COMMERCIAL MOTORS LTD. versus COMMISSIONER OF TRADE TAX U.P., LUCKNOW &  OTHERS
[2015] 9 S.C.R. 1036, Supreme Court of India, 2015
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
A 
B 
(2015] 9 S.C .. R. 1036 
COMMERCIAL MOTORS LTD. 
v. 
COMMISSIONER OF TRADE TAX U.P., LUCKNOW & 
OTHERS 
(Civil Appeal Nos. 622-623 of2015) 
SEPTEMBE.R 11, 2015 
[DIPAK MISRA AND PRAFULLA C~ PANT, JJ.] 
C 
U.P. Trade Tax Act, 1948: s.21(2), proviso as amended 
on 30.4.2001 -Assessment year 1990-91. - Whether the 
show cause notice issued u/s.21(2) on 13.3.2002 seeking 
reassessment in respect of assessment year 1990-91 of 
which the assessment was completed on 25. 3. 1995 is valid 
o and acceptable in Jaw- Held: For the purpose of limitation ul 
s.21(1) and the first proviso, the period of limitation is to be 
counted from the end of the relevant _assessment year i.e. 
31.3.1991 - The proviso was amended on 30.4.2001 and 
the previous provision that contained the words "eight years 
E from the end of such year" were substituted by "six years from 
the end of such year or March 31, 2002 whichever is later" -
By virtue of amendment, the assessment or reassessment 
cannot be made after expiry of six years and it would not 
mean that the assessment can be made by 31.3.2002 
F irrespective of assessment year, for that would be contrary to 
the roqµisite intent of the legislature- Therefore, the initiation 
of reassessment was not valid being barred by limitation. 
Tax/Taxation: Applicability of the Jaw- Held: The law in 
G force in the assessment year is to be applied unless there is 
an amendment which comes into force having retrospective 
operation. 
Allowing the appeals,
the Court 
H 
HELD: 1. In the case at hand the proviso that has 
1036
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1037 
TRADE TAX U.P., LUCKNOW 
been amended on ·30.4.2001 and the previous provision A 
that contained the words "eight years from the end of 
such year'' have been substituted by "six years from the 
end of such year or March 31, 2002 whichever is later". 
Original assessment order is dated 25.2.1995 and the 
notice for reassessment is dated 13.3.2002. For the B 
purpose of limitation under Section 21(1) and the first 
proviso, the period of limitation is to be counted from 
the end of the relevant assessment year. i.e. 31.3.1991. 
Thus, the notice dated 13.3.2002 was beyond six years 
or even eight years of the end of assessment year i.e. C 
1990-91. The question is whether the notice is saved by 
the expression "six years from the end of such year or 
March 31, 2002. There can be no iota of doubt that period 
of six years would have the full effect in respect of fresh D 
assessment or reassessment, where notice is issued or 
after the date the proviso came into force. [Para 16] 
(1053-E-H; 1054-A-B] 
2. The law in force in the assessment year is to be 
applied unless there is an amendment which comes into E 
force having retrospective operation. 
The State 
legislature has intentionally reduced the period from 
eight years to six years. However, the outer limit has 
been fixed either six years or March 31, 2002. The F 
amendment is not only beneficial to the assessee but 
also intends to protect the interest of the revenue. Prior
to this amendment, the period of limitation was eight 
years. There could be cases which were pending by 
virtue of issue of notice as the earlier limitation period G 
was eight years under the pre-amended proviso. The 
intention of the latter part of the proviso. is to save such 
pending assessments and that is why a specific date, 
that is, March 31, 2002 has been incorporated. While 
reducing the period from eight years to six years, time H
1038 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A has been specified to complete the assessment or 
reassessment by 31.3.2002. Had the said date, that is, 
31.3.2002, is not treated as a saving factor, the pending 
reassessment cases covered by eight years period 
would have come under the sunset and reduced 
B limitation period would have adversely affected the 
interest of the revenue. Therefore, the protective 
provision. If such construction is not placed, it would 
be rather inequitable, in a way incongruous, as on the 
one hand the period of limitation is reduced and by fixing 
C a determinative date, a peculiar situation is created. The 
legislative intent was not to enhance and increase the 
limitation period, regardless and notwithstanding the 
financial or assessment year. If the stand of the revenue 
0 
is to be accepted, then the effect of·2001 amendment 
would empower and authorise reopening of cases 
without reference to the financial year, provided the 
assessment order was made on or before 31.3.2002. 
