IMPORTANT POINTS
When law of limitation when affects substantial rights of a party, then subsequent amendment should not be read as retrospectively unless so stipulates expressly or requires so by necessary implication.
Amendment to section 21(2) of U.P. Trade Tax Act, 1948 reducing the limitation period from 8 to 6 years or March 31, 2002 is only partly retrospective.

JUDGMENT

Dipak Misra, J.

The appellant is a registered dealer under the U.P. Trade Tax Act, 1948 (for brevity, ‘the Act’) and authorised to deal with scooters manufactured by M/s. Bajaj Auto Limited, and during the assessment year 1990-91, had sold the two wheelers to the government employees through U.P. Government Employees Welfare Corporation as well as canteen of the Stores Department amounting to Rs.5,23,93,337.57. During the course of assessment, the appellant had submitted certificates which were required to be issued for claiming exemption in terms of the exemption notification no. 7037 dated 31.1.1985. The assessee had produced 270 sale certificates and on the basis of the same he was granted exemption on the sale of scooters for the aforesaid amount by the Assessing Officer vide assessment order dated 25.3.1995. As claimed by the revenue, at a later stage it discovered that the total sale amount of the scooters in question was in fact Rs.4,26,94,276.59 instead of Rs.5,23,93,337.57 and hence the assessee was liable to pay tax on the sale of scooters to the extent of Rs.97,02,050.65 on which it had earlier been granted sales tax waiver in view of the circular dated 16.4.1994.

2. Treating the original assessment as defective, a show cause notice dated 13.3.2002 was issued to the appellant fixing the date of 18.3.2002 requiring the assessee to show cause to offer explanation why a proceeding under Section 21(2) of the Act should not be initiated against it and the tax component should not be realised.

3. The assessee filed its reply on 18.3.2002 taking two grounds, namely, (i) that the proceedings under Section 21(2) of the Act could not be initiated against it as the same was barred by limitation being initiated after lapse of six years from the date of end of assessment year i.e. 31.3.1997 in the light of the proviso to sub-section 2 of Section 21 of the Act and (ii) the books of accounts were examined during the original assessment proceeding by the Assessing Officer as is manifest from the assessment order of the year 1990-91 and, therefore, the material having already been considered by the Assessing Officer while making the original assessment, steps could not be issued for reopening of the assessment.

4. The competent authority considering the reply submitted by the appellant required the assessee to appear with the documents to clarify the position. At that juncture, the appellant preferred Writ Petition No. 1513 of 2002 and the High Court entertained the writ petition, issued notice and as an interim measure, directed that the assessment proceeding may continue but no final order should be passed.

5. The contentions raised in the reply were advanced in the writ petition and they were resisted by the Department by filing counter affidavit contending, inter alia, that the amendment incorporated in Section 21(2) of the Act has retrospective effect and the steps taken for reopening the assessment was within time and there was no justification for invocation of the writ jurisdiction. The High Court, after noting the rival submissions of the parties formulated the following two questions for determination:-

“1. Whether in the facts and circumstances mentioned above could a complete assessment under the Act could be reopened after prescribed period when that period has been enlarged by amending the law?

2. Whether any case for reopening the assessment relying upon the Section 21(1) is made out and whether it is a case of change of opinion?”

6. As far as the first issue is concerned, the High Court referred to the decision in Addl. Commissioner (Legal) and Anr. v. Jyoti Traders and Anr., (1999) 2 SCC 77 in extenso, referred to the pronouncement in Binani Industries Ltd. v. Assistant Commissioner of Commercial Taxes, JT 2007 (5) SC 311 and the decision referred therein i.e. Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S.G. Mehta, ITO, AIR 1963 SC 1436 and opined thus:-

“Under Sub-section (1) of Section 21 of the A