Appeal No 830 of 1963
Appeal by special leave from the judgment and decree dated March 3 1960 of the Allahabad High Court in Special Appeal No 3 of 1956
G section Pathak and section P Varma for the appellants
781 OP Rana for the respondents
K Srinivasan and R Gopalakrishnan for the intervener
The Judgment of the Court was delivered by Shah J
The appellants public limited Company having its registered office at Calcutta was with effect from October 5 1946 appointed sole agent for sale of goods manufactured by the Swadeshi Cotton Mills Company Ltd On March 20 1952 the Sales Tax Officer Kanpur issued a notice under section 21 of the UP Sales Tax Act 1948 calling upon the appellant Company to file a return of its turnover for the assessment year 1948 49 on the ground that the turnover had escaped assessment
On March 31 1952 the Sales Tax Office made a best judgment assessment and determined the taxable turnover of the appellant Company at Rs 50 lakhs for the year 1948 49 and determined the appropriate tax liability
In the appeal to the Judge Appeals Sales Tax the order passed by the Sales Tax Officer was set aside that authority holding that the appellant Company was not a dealer within the meaning of section 2c of the Act
But the order of the appellate authority was set aside by the Judge Revisions Sales Tax by order dated March 28 1955 and the case was remanded to the Sales Tax Officer for fresh assessment
In the view of the Judge Revisions Sales Tax it was necessary to determine the ownership of the goods at the time of their sale
The Sales Tax Officer then issued a notice calling upon the appellant Company to produce its books of account and other relevant documents on July 23 1955 for the purpose of assessment for the year 1948 49
The appellant Company contended that as the original assessment under section 21 had been set aside by the Judge Revisions Sales Tax no proceeding in connection with that assessment was pending and re assessment was barred because more than three year had elapsed since the end of the year of assessment
The Sales Tax Officer rejected the contention of the appellant Company and insisted that the books of account and other documents be produced as directed earlier
The appellant Company then petitioned on September 2 1955 to the High Court of Allahabad under article 226 of the Constitution for a writ in the nature of prohibition restraining the Sales Tax Officer Kanpur from proceeding with the assessment of the appellant Company for the assessment year 1948 49 and for a writ of certiorari quashing the order dated September 2 1955 of the Sales Tax Officer Kanpur and the proceeding taken for re assess 782 ment in pursuance thereof
Chaturvedi J held that assessment sought to be made by the Sales Tax Officer pursuant to the order of the Judge Revisions Sales Tax was clearly barred by the law of limitation prescribed in that behalf by section 21 of the UP Sales Tax Act
It was in the view of the learned Judge immaterial whether assessment was being made by the Sales Tax Officer suo motu or under the direction of a superior authority if at the time of making the re assessment the period prescribed by section 21 had expired
The order passed by Chaturvedi J was reversed in appeal by a Division Bench of the High Court
The High Court held that the Sales Tax Officer was competent in view of the order of remand which directed fresh assessment to commence fresh assessment proceedings against the appellant Company and in commencing and continuing those proceedings he was acting in compliance with the directions given under sections 9 and 10 of the Act which he was bound to carry out and to such assessment proceedings the period of limitation prescribed by section 21 of the Act did not apply
Against the order passed by the High Court reversing the order passed by Chaturvedi J this appeal has been preferred with special leave
The material provisions of the UP Sales Tax Act are briefly these  section 9 conferred a power upon the designated authority to entertain an appeal against the order passed by the Sales Tax authority and by sub section
3 of section 9 it was provided The appellate authority may after giving the appellant a reasonable opportunity of being heard a confirm reduce enhance or annul the assessment or b set aside the assessment and direct the assessing authority to pass a fresh order after such further inquiry as may be directed or c 
By sub section
3 of section 10 as it stood at the relevant time it was provided  The Revising Authority may in his discretion at any time suo motu or on the application of the Commissioner of Sales Tax or the person aggrieved call for and examine the record of any order made by any Appellate or Assessing Authority under this Act for the purpose of satisfying himself as to the legality or propriety of such order and may pass such order as he thinks fit 783 Provided that no such application shall be entertained in any case where an appeal lay against the order but was not preferred
 Section 21 as it stood at the relevant time provided Where the whole or any part of the turnover of a dealer has for any reason escaped assessment to tax in any year the Assessing Authority may at any time within three years from the expiry of such years and after issuing notice to the dealer and making such enquiry as may be necessary assess the tax payable on such turnover In the view of the High Court section 21 which imposed upon the Assessing Authority duty to exercise his power to assess turnover which escaped assessment within three years from the end of the year of assessment applied only to the order which the Assessing Authority made suo motu  where he was directed to proceed by an order of the appellate or revisional authority under sections 9 and 10 of the Act to re assess the period of limitation has no application
In our view the High Court was in error in so limiting the operation of section 21