Such an interpretation would be contrary to the 
E legislative intendment for the reason, the same 
amendment has reduced the limitation period from eight 
years to six years. The logical corollary is that the 
. legislative intent was not to do away and erase the 
limitation period, but the date "March 31, 2002" was 
F incorporated only to protect the cases which could be 
earlier governed by a limitation period of eight years. 
Thus, 2001 amendment is not fully
retrospective, but it 
is partly retrospective. It reduces the limitation period 
from eight years to six years and simultaneously protects 
G and safeguards the interest of the revenue in respect of 
cases within eight years and six years provided the 
. reassessments·are completed by 31"1 March, 2002. [Para 
19] [1057-D-H; 1058-A-F] 
H 
CTO v. Biswanath Jhunjhunwalla 1996 (5) Suppl. 
SCR 286: (1996) 5 SCC 626; Ahmedabad
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1039 
TRADE TAX U.P., LUCKNOW 
Manufactur'ing & Calico Printing Co. Ltd. v. S. G. 
Mehta, /TO AIR 1963 SC 1436: 1963 Suppl. 
SCR 92; National Agricultural Coop. Marketing 
Federation of India Ltd. v. Union of India 2003 (3) 
SCR 1: (2003) 5 SCC 23; Thirumalai Chemicals 
Ltd. v. Union of India 2011 (4) SCR 838: (2011) 
6 sec 739 - relied on. 
Addi. Commissioner (Legal) and Anr. v. Jyoti 
Traders and Anr. 1998 (3) Suppl. SCR 67: (1999) 
2 sec 77 - distinguished. 
Addi. Commissioner (Legal) and Anr. v. Jyoti 
Traders and Anr. 1998 (3) Suppl. SCR 67: (1999) 
2 SCC 77; Binani Industries Ltd. v. Assistant 
Commissioner of Commercial Taxes JT 2007 (5) 
SC 311; Ahmedabad Manufacturing & Calico 
Printing Co. Ltd. v. S. G. Mehta, /TO AIR 1963 SC 
1436: 1963 Suppl. SCR 92; State of U.P. v. Anil 
Kumar Ramesh Chandra Glass Works (2005) 11 
SCC 451; State of Orissa v. Sangram Keshari 
Misra (2010) 13 SCC 311; Ministry of Defence v. 
Prabhash Chandra Mirdha 2012 (6) SCR182 : 
(2012) 11 sec 565 - referred to. 
Case Law Reference 
1998 (3) Suppl. SCR 67 
distinguished. Paras 6, 16 
JT 2007 (5) SC 311 
referred to. 
Para 6 
1963 Suppl. SCR 92 
relied on. 
Paras 6, 16 
(2005) 11 sec 451 
referred to. 
Para 11 
(2010) 13 sec 311 
referred to. 
Para 11 
2012 (6) SCR 182 
referred to. 
Para 11 
1996 (5) Suppl. SCR 286 
relied on. 
Paras 12, 16 
2003 (3) SCR 1 
relied on. 
Para 17 
2011 (4) SCR 838 
relied on. 
Para 18 
A 
B 
c 
D 
E 
F 
G 
H
1040 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
622-623 of 2015 
From the Judgment and Order dated 03.03.2014 of the 
High Court of Judicature atAllahabad, Lucknow Bench in WP 
B No. 1513 of 2002 and 25.04.2014 in RP No. 365 of2014. 
Pawanshree Agrawal and Pradeep Agrawal for the 
Appellant. 
Ravi Prakash Mehrotra and Rajeev Dubey for the 
C Respondents. 
The Judgment of the Court was delivered by 
DIPAK MISRA, J. 1. The appellant is a registered dealer 
D under the U.P. Trade Tax Act, 1948 (for brevity, 'the Act') and 
authorised to deal with scooters manufactured by Mis. 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 
E 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 
F 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 
G 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 
H the circular dated 16.4.1994.
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1041 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
2. Treating the original assessment as defective, a show A 
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. 
B 
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 C 
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 
manifestfrom the assessment order of the year 1990-91 and, 
D 
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 E 
submitted by the appellant required the assesseci 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 
F 
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 G 
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 · 
H
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A of the parties formulated the following two questions for 
determination:-
"1. Whether in the facts and circumstances 
mentioned above could a complete assessment 
B 
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 
c 
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 Addi. Commissioner (Legal) and 
D Anr. v. Jyoti Traders and Anr. 1 in extenso, referred to the 
pronouncement in Binani Industries Ltd. v. Assistant 
Commissioner of Commercial Taxes2 and the decision 
referred therein i.e. Ahmedabad Manufacturing & Calico 
Printing Co. Ltd. v. S.G Mehta, IT03, and opined thus:-
E 
"Under Sub-section (1) of Section 21 of the Act 
before its amendment, the assessing authority may, 
after issuing notice to the dealer and making such 
inquiry as it may consider necessary, assess or 
F 
reassess the dealer according to law. Sub-section 
(2) provided that except as otherwise provided in 
th is section no order for any assessment year shall 
be made after the expiry of 2 years from the end of 
such year or till 31.3.1988 whichever is later. 
