TaxTMI 
TaxTMI 
2018 (8) TMI 1160
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....N For The RESPONDENT(S) : ADV. SRI.S.ANIL KUMAR (TRIVANDRUM) JUDGMENT Vinod Chandran, J The impugned judgments in the above appeals disposed of a batch of writ petitions as also writ petitions, individually, filed by the assessee-petitioners against notices issued for assessment under the Kerala Value Added Tax Act, 2003 (for brevity "KVAT Act"). The issues raised being identical, reference is made to the common judgment dated 05.10.2016 disposing of a batch of writ petitions [W.P(C) No.10979 of 2015 & connected cases]. The learned Single Judge categorized these cases on the basis of the provision under which the proceedings were initiated. The first group in the impugned common judgment are cases in which notices were issued under Section 25(1) of the KVAT Act, beyond the period of limitation provided thereunder classified as Group-A. In some of these cases the assessment has been completed and the petitioners have approached this Court under Article 226, without availing the statutory remedies on the ground of the proceedings itself being without jurisdiction for reason of the limitation having kicked in. Group-B are cases in which again the proceedings were issued af....
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.... proviso was of the period for completion of assessments; for which there was no limitation provided. The assessments which lapsed for reason of no notices being issued, within five years, cannot stand revived by the extension of the period for completion of assessment; for which the statute provided no limitation, was the finding. 4. Having followed the Full Bench decision, we are of the opinion that nothing more remains to be said on the question of limitation under Section 25(1). Notices in all the cases coming under Group-A, were issued by the respective Assessing Authorities, after the expiry of 5 years from the last date of the assessment year. Later, there was a proviso introduced extending the period for completion of assessment till the end of the year. These amendments were made in the successive years after 2010, the benefit of which was claimed by learned Special Government Pleader (Taxes) for sustaining the notices issued. We have followed the Full Bench decision insofar as finding that the limitation was for not concluding the assessment but for initiation of proceedings. The interpretation placed on the words 'proceed to determine...' by the Full Bench, wa....
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....ffect. The legislature by such an amendment could have revived assessment for years in which the period of limitation had expired as per the pre-amended provision. No such retrospective amendment has been made here. The judgment impugned, insofar as it allows the writ petitions under Group-A is unassailable. So are the other judgments passed in the writ petitions, individually. 6. The next batch of writ appeals are with respect to the introduction of Section 25B in the KVAT Act by the Kerala Finance Act, 2013 w.e.f. 01.4.2013. By the introduction of the said provision, power was conferred on the Deputy Commissioner to extend the period of completion of assessment beyond the period specified in Sections 24 and 25 of the KVAT Act. Sections 24 and 25 respectively had limitation of 4 and 5 years for proceeding to determine inter alia the escaped turn over. The provision introduced as Section 25B definitely confers the Deputy Commissioner with powers to extend the period of limitation for completion of assessment, but as found earlier, there is no period prescribed in Sections 24 & 25 for completion of assessment. The limitation in Sections 24 & 25 was to 'proceed to determine.......
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....ioner [(1978) 1 SCC 405]: "77. We have been told that wherever the Parliament has intended a hearing it has said so in the Act and the rules and inferentially where it has not specificated it is otiose. There is no such sequitur. The silence of a statute has no exclusionary effect except where it flows from necessary implication. Article 324 vests a wide power and where some direct consequence on candidates emanates from its exercise we must read this functional obligation". 8. It was held in (1981) 1 SCC 664 [Swadeshi Cotton Mills v. UOI] thus: "Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle as distinguished from an absolute rule of uniform application seems to be that where a statute does not,....
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.... justice by reading into the said provision, the requirement to hear the assessee who would be visited with civil consequences of re-assessment and further liability to tax. 10. The learned Special Government Pleader then relied heavily on Additional Commissioner( Legal) and another v. Jyoti Traders [(1999) 2 SCC 77] to argue for the position that the legislature could re-open even pending assessments. We have no quarrel on the proposition; but whether such an exercise was carried out here, is the moot question. In Jyoti Traders, the Hon'ble Supreme Court was concerned with a proviso added to a sub-section which provided limitation for completion of assessment. The sub-section provided that no order of assessment or re-assessment under the Act shall be made after the expiration of the four years from the end of an assessment year. The proviso conferred the Commissioner with powers to permit assessment or re-assessment after the expiration of period of limitation but within 8 years from the end of assessment year. The Hon'ble Supreme Court upheld the validity of the provision and found that by implication there is a retrospective amendment made to the provision for lim....
