TaxTMI 
TaxTMI 
2011 (3) TMI 1845
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.... person can be denied the benefit of exemption from payment of sales tax, or the benefit of payment of sales tax at a reduced rate, which the legislature has, otherwise, vested in him? 2. In the answers to the questions, posed above, rest the decision in this appeal. However, an incidental question, which we have to answer, in this appeal, has also arisen, and the question is: when a statutory authority, while det ermining the question of reopening of assessment of taxable liability, acts on the basis of the clarification, which such an authority obtains from his superior authority, on the issue raised in the proceedings of reopening of assessment, and opens the assessment and makes assessment on the basis of the clarifications received from his superior authority, whether such an action is sustainable in l aw, particularly, when, there is no independent application of mind by the authority, who re-opens the assessment as to whether the clarification, as given by h is superior authority, are attracted to the facts of the case or not? 3. The questions, indicated above, have arisen in the context of Section 9 of the Assam General Sales Tax Act, 1993 (in short, 'the AGST Act, 19....
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....supplied by them. Since the intra-State sale of PVC pipes carried higher rate of tax, the State Government decided to reduce the rate of tax, in respect of local manufacturers, to 4.4%. The benefit of such reduced rate of tax could not have been given to the local manufacturers except by way of issuing requisite notification under Section 9 of the AGST Act, 1993, which empowers the State Government, as indicated above, to grant exemption from payment of tax, or to pay tax at a reduced rate. A notification was accordingly issued, on 28.04.1998, under Section 9(3) of the AGST Act, 1993, making the notification effective for a period of three years. 6. It is noteworthy, now, that according to Section 9(3) of the AGST Act, 1 993, the validity of a notification, issued under Sub-Section (3) of Section 9 of the AGST Act, 1993, shall not exceed a period of three years from the date of its issue. Ordinarily, therefore, a notification, issued under Section 9 of the A GST Act, 1993, would remain, unless earlier withdrawn, valid and effective for a period of three years from the date of its issue. Seen in this light, the notification, dated 28.04.98, (which was initially issued), could not....
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....he appellant herein claimed and was given by the assessing authority the benefit of the notification, in question, for the assessment year 2004-05, inasmuch as the appellant was allowed to pay tax at the reduced rate of interest, even for the assessment year 2004-2005, against supply of PVC pipes, manufactured by it, to various Government Departments in Assam. To be precise, for the assessment year 2004-05, the Superintendent of Taxes completed assessment, on 04.04.2007, by allowing payment of tax by the appellant at a concession al rate of 4%. 12. However, the problem for the appellant started, when a notice was issued, on 06.11.2008, to the appellant by respondent no 4 herein, namely, Superintendent of Taxes, contending therein, inter alia, that the appellant had been wrongly allowed payment of tax at the concessional rate of 4%, on its turnover, for the assessment year 2004-05, against supply of PVC pipes to various Government departments of the State Government on the strength of the notification, dated 03.0 1.2003, aforementioned inasmuch as the notification, being effective from 01.05. 2001, could not have continued to remain in force beyond a period of three years and the....
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.... letter, dated 05.12.2004, respondent No. 3, namely, Commissioner of Taxes, Assam, issued a clarification, on 19.02.2009, conveying to the respondent No. 4 to the effect that though the notification, in question, had been issued on 03.01.03, yet since the notification was brought into force with effect from 0 1.05.2001, the notification ought to be treated to have remained in force from 01.05.2001 to 30.04.2004. The clarification, so issued by respondent No. 3, on 19.02.2009, being relevant to the present appeal, is reproduced below: Sub - Clarification Ref - Your letter No. 6356 dated 05.12.2008. With reference to your letter seeking clarification in respect of Govt. Notification issued vide FTX-189/93/pt/268, dt 03.01.2003, giving effect from 01 .05.2001, it is stated that the notification was issued under Section 9(3) of the Assam General Sales Tax Act, 1993, since repealed. As per proviso to Section 9 (3) (ii) the validity of notification issued under said section shall not exceed a period of 3 years from the date of its issue. However, since the notification was brought into force from 01.05.2001, therefore, the notification was i....
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....remained valid till 02.01. 2006. The revision, filed by the appellant, was accordingly dismissed on the premises aforementioned. 19. It is, thus, clear that the appellant was denied the benefit of the notification aforementioned on two grounds, namely, that the notification having mentioned that it had come into force on 01.05.2001, the notification could not have been treated to have remained in force beyond 30.04.2004, and, secondly, equity estopped the appellant from claiming the benefit of the notification, because the appellant had already availed the benefit for a maximum period of three years covering thereby the period, when (according to the appellant itself), the notification could not have been, in law, effective. 20. Aggrieved by the dismissal of the revision, the appellant filed a writ petition under Article 226 of the Constitution of India, which gave rise to WP(C) No. 4859/2009, seeking issuance of appropriate writ(s) setting aside and quashing not only the reopening of the assessment, but also the revisional order. In the writ petition, a learned Single Judge of this Court took the view that in the facts and circumstances of the case, the expression, 'dat....
