2013(3) ALL MR 288
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

D.Y. CHANDRACHUD AND A.A. SAYED, JJ.

Sahyadri Sahakari Sakhar Karkhana Ltd. Vs. State Of Maharashtra & Ors.

Writ Petition No. 5859 of 2012

18th January, 2013

Petitioner Counsel: Mr. S.S. Patwardhan,Mr. N.V. Tapare,Mr. Ruturaj Pawar
Respondent Counsel: Mr. Vinay A. Sonpal

Maharashtra Value Added Tax Act (2002), Ss.23,21 - Notice - Notice issued to petitioner on 17th Jan 2012 under S.21(3) - Notice relates to year 2005-06 and 2006-07 - Contention that assessment for these years has become time barred by limitation on 31st March 2009 and 31st March 2010 - By amendment effected due to Ordinance 6 of 2011 provision under S.21 is deleted in its entirety - Reference to S.21(3) in provision of S.23(3A) was also deleted - However in this case when amendment was brought by Ordinance, time prescribed for issuance of notice under S.21(3) and for completing assessment under S.23(3A) had not come to end - Legislature made special provision in respect for period ending on 31st March 2008 to which present proceedings relate - Both for amended and unamended provision assessment is not time barred.

Contention that assessment for these years has become time barred by limitation on 31st March 2009 and 31st March 2010. Submission proceeds on basis that S.21(2) would apply and no order of assessment could be made after expiry of 3 years. Fallacy in submission is that in respect of assessments for period ending on or before 31 March 2008, S.21(3) initially provided extended period ending on or before 31 March 2008, S.21(3) initially provided extended period of 6 years for issuance of notice for assessment and where such notice was issued, S.23(3A) allowed period of 7 years to complete assessment. Consequently, for year 2005-06 notice under 23(3A) could be issued until 31st March 2012 and assessment under S.23(3A) could then be made until 31st March 2013. For year 2006-7 notice under S.21(3) could have been issued until 31st March 2013 and assessment under S.23(3A) could be made by 31st March 2014. Point to note is that when amendment was brought about, time prescribed for issuance of notice under S.21(3) for completing assessment under S.23(3A) had not come to end and assessment had not become time barred. Legislature has made special provision in respect of period ending on 31st March 2008 to which present proceedings relate. Amended provision does not make difference to position. Both under amended and unamended provision assessment in not time barred for year 2005-6 and 2006-7.

Paras 12, 13

Cases Cited:
Siemens India Ltd. Vs. The State of Maharashtra, 62 Sales Tax Cases, 40 [Para 9,10,13]


JUDGMENT

Dr. D.Y. Chandrachud, J. :- Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.

2. The Petitioner is a society registered under the Maharashtra Co-operative Societies Act, 1960 and engages in the business of manufacture of sugarcane by crushing sugarcane supplied by its members. The issue in the present case relates to the validity of a notice issued to the Petitioner under Section 23 of the Maharashtra Value Added Tax Act, 2005 on 17 January 2012. The two assessment years to which the notices relate are AY 2005-6 and 2006-7. The contention of the Petitioner is that the assessments for 2005-6 and 2006-7 became barred by limitation on 31 March 2009 and 31 March 2010. Hence, it has been urged that the notices are unlawful.

3. Though in the petition as originally filed there is a challenge to the constitutional validity of the provisions of Section 23 (3A) as amended by Ordinance 6 of 2011, subsequently replaced by Act 6 of 2011, during the course of the hearing, the Court was informed by learned Counsel appearing on behalf of the Petitioner that for the purpose of deciding these proceedings it would not be necessary to consider the constitutional validity of the amended provision.

4. In order to appreciate the grievance which has been urged on behalf of the Petitioner it would be necessary to advert to some of the salient provisions having a bearing on the issue. Sub-section (1) of Section 21 provided that where a return is filed by the prescribed date by a registered dealer, no notice calling upon the dealer for the assessment in respect of the period covered by the return shall be served on the dealer after two years from the end of the year containing the period to which the return relates. Sub-section (2) deals with a situation where a registered dealer has not filed a return. Sub-section (3) of Section 21 provided as follows :

"(3) Notwithstanding anything contained in sub-section (1) or (2), a notice for assessment in respect of any period ending on or before the 31st March 2008, may be served on the dealer within a period of six years from the end of the year containing the said period."