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....he proviso came into force w.e.f. 19-2-1991. We do not think that subsection (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment before the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment under Section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be reopened up to 31- 3-1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under sub-section (1) of Section 21 have to be completed within 8 years of the particular assessment year. ..." 12. The above extracted paragraph from Jyoti Traders answers the contention raised by the Revenue against them and supports the assessee. Against the revenue it has to be stated that the language of the proviso ....
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.... provided under Section 25 of the KVAT Act. We also do not think that there is any error in the use of the words "proceed to determine..." since what is to be determined is the escapement of income, short fall of tax and so on and so forth which would result in a re-assessment. 14. The learned Special Government Pleader (Taxes) lastly argued that there was an amendment by substitution to Section 25(1) by which the period for proceeding to determine was made 6 years. When a substitution is made as distinguished from addition, deletion or insertion then, the substituted provision would relate back to the date of the enactment unless otherwise specified. Strong reliance was placed on AIR 2014 Karnataka 120 (Full Bench) [Hassan Co-operative Milk Producers Societies Union Limited v. State of Karnataka] to urge the position. At least the notices issued within the six year period has to be sustained argues the Special G.P. In Hassan Co-operative Union the Full bench considered the issue of a substitution made, changing the term of an elected committee of a cooperative society from "five co-operative years" to "five years from the date of election". The State sought to appoint an Admini....
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.... unless the same is expressed in clear language or implied, without any scope for doubt, then the amendment would only be prospective. We are of the opinion that when there is a substitution, unless the same is expressed to be prospective the Courts could always interpret it to be retrospective, looking at the scheme of the enactment, the purpose and object of the amendment, especially when the amendment by substitution, was intended at removing an obvious anomaly or correcting a blatant error or obliterating an absurdity or bringing it in consonance with any other law or the Constitution; as was the case in Hassan Co-operative Union. On the other hand an amendment other than by substitution would be retrospective only if it is so expressed or it follows from necessary intendment, as is implicit from the language employed. Otherwise there is no requirement for the legislature to express the retrospectivity; it could very well make a substitution, which would operate from the inception of enactment. 17. Coming back to the Karnataka case, the Full Bench, in considering the specific substitution made, extending the period of an elected committee of a co-operative society, to five y....
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....five years from election to completion of five co-operative years. Then there could arise a situation that the five years from election expired on a date prior to the substitution and the elected members took charge or was about to take charge and immediately thereafter the substitution came. In that case there could be no continuation of the expired board till the end of the co-operative year, since their term had expired and the substantive right of the newly elected members to be sworn into office, would be taken away. We hence respectfully follow the declaration on substitution made by the Division Bench in S.M. Kelagiri but, with equal respect, agree with the conclusion of the Full Bench, interpreting the provision, to inure to the benefit of the boards of those co-operative societies who were in office at the time of amendment, whose term stands extended to the date of expiry of five years from their election date. We now examine the Supreme Court decisions referred to by the Full Bench of the Karnataka High Court for completeness. 19. In AIR 1952 SC 324 Shamrao V. Parulekar Vs. D.M. Thana the question was whether the detention order, initially passed under a Preventive De....
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....hat the appeal being a continuation of the original proceedings any retrospective amendment taking away the right of pre-emption should be given full effect to. The third set advanced the proposition that when any amendment is made during the pendency of an appeal or other statutory proceedings the appellate or revisional court should take into account the amendment. In other words when an appeal or other proceeding is pending from the decree of the first court if the right is taken away, then the higher Court should reject the claim of pre-emption. The Constitution Bench agreed with the first two set of decisions and disagreed with the third set; despite the amendment taking away the right was by way of substitution. What follows is that a substitution does not invariably result in a retrospective application. 21. The Constitution Bench in disagreeing with the third set of decisions garnered support from a number of decisions, which were also cited by the Full Bench of the Karnataka High Court, which we will now look into. AIR 1957 SC 540 Garikapati Veeraya Vs. N. Subbiah Choudhry spoke on the vested right accrued to a party to a suit at its inception, of an appeal, which remai....
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....ssee, after the expiry of the period of limitation, not to be assessed or re-assessed can be meddled with only by an amendment, expressed or implied to be retrospective. 22. K.S. Paripoornan Vs. State of Kerala was also noticed and the legal position emerging from the decisions cited was declared so in Shyam Sunder: "We are further of the view that there is a presumption against the retrospective operation of a statute and further a statute is not to be construed to have a greater retrospective operation than its language renders necessary, but an amending Act which affects the procedure is presumed to be retrospective, unless amending Act provides otherwise. We have carefully looked into new substituted S.15 brought in the parent Act by Amendment Act, 1995 but do not find it either expressly or by necessary implication retrospective in operation which may effect the right of the parties on the date of adjudication of suit and the same is required to be taken into consideration by the appellate Court. In Shantidevi (Smt) v. Hukumchand (1996) 5 SCC 768 : (1996 AIR SCW 3680 : AIR 1996 SC 3525) this Court had occasion to interpret the substituted S.15 with which we are con....
