Back
2008 Supreme(SC) 1594
2008(8) Supreme 128
SUPREME COURT OF INDIA
Dr. Arijit Pasayat and Dr. Mukundakam Sharma, JJ.
S/s Kanpur Edibles Pvt. Ltd. — Appellant
versus
Commissioner, Trade Tax, U.P. — Respondent
Civil Appeal No. of 2008
(Arising out of S.L.P. (C) No. 11004 of 2007)
Decided on : 24-10-08
Shail Kr. Dwivedi, A.A.G., Shanti Bhushan, Sunil Gupta, Sr. Advs., K.G. Bhagat, Vineet Bhagat, Ehraz Zafar, Narendra Sharma, Satya Priya Kamra, Debasis Misra, Krishnan Venogopal, ARvind Verma, Ravindra Kumar, Manoj Kr. Dwivedi and Gunnam Venkateswara Rao, Advocates.
IMPORTANT POINT
An order of assessment or re-assessment which was in existence at the point of time notice was issued, continues to be effective unless it is varied. If it is not varied it goes without saying that it continues to be operative and effective.
Headnote:U.P. Sales Tax Act, 1948 – Section 10-B – Scope and ambit of Section 10-B of Act in background of Section 21 of Act – Orders of assessment passed for two assessment years 1997-98 and 1998-99 on 27.2.1999 and 17.6.2000 respectively – Issuance of notice for re-assessment in terms of Section 21 of Act on 21.8.2001 – Order was passed on 29.5.2003 holding that notice issued under Section 21 was cancelled – Preliminary objections raised by appellant relating to limitation were rejected by order dated 23.12.2006 – Appeal – Order passed by Tribunal reversing Joint Commissioner’s order and holding that notice under Section 10 was issued beyond the period of limitation- Department filed Tax Revision cases before the High Court – High Court held that order passed by Commissioner of Trade Tax, U.P. under Section 10-B of the U.P. Sales Tax Act, 1948 was within period of limitation – Appeals thereagainst – An order of assessment or re-assessment which was in existence at the point of time notice was issued, continues to be effective unless it is varied – If it is not varied it goes without saying that it continues to be operative and effective – The period fixed for making assessment or re-assessment under any provision of Act for any assessment year is two years from the end of the concerned assessment year – However, the maximum period available for making assessment or re-assessment is 4 years from end of the assessment year in question – Instantly what the revisional authority was empowered to test was legality or propriety of order canceling notices issued under Section 21(1) by order dated 29.5.2003- Such an exercise cannot encompass an order of assessment – Original orders had not been varied and could not have been varied after the period of limitation – What could not have been directly achieved had been attempted to be done in an indirect manner – If the revisional authority was of view that order dated 29.5.2003 was not legal, then that order would have been varied if it was found that order lacked legality or propriety – The expression “with respect thereof” made the position clear that for testing the legality or propriety of the order dated 29.5.2003 if any order was to be passed that had to be passed with respect thereof – Such an order did not empower revisional authority to make an order of assessment – What the revisional authority had done was to substitute the original orders of assessment in the garb of testing the legality and/or propriety of the order cancelling the notices – Such a course was not countenanced and had no legal basis – Hence High Court was held not justified in interfering with order of Tribunal – Impugned orders of High Court set aside – Appeals allowed. (Para 8)
Facts of the Case :
1. Orders of assessment passed herein in the instant case for two assessment years 1997-98 and 1998-99 on 27.2.1999 and 17.6.2000 respectively and a notice was issued for re-assessment in terms of Section 21 of Act on 21.8.2001. Order was passed on 29.5.2003 holding that notice issued under Section 21 was cancelled. Preliminary objections raised by appellant relating to limitation were rejected by order dated 23.12.2006. On Appeal, Order was passed by Tribunal reversing Joint Commissioner’s order and holding that notice under Section 10 was issued beyond the period of limitation. Department filed Tax Revision cases before High Court. High Court held that order passed by Commissioner of Trade Tax, U.P. under Section 10-B of the U.P. Sales Tax Act, 1948 was within period of limitation.