That section imposes a restriction upon the power of the Sales Tax Officer that officer is competent within three years next succeeding the date to which the tax relates to assess tax payable on the turnover which has escaped assessment
But the section does not provide expressly nor is there any implication that the period within which re assessment may be made applies only to those cases where the Sales Tax Officer acts on his own initiative and not pursuant to the directions of the appel late or the revisional authority
In our view the principle of the judgment of the Privy Council in Commissioner of Income tax Bombay Presidency and Aden vs Khemchand Ramdas a firm 1 applies to this case
In Khemchand s case1 the tax payer was assessed as a registered firm to income tax by order dated January 17 1927 for the year 1926 27 under section 234 of the Income tax Act
Under the Act as it then stood a registered firm was not liable to pay super tax and was liable to income tax at the maximum rate
On January 9 1928 the Commissioner of Income tax In exercise of powers of revision under section 33 of the Act issued a notice to the assessee requiring him to show cause why the order of the Income tax Officer granting registration of the firm and assessing it on that footing should not be set aside and by order dated February 13 1928 ordered cancellation of registration and 1 1938 LR 65 TA 236
784 directed the Income tax Officer to take necessary action thereupon
On May 4 1929 the Income tax Officer assessed to super tax the assessee on the footing that its registration was cancelled
authority of the Income tax Officer to assess was challenged
It was held by the Judicial Committee that as the Income tax Officer had made the order imposing super tax on the assessee more than one year after the earlier demand in respect of income tax the order was without jurisdiction
The Judicial Committee pointed out that once a final assessment has been made it cannot be reopened by the Income tax Officer of his own motion or at the direction of the Commissioner exercising his powers under section 33 of the Indian Income tax Act 1922 except in the circumstances and within the time prescribed by sections 34 and 35 of the Act
They observed that sections 34 and 35 were exhaustive and prescribed the only circumstances in which and the only time in which such fresh assessments could be made and fresh notices of demand could be issued
As the Income tax Officer took no fresh step within one year under the statute he was hopelessly out of time whichever of the two sections was applicable
But the order of the High Court must still be confirmed because during the pendency of the proceeding in the High Court section 21 was extensively amended
The section as amended by Act 19 of 1956 from May 28 1956 reads as follows 1 If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer has for any reason escaped assessment to tax for any year the assessing authority may after issuing notice to the dealer and making such enquiry as may be necessary assess or re assess him to tax 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
Nothing in this sub section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment
2 No order of assessment under sub section 1 or under any other provision of this Act shall be made for any assessment year after the expiry of four years from the end of such year
Provided that where the notice under sub section 1 has been served within such four years the assessment or re assessment to be made in pursuance of such 785 notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded Provided further that nothing contained in this section limiting the time within which any assessment or re assessment may be made shall apply to an assessment or re assessment made in consequence of or to give effect to any finding or direction contained in an order under section 9 10 or 11
Explanation
Under the terms of section 21 1 as amended where the assessing authority has reason to believe that any part of the turnover has or any reason escaped assessment to tax for any year he may make Assessment within four years from the end of the year in which the turnover has escaped assessment
The rule is however subject to two exceptions i when notice under sub section
1 has been served within four years the assessment or re assessment to be made in pursuance of such notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded and ii that nothing contained in s 21 which limits the time within which any assessment or re assessment is to be made applies to assessment or re assessment made in consequence of or to give effect to any finding or direction contained in an order under sections 9 10 or 11
Therefore where the Sales Tax Officer proceeds in pursuance of a direction given by the appellate or revising authority or under an order made by the High Court in a reference under section II the period of limitation prescribed by sub section
2 of section 21 does not apply
This section was incorporated in the Act by section 15 of the amending Act which enacted For section 21 of the Principal Act the following shall be and be always deemed to have been substituted  The amended section was therefore to be deemed to be in operation at all material times since the enactment of the UP Sales Tax Act 15 of 1948
The Legislature has given a clear retrospective operation to the amended section as from the date on which the principal Act came into operation and correctness of the order of the Sales Tax Officer holding that there was no bar of limitation to the making of a fresh assessment pursuant to the order of the appellate or revising authority had to be adjudged in the light of section 21 as amended by Act 19 of 1956
The words used by the Legislature are precise and admit of only one interpretation that 786 proceedings taken for assessment or re assessment in consequence of or to give effect to an order of the appellate or revising authority or an order passed by the High Court under section 11 may be taken notwithstanding the expiry of the period prescribed by sub section