G 
However, after the amendment, a proviso was added 
to Sub-section (2) undet which Commissioner of 
Sales Tax. authorises the assessing authority to 
make
assessment or reassessment after the 
H 
(1999) 2 sec 77 
2 
JT 2007 (5) SC 311 
3 AIR 1963 SC 1436 
•
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1043 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
expiration of aforesaid period but.not after 8 years 
from the end of such year notwithstanding that such 
assessment or reassessment may involve a change 
of opinion. The proviso came into force w.e.f. 
February 19, 1991. This proviso was further 
amended and "six years from the end of such year 
or March 31, 2002 whichever is later" were 
substituted in place of words "eight years from such 
year". In view of llnd proviso the assessment or 
reassessment for the year 1987-88 may be made 
till 31. 3.1993 and as per IVth proviso the 
assessment or reassessment.for the year 1989-90 
may be made till 31.3.1995. We do not think that 
. sub-section (2) and the proviso added to it leave 
anyone in doubt that as on the date when the 
amended proviso came into force, the 
Commissioner of Sales Tax could authorise making 
of assessment or reassessment after the expiration 
of six years from such year, i.e. upto 31.3.1999 or 
March 31, 2002 whichever is later. It is immaterial 
if a period for assessment or reassessment under 
sub-section (2) of Section 21 before the addition of 
the said proviso had expired. Read as it is, these 
provisions would mean that the assessment for the 
year 1987-88 could be reopened up to March 31, 
1993. Authorisation by the Commissiorier of Sales 
Tax and completion of assessment or reassessment 
under sub-section (1.) of Section 21 have to be 
completed within 6
years of the particular 
assessment year or till 31.3.2002 whichever is latter. 
Notice to the assessee follows the authorisation· by 
the Commissioner of Sales Tax. It is not disputed 
that a fiscal statute can have retrospective operation. 
If we accept the interpretation given by the 
respondents, the proviso added to Sub-section (2) 
A 
B 
c 
D 
E 
F 
G 
H
1044 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
of Section 21 of the Act providing limitation up to 
31.3.2002 becomes redundant. Proviso now 
added to Sub-section (2) of Section 21 of the Act 
does not put any embargo on the Commissioner of 
Sales Tax not to reopen the assessment if period, 
B 
as prescribed earlier, had expired before the 
proviso came into operation. 
7. After so stating the High Court proceeded to understand 
the intention of the legislature in enacting the provision and in 
C that context noted that the date of commencement of the 
proviso to Section 21 (2) ~f the Act does not control its 
retrospective operation; that after the amendment after 
substitution of the proviso to Section 21 (2) of the Act, it is six 
years of the particular assessment year or till 31.3.2002 
D whichever is later; and that bare reading of the proviso makes 
it clear that the notice issued by the department to the assessee 
was within time. The Division Bench declared another Division 
Bench decision rendered in Mis. Prag Ice and Oil Mills and 
others v. Additional Commissioner of Trade Tax and Anr.4 
E as per incuriam on the ground that it had not taken note of 
amended provision and the decision of this Court in Jyoti 
Traders (supra). 
8. After answering the issue of limitation, the High Court 
F 
proceeded to deal with the other question and in that context 
came to hold that initial opinion while passing the original 
assessment order was to grant exemption on sale of
scooters 
had not been changed while issuing the notice but the revenue 
had found that exemption had been wrongly allowed to the 
G extent of Rs. 97,02,050.65 which ought to have been taxed 
and accordingly did not find any substance on the second 
ground. Being of this view, the High Court dismissed the writ 
petition. Hence, the present appeal by special leave. 
H • VSIT 2008 892
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1045 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
9. We have heard Mr: Pawanshree Agrawal, learned A 
counsel for the appellant and Mr. Ravi Prakash Mehrotra, 
learned counsel for the respondents 
10. To appreciate the controversy it is appropriate to 
reproduce Section 21 (2), as amended, in entirety. 
