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IN THE HIGH COURT OF DELHI
Madan B. Lokur, V.B. Gupta, JJ.
INTERNATIONAL METRO CIVIL CONTRACTORS
Versus
COMMISSIONER OF SALES TAX/VAT, DELHI VYAPAR BHAWAN, NEW DELHI & ORS.
Writ Petition (Civil) No. 5828 of 2007
Decided On: Decided On : 14-03-2008
The Court held that the Commissioner of Value Added Tax (VAT) did not have the power to revise an assessment order dated 31st March 2003, as the power of revision was omitted under the Delhi Value Added Tax Act, 2004 (DVAT Act) and was not saved under the DVAT Act. The Court also held that the orders dated 19th April 2007 and the show cause notice dated 18th July 2007 issued by the Deputy Commissioner were without jurisdiction and quashed them.
Fact of the Case:
The Petitioner, a construction company, was granted a refund of Rs. 6,30,79,487/- by the Tax Assessment Officer for the assessment year 2001-2002. The refund was accepted by the Revenue and was not sought to be immediately revised or otherwise set aside. Subsequently, the Assessing Officer rejected the refund application and made interpolations and manipulations in the order dated 14th August 2003. The Petitioner filed a writ petition challenging the rejection of the refund application and the order of reassessment dated 15th January 2004. The Division Bench quashed the order dated 14th August 2003 and the reassessment order and directed the Commissioner to pass appropriate orders on the refund application. The Commissioner passed an order on 12th August 2004 directing the concerned Assistant Commissioner to revise the assessment order. The Petitioner filed a miscellaneous application challenging the order dated 12th August 2004. On 20th September 2004, the Court stayed the operation of the order dated 12th August 2004. The Works Contract Act and the DST Act were repealed on 31st March 2005 and the DVAT Act was brought into force on 1st April 2005. The DVAT Act did not confer any power of revision on the Commissioner of VAT. On 19th April 2007, the Commissioner issued two orders, one delegating powers of revision under section 46 of the DST Act to the Deputy Commissioner, Special Zone in respect of the Petitioner, and the other transferring the jurisdiction in respect of the Petitioner to the Deputy Commissioner, Special Zone. The Deputy Commissioner issued a show cause notice dated 18th July 2007 to the Petitioner requiring it to show cause why the assessment order dated 31st March 2003 should not be revised. The Petitioner filed the present writ petition challenging the two orders dated 19th April 2007 and the show cause notice dated 18th July 2007.
Finding of the Court:
The Court held that no proceedings for revising the assessment order were initiated by the Revenue before 31st March 2005 when the DST Act and the Works Contract Act were repealed. The Court also held that the revisionary proceedings (if they were initiated) were not saved by the DVAT Act, as the power of revision was omitted under the DVAT Act and was not saved under the DVAT Act. The Court further held that the orders dated 19th April 2007 and the show cause notice dated 18th July 2007 issued by the Deputy Commissioner were without jurisdiction and quashed them.
Issues: 1. Whether any proceedings for revising the assessment order were at all initiated by the Revenue before 31st March 2005 when the DST Act and the Works Contract Act were repealed? 2. If the answer to the above question is in the affirmative, whether the proceedings initiated by the Revenue were saved by the DVAT Act on the repeal of the DST Act and the Works Contract Act on 31st March 2005? 3. What is the effect (if any) of the omission, in the DVAT Act, of the power to revise an assessment that was available to the Commissioner under Section 16 of the Works Contract Act read with Section 46 of the DST Act?
Ratio Decidendi: The Court held that the power of revision is an enabling power available to a superior authority to correct an error committed by a subordinate authority. The Court also held that the power of revision being only an enabling power and not a substantive right, it is not saved by Section 106(2) of the DVAT Act, which only saves a 'right' or an 'entitlement', both being synonymous. The Court further held that the omission of a provision in a subsequent legislation enacted subsequent to the repeal of an earlier legislation has the effect of obliterating or effacing that power such that it does not survive after the repeal of the earlier legislation.
Final Decision: The Court allowed the writ petition and quashed both the orders dated 19th April 2007 and the show cause notice dated 18th July 2007. The Court also awarded costs of Rs. 26,18,000/- to the Petitioner.
MADAN B. LOKUR, J.
This case exposes us to another unfortunate aspect of the underbelly of litigation in India one where both litigating parties go hammer and tongs at each other with neither side willing to give any quarter. This may be understandable where the litigating parties are individuals or corporations seeking a slice of the cake. But where one of the parties is the State, it is a little difficult to appreciate why a litigation should be fought tooth and nail, particularly when a Constitutional Court has repeatedly taken a view that is not only unfavourable to it, but has resulted in observations suggesting that the State is trying to overreach the process of the Court. There is also a severe indictment of a functionary of the State, by this Court, of interpolations and manipulations in an official order. This is perhaps what makes the stage show enacted by the State in this litigation a little distasteful and unpalatable if not sordid and tragic.
To make matter worse, if we were to include the initiation of contempt proceedings, this is the fifth time that the Petitioner has had to approach this Court for relief that was due to it as far back as in April, 2003 - such is the irony of this litigation, which has twice reached the Supreme Court already.
Add to this the fact that when we requested learned counsel for the parties to let us know the expenses incurred by their clients so that meaningful costs could be awarded to the successful party, as laid down by the Supreme Court, we were shocked to learn that this litigation alone (not to mention the earlier forays in this Court or the Supreme Court) has cost the parties almost half a crore of rupees - so much for access to inexpensive and affordable justice.
With this preface, it is necessary to consider the challenge mounted by the Petitioner which is to :
(a) An order dated 19th April, 2007 issued by the Commissioner, Value Added Tax. By this order, the jurisdiction in respect of the Petitioner for the assessment year 2000-2001 onwards under the Delhi Sales Tax on Works Contract Act, 1999 (the Works Contract Act) and the Central Sales Tax Act, 1956 was transferred to the Deputy Commissioner (Special Zone).
(b) Another order dated 19th April, 2007 issued by the Commissioner, Value Added Tax. Essentially, this order delegates revisionary powers under Section 46 of the Delhi Sales Tax Act, 1975 (the DST Act) to the Deputy Commissioner (Special Zone). It may be noted that the DST Act was repealed on 31st March, 2005.
(c) A notice dated 18th July, 2007 issued by the Deputy Commissioner (Special Zone) of the Government of NCT of Delhi, Department of Trade and Taxes. By this notice, the Deputy Commissioner (Special Zone) seeks to exercise his (delegated) revisionary jurisdiction to call for and examine the record/proceedings pertaining to the assessment of the Petitioner under the Works Contract Act and the DST Act.
The initial facts :
On 31st March, 2003, an assessment order was passed by the Tax Assessment Officer in respect of the Petitioner for the assessment year 2001-2002. By virtue of this order, the Assessing Officer granted a refund of Rs. 6,30,79,487/- to the Petitioner which was then to be made over to the Petitioner on an application filed by it. The assessment order was accepted by the Revenue and was not sought to be immediately revised or otherwise set aside. It may be mentioned, en passant, that the assessment order was rectified on 9th June, 2003 but that is admittedly of no real significance or import.
Consequent upon the assessment order, the Petitioner preferred an application on 2nd May, 2003 for refund of the amount due to it under Section 30(1) of the DST Act. Unfortunately, the Assessing Officer, instead of granting the refund, went on to consider the merits of the assessment order as if he were sitting in appeal over the assessment made.
Eventually, the Assessing Officer passed an order dated 14th August, 2003 whereby he rejected the refun
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