TaxTMI 
TaxTMI 
2011 (9) TMI 585
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....rned counsel for the assessee - petitioner contended that in view of the decisions rendered in International Metro Civil Contractors v. Commissioner of Sales Tax/VAT and Another, [2008] 16 VST 329 (Delhi) and LG Electronics (India) Ltd. v. Commissioner of Trade and 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 th....
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....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 come into force. It is urged that the proceedings being fundamentally unsustainable 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....
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....on Bench decisions in International 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 i....
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....missioner 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 and 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 and Co., AIR 1965 SC 1585, Kailash Nath Agarwal and Ors. v. Pradeshiya Industries and Inv. Corporation, UP and Anr., AIR 2003 SC 1886, Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue, West Bengal, (1976) 3 SCC 369, Kolhapur Canesugar Works Ltd. v. Union of India and Ors., (2000) 2 SCC 536, Shiv Shakti Co-op. Housing Society v. Swaraj Developer and Ors., (2003) 6 SCC 659, G.K. Choksi and Co. v. Commissioner of Income Tax, Gujarat, (2008) 1 SCC 246 and Hindustan Construction Co. Ltd. v. State of Haryana, (2005) 141 STC 119 (PandH). 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, ....
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....nt 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 and Ors. v. M.R. Apparao and Anr., (2002) 4 SCC 638, Commissioner of Income Tax, UP v. M/s Shah Sadiq and Sons, (1987) 3 SCC 516, Bansidar and Ors. v. State of Rajasthan and Ors., (1989) 2 SCC 557, Gajraj Singh and Ors. v. State Transport Appellate Tribunal and Ors., (1997) 1 SCC 650, Kolhapur Canesugar Works Ltd. (supra), Shiv Shakti Co-Housing Society (supra), Gammon India Ltd. v. Special Chief Secretary and Ors., (2006) 3 SCC 354, Kalawati Devi v. CIT, West Bengal and Ors., (1967) 66 ITR 680 (SC) and M/s Mahes....
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....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 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. 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....
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....f it were to be argued 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 no....
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....nt 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. 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 ....
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.... 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 requirements of t....
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....ate 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 scheme of Section 46 is appositely understood, it clearly conveys that the proceeding 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 m....
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....eriod 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 any officer or person subordinate to him, the Commissioner may, of his own motion or upon information rec....
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....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." 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 d....
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.... Thus, the test would be whether a right had accrued or vested in favour of the assessee and whether in law there was any obligation or 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." "The term 'liability' is one of at least double sign....
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....r 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." 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 Crimina....
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....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 asse....
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....97 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 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 ....
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....d 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 en....
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.... 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 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)(ii....
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....eiture 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 and 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 ....
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....er 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 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, th....
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.... 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 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 ....