B 
Section 21 -Assessment of tax on the turnover 
not assessed during the year 
(2) Except as otherwise provided in this section, no 
order of assessment or re-assessment under any 
provision of this Act for any assessment year shall 
be made after the expiration of two years from _the 
end of such year or March 31, 1998, whichever is 
later: 
Provided that if the Commissioner, on his own or 
on the basis of reasons recorded by the assessing 
authority, is satisfied that it is just and expedient so 
to do, authorises the Assessing Authority in that 
behalf, such assessment or re-assessment may be 
made after the expiration of the period aforesaid, 
but not after the expiration of (six years from the end 
of such year or March 31. 2002. whichever is later] 
notwithstanding that such assessment or re-
assessment may involve a change of opinion: 
Provided further that the assessment or re-
assessment for the assessment year 1987 -88 may 
be made by March 31, 1993: 
Provided also that if the eligibility certificate granted 
underSedion 4-A has been amended or cancelled 
by the Commissioner under subsection (3) of 
Section 4-A, the order
of assessment or re-
c 
D 
E 
F 
G 
assessment may be made within one year from the 
H
1046 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
date of receipt by the assessing authority of the 
copy of the order amending or cancelling the 
aforesaid certificate or by March 31, 1995, 
whichever is later: 
B 
Provided also that the assessment or re-
assessment for the assessment year 1989-90 may 
be made by March 31, 1995. 
c 
[underlining is ours] 
11 . Regard being had to the anatomy of the aforesaid 
amended provision, the singular question that arises for 
consideration is whether the show cause notice issued under 
Section 21(2) of the Act seeking to reassess the assessee in 
0 
respect of the assessment year 1990-91 of which the 
assessment was completed on 25.3.95 is valid and acceptable 
in law. The stand of the assessee-appellant is that the 
reopening of assessment under could only be till 31.3.1997, 
that is, a period of six years from the end of assessment year 
E 
1991 and hence, the notice having been issued on 13.3.2002 
is wholly unsustainable in law. The stand of the revenue is that 
as per the language employed under Section 21 (2), 
·assessment or reassessment could be done either within six 
years from the end of the assessment year in question or till 
F 
31.3.2002 whichever is later, therefore, the notice is valid and 
within the prescribed period of limitation. The learned counsel 
for the appellant would submit that by virtue of the amendment, 
the assessment or reassessment cannot be made after expiry 
of six years and it would not mean that
the assessment can be 
G made by March 31, 2002 irrespective of the assessment year, 
for that would be·contrary to the requisite intent of the legislature. 
Learned counsel for the revenue, per contra, would contend 
that the limitation has been extended up to period of six years 
from the assessment year 1991 or 31.3.2002 whichever is 
H later, and hence, the pronouncemeni in Jyoti Traders (supra)
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 1047 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
would squarely apply inasmuch as the notice for reassessment A 
has been sent within the stipulated period i.e. 31.3.2002 as 
certain errors have been discovered in the original assessment 
which was found to be defective. That apart, a contention has 
been put forth that a notice to show cause has rightly not been 
interfered with by the High Court in exercise of the writ B 
jurisdiction in view of the judgments rendered in State ofU.P. 
v. Anil Kumar Ramesh Chandra Glass Works5, State of 
Orissa v. Sangram Keshari Misra6 , and Ministry of 
Defence v. Prabhash Chandra Mirdha7• 
c 
12. First, we shall refer to the decision in Jyoti 
Laboratories (supra). In the said case, the assessment in 
respect of the assessment year 1985-86 under the Act was 
completed on 27 .11.1989 and in respect of Jyoti Traders, the 
assessment for the said year was completed on 28.2.1990. 
D 
The period for assessment or reassessment which was four 
years under Section 21 of the Act for the assessment year 
1985-86 expired on 31.3.1990 in respect of the assessee-
Jyoti Traders. The court took note of the factthatthe amending 
Act had received assent of the Governor of the Uttar Pradesh 
E 
on 19.8.199.1 and different dates were prescribed for coming 
into force of various provisions of the amending Act. Section 
21 of the Act that underwent an amendment and the court was 
concerned with the relevant provision
which came into force 
F 
w.e.f. 19.2.1991. On the basis of the amendment, the Sales 
Tax Officer, after taking sanction from the Commissioner of 
Sales Tax, issued notices to the assessee for reassessment. 