2 of section 21
Mr Pathak on behalf of the appellant Company pleaded that even if that be the true interpretation of section 21 as amended the section could only apply to proceedings which were pending at the date on which the Act was amended but in law no proceeding was pending because the Judge Revisions Sales Tax had no power to direct after the expiry of the period prescribed under section 21 as it originally stood to make a fresh assessment in respect of the year 1948 49
There are two clear answers to this plea either of which is sufficient to reject it
The revisional authority had under section 103 power to make such order as he thought fit after calling for and examining the record of any order made by an appellate or an assessing authority and after satisfying himself as to the legality or propriety of such order
Even assuming that the revisional authority came to a conclusion which was erroneous in law it was still an order which he had jurisdiction to make and that order unless set aside in a proper proceeding could not be ignored on the ground of lack of jurisdiction
There was therefore a proceeding pending before the Sales Tax Officer in pursuance of the direction given by the Judge Revisions Sales Tax who had directed the Sales Tax Officer to make a fresh assessment
Whether in pursuance of this direction a fresh assessment could be made under section 21 before it was amended need not detain us
We are concerned with the jurisdiction of the revising authority to make the order that he did under the section as it stood amended and not with the competence of the assessing authority to pass an order for assessment under the statute before it was amended
The other ground is also equally decisive
By section 15 of Act 19 of 1956 section 21 of the Act as amended must be deemed to have been on the statute book on the date on which the revising authority passed his order and under that amended provision the power of the assessing authority to assess or re assess pursuant to an order of the revising authority was not lost when the period prescribed by sub section 2 of section 21 for assessment or re assessment expired
Under section 21 before it was amended there could be no order of assessment or re assessment either by the Sales Tax Officer suo motu or pursuant to the direction of the appellate or revising authority after the expiry of the period of three years prescribed by the statute but under section 21 as amended the power may be exercised by the Sales Tax Officer suo motu within four years for assessment or 787 re assessment
That power could be exercised under the first proviso within a further period of one year if a notice under sub section
1 was served within four years of the end of the year of assessment and without limit of time when it was made in consequence of or to give effect to any finding or direction contained in an order of the appellate or revisional authority or under an order of the High Court under section 11
In initiating proceeding for assessment pursuant to the direction of the revising authority the Sales Tax Officer was by virtue of section 21 as amended subject to no restrictions as to the period within which the order of assessment could be made
The order passed by the High Court must therefore be confirmed
The appeal fails and is dismissed with costs
Appeal dismissed


Summary:
The sales tax officer made a best judgment assessment with respect to the turnover of the appellant under section 21 of the UP Sales Tax Act 1948
The order was set aside by the appellate authority
The revisional authority revised the appellate order and remanded the case to the sales tax officer for making a fresh assessment
When the officer issued a notice for assessment in pursuance of that order the assesee contended that as the original assessment had been set aside no proceeding in connection with it was pending and that reassessment was barred because more than three years had elapsed since the end of the year of assessment
The officerejected the contentions
The assessee filed a writ petition in the High Court and it was allowed by a Single Judge
The State appealed to the Division Bench
While the appeal was pending section 21 was extensively amended in 1956 and the legislature gave retrospective operation to the amended section
As a result of the amendment it was provided that when the officer proceeded in pursuance of a direction given by the revisional authority no period of limitation applied
The Division Bench however relied upon the unamended section and set aside the order of the Single Judge holding that even under the unamended section no period of limitation applied when the assessing officer was directed to proceed by an order of the revisional authority
The assessee appealed to the Supreme Court
HELDThe appeal should be dismissed
Though the High Court was in error in its interpretation of the unamended section on the principle of Commissioner of Income tax Bombay Presidency and Aden vs Khemchand Ramdas LR 65 IA 236 still the order of the High Court must be confirmed because of the amendment of 1956
The words used by the legislature in the amended section are precise and admit of only one interpretation namely that nothing contained in the section limits the time from the year of assessment within which proceedings should be taken for assessment or reassessment in consequence of or to give effect to an order of the revisional authority
783 E G 784 D E 785 H 786 B Even assuming that the amended section applied only to pending proceedings when the revisional authority made an order after examining the record directing the assessing officer to make a fresh assessment there was a proceeding pending before such officer in pursuance of such direction
786 E