Delhi High Court
M/S Kumagai Skanska Hcc Itochu Group vs The Commissioner, Value Added Tax & Anr. on 1 November, 2010
Author: Dipak Misra
Bench: Chief Justice, Manmohan
* THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: 14.09.2010
% Judgment Pronounced on: 01.11.2010
+ WP (C) No. 3001 of 2010 and CM No. 5987/2010
Reliance Infrastructure Ltd. ... Petitioner
Through: Mr. S. Ganesh, Mr. Neeraj Kishan
Kaul, Sr. Advs. with Mr. Sushil
Verma, Adv.
Versus
Commissioner of Trade Taxes & Ors. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. H.L. Taneja, Mr. Rajesh Mahana,
Mr. Amey Nargolkar, Advocates
+ WP (C) No. 274 of 2010 and CM No. 581/2010
Dharam Pal Satya Pal Ltd. & Anr. ... Petitioner
Through: Mr. S. Ganesh, Mr. Neeraj Kishan
Kaul, Sr. Advs. with Mr. Ruchir
Bhatia, Mr. Sumit Batra, Adv.
Versus
The Commissioner, Value Added Tax & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. H.L. Taneja, Mr. Rajesh Mahana,
Mr. Amey Nargolkar, Advocates
+ WP (C) No. 974 of 2010 and CM No. 1997/2010
M/s Kumagai Skanska HCC ITOCHU Group ... Petitioner
Through: Mr. Rajesh Jain, Ms. Neetika
Khanna, Mr. Sumit Batra, Advs.
Versus
The Commissioner, Value Added Tax & Anr. ... Respondents
Through: Mr. Parag P. Tripathi, ASG with
Mr. H.L. Taneja, Mr. Rajesh Mahana,
Mr. Amey Nargolkar, Advocates
Mrs. Avnish Ahlawat, Advocate.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
WP(C) Nos. 3001/10, 274/10, 974/10 Page 1 of 21
1. Whether reporters of the local papers be allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the Digest?
DIPAK MISRA, CJ
Regard being had to the commonality of controversy, these writ
petitions were heard analogously and are disposed of by a singular order.
For the sake of clarity and convenience, the facts in WP(C) No. 3001/2010
are exposited herein.
2. Invoking the jurisdiction of this Court under Article 226 of the
Constitution of India, the petitioner, a company incorporated under the
Companies Act, 1956, has called in question the legality and validity of the
initiation of the revisional proceedings against the petitioner by issuance of
notice dated 08.04.2010 under Section 74A read with Section 106 of the
Delhi Value Added Tax Act, 2004 (for brevity „the DVAT Act‟) by the
Commissioner, Trade Taxes, Delhi, the first respondent herein, purporting to
revise the orders of the Additional Commissioner dated 14.01.2008 and
25.01.2008 and to restore the order passed by the assessing authority on
03.03.2006. It is pleaded that orders of the assessing authority as well as
that of the first appellate authority relate to assessment year 2004-05 to
which Delhi Sales Tax Act, 1975 (for brevity „DST Act‟) was applicable and
not the provisions of the DVAT Act which came into force with effect from
01.04.2005. It is contended that the initiation of the revisional proceedings
against the petitioner is wholly without jurisdiction and without the authority
WP(C) Nos. 3001/10, 274/10, 974/10 Page 2 of 21
of law inasmuch as the power of revision engrafted in Section 74A of the
DVAT Act cannot be pressed into service in respect of orders passed under
the provisions of the DST Act. That apart, the provision of Section 74A of
the DVAT Act has no application at all to the year 2004-05 during which the
the said provision had not come into force. It is urged that the issue is
squarely covered in favour of the petitioners by the decisions rendered by
this Court in International Metro Civil Contractors v. Commissioner of
Sales Tax/VAT & Another, [2008] 16 VST 329 (Delhi) and LG Electronics
(India) Ltd. v. Commissioner of Trade & Taxes, New Delhi [2008] 16 VST
361 (Delhi) and, therefore, the petitioner should not be compelled to face the
proceedings which is fundamentally not sustainable being ab initio void.