5. Section 23 provides for assessment. Under Sub-section (1) of Section 23 a best judgment assessment is provided for where a registered dealer fails to file a return in respect of any period by the prescribed date. Sub-section (2) of Section 23 refers to a situation where a return is filed by a registered dealer. In that event, the Commissioner is empowered to serve a notice on the dealer in order to require the presence of the dealer or the production of further documents. Section 23(2) provides as follows :

"2. Where the return in respect of any period is filed by a registered dealer by the prescribed date and if the Commissioner considers it necessary or expedient to ensure that return is correct and complete, and he thinks it necessary to require the presence of the dealer or the production of further documents, he shall serve on such dealer, a notice requiring him on a date and at a place specified therein, either to attend and produce or cause to be produced all documents on which such dealer relies in support of his return, or to produce such documents or evidence as is specified in the notice.

On the date specified in the notice, or as soon as may be thereafter, the Commissioner shall, after considering all the documents or evidence which may be produced, assess the amount of tax due from the dealer;

Provided that, if a registered dealer fails to comply with the terms of any notice issued under this sub-section, the Commissioner shall assess, to the best of his judgment the amount of tax due from him.

Provided further that, no order of assessment under this sub-section shall be made after the expiry of three years from the end of the year containing the period to which the return relates." (emphasis supplied)

6. Under sub-section (2) of Section 23, a period of three years was stipulated for making an order of assessment. By Maharashtra Act 25 of 2007 sub-section (3A) was introduced with effect from 15 August 2007. Sub-section (3A) provides as follows :

"(3A) Where a notice for assessment under sub-section (3) of section 21 has been served on the dealer, the Commissioner shall assess, to the best of his judgment, the amount of tax due from him;

Provided that, no order of assessment under this sub-section shall be made after the expiry of seven years from the end of the year containing the period in respect of which the notice for assessment has been issued." (emphasis supplied)

7. Section 21 which provided for a period of limitation for the issuance of a notice of assessment was deleted with effect from 1 April 2005 (the date of the enforcement of the Act) by Ordinance 6 of 2011 with effect from 10 March 2011. Simultaneously, sub-section (3A) of Section 23 was amended to read as follows :

"(3A) Notwithstanding anything contained in sub-section (2) or sub-section (3), an order of assessment, in respect of any period ending on or before the 31st March 2008, may be made under the respective provisions within a period of seven years from the end of the year containing the said period."

8. Prior to the amendment of sub-section (3A), that provision permitted the Commissioner to assess to the best of his judgment where a notice of assessment under Sub-section (3) of Section 23 had been served on a dealer. Since Section 21 was deleted by Ordinance 6 of 2011, the reference to Section 21(3) has been removed in Section 23(3A) and a non-obstante provision has been inserted. Section 23(3A) has been inserted with effect from 1 April 2005.

9. The submission which has been urged on behalf of the Petitioner is that :

(i) Under Section 23 (2) the second proviso stipulates that no order of assessment under the sub-section may be made after the expiry of three years from the end of the year containing the period to which the return relates;

(ii) For AY 2005-6, the assessment became barred on 31 March 2009 while for AY 2006-7, the assessment became barred on 31 March 2010;

(iii) Sub-section (3A) of Section 23 which was brought in with effect from 15 August 2007 would have no application unless a notice for assessment under sub-section (3) of Section 21 had been served on a dealer. No notice was served on the dealer until the assessment became time barred on 31 March 2009 and 31 March 2010 respectively;

(iv) The amended provision of Section 23 (3A) which was brought in by Ordinance 6 of 2011 enacted a non-obstante provision. The amended provision however would not revive an assessment which had become time barred prior to the insertion of the provision. In the present case, even before the introduction of the amended provision of Section 23(3A) by Ordinance 6 of 2011, the assessment had become time barred.

Reliance was placed on a judgment of a Division Bench of this Court in Siemens India Ltd. v. The State of Maharashtra, 62 Sales Tax Cases, 40.

