Important Point
Proviso to sub-section (2) (inserted w.e.f. 19.2.91) to Section 21 of the U.P. Trade Tax Act, 1948 does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, so prescribed earlier, had expired before the proviso came into operation.

Headnote:U.P. Trade Tax Act, 1948- Section 21 as amended w.e.f. 19.2.91 -Reassessment - Limitation-Proviso added to sub-section (2) to Section 21 is retrospective-Operation of proviso relates and encompasses back to previous eight assessment years-Proviso does not put an embargo on the Commissioner to reopen assessment if period, as prescribed earlier, had expired before proviso came into operation.
Held : Under sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in this Section no order for any assessment year shall be made after the expiry of 4 years from the end of such year. However, after the amendment, a proviso was added to sub-section (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of 8 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force w.e.f. February 19, 1991. We do not think that sub-section (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 after 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 of 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 re-opened up to March 31, 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. Notice to the assessee follows the authorisation by the Commissioner of Sales Tax, its service on the assessee is not a condition precedent to re-open the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub-section (2) of Section 21 of the Act becomes redundant. Commencement of Act can be different than the operation of the Act though sometimes both may be the same. Proviso now added to sub-section (2) of Section 21 of the Act does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, as prescribed earlier, had expired before the proviso came into operation. One has to see the language of the provision. If it is clear, it has to be given its full effect. To reassure oneself, one may go into the intention of the legislature in enacting such provision. The date of commencement of the proviso to Section 21(2) of the Act does not control its retrospective operation. Earlier the assessment/re-assessment could have been completed within four years of that particular assessment year and now by the amendment adding proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after satisfaction of the Commissioner of Sales Tax. The proviso is operative from February 19, 1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to previous eight assessment years. We need not refer to the provisions of Income Tax Act to interpret proviso to Section 21(2) language of which is clear and unambiguous and so is the intention of Legislature. We are, thus, of the view that High Court was not right in quashing the sanction given by the Commissioner of Sales Tax and notices issued by the Assessing Authority in pursuance thereto. (Para 24)

Judgment

D.P. Wadhwa, J.-Leave granted.

2. In both these appeals which are against two separate judgments of the same Division Bench of the Allahabad High Court, a common question of law arises. It is that in the circumstances could a completed assessment under the U.P. Sales Tax Law be re-opened after the prescribed period when that period was enlarged by amending the law.

3. Facts are similar.

4. In the appeal of Lohia Machines Limited (arising out of SLP(C) No. 11015 of 1997) assessment for the year 1985-86 under the UP Trade Tax Act, 1948 (for short ‘the Act’) was completed on November 27, 1989. The Act is also called the U.P. Sales Tax Act. In the appeal of Jyoti Traders (arising out of SLP (C) No. 8866 of 1997) assessment for the year 1985-86 was completed on February 28, 1990. Period for assessment or reassessment, which is four years under Section 21 of the Act, for the assessment year 1985-86 expired, on March 31, 1990.

5. The Act was extensively amended by the U.P. Sales Tax (Amendment and Validation) Act, 1991. The amending Act received the assent of the Governor of Uttar Pradesh on August 19, 1991. Different dates were prescribed for coming into force of various provisions of the amending Act. Section 21 of the Act also underwent an amendment and the relevant provision with which we are concerned came into force with effect from February 19, 1991.

6. Taking advantage of the amendment to Section 21, which now prescribed a period of eight years, the Sales Tax Officer after taking sanction from the Commissioner of Sales Tax issued notices to the respondents in both these appeals for re-assessment. In the case of Lohia Machine Ltd. sanction order is dated December 12, 1993 and notice is dated September 8, 1994. In the case of Jyoti Traders date of sanction order is November 12, 1993 and the notice had been issued for January 11, 1994. Sanctions given and notices thus issued were after more than four years with reference to the assessment year 1985-86 under the Act before its amendment.

7. The respondent challenged both these orders of sanction of the Commissioner of Sales Tax and the notices for re-assessment in two separate writ petitions which were allowed by the High Court and the sanction orders of the Commissioner as well as notices issued by the Sales Tax Officer were quashed. This led to filing of the present appeals.

8. Relevant provisions of Section 21 of the Act are as under:-

“Section 21. Assessment of tax on the turnover not assessed during the year.

(1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or re-assessee the dealer or tax according to law:

Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assessment as the case may be.

Explanation............

(2) Except as otherwise provided in this section no order of assessment or reassessment under any provision of this Act for any assessment year shall be made after the expiration of four years from the end of such year.”

By the amending Act a proviso was added to sub-section 2 as under:-

“Provided that if the Commissioner of Sales Tax, on being satisfied on the basis of reasons recorded by the assessing authority that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or re-assessment may be made after the expiration of the period aforesaid but not after the expiration of eight years from the end of such year notwithstanding that such assessment or reassessment may involve a change of o

Click Here to Read the rest of this document

1998 Supreme(SC) 1165

Important PointProviso to sub-section (2) (inserted w.e.f. 19.2.91) to Section 21 of the U.P. Trade Tax Act, 1948 does not put any embargo on the Commis­sioner of Sales Tax not to reopen the assessment if period, so pre­scribed earlier, had expired before the proviso came into operation.

Cases Referred (5)

Important Point
Proviso to sub-section (2) (inserted w.e.f. 19.2.91) to Section 21 of the U.P. Trade Tax Act, 1948 does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, so prescribed earlier, had expired before the proviso came into operation.