3. It is averred that the petitioner had effected sales of electrical
equipments to the various undertakings such as M/s BSES Yamuna Power
Ltd. and M/s BSES Rajdhani Power Ltd., etc. which are engaged in
generation/distribution of electricity in Delhi. The sales were made against
exemption certificates issued by the said companies under Rule 11 of Delhi
Sales Tax Rules, 1975. The petitioner had not collected any tax on its sale to
the said companies. The claim of the petitioner not to be brought under the
net of tax was denied by the Value Added Tax Officer, the third respondent
herein, on the sole ground that the said two buyers were not licencees under
the Indian Electricity Act, 1919. Being dissatisfied with the said orders, the
petitioner preferred an appeal before the respondent No.2 and the first
appellate authority, under Section 43 of the DST Act, entertained the appeal
subject to deposit of Rs.10 crores vide order dated 06.09.2006. The said
WP(C) Nos. 3001/10, 274/10, 974/10 Page 3 of 21
order was reviewed requiring the petitioner to deposit Rs.7.5 crores in cash
and to furnish a bank guarantee for Rs.2.5 crores. The appeal was heard on
merits and the first appellate authority remanded the matter to the original
authority by order dated 14.1.2008. The assessing officer, on the initial date
of hearing, took the view that the cases were only remanded without any
clear guidelines to him. Thereafter, an application for review/rectification
was filed before the appellate authority. The appellate authority, by order
dated 25.11.2008, remanded the matter with specific direction that the
exemption certificates issued by M/s BSES Yamuna Power Ltd. and M/s
BSES Rajdhani Power Ltd. are valid for exemption on the ground that these
companies were nothing but successors of Delhi Vidyut Board as all the
assets and liabilities of Delhi Vidyut Board stood transferred to the said
companies and, hence, they should be deemed to be licencees to issue
certificates. Thereafter, the petitioner appeared before the Value Added Tax
Officer who kept adjourning the matter and waited for instructions from his
senior officers. The assessing officer did not pass any order on the basis of
the remand order as a result of which it got time barred. At this juncture, the
Sales Tax Department preferred an appeal before the appellate tribunal
under Section 43(2) of the DST Act against the orders of the first appellate
authority. Along with the appeal, an application for condonation of delay
was filed. At that juncture, a preliminary objection was raised by the
petitioner with regard to the maintainability of the appeal. Thereafter, the
Department filed an application for withdrawal of the appeal which was
allowed and the appeal was permitted to be withdrawn by the tribunal.
WP(C) Nos. 3001/10, 274/10, 974/10 Page 4 of 21
Thereafter, as set forth, the first respondent, namely, the Commissioner of
Trade Taxes, has issued notice under Section 74A read with Section 106 of
the DVAT Act proposing to suo motu revise the orders dated 14.01.2008
and 25.11.2008.
4. It is contended, inter alia, that the respondent No.1 has no jurisdiction
to issue notice in view of the decisions rendered by this Court in
International Metro Civil Contractors (supra) and LG Electronics (India)
Ltd. (supra). It is further put forth that if Section 74A is read in conjunction
with Section 106 of the DVAT Act, it is clear as day that the power of suo
motu revision does not rest any more with the first respondent and,
therefore, the recourse could not have been taken to the said provision for
initiating a suo motu revision. Quite apart from the above, various other
aspects have been highlighted relating to how the issuance of notice is
without any application of mind and how the same is contrary to various
decisions in the field. In this factual backdrop, prayer has been made to
issue a writ of certiorari for quashment of the notice dated 08.04.2010 issued
by the first respondent.
5. A counter affidavit has been filed by the answering respondents
contending, inter alia, that after the decisions rendered in International
Metro Civil Contractors (supra) and LG Electronics (India) Ltd. (supra),
Section 74A of the DVAT Act has been amended by the Amendment Act,
2009 whereby sub-section (5) has been inserted to the said section as a
consequence of which, Section 74A has become operational with effect from
WP(C) Nos. 3001/10, 274/10, 974/10 Page 5 of 21
01.04.2005. It is put forth that the result of the aforesaid amendment is that
the defect pointed out by this Court in the aforesaid two decisions stand
obliterated and as a fall out thereof, the legislative intention becomes clear to
confer the power of suo motu revision on the Commissioner. Reference has
been made to Section 106 of the DVAT Act to highlight that the power rests
with the Commissioner for exercise of suo motu power under the DVAT Act
in respect of the orders passed under DST Act. Quite apart from the above,
various aspects have been highlighted to show how the petition is totally
devoid of merit.