10. On the other hand, it has been urged on behalf of the Revenue that :

(i) Under the provisions of Section 21(3), in respect of a period ending on or before 31 March 2008, a notice of assessment on the dealer could be served within a period of six years from the end of the year containing the period;

(ii) Both the assessment years 2005-6 and 2006-7 were governed by Section 21(3) and a notice could have been issued on or before 31 March 2012 and 31 March 2013 in respect of those two years;

(iii) Sub-section (3A) of Section 23 was introduced into the statute with effect from 15 August 2007 by Maharashtra Act 25 of 2007 under which an extended period of seven years was provided for the Commissioner to make an assessment where a notice of assessment was served under Section 21(3). Hence, where a notice of assessment related to a period ending on or before 31 March 2008, a notice of assessment under Section 21(3) could be served on a dealer within a period of six years and an assessment could be made under Section 23(3A) within a period of seven years from the end of the year containing the period to which the notice related;

(iv) Consequently, even before the amended provisions were brought in by Ordinance 6 of 2011, the Revenue in the present case was within time to serve a notice of assessment under Section 21 (3) for the period prior to 31 March 2008 and for carrying out an assessment under Section 23(3A). The assessments were not time barred;

(v) The amendment of 2011 deleted Section 21 and made a consequential amendment to Section 23(3A) by introducing a non-obstante provision. As a result, the reference to the notice under Section 21 has been removed from Section 23(3A). In the present case the assessment has not become time barred on 31 March 2009 or 31 March 2010 and when a notice dated 7 January 2012 was issued, time for completing the assessment had not expired even under the unamended provision. A fortiori, it has been urged, time for completing the assessment is still to expire even under the amended provision;

(vi) The Legislature has created two separate categories of periods one before 31 March 2008 and the other thereafter with two different periods of limitation; and

(vii) The judgment of the Division Bench in Siemens India (supra) is distinguishable since the amendment in that case was not retrospective. Moreover, the ratio of the judgment is contained in paragraph 25.

The rival submissions now fall for consideration.

11. Under sub-section (1) of Section 21 of the Maharashtra Value Added Tax Act, 2005 a period of two years was prescribed within which a notice calling a dealer for assessment had to be issued where a return was filed by a dealer by the prescribed date. This period in a case where a dealer had not filed a return was prescribed as three years in sub-section (2). Sub-section (3) which contained a non-obstante clause overrode sub-sections (1) and (2) and provided an extended period of six years for the issuance of a notice of assessment in respect of any period ending on or before 31 March 2008. In respect of a period commencing on and after 1 April 2008, the period which is prescribed by sub-sections (1) and (2) alone would apply. Section 23 deals with assessment. Under sub-section (2) of Section 23, where a return is filed by a registered dealer within the prescribed date the Commissioner as an assessing officer is empowered to issue a notice to secure the presence of a dealer or for the production of further documents. Upon a dealer failing to comply with the notice, the Commissioner is empowered to make a best judgment assessment. Under the second proviso to sub-section (2) of Section 23, no order of assessment under the sub-section could be made after the expiry of three years from the end of the year. With effect from 15 August 2007, the legislature introduced sub-section (3A) into Section 23 to allow the Commissioner to assess, to the best of his judgment the tax dues from a registered dealer on whom a notice of assessment under sub-section (3) of Section 21 has been served. Section 23(3A) operates in respect of the period prior to 31 March 2008, since the notice under Section 21(3) to which the provision makes a reference specifically was to relate to that period. Under sub-section (3A) of Section 23, an assessment could be made within seven years from the end of the year containing the period in respect of which a notice of assessment was issued. Under Section 23(2), an assessment was required to be made within a period of three years from the end of the year, where a return is filed by a registered dealer. This was a general provision. Section 23(3A) operated in an area where a notice under Section 21(3) has been served on the dealer. Such a notice, as already observed above, is governed by the period ending on 31 March 2008.

12. The effect of Ordinance 6 of 2011 was to delete the provisions of Section 21 in their entirety with effect from the date of enforcement of the MVAT Act - 1 April 2005. Since Section 21 stood deleted, the reference sub-section (3) of that provision in Section 23(3A) became otiose. In consequence, Section 23(3A) was also amended so as to delete the reference to the notice under Section 21(3) and to provide a substantive non-obstante clause that would override sub-sections (2) and (3).