The orders granting sanction and the issuance of notices for 
reassessment were challenged before the High Court and the G 
writ court quashed the same. This court took note of the proviso 
to sub-section 2 of Section 21 as inserted by the amending 
Act 1981 which came into force w.e.f. 19.2.1991. The High 
5, (2005) 11 sec 451 
.s (2010) 13 sec 311 
7 (2012) 11 sec 565 
H
1048 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
Court had expressed the view that when the period for 
assessment or reassessment for the year 1985-86 under 
Section 21 of the Act before insertion of the proviso to sub-
section 2 thereof had expired on 31.3.1990, the amendment 
had no effect. The stand of the revenue before this court was 
B that the interpretation placed on sub~section 2 of Section 21 
by the High Court, if accepted, would make the provision 
prospective in nature which will make the proviso redundant. 
It was also contended that proviso in fact operated after expiry 
. C of the four years period prescribed under the sub-section and 
the notice had to follow after the order was obtained from the 
Commissioner and not prior to that. Reliance was placed on 
the authority in CTO v. Biswanath Jhunjhunwa//a8. 
· 
13. The decision in Biswanath Jhunjhunwalla (supra) dealt 
D with Bengal Finance (Sales Tax) (Third Amendment) Act, 1974 
which substituted Section 26(1) of the principal Act which 
empowered the State Government to make rules with 
prospective or retrospective effect for carrying out the purposes 
of the Act. In exercise of the said power, Rule 80(5) of the 
E Bengal Sales Tax Rules, 1941 was amended. The amended 
Rule provided that the Commissioner or any other authority to 
whom power has been delegated shall not, of his own motion, 
revise any assessment made or order passed under the Act 
F 
or the rule thereunder if the assessment had been made
or 
the order had been passed more than six years previously. 
The show cause notices being issued, the High Court was 
moved for quashment of the same and it ruled that by the 
amendment of the rule, assessment which had been completed 
G could be revisedwithin six years of the date of such completion, 
but when the right to revise the assessment under the 
unamended provision of the rule stood barred on the date of 
the amendment, such assessment could not be reopened or 
revised. It was also opined by the High Court that the amended 
H 
s (1996) s sec 626
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 1049 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
notification neither expressly nor by necessary implication A 
confer any power of revision of assessment which stood barred 
on the date on which it was issued. This Court after referring 
to the decisions in /TO v. S.K. Habibul/ah9, S.S. Gadgil, /TO 
v. Lal and Co. 10 and /TO v. lnduprasad Devshanker Bhatt11, 
opined thus:-
B 
"12. What, therefore, we have to seek is the clear 
meaning of the said Notification. If there be no doubt 
. about meaning, the amendment brought about by 
the said Notification must be given full effect. If the 
language expressly so states or clearly implies, 
retrospectivity must be given with effect from 1-11-
1971, so as to encompass all assessments made 
within the period of six years theretofore, whether 
they have become final by reason of the expiry of 
the period of four years or not. . 
13. By reason of the said Notification, with effect 
from 1-11-1971, Rule 80(5)(it) has to be read as 
barring the Commissioner (or other authority to 
whom power in this behalf has been delegated by 
the Commissioner) from revising of his own motion 
any assessment made or order passed under the 
Act or the rules ifthe assessment has been made 
or the order has been passed more than six years 
previous to 1-11-1971. Put conversely, with effect 
from 1-11-1971, Rule 80(5)(ii) permits the 
Commissioner (or other authority) to revise of his 
own motion any assessment
made or order passed 
under the Act or the rules provided the assessment 
has not been made or the order passed more than 
six years previously. This being the plain meaning, 
9 (1962)441TR809=AIR1962SC91S 
10 (1964) 53 ITR 231"AIR1965 SC 171 
11 (1969) 72 ITR 595 =AIR 1969 SC 778 
c 
D 
E 
F 
G 
H
1050 
A 
B 
c 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
the said Notification must be given full effect Full 
effect can be given only if the said Notification is 
read as being applicable not only t-0 assessments 
which were incomplete but also to assessments 
which had reached finality by reason of the earlier 
prescribed period of four years having elapsed. 
Where language as unambiguous as this is 
employed, it must be assumed that the legislature 
intended the amended provision to apply even to 
assessments that had so become final; if the 
intention was otherwise, the legislature would have 
so stated." 