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....cannot be read in law as retrospective. So contends Mr. Dutta. In support of this submission, Mr. Dutta places reliance on Bakul Cashew Co. and Others vs. Sales Tax Officer, Quilon and another, reported in (1986) 2 SCC 365. 24. Elaborating his submission, as noted above, Mr. Dutta points out that the 2nd proviso to Section 9(3) makes it clear that the validity of the notification, which is issued under Section 9(3), shall not remain valid for more than three years from the 'date of its issue'. Since the proviso uses the expression, ' from the date of its issue', Mr. Dutta contends that the date of issue of the notification, in the present case, being 03.01.2003, the notification ought to have been held to have remained valid for a period of three years commencing from 01.03.2003 and, in such circumstances, the notification could not have been treated, contrary to the parent legislation, to have come into force on a date prior to the date of its issuance, i.e., 03.01.2003; whereas, the respondents have been insisting that though the notification had been issued on 03.01.2003, it was given effect to, or had been brought into force, on 01.05.2001, and, therefore, the notification c....
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.... already made, needed to be reopened or not, respondent No. 4 looked to his superior, namely, the respondent No. 3 for guidance as to whether the notification, in question, should be treated to have come into force on 03.01.2003, which was the date of issuance of the notification, or should it be read retrospectively with effect from the date on which the notification stated to have come into force. Responding to the clarification, which the respondent No. 4 had so sought for, respondent No. 3, points out Mr. Dutta, gave his 'clarification' and it is this 'clarification', which the respondent No. 4 treated as his guidance and reopened the assessment. There was, thus, contends Mr. Dutta, no independent application of mind by the respondent No. 4, which was nothing but complete abdication of authority by respondent No. 4. The impugned order, therefore, submits Mr. Dutta, reopening the assessment and making the assessment afresh was wholly illegal. 29. Mr. Dutta submits that aggrieved by the wrong construction of the notification and the conduct of the respondents, when the appellant approached this Court by way of writ petition, the learned Singl....
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....years on the strength of the notification, the appellant, could not have claimed and cannot, now, once again, claim the benefit of concessional rate of tax under the same notification by asking the authorities concerned, or the High Court, to treat the notification as prospective in nature. In effect, Mr. Saikia points out, in this regard, that the provisions of exemption from payment of tax, or payment of tax at a concessional rate, has to be construed strictly and, on the basis of this principle, the appellant must be denied, and has been rightly denied, its claim to receive benefit for longer than three years. For the purpose of sustaining his contention, that a notification, granting exemption, has to be construed strictly, Mr. Saikia has referred to, and relied upon, the decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and Others, reported in (2001) 1 SCC 236. 33. Mr. Saikia further points out that, in the writ petition, there was no challenge to the validity of the notification and, without challenging the notification, the appellant cannot claim that the notification must be read to have come into force on the date of its issuance, i.e., 03.0....
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....g this crucial question, the statutory authorities rejected the claim of the appellant and the learned Single Judge fell into error in not interfering with the same. As the appellant was seeking benefit under the notification, there was, according to Mr. Dutta, no question of challenging the notification. Mr. Dutta reiterates that what the appellant had been asking the statutory authorities and the High Court was to give a legal and correct interpretation of the notification in respect of the validity period of a notification irrespective of the fact as to whether the appellant had or had not legally or justifiably enjoyed the benefit as regards the rate of tax payable by the appellant. The correct interpretation of statutory provisions cannot, submits Mr. Dutta, depend on the fact as to whether the appellant has already availed the benefit of concessional rate of tax in the past or not. The decision, therefore, reached by the statutory authorities and non-interference therewith by the learned Single Judge, in the writ petition, are, therefore, according to Mr. Dutta, contrary to law and may, therefore, be interfered with in this appeal. 37. As already indicated above, the answe....
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....exemption granted under any scheme at any time as it may think fit and proper. 38. A microscopic reading of the provisions of Section 9, as a whole, and, in particular, the proviso to Section 9(3) clearly shows that the validity of a notification, issued under Section 9, shall not exceed beyond a period of three years from the date of its issue. 39. The expression, date of its issue, would, without doubt, mean the date on which the notification is issued and it is from the date of issuance of the notification that the validity period of the notification would start running. The notification, as contemplated by the second proviso to Section 9(3), has to be, therefore, prospective in effect. 40. There can be no doubt, and it could not be disputed, on behalf of the respondents, that a notification, issued under Section 9, would, ordinarily, remain, in the light of the language appearing in the second proviso to Section 9(3) for a period of three years from the date of its issue unless withdrawn earlier or indicated otherwise by the notification. Hence, the commencement of validity of such a notification has to be, ordinarily, from the date of issuance of the notification and ....
