Case: The Sales Tax Officer Vs. Hanuman Prasad

1. The respondent was a registered dearer carrying on the business of selling goods liable tounder the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter referred to as "the repealed Act"). For the period from 3rd November, 1956 to 23rd October l957, the respondent filed his return which was not accepted by theofficer, who, on March 10, 1959, issued a notice in Form XII to the respondent. Subsequent to this notice, on May 23, 1959, the turnover of the sales of the respondent was assessed to tax under S. 11 (4) (a) of the repealed Act. In the meantime, on April 1, 1959, the Madhya Pradesh General Sales Tax Act, 1958 (Act No. II of 1959) (hereinafter referred to as "the new Act") came into force. On October 23, 1962, theOfficer discovered that part of the turnover of the respondent for the period mentioned above had escaped assessment and issued a notice under S. 19 (1) of the new Act. The respondent raised a preliminary objection that his sales had been assessed under the repealed Act, under which the limitation of a period of three years was prescribed by Sectionfor assessment of escaped turnover. TheOfficer rejected that objection by his order dated 29the October, 1962, and decided to proceed with the reassessment. There upon, the respondent moved a petition under Articles 226 and 227 of the "Constitution before the High Court of Madhya Pradesh, Jabalpur, praying for the quashing of the order of theOfficer dated 29 the October, 1962, and the notice dated 23rd October, 1962. The High Court held that the period of limitation governing the proceedings instituted by the notice dated 23rd October, 1962, was that laid down under S.(1) of the repealedAct, so that theproceedings were barred by time. The notice dated 23rd October, 1962, and the subsequent order dated 29th October, 1962 were consequently quashed. TheOfficer of Jabalpur has now come up to this Court in this appeal by special leave against this order of the High Court.

Court's reasoning:
3. The facts given by us above clearly show that the original assessment of the respondent was in respect of a period when the new Act had not come into force. The respondent had filed the return, and even the notice in that connection was issued by the Sales-tax Officer prior to the enforcement of the new Act. The actual order of assessment was made on 23rd May, 1959 shortly after the new Act had come into force. The mere enforcement of that Act by the time the order of assessment was passed by the Sales-tax Officer cannot lead to the conclusion that the assessment of the respondent was made under the new Act and not under the repealed Act. It was under S. 52 of the new Act that the repealed Act was repealed, and that Section itself under the proviso laid down that such repeal shall not affect the previous operation of the said Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder. There was also the further addition that subject thereto, anything done or any action taken (including any appointment, notification, notice, order rule, form. Regulation certificate or licence in the exercise of any power conferred by or under the said Act shall, in so far as it is Act inconsistent with the provisions of this Act, be deemed to have been done or taken in exercise of the powers conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken. In view of this proviso it has to be held that when this new Act came into force on 1st April. 1959, all rights title, obligation or liability already acquired, accrued or incurred under the repealed Act by the respondent remained affected and intact. The rights and liabilities, which had been acquired or incurred under the repealed Act, included the right or liability to be assessed in accordance with the provisions of the repealed Act in respect of turnover of sales effected during the time when that Act was in force. The repealed Act laid down what turnover was taxable, how it was to be computed, and at what rate the tax was to be charged. These provisions clearly created rights as well as liabilities of dealers. Those rights and liabilities were thus preserved by S. 52 of the new Act. The assessment which was completed in the case of the respondent on 23rd May, 1959 was therefore, an assessment in accordance with the rights and liabilities of the respondent under the repealed Act: and this being so, it has to be held that the proviso to S. 19 (l) of the new Act was applicable to the case of the respondent. As a result of this proviso, the period of re-assessment on the ground of under-assessment, escapement or wrong deduction in the case of the respondent had to be as provided in S. 11-A(1) of the repealedAct, so that theperiod was three years and not five years as laid down by S. 19 (1) of the new Act. The notice dated 23rd October, 1962, was clearly issued beyond the period of limitation prescribed by S. 11-A(1) of the repealedAct and theproceedings in pursuance of it wereis, however significant that, though the principal clause of S. 19 (1) was amended, the proviso to was not deleted by the Amending Act. The proviso therefore, continued to remain in force. It is well-recognised that a proviso is added to a principal clause primarily with the object of taking out of the scope of that principal clause what is included in it and what the Legislature desires should be excluded. Consequently, even if it be held that the effect of the Amending Act was that, under the principal clause of S. 19 (1), the reassessment of the under-assessed or escaped turnover in the case of the respondent could be taken up within a period of five calendar years, that provision became ineffective because of the continued existence of the proviso. The Amending Act had not come into force when the High Court decided the petition, and consequently, the High Court had no occasion to consider its effect. However, as we have indicated above, the order made by the High Court remains unaffected even after this amendment, and the decision given that the limitation applicable to the case of the respondent is that laid down by S. 11-A(1) of the repealedis correct. It is true that the amendment in S. 19 (1) of the new Act made by the Amending Act was given retrospective effect under S. 5 of the Amending Act, but that also is immaterial, because, even after the amendment, the provision contained in the proviso had to prevail over the principal clause of S. 19 (1).6. The brought to our second piece of legislation notice was the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964 (Act 20 of 1964) by which also S. 19 (1) of the new Act was slightly amended. That amendment, however, has no hearing on the point which we are called upon to decide in this appeal, and consequently, needs no consideration.In the alternative, this question may be examined in another aspect. Section(1) of the repealeditself created a right in favour of the respondent not to be assessed in respect of turnover that was under assessed or had escaped assessment after the expiry of the period prescribed in that subsection. The proviso to S. 52 of the new Act preserved this right of the respondent, and on this ground also, theOfficer was not competent to issue the notice for reassessment after that period of limitation had expired.