2. Present appeals have been filed against said order of High Court.
Findings of the Court :
Instantly what the revisional authority was empowered to test was legality or propriety of order canceling notices issued under Section 21(1) by order dated 29.5.2003. Such an exercise cannot encompass an order of assessment. Original orders had not been varied and could not have been varied after the period of limitation. What could not have been directly achieved had been attempted to be done in an indirect manner. If the revisional authority was of view that order dated 29.5.2003 was not legal, then that order would have been varied if it was found that order lacked legality or propriety-.The expression “with respect thereof” made the position clear that for testing the legality or propriety of the order dated 29.5.2003 if any order was to be passed that had to be passed with respect thereof. Such an order did not empower revisional authority to make an order of assessment. What the revisional authority had done was to substitute the original orders of assessment in the garb of testing the legality and/or propriety of the order cancelling the notices. Such a course was not countenanced and had no legal basis.Hence High Court was held not justified in interfering with order of Tribunal. Impugned orders of High Court were held liable to be set aside.
Result : Appeals allowed.
JUDGMENT
Dr. Arijit Pasayat, J. —
1. Leave granted.
2. These four appeals involve common issues and, therefore, are disposed of by this common judgment.
3. Challenge in each case is to the judgment of learned Single Judge of Allahabad High Court holding that the order passed by the Commissioner of Trade Tax, U.P. under Section 10-B of the U.P. Sales Tax Act, 1948 (in short the ‘Act’) (also described as U.P. Trade Tax Act, 1948) was within the period of limitation and therefore the order passed by the Trade Tax Tribunal, Kanpur Bench-1 (in short the ‘Tribunal’) passed in four connected Second Appeal Nos.1 to 4 of 2007 for the assessment years 1997-98 and 1998-99 in both the State Act and the Central Sales Tax Act, 1956 (in short the ‘Central Act’) was contrary to law.
4. The controversy lies within a very narrow compass relating to scope and ambit of Section 10-B of the Act in the background of Section 21 of the Act.
5. A brief reference to the factual aspects would suffice. Orders of assessment were passed for the two assessment years 1997-98 and 1998-99 on 27.2.1999 and 17.6.2000 respectively. On 21.8.2001 notice for re-assessment in terms of Section 21 of the Act with authorization of the Additional Commissioner, Kanpur under Section 21(2) was issued. It is to be noted that for the period during which such notice can be issued is normally two years, but with the approval of the Commissioner it can be extended to 4 years from the end of the concerned assessment year. The order was passed on 29.5.2003 holding that the notice issued under Section 21 was cancelled. In other words, holding that there was no need for any variation in the assessment orders. On 31.1.2006 and 8.2.2006 notices under Section 10-B of the Act for revision of the order dated 29.5.2003 in respect of two assessment years were issued. Preliminary objections raised by the appellant relating to limitation were rejected by order dated 23.12.2006. Appeal was preferred before the Tribunal which by order dated 13.3.2007 reversed the Joint Commissioner’s order and held that the notice under Section 10 was issued beyond the period of limitation. Department filed Tax Revision cases before the High Court. As noted above, the High Court has set aside the orders of the Tribunal.
Learned counsel for the appellant submitted that the crucial expression in Section 10-B (3)(c) is “the order in question”. In the instant case the initiation of proceedings for revision in terms of Section 10-B related to the order dated 29.5.2003. While purporting to revise that order, in reality orders of assessment have been passed which in substance substitutes the earlier orders of assessment. The notices dated 31.1.2006 and 8.2.2006 cannot be related to the orders of assessment dated 27.2.1999 and 17.6.2000. It is submitted that even if under Section 10-B (1) an order is sought to be revised, the same should be relatable to the order which is sought to be revised and cannot be extended to an order which has become final and in respect of which no proceeding under Section 10B(1) has been initiated.
With reference to the conclusions of the Joint Commissioner it is submitted that by merely stating that the order dated 29.5.2003 was revised, the exemption granted previously has been withdrawn and it has been held that the tax is recoverable.
It is pointed out that the effect of an order dropping the proceedings initiated for re-assessment was considered by this Court in M/s Kundan Lal Srikishan, Mathura (U.P.) v. Commissioner of Sales Tax, U.P. and Anr.,1 (1987 (1) SCC 684). With the object of getting over the view expressed, an amendment was made by U.P. Sales Tax (Amendment and Validation) Act, 1991 (in short the ‘Validation Act’) by adding Explanation III to Section 21 (1) w.e.f. 1.3.1973. It is pointed out that in Kundan Lal’s case (supra) this Court with reference to the decision in The Deputy Commissioner of Commercial Taxes v. M/s H.R. Sri Ramulu,2 (1977 (1) SCC 703) held that once a notice is i
