecting the respondents' contention that it should date back to the enactment date. The court emphasized that taxation statutes must be clear to allow dealers to plan their business activities accordingly.2. Validity of Treating a Notice Under Section 5(4) as Issued Under Section 6 of the Act:Section 5(4) and Section 6 of the Entry Tax Act serve different purposes. Section 5(4) pertains to calling upon the dealer to furnish necessary particulars for assessment, while Section 6 deals with escaped assessments where no assessment was made. The court found that the notice issued under Section 5(4) could not be treated as one under Section 6, as the returns had been filed and details furnished by the petitioners. Thus, Section 6 was not applicable in this case.3. Limitation Period for Issuing a Notice Under Section 5(4) and Validity of the Assessments:Section 5(6) specifies a three-year period for assessments. The notice issued on 02.01.2017 could only cover assessments from 03.01.2014 to 02.01.2017. Consequently, reopening assessments for the years 2008-09 to 2012-13 was beyond the three-year limitation period. Therefore, the court held that the assessments were invalid and unsustainable.4. Applicability of the Clarification Issued by the Commissioner of Commercial Taxes:The respondents argued that the clarification in the case of Sri. Vittal A. Naik applied to all manufacturers, while the earlier clarification in the case of Ghaichap Zarda did not apply to the petitioners. The court found this contradictory and stated that if one clarification applied to all, so should the other, unless there was a material change in circumstances or law. The court did not address other points raised by the petitioners, leaving them open for future consideration.Order:The court allowed the writ petitions, quashing the assessment and rectification orders for the assessment years 2008-09 to 2011-12 in W.P.Nos.202323 and 201286 of 2018, and for the year 2012-13 in W.P.No.44960/2017.
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