Patna High Court
The State Of Bihar And Anr. vs Radha Krishna Kamala Prasad on 16 April, 1957
Equivalent citations: [1957]8STC440(PAT)
Author: Chief Justice
Bench: Chief Justice
JUDGMENT Ramaswami, C.J. and Raj Kishore Prasad, J.
1. In these two cases the assessee Messrs. Radha Krishna Kamala Prasad was assessed to sales tax for the period from the 1st July, 1947, to the 31st March, 1948. The assessee deals in timber and forest products. A proceeding was started against the assessee under Section 13 (5) of the Bihar Sales Tax Act because the Superintendent of Sales Tax was satisfied that the dealer was liable to pay tax under the Act but he had wilfully failed to apply for registration. The proceeding under Section 13 (5) of the Act was started on the 29th June, 1950. An objection was raised on behalf of the assessee that the proceeding was barred under Section 13(6) because it was initiated more than two years after the expiry of the relevant period. The objection was rejected by the Deputy Commissioner of Sales Tax. The matter was taken in revision by the assessee to the Board of Revenue. The revisional application was allowed by the Board of Revenue on the ground that the proceeding was barred under Section 13 (6) of Bihar Act XIX of 1947 and that Bihar Act VI of 1949 which extended the time of limitation under Section 13 (6) was not applicable to the case.
2. At the instance of the State of Bihar the Board of Revenue has submitted the following question of law for determination by the High Court in M.J.C. No. 369 of 1955 :
Whether assessment proceeding from the quarter ending 30th September, 1947, up to the year ending 31st March, 1948, which is governed under the Bihar Sales Tax Act, 1947, can be initiated latest by the end of the year 1951-52 ?
3. In M.J.C. No. 387 of 1955 the Board of Revenue has been required by the High Court to state a case on the following question of law under Section 25 (3) of Bihar Act XIX of 1947 :
Whether the proceeding for assessment of sales tax initiated by the Sales Tax Officer on the 29th of June, 1950, against the assessee for tax due for the period from the 1st of July, 947, to the 31st of March, 1948, has been validly started, and whether the assessee could be lawfully assessed for sales tax for this period in the circumstances of this case ?
4. Both the questions of law practically raise the same point for determination, namely, whether Bihar Act VI of 1949 applies to these cases and whether the proceeding taken against the assessee under Section 13 (5) on the 29th June, 1950, was barred by limitation.
5. The argument put forward by the learned Government Advocate is that Bihar Act VI of 1949 applies to these cases and the proceedings started against the assessee on the 29th June, 1950, was not barred by time. Section 13 (6) as it stood before the amendment made by Bihar Act VI of 1949 is in the following terms:-
Any assessment made under this section shall be without prejudice to any prosecution instituted for an offence under this Act :
Provided that no proceeding for assessment of the tax due from a dealer in respect of any period shall be initiated later than 24 months from the expiry of such period or later than 12 months from the date of disposal of the appeal, revision, review or reference directing fresh assessment.
6. Section 7 of Bihar Act VI of 1949 amended the section and extended the period of limitation to four years. Section 7 of Bihar Act VI of 1949 states as follows :
In the proviso to Sub-section (6) of Section 13 of the said Act, for the words 'twenty-four months' and 'twelve months', the words 'four years' and 'two years' shall, respectively, be substituted.
7. The Board of Revenue took the view that Bihar Act VI of 1949 was not retrospective and so the proceedings for assessment of tax for the period from the 1st July, 1947, to the 31st March, 1948, could not be taken under the new law. In our opinion the Board has taken an erroneous view of law on this point. It is a well established principle that the law of limitations must be applied not with regard to the time when the cause of action arose but with regard to the point of time when the proceedings are initiated. In the present case the proceeding for assessment was initiated on the 29th June, 1950, and on that date Section 13 (6) had been amended by Bihar Act VI of 1949 and under the amended section the limitation was four years from expiry of the period in respect of which tax is due. In our opinion, the amended section applies to the present case. This view is supported by a decision of the Privy Council in Ramayya v. Lakshmayya A.I.R. 1942 P.C. 54, in which it was observed by Sir Madhavan Nair that ordinarily a suit would be governed by the law of limitation in force when the suit had been instituted ; but if the defendants were able to show that the right of action had become barred under the old Act then the title that they had acquired could not be defeated by the subsequent Limitation Acts. A similar view has been expressed by a Division Bench of the Madras High Court in Sakkarai Ambalagaran v. Sundilapathi 16 I.C. 236, in which it was held that a mortgage executed when the Limitation Act of 1871 was in force and not barred when the Limitation Act of 1877 was passed, gets the benefit of the extension of the period of limitation under the latter Act. There is also a discussion of the principle in Manjoori Bibi v. Akol Mahumed 17 C.W.N. 889, where it is pointed out by the Calcutta High Court that the presumption against a retrospective construction of a statute has no application to enactments which affect only the practice and procedure of Courts even where the alteration which the statute makes has been disadvantageous to one of the parties. In the present case it appears that Bihar Act VI of 1949 came into effect from the 22nd March, 1949, on which date it was published in the Bihar Gazette. On this date proceedings under Section 13 (6) could have been validly initiated against the assessee under the old law as it stood before the amendment. In other words, the right of the authorities to take proceedings for assessment under the old law had not become barred when Bihar Act VI of 1949 was passed and came into effect. In our opinion, therefore, the proceeding initiated against the assessee on the 29th June, 1950, in the present case was governed by the provisions of Section 13 (6) of Bihar Act XIX of 1947 as amended by Bihar Act VI of 1949. It follows that the proceeding initiated under Section 13 (5) on the 29th June, 1950, against the assessee is legally valid and is not barred by limitation.
8. For these reasons we hold that the two questions of law upon which the Board of Revenue has stated a case must be answered in favour of the State of Bihar and against the assessee. The assessee must pay the costs of this reference. There will be a consolidated hearing fee of Rs. 250.