6. We have heard Mr. S. Ganesh and Mr. N.K. Kaul, Sr. Advocates with
Mr. Ruchir Bhatial,Mr. Sumit Batra, Mr. Sushil Verma, Mr. Rajesh Jain,
Ms. Neetika Khanna, advocates for the petitioners and Mr. Parag P. Tripathi,
learned ASG with Mr. H.L. Taneja, Mr. Rajesh Mahana, Mr. Amey
Nargolkar, Advocates for the respondent.
7. The submission of Mr.Ganesh, learned senior counsel appearing on
behalf of the petitioner, is that the DST Act was repealed on 01.04.2005 and
DVAT Act was brought into force and in the absence of anything in the Act
especially Section 106 which deals with repeal and saving suo motu power
of revision under Section 74A of the DVAT Act cannot be initiated.
Learned senior counsel has heavily relied on Division Bench decisions in
International Metro Civil Contractors (supra) and LG Electronics (India)
Ltd. (supra). Learned senior counsel for the petitioners further submitted that
when there is a detailed repeal and saving provision, then Section 6 of the
WP(C) Nos. 3001/10, 274/10, 974/10 Page 6 of 21
General Clauses Act has no application and further so there is no General
Clauses Act as far as Delhi is concerned. The use of the term word „right‟
occurring in Section 106(2) cannot possibly be understood to include a
reference to any power conferred under the Statute on the authorities. It is
further, contended by the learned senior counsel that Section 106(3)
specifically refers to powers conferred by or under the said Act which
includes the DST Act and, hence, Section 106 draws a clear distinction
between "right" and "power". It is urged by him that when the legislature
consciously uses two distinct terms in the same statute, even in two different
sections, the two terms must be considered to mean different and distinct
things. It is canvassed by Mr. Ganesh that revisional power has always been
held to be a power and not a right and, therefore, the same could not be
exercised by the authorities. To buttress his submissions, he has drawn
inspiration from the decisions rendered in Ravula Subba Rao and another
v. The Commissioner of Income Tax, Madras, 1956 SCR 577, Bansidhar
and others v. State of Rajasthan and others, (1989) 2 SCC 557, Deputy
Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam
v. Janatha Expeller Company, (2001) 121 STC 80, Kailash Nath Agarwal
and others v. Pradeshiya Industrial & Investment Corporation of U.P. Ltd.
and another, (2003) 4 SCC 305, G.K. Choksi and Company v.
Commissioner of Income Tax, Gujarat, (2008) 1 SCC 246, Hari Shankar
v. Rao Girdhari Lal Chowdhury, AIR 1963 SC 698, State of Kerala v. K.M.
Cheria Abdullah and Company, AIR 1965 SC 1585, Shiv Shakti Coop.
Housing Society, Nagpur v. Swaraj Developers and others, (2003) 6 SCC
WP(C) Nos. 3001/10, 274/10, 974/10 Page 7 of 21
659 and Hindustan Construction Company Ltd. v. State of Haryana,
(2005) 141 STC 119.
8. Mr. Parag Tripathi, learned Additional Solicitor General appearing for
the respondents, per contra, submitted that this Court in International Metro
Civil Contractors (supra) and LG Electronics (India) Ltd. (supra) interfered
as the Section 74A was brought in the statute book on 16.11.2005 and,
therefore, when the amendment was brought with effect from 1.4.2005 it
would convey that the intention of the legislature became quite clear that the
exercise of suo motu power of revision was kept alive at the time of
commencement of the Statute. Learned counsel for the revenue further
submitted that Section 106 has to be read in conjunction with the
amendment and the conjoint reading of the said provisions would make it
clear as crystal that the legislature intended that the suo motu power of
revision would be applicable to the proceedings under the DST Act.