14. Thereafter this Court referred to number of other 
decisions and eventually interpreting the amendment in Section 
D 21 opined that:-
E 
F 
G 
H 
· "The two decisions in the cases of Ahmedabad 
Manufacturing & Calico Printing Co. ~td and 
Biswanath Jhunjhunwalla are more closer to the 
issue involved in the present case before us. They 
laid down that it is the language of the provision 
that matters and when the meaning is clear, it has 
to be given full effect. In both these cases, this Court 
held that the proviso which amended the existing 
provision gave it retrospectivity. When the provision 
of law is explicit, it has to operate fully and there 
could not be any limits to its operation. This Court 
in Biswanath Jhunjhunwa/la case said that if the 
language expressly so states or clearly implies, 
retrospectivity must be given to the provision. Under 
Section
34 of the Income Tax Act, 1922, it is the 
service of the notice which is the sine qua non, an. 
indispensable requisite, for the initiation of 
assessment or reassessment proceedings where
COMMERCIALMOTORSLTD. v. COMMISSIONER OF 
1051 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA,J.] 
income had escaped assessment. That is not so 
in the present case. Under sub-section (1) of 
Section 21 of the Act before its amendment, the 
assessing authority may, after issuing notice to the 
dealer and making such inquiry as it may consider 
necessary, assess or reassess the dealer 
according to law. Sub-section (2) provided that 
except as otherwise provided in this section, no 
order for any assessment year shall be made after 
the expiry of 4 years from the end of such year. 
However, after the amendment, a proviso was 
added to sub-section (2) under which the 
Commissioner of Sales Tax authorises the 
assessing authority to make assessment or 
reassessment before the expiration of 8 years from 
the end of such year notwithstanding that such 
assessment or reassessment may involve a change 
of opinion. The proviso came into force w.e. f. 19-2-
1991. We do not think that sub-section (2) and the 
proviso added to it leave anyone in doubt that as 
on the date when the proviso came into force, the 
Commissioner of Sales Tax could authorise making 
of assessment or reassessment before the 
expiration of 8 years from the end of that particular 
assessment year. It is immaterial if a period for 
assessment or reassessment under sub-section (2) 
of Section 21 before the addition of the said proviso 
had expired: Here, it is the completion of 
assessment or reassessment under Section 21
which is to be done before the expiration of 8 years 
of that particular assessment year. Read as it is, 
these provisions would mean that the assessment 
for the year 1985-86 could be reopened up to 31-
3-1994. Authorisation by the Commissioner of 
Sales Tax and completion of assessment or 
A 
B 
c 
D 
E 
F 
G 
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· A 
reassessment under sub-section ( 1) of Section 21 
have to be completed within 8 years of the particular 
assessment year." 
B 
c 
D 
F 
G 
And again:-
" If we accept the interpretation given by the 
respondents, the proviso added to sub-section (2) 
of Section 21 of the Act becomes redundant. 
Commencement of the Act can be different than 
the operation of the Act though sometimes, both 
may be the same. The proviso now added to sub-
section (2) of Section 21 of the Act does not put 
any embargo on the Commissioner of Sales Tax 
not to reopen _the assessment if the period, as 
prescribed earlier, had expired before the proviso 
came into operation. One has to see the language 
of the provision. If it is clear, it has to be given its full 
effect. To reassure oneself, one may go into the 
intention of the legislature in enacting such 
provision. The date of commencement of the 
proviso to Section 21 (2) of the Act does not control 
its retrospective operation. Earlier the assessment/ 
reassessment could have been completed within 
four years of that particular assessment year and 
now by the amendment adqing the proviso to 
Section 21 (2) of the Act it is eight years. The only 
safeguard being that it is after the satisfaction of 
the Commissioner of Sales Tax. The proviso is 
operative from 19-2-1991 and a bare reading of 
the proviso shows that the operation of this proviso 
relates and encompasses back to the previous
eight assessment years." 
15. It is noticeable the interpretation was placed by this 
H Court on the amendment appended to sub-section (2) of
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1053 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
Section 21 by the amending provision that came into force A 
w.e.f. 19.2.1991, the Court relied on the authority in Biswanath 
Jhunjhunwal/a (supra), as thought by the Court, was a 
. proximate ruling. In the earlier case Rule 80(5) (ii) was 
interpreted to have conferred express power and clearly by 
implication that retrospectivity must be given to the notification B 
so that it can have full effect. The Court opined that plain 
meaning was to be placed on the amendment, especially on 
the words "the assessment has been made or the order has 
been passed more than six years previously", and full effect 
could only be g\ven if the said notification was read as if C 
applicable not only to assessments which were incomplete 
but also to assessments which had reached finality by reason 
of the earlier prescribed period of four years having elapsed. 
The Court further opined where language was unambiguo1:1s D 
as Rule 80(5)(ii), it must be assumed that the legislature 
intended the amended provision to apply even to assessments 
that had become final, for if the intention was otherwise, the 
legislature would have so stated. 