13. The submission which has been urged on behalf of the Petitioner is that the assessments for AYs 2005-6 AND 2006-7 would be time barred respectively on 31 March 2009 and 31 March 2010. This submission proceeds on the basis that the second proviso to Section 21(2) would apply and no order of assessment could be made after the expiry of three years. The fallacy in the submission is that in respect of assessments for the period ending on or before 31 March 2008, Section 21(3) initially provided an extended period of six years for the issuance of a notice for assessment and where such a notice was issued, Section 23(3A) allowed a period of seven years to complete the assessment. Consequently, for AY 2005-6 a notice under Section 21(3) could be issued until 31 March 2012 and the assessment under Section 23(3A) could then be made until 31 March 2013. For AY 2006-7 a notice under Section 21(3) could have been issued until 31 March 2013 and an assessment under Section 23 (3A) could be made by 31 March 2014. The fact that a notice had not been issued would make no difference to the situation because the time for the issuance of the notice under Section 21(3) and consequently for making an assessment under Section 23(3A) had not expired. Before the assessment became time barred, the legislature stepped in by deleting Section 21 by Ordinance 6 of 2011 and by making a corresponding amendment by Section 23(3A). But, the point to note is that when the amendment was brought about by Ordinance 6 of 2011, the time prescribed for the issuance of a notice under Section 21 (3) and for completing an assessment under Section 23(3A) had not come to an end and the assessment had not become time barred. The legislature has made a special provision in respect thereof for the period ending on 31 March 2008 to which the present proceedings relate. The amended provision does not make any difference to the position. Both under the unamended and under the amended provision, the assessment is not time barred for A.Ys 2005-06 and 2006-07. This is, therefore, not a case of the nature that was dealt with in the judgment of the Division Bench of this Court in Siemens India (supra). In Siemens India (supra) the issue which fell for decision of the Division Bench was formulated as follows :

"Whether, in the facts and circumstances of the case, i.e. where the assessee had filed his returns during the period 1st April, 1964 to 31st March, 1965, and the order of assessment was passed on 20th April, 1967, was the Tribunal right in holding that the notice served on 14th March, 1972, under section 57 of the Act for suo motu revision was not barred by limitation ?"

The ratio of the judgment of the Division Bench has been stated as follows in paragraph 25 :

"25. In the premises, the relevant law applicable in the present case at the time when the Commissioner issued notice of suo motu revision, was the period of limitation in force on that day, i.e., section 57 as amended on 1st May, 1970 (3rd amendment). The Commissioner was, therefore, required to issue a notice within 3 years of the communication of the assessment order. In the present case the assessment order was passed on 20th April, 1967. There is no dispute that the notice of the Commissioner, which is dated 14th March, 1972, is beyond the period prescribed under the 3rd amendment to section 57. It is therefore time-barred."

In paragraph 14 of the judgment the Division Bench observed that limitation is a matter of procedural law yet where a right is accrued to the party because the prescribed period of limitation has expired, this accrued right cannot be taken away by any subsequent Act which enlarges the time. The Division Bench was of the view that if a subsequent Act enlarges the time while the period of limitation prescribed under an old Act has not expired, the subsequent law will govern the proceedings. In the case of a revision, the Division Bench held that the law of limitation applicable would be the law at the date when the revision proceedings are initiated, the exception being where the revision is barred by limitation under the old law before the amended law enlarges limitation. The situation in this case is distinct from the contingency envisaged in the judgment in Siemens India (supra) because the period of limitation for making an assessment in respect of the period ending on 31 March 2008 had yet not expired. Hence, the present is not a case where by a subsequent amendment, limitation has been enlarged even though the limitation prescribed under the earlier legislative provision has expired. As we have noted the period of limitation for completing an assessment in respect of the period ending on 31 March 2008 had still not come to an end for A.Y.s 2005-06 and 2006-07.

14. In these circumstances and having considered the submissions which have been urged on behalf of the Petitioner, we find no merit in the Petition. The Petition shall accordingly stand dismissed. However, there shall be no order as to costs.

Petition dismissed.