Learned Additional Solicitor General further urged that the action is also
saved under General Clauses Act inasmuch as Bengal General Clauses Act,
1891 ("Bengal Act") had been made applicable to Delhi. It is contended by
Mr. Tripathi that the power to exercise revisional jurisdiction contained in
Section 46 of the DST Act has been specifically re-enacted w.e.f. 1.4.2005
under the DVAT Act as Section 74A has been brought into force from that
day and, therefore it is fallacious on the part of the petitioner to contend that
the suo motu power of revision cannot be exercised. It is also argued by him
that in a case where a particular provision in a statute is omitted and in its
place another provision dealing with the same contingency is introduced
WP(C) Nos. 3001/10, 274/10, 974/10 Page 8 of 21
without a saving clause in favour of pending proceedings then it can
reasonably be inferred that the intention of the legislature is that the
proceedings shall not continue but fresh proceedings for the same purpose
can be initiated under the new provision. To bolster his submissions he has
placed reliance upon Shiv Shakti Coop. Housing Society (supra), Kolhapur
Canesugar Works Ltd. and another v. Union of India and others, (2000) 2
SCC 536, Gammon India Ltd. v. Special Chief Secretary and others,
(2006) 3 SCC 354, Commissioner of Income Tax, U.P. v. M/s Shah Sadiq
and Sons, (1987) 3 SCC 516, Bansidhar and others (supra), Kalawati Devi
Harlalka v. Commissioner of Income Tax, West Bengal & Ors., 66 ITR
680, T.S. Baliah v. T.S. Rangachari, Income Tax Officer, 72 ITR 787,
Director of Settlements, Andhra Pradesh and others v. M.R. Apparao and
another, (2002) 4 SCC 638 and M/s Maheshwari Agencies v. State of U.P.
and others, (2010) UPTC 872.
9. The hub of the matter is whether after the repeal of the DST Act a suo
motu power of revision under Section 74A of the DVAT Act can be
initiated. At the very outset, we may appositely note that when suo motu
power was exercised under Section 74A of the DVAT Act, the same was
challenged in International Metro Civil Contractors (supra) and the
Division Bench came to hold that on the repeal of the DST Act and the
Works Contract Act coupled with the omission of the revisionary power of
the Commissioner under the DVAT Act, the said power completely got
obliterated or effaced and did not survive after 01.04.2005 and hence, no
action could be taken against the petitioner therein. It is urged that in the
WP(C) Nos. 3001/10, 274/10, 974/10 Page 9 of 21
earlier case Section 74A was inserted on November 16, 2005 but the Bench
held that the same did not resuscitate or resurrect the long-dead revisionary
power conferred on the Commissioner under Section 46 of the DST Act as it
had no retrospective effect and the legislature by amendment brought
Section 74 of the DVAT Act w.e.f. 01.04.2005 and it has not really
bestowed the power on the Commissioner to exercise the power of revision.
It is urged by him that the power flows from Section 106(2) of the DVAT
Act and in the absence of any amendment therein recourse cannot be taken
by applying Section 74A w.e.f. 01.04.2005 on an erroneous conception that
by such retrospective incorporation the power gets revived with the
Commissioner. Quite apart from the above it is urged by him that Section 6
of the General Clauses Act would not apply to the cases at hand.
10. At this juncture, we may fruitfully refer to Section 46 of the DST Act
which reads as follows:
"46. Revision of orders prejudicial to revenue. - The
Commissioner may call for and examine the records of
any proceeding under this Act and if he considers that any
order passed therein by any person appointed under sub-
section (2) of section 9 to assist him is erroneous in so far
as it is prejudicial to the interests of Revenue, he may,
after giving the dealer an opportunity of being heard and
after making or causing to be made such inquiry as he
deems necessary, pass such order thereon as the
circumstances of the case justify, including an order
enhancing or modifying the assessment and penalty (if
any) imposed or canceling the assessment and penalty (if
any) imposed and directing fresh assessment :
PROVIDED that a final order under this section
shall be made before the expiry of five years from the date
of the order sought to be revised."
WP(C) Nos. 3001/10, 274/10, 974/10 Page 10 of 21
11. Section 74A of DVAT Act which was inserted initially w.e.f.
16.11.2005 reads as follows:
"74A. Revision
(1) After any order including an order under this
section or any decision in objection is passed under this
Act, rules or notifications made thereunder, by any
officer or person subordinate to him, the Commissioner
may, of his own motion or upon information received by
him, call for the record of such order and examine
whether :-
(a) any turnover of sales has not been brought to
tax or has been brought to tax at lower rate, or has
been incorrectly classified, or any claims
incorrectly granted or that the liability to tax is
understated, or
(b) in any case, the order is erroneous, in so far
as it is prejudicial to the interest of revenue, and
after examination, the Commissioner may pass an
order to the best of his judgment, where necessary.
(2) (a) For the purpose of the examination and
passing of the order, the Commissioner may
require, by service of notice, the dealer to produce
or cause to be produced before him such books of
accounts and other documents or evidence as he
thinks necessary for the purposes aforesaid.