16. In the case at hand the proviso that has been E 
amended on 30.4.2001 and the previous provision that 
contained the words "eight years from the end of such year" 
have been substituted by "six years from the end of such year 
or March 31, 2002 whichever is
later". It is apt to note here F 
that the assessment year in question is 1990-91 or year ending 
31.3.1991. Original assessment order is dated 25.2. ~ 995 and 
the notice for reassessment is dated 13.3.2002. For the 
purpose of limitation under Section 21 ( 1) and the first proviso, 
the period of limitation is to be counted from the end of the G 
relevant assessment year i.e. 31.3.1991. Thus, the notice 
dated 13.3.2002 was beyond six years or even eight years of 
the end of assessment year i.e. 1990-91. The question is 
whether the notice is saved by the expression "six years from 
the end of such year or March 31, 2002. In the backdrop of the H
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(2015) 9 S.C.R. 
A 
ratio laid down in Jyoti Traders (supra), there can be no iota 
of doubt that period of six years would have the full effect in 
respect of fresh assessment or reassessment, where notice 
is issued or after the date the proviso came into force. It has 
to be borne in mind that law of limitation when affects 
B substantial rights of a party, such subsequent amendment 
should not be read as retrospectively unless the amendment 
so stipulates or requires so by necessary implication. It has 
been held in Biswanath Jhunjhunwal/a (supra) when the 
intendment of the legislature is clear and the language is . 
C 
unambiguous or it impliedly follows, then full effect should be 
given and the provision be treated as retrospective. In this 
regard, rE;lference to a Constitution Bench decision in 
Ahmedabad Manufacturing & Calico Printing Co. Ltd. 
0 
(supra) would be apt. The majority view, as is discernible, is 
to the following effect:-
E 
F 
"The legislature may affect substantial rights by 
enacting laws which are expressly retrospective or 
by using language which has that necessary result. 
And this language may give an enactment more 
retrospectivity than what the commencement clause 
gives to any of its provisions. When this happens 
the provisions thus made retrospective, expressly 
or by necessary intendment, operate from a date 
earlier than the date of commencement and affect 
rights which, but for such operation, would have
continued undisturbed." 
17. In this context, a passage from National Agricultural 
G Coop. Marketing Federation of India Ltd. v. Union of 
lndia12 is worth reproducing:-
"that there is no fixed formula for the expression of 
legislative intent to give retrospectivity to an 
H 
12 (2003) s sec 23
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 1055 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
enactment. Every legislation whether prospective 
or retrospective has to be subjected to the question 
of legislative competence. The rettospectivity is 
liable to be decided on a few touchstones such as: 
(1) the words used must expressly provide or clearly 
imply retrospective operation; (ii) the retrospectivity 
must be reasonable and not excessive or harsh, 
otherwise it runs the risk of being struck down as 
unconstitutional; (iii) where the legislation is 
introduced to overcome a judicial decision, the 
power cannot be used to subvert the decision 
without removing the statutory basis of the decision. 
There is no fixed formula for the expression of 
legislative intent to give retrospectivity to an 
enactment. A validating clause coupled with a 
substantive statutory change is only one of the 
methods to leave actions unsustainable under the 
unamended statute, undisturbed. Consequently, the 
absence of a validating clause would not by itself 
affect the retrospective operation of the statutory 
provision, if such retrospectivity is otherwise 
apparent." 
18. In Thirumalai Chemicals Ltd. v. Union of lndia13, 
it has been held thus:-
"Limitation provisions therefore can be procedural 
in the context of one set of facts but substantive in 
the context of different set of facts because rights 
can accrue to both the parties. In such a situation, 
test is to see whether the
statute, if applied 
retrospectively to a particular type of case, would 
impair existing rights and obligations. An accrued 
right to plead a time bar, which is acquired after 
13 (2011i s sec 739 
A 
8 
c 
D 
E 
F 
G 
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
the lapse of the statutory period, is nevertheless a 
right, even though it arises under an Act which is 
procedural and a right which is not to be taken away 
pleading retrospective operation unless a contrary 
intention is discernible from the statute. Therefore, 
unless the language clearly manifests in express 
terms or by necessary implication, a contrary 
intention a statute divesting vested rights is to be 
construed as prospective." 