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.... from the date of substitution. The Hon'ble Supreme Court found that the substitution was intended to remove the anomaly and by necessary implication it had retrospective effect from the date on which the disqualification was first brought into the statute book. It was held so in para 22: "22. The State Legislature of Haryana intended to impose a disqualification with effect from 5-4-1994 and that was done. Any person having more than two living children was disqualified on and from that day for being a member of municipality. However, while enacting a proviso by way of an exception carving out a fact-situation from the operation of the newly introduced disqualification the draftsman's folly caused the creation of trouble. A simplistic reading of the text of the proviso spelled out a consequence which the Legislature had never intended and could not have intended. It is true that the Second Amendment does not expressly give the amendment a retrospective operation. The absence of a provision expressly giving a retrospective operation to the legislation is not determinative of its prospectivity or retrospectivity. Intrinsic evidence may be available to show that the ....
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....ature was incompetent to nullify or overrule the judgment of the constitutional court. It was reiterated that when a particular statute is declared invalid, the legislature has the power to suitably amend the law by use of appropriate phraseology, rectifying the defects and removing the inconsistency pointed out by the Court. In that context the legislature also could validate the actions taken under the earlier statute as if the defects pointed out never existed; which cannot be termed as an incursion on the judicial power. 25. AIR 1997 SC 1815 [State of Tamil Nadu v. M/s Arooran Sugars Limited] also was concerned with an enactment prescribing a ceiling limit on land holdings and the consequential vesting in the Government of the excess lands. There was also a compensation payable, which was reduced from the rate as it originally existed, by an amendment. After the rate reduction was introduced, a provision was introduced deeming the vesting to have occurred from a date prior to such reduction, with a view to make the land holder liable to, a compensation to the Government for any benefit derived from the land. The respondent who had considerable land holdings claimed compensat....
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.... 1996 AIR SCW 1051 [Indian Aluminium Co. v. State of Kerala and others] also examined an enactment and the validation clause contained therein; brought about to avoid refund of a sur-charge imposed on supply of electricity, which impost by an earlier executive order was set aside. The decision is also an authority for the proposition that when an enactment is challenged, as far as possible the resolution should be in favour of the legislative body, putting the most liberal construction upon the legislative entry, conferring on it the widest amplitude. Therein, an excise duty was imposed on electricity by the Parliament, to recoup which an executive order was made to impose a levy of surcharge on the consumers. Later the excise duty was withdrawn and in supersession of the executive order another was brought out to continue the levy. On a challenge by the consumers the High Court set it aside finding it to be a compulsory exaction for the benefit of the State and finding the enactment under which the order was issued not having conferred competence on the Government to levy and collect a duty of excise. A subsequent enactment revived the impost and validated the levy under the earli....
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....e old provision stands unaltered. These decisions do not at all help the State to sustain the notices, on the basis of the substitution made. 29. We have to now notice the decisions relied on by the respondents-assessees. AIR 1962 SC 918 [I.T.O v. S.K. Habibullah] was a case in which the completed assessment of a partner of a firm was sought to be rectified on the basis of the assessment of the firm, completed subsequently. The rectification was attempted within the four year period of limitation. However the reopening of the completed assessment against the partner was by virtue of a deeming provision incorporated into the statute permitting such rectification on the basis of the errors in the assessment of the partner, revealed on completion of assessment of the firm. The amendment made was after the completion of assessment of the partner. The Supreme Court ruled that the subject of rectification was not a rectifiable mistake as per the statute, as it originally stood and only the amendment deemed it to be rectifiable mistake. Hence there could be no retrospectvity inferred to rectify completed assessments on the basis of the deeming provision brought into the statute subsequ....
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....mitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. ...". 31. Union of India & Others v. Uttam Steel Limited [(2015) 13 SCC 209] is again a case on point, having dealt with a substitution, which was held to be not retrospective. The provision was under the Central Excise Act, 1944, wherein a period of limitation for claiming refund was extended from six months to one year by virtue of an amendment by substitution. Before the amendment came, the respondent had filed a claim for rebate, but beyond the six months period, on 28.12.1999. On 12.05.2000, the period of six months was substituted with a period of one year. The rebate application having been filed within the period of one year, the respondent contended that th....