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....able in law. The concern of the revenue, (same as the case at hand), was that it would require the revenue to make adjustment of benefits, which the assessee might have, in the meanwhile, received. The Court, in Mangalam Timber Products Ltd. (supra), pointed out, in this regard, that if the effect of reading of the notification prospectively would require making of some adjustments to be made with regard to the benefits, which the petitioner might have derived as a result of the notification, it is not for the Court to make the calculation. The Court, however, made it clear, in Mangalam Timber Products Ltd. (supra), that if adjustment is required to be made, the same should be made at the level of the revenue authority keeping in view the fact that the notification is prospective in nature. Speaking for the Court, in Mangalam Timber Products Ltd. (supra), A.K. Ganguly, J., (as his Lordship, then, was) observed: It is clear on a plain reading that the said section 7 that it is prospective in operation. It is rather settled that laws are normally made prospectively but it can be made retrospectively also. If a law is to be made retrospectively, the Legislature must ....
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....may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or by-law which can operate with retrospective effect; (see Subba Rao, J., in Dr Indramani Pyarelal Gupta v. W.R. Nathu) - the majority not having expressed any different opinion on the point; Modi Food Products Ltd. v. CST; India Sugars and Refineries Ltd. v. State of Mysore and S. Shiv Dev Singh v. State of Punjab. (Emphasis is added) 45. Mr. Dutta is, therefore, not incorrect, when he refers to the case of Bakul Cashew Co. and others Vs. Sales Tax Officer, Quilon and another, reported in (1986) 2 SCC 365, wherein the Court, having referred to the position of law as indicated in M.C. Ponnoose (supra), observed and held as under: 8 & & & &..The power of exemption in the instant case was exercised through a retr....
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..... However, on the completion of the assessment, it was pointed out by the respondent No. 4, while seeking to reopen the assessment, that a notification, issued under Section 9(3), cannot, in the light of the second proviso thereto, remain in force for a period longer than three years. This apart, since the notification had mentioned that it (notification) shall be treated to have come into force on 01.05.2001, the notification, according to respondent No. 4, ought to be held to have enured, by efflux of time, on 30. 4.2004. Consequently, respondent No. 4 took the view that the assessee was not entitled to the exemption, which he had availed in respect of the assessment year 2004-2005. The notice of show cause was accordingly issued by the respondent No. 4 to the appellant and, on receiving the notice, the appellant contended, in no uncertain words, that under the second proviso to Section 9(3), the notification remains, and ought to be treated to have remained, in the present case, valid f or a period of three years from 'the date of its issue', i.e., 03.01.2003. 49. Confronted with the bold stand, so taken by the appellant, respondent No .4 looked towards re....
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....tion has to be read in tune with the parent legislation and when the parent legislation makes the notification, issued under Section 9(3), prospective in nature, the notification has to be given prospective effect. 51. In fact, respondent No. 4, who has reopened the assessment and made the impugned re-assessment, did not even decide as to what the expression, 'date of its issue', in Section 9(3), means. What he decided was as to what is the date on which the notification came into force; whereas the plain language of the law required him to really determine the date of issuance of the notification and start counting the period of validity with effect from the date of issuance of the notification. Respondent No. 4 abdicated his authority to decide this basic issue raised and without deciding the issue, so raised, had reopened the assessment by holding that the notification, in question, having come into force on 03.01.2003, must be read to have come into force on 01.05.2001. 52. Turning to the order passed in the revision, it needs to be noted that even the respondent No. 3, when confronted with the impugned order of re-assessment, did not answer the question ra....
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....ts issue and not with effect from any date prior thereto. This primary position, as regards the notification, appears to have escaped the attention of the learned Single Judge. The learned Single Judge has, therefore, observed, at para 19, while dealing with the notification, as under. 19. The notification dated 1.3.2003 is conspicuous by its language to be effective from 1.5.2001. The period of exemption/reduction is limited by the Act to be for a period of three years. In the comprehension of this Court though section 9(3) does not as such in express words permit the State Government to issue a notification with a back date, the words 'date of issue' is in uncertain terms int ended to be the starting point of the period of three years to avail the exemption or reduction in the rate of tax. By issuing this notification as is apparent in the contextual facts, the State Government desired a continuity in the exempt ion/reduction on and from 1.5.2001 and not 1.3.2002. The date of issue i.e. 1.3. 2003, if construed to be the starting point of the grant of the exemption/reduction, it will not only be obviously against the apparent objective conveyed there by but also lead to u....