19. Keeping in view the aforesaid enunciation of law, it is 
to be seen whether the amendment and introduction of the 
words "six years from the end of such year or March 31, 2002 
whichever is later" either expressly or by necessary implication 
can be regarded as retrospective. The cardinal principle which 
D is accepted is that law in force in the assessment year is to be 
applied unless there is an amendment which comes into force 
having retrospective operation. In the instant case, the 
Legislature has brought the amendment by reducing the period 
from eight years to six years. The language employed in the 
E 
proviso has to be carefully scrutinised and appreciated. In 
Jyoti Traders (supra), the Court was dealing with the 
amendment where the words that were brought in "eight years 
from the end of such year" and the Court interpreted the 
F 
legislative intent and opined that to give full effect to the 
intention, it has to date back to the previous assessment of 
eight
years. In the present amendment, the words thathave 
been substituted are "six years from the end of such year or 
March 31, 2002 whichever is later". We have already stated 
G the period of six years has to be given full effect. There can be 
no trace of doubt in the same. The words "or March 31, 2002 
whichever is later" are of immense significance. It is extremely 
important to understand the intent of the legislature, for 
specifying this date when the limitation period was reduced 
H from eight years to six years. It is the submission of the learned
COMMERCIAL MOTORS LTD. v. COMMISSIONER OF 
1057 
TRADE TAX U.P., LUCKNOW [DIPAK MISRA, J.] 
counsel for the revenue that the amended proviso does not A 
place any embargo on the Commissioner of Sales Tax to 
reopen an assessment even if the limitation has expired before 
the proviso came into operation under the pre or post 
amendment period of eight or six years and the High Court is 
justified in holding that the assessment or reassessment could 
B 
be done either within six years from the end of the assessment 
year in question or till 31.3.2002 whichever is later. On a first 
blush, the interpretation placed by the High Court, which has 
been assiduously supported by the learned counsel for the 
State may look attractive, but on a closer scrutiny, the fallacy in C 
the interpretation becomes clear. As far as six years is 
concerned, as stated earlier, there can be no difficulty. The 
State legislature has intentionally reduced the period from eight 
years to six years. Such reduction of period is definitely 0 
beneficial for the assessee. It is worth noting the period was 
reduced to six years, however, in the language used, the outer 
limit has been fixed either six years or March 31, 2002 and, 
therefore, the latter part of the proviso also specifying the date 
31•1 March, 2002 has to be appositely interpreted. The E 
amendment, as we perceive, is not only beneficial to the 
assessee but also intends to protect the interest of the revenue. 
Prior to this amendment, the
period of limitation was eight years. 
There could be cases which were pending by virtue.of issue of 
notice as the earlier limitation period was eight years under f 
the pre-amended proviso. The intention of the latter part of 
the proviso is to save such pending assessments and that is 
why a specific date, that is, March 31, 2002 has been 
incorporated. While reducing the period from eight years to 
six years, time has been specified to complete the assessment G 
or reassessment by 31.3.2002. The making of assessment 
is .an extremely material facet. Had the said date, that is, 
31.3.2002, is not treated as a saving factor, the pending 
reassessment cases covered by eight years period would have 
come under the sunset and reduced limitation period would 
H
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A have adversely affected the interest of the revenue. Therefore, 
the protective provision. If such construction is not placed, it 
would be rather inequitable, in a way incongruous, as on the 
one hand the period of limitation is reduced and by fixing a 
determinative date, a peculiar situation is created. The 
B legislative intent was not to enhance and increase the limitation 
period, regardless and notwithstanding the financial or 
assessment year. If the stand of the revenue is to be accepted, 
then the effect ·of 2001 amendment would empower and 
authorise reopening of cases without reference to the financial 
C ye_ar, provided the assessment order was made on or before 
31.3.2002. Such an interpretation would be contrary to the 
legislative intendment for the reason, the same amendment 
has reduced the limitation period from eight years to six years. 
0 The logical corollary is that the legislative intent was not to do 
away and erase the limitation period, but the date "March 31, 
2002" was incorporated only to protect the cases which could 
be earlier governed by a limitation period of eight years. Thus, · 
2001 amendment is not fully retrospective, but it is partly 
E retrospective. If reduces the limitation period from eight years 
to six years and simultaneously protects and safeguards the 
interest of the revenue in respect of cases within eight years 
and six years provided the reassessments are completed by 
31•t
March, 2002. Hence, we are of the considered opinion 
F that the decision in Jyoti Traders (supra) is distinguishable, 
regard being had to the nature of the amendment that has been 
brought in and consequently, the interpretation placed by the. 
High Court on the amended provision is incorrect. 
G 
20. In view of tile foregoing analysis, the appeals are 
allowed and the judgment and order passed by the High Court 
are set aside. Resultantly, the initiation of the re-assessment 
proceeding is set aside being barred by limitation. There shall 
be no order as to costs. 
H 
Devika Gujral 
Appeals allowed.