2025 (7) TMI 1633 - HC - VAT / Sales Tax

Pre-deposit under Section 39(5) HGST Act stays valid after repeal due to saving clause in HVAT Act Section 61

The HC held that the pre-deposit requirement under Section 39(5) of the repealed HGST Act, 1973, remains enforceable post-repeal due to the saving clause ... Validity of demand under the repealed act - Scope of saving clause - Interest on the delayed payment from the date of deposit and not from the date of order in contravention of the provisions of Section 43 and Rule 35(1)(b) of HGST Act, 1973 - non-appreciation of provisions of Section 43 of the HGST Act, 1973 - HELD THAT:- In the judgment passed by this Court in Khazan Chand Nathi Ram’s case [2004 (3) TMI 720 - PUNJAB AND HARYANA HIGH COURT], as referred to by learned counsel for the appellant, this Court held that right of appeal is a substantive right that vests at the date of commencement of the lis and is governed by the law prevailing at that time. Section 39(5) of the HGST Act, requiring pre-deposit of tax, interest, and penalty, continues to apply even after the repeal of the Act, as the right is saved under Section 4 of the Punjab General Clauses Act, 1898. Further that lis under taxation laws commences on the date when returns are filed or required to be filed. Cause of action arises from failure to furnish returns or rejection of returns by the Assessing Authority. Pre-deposit condition under Section 39(5) HGST Act for filing appeals remains enforceable despite repeal, as the right to appeal is preserved by the General Clauses Act. Right of appeal under taxation laws is substantive and accrues at the commencement of the lis. It is governed by the law prevailing at the date of initiation of proceedings, not by the law prevailing at the time of filing the appeal or decision. Subsequent enactments cannot alter vested rights unless expressly stated or implied. Hon’ble the Supreme Court in Mohar Singh Pratap Singh’s case [1954 (10) TMI 38 - SUPREME COURT] and M/s Gammon India Ltd.’s case [2006 (2) TMI 278 - SUPREME COURT] held that whenever there is repeal of an enactment and simultaneous re-enactment, re-enactment is to be considered/construed as re-affirmation of old/earlier law and provisions of repealed Act which are thus, re-enacted continue in force uninterruptedly unless, re-enacted enactment manifests an intention incompatible with or contrary to the provisions of repealed Act. Further it was held that such incompatibility will have to be ascertained from a consideration of relevant provisions of the reenacted enactment and mere absence of saving clause is, by itself, not material for consideration of all the relevant portions of new enactment. In the present case, Section 61 (Repeal and Saving) of HVAT Act, 2003, repeals HGST Act, 1973, by saving the previous operation of the Act so repealed or anything duly done or suffered thereunder and further saves any right, title, privilege, obligation or liability acquired, accrued or incurred under the repealed Act. Further it saves any act done or any action taken (including any appointment, notification, notice, order, rule, form, regulation, certificate) in the exercise of any power conferred by or under the repealed Act. Section 61 (Repeal and Saving) of HVAT Act thus clearly shows/reflects the legislative intention to preserve the continuity of legal consequences flowing from acts or omission under the repealed HGST Act. the intention of the legislation. In view of Section 6 of the General Clauses Act, 1897 and law laid down by Hon’ble the Supreme Court, the substantial questions of law are answered in favour of the appellant and against the respondent. Impugned order dated 03.07.2017 passed by the Haryana Tax Tribunal in STA No.34 of 2014-15 is hereby set aside - Appeal allowed. ISSUES: Whether interest on refund of tax demand raised under the repealed Haryana General Sales Tax Act, 1973 (HGST Act) but assessed after the commencement of Haryana Value Added Tax Act, 2003 (HVAT Act) is payable under the provisions of the HGST Act or the HVAT Act.Whether the provisions of Section 43(2) read with Rule 35(1)(b) of the HGST Act apply to interest on delayed refund where the assessment order was passed under the HGST Act after the HVAT Act came into force.Whether the provisions of Section 20(8) of the HVAT Act are applicable to claims for interest on refund in cases where the demand was originally raised under the HGST Act but the refund and assessment occurred after HVAT Act's commencement.Whether the repeal and saving provisions under Section 61 of the HVAT Act and Section 6 of the General Clauses Act, 1897 apply to preserve rights, liabilities, and procedures arising under the repealed HGST Act.Whether the learned Haryana Tax Tribunal was justified in allowing interest on the entire refund amount from the date of deposit till the date of refund under Section 20(8) of the HVAT Act, contrary to the provisions of the HGST Act. RULINGS / HOLDINGS: The Court held that the assessment order dated 29.03.2005, though passed after the commencement of the HVAT Act, was passed under the HGST Act; however, by virtue of Section 61 of the HVAT Act, such assessment order is deemed to have been passed under the HVAT Act, making the HVAT Act provisions applicable for interest on refund.The Court ruled that the provisions of Section 20(8) of the HVAT Act, which entitle the assessee to interest on the refund amount for the entire period from the date of deposit till the date of refund at the rate of 1% per month, apply in the present case.The Court set aside the orders of the lower authorities that restricted interest payment to the delayed period beyond 90 days under Section 43(2) of the HGST Act, holding that the learned Haryana Tax Tribunal was justified in allowing interest for the entire period under Section 20(8) of the HVAT Act.The Court emphasized that the repeal and saving provisions under Section 61 of the HVAT Act and Section 6 of the General Clauses Act, 1897 preserve rights, liabilities, and actions under the repealed HGST Act unless a different intention is manifest in the HVAT Act, which is not the case here.The Court observed that the judgment relied upon by the appellant regarding the applicability of HGST Act provisions for interest is distinguishable and that the settled law supports application of the HVAT Act provisions for interest in the present circumstances. RATIONALE: The Court applied the statutory framework of the HVAT Act, 2003, specifically Section 61 (Repeal and Saving), which repealed the HGST Act but preserved all rights, liabilities, and actions under the repealed Act, deeming them to be done under the HVAT Act as if it was in force on the date of such actions.The Court relied on Section 6 of the General Clauses Act, 1897, which provides that repeal of an enactment shall not affect rights, privileges, obligations, liabilities, or legal proceedings unless a different intention appears in the repealing Act.The Court referred extensively to authoritative precedents, including a Constitution Bench decision in State of Punjab v. Mohar Singh Pratap Singh, and decisions from other jurisdictions, establishing that simultaneous repeal and re-enactment is construed as a continuation of the law unless the new enactment manifests a contrary intention.The Court distinguished the judgment relied upon by the appellant, noting it involved exercise of extraordinary jurisdiction under Article 226 of the Constitution and did not decide the issue on statutory provisions applicable in regular appeals.The Court underscored the principle that the right to appeal and substantive rights under taxation laws vest at the commencement of lis and are governed by the law prevailing at that time, but procedural aspects and enforcement, including interest on refund post repeal, are governed by the repealing Act's provisions unless otherwise indicated.The Court found no manifest intention in the HVAT Act to exclude interest payment under Section 20(8) for refunds relating to assessments originally under the HGST Act but assessed and refunded after HVAT Act commencement.