(b) Notwithstanding anything contained to the
contrary in section 34, no order under this section
shall be passed after the expiry of four years from
the end of the year in which the order passed by
the subordinate officer has been served on the
dealer.
(c) Notwithstanding anything contained to the
contrary in section 34, where in respect of any
order or part of the said order passed by the
subordinate officer, an order has been passed by
any authority hearing the objection or any
appellate authority including the Tribunal or such
order is pending for decision in objection or in
appeal, or an objection or an appeal is filed, then,
whether or not the issues involved in the
examination have been decided or raised in the
WP(C) Nos. 3001/10, 274/10, 974/10 Page 11 of 21
objection or the appeal, the Commissioner may,
within five years of the end of the year in which
the said order passed by the subordinate officer has
been served on the dealer, make a report to the said
objection hearing authority or the appellate
authority including the Tribunal regarding his
examination or the report or the information
received by him and the said appellate authority
including the Tribunal shall thereupon, after giving
the dealer a reasonable opportunity of being heard,
pass an order to the best of its judgment, where
necessary.
(3) If the Commissioner has initiated any proceeding
before an appropriate forum against an issue which is
decided against the revenue by an order of the Tribunal,
then the Commissioner may, in respect of any order,
other than the order which is the subject matter of the
order of the Tribunal, call for the record, conduct an
examination as aforesaid, record his findings, call for the
said books of account and other evidence and pass an
order as provided for under this section as if the issue
was not so decided against the revenue, but shall stay the
recovery of the dues including the interest or penalty,
insofar as they relate to such issue until the decision by
the appropriate forum and after such decision, may
modify the order of revision, if necessary.
(4) No proceedings under this section shall be
entertained on any application made by a dealer or a
person."
12. Section 106 which deals with Repeal and savings is as follows:
"106. Repeal and savings
(1) The Delhi Sales Tax Act, 1975 (43 of 1975), the
Delhi Tax on Entry of Motur Vehicles into Local Areas
Act, 1994 (4 of 1995), the Delhi Sales Tax on Works
Contract Act, 1999 (9 of 1999), and the [Delhi Sales Tax
on Right to Use Goods Act, 2002 (13 of 2002)] as in
force in Delhi (referred to in this section as the "said
Acts"), are hereby repealed.
(2) Notwithstanding sub-section (1) of this section,
such repeal shall not affect the previous operation of the
said Acts or any right, title, entitlement, obligation or
liability already acquired, accrued or incurred thereunder.
WP(C) Nos. 3001/10, 274/10, 974/10 Page 12 of 21
(3) For the purposes of sub-section (2) of this section,
anything done or any action taken including any
appointment, notification, notice, order, rule, form or
certificate in the exercise of any powers conferred by or
under the said Acts shall be deemed to have been done
or taken in the 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, and all
arrears of tax and other amounts due at the
commencement of this Act may be recovered as if they
had accrued under this Act."
13. The submission of Mr. Ganesh, learned senior counsel for the
petitioners is that the Division Bench in International Metro Civil
Contractors (supra) and LG Electronics (India) Ltd. (supra) had not
accepted the stand of the revenue that the Repeal and savings provision
conferred any power or saved the power of the Commissioner to exercise the
revisional jurisdiction under Section 74A of the DVAT Act. Per contra Mr.
Tripathi, learned Additional Solicitor General would submit that the
Division Bench addressed itself with regard to the legislative intention as the
power was exercised prior to insertion of Section 74A of the DVAT Act on
24.11.2005 and, therefore, after the legislature amended the provision w.e.f.
1.4.2005 the power got revivied.
14. In International Metro Civil Contractors (supra), the Division Bench
referred to Section 46 of the DST Act and 106 of the DVAT Act and
addressed the meat of the matter as follows:
"Coming to the meat of the matter, we are required to
consider whether, after the DVAT Act came into force,
the Revenue could issue the show cause notice dated
July 18, 2007 seeking to revise the assessment order
dated March 31, 2003. To answer this question, we
would need to consider the following three issues:
WP(C) Nos. 3001/10, 274/10, 974/10 Page 13 of 21
"1. Whether any proceedings for revising the
assessment order were at all initiated by the
Revenue before March 31, 2005 when the DST
Act and the Works Contract Act were repealed? If
not, the impact thereof.
2. If the answer to the above question is in the
affirmative, whether the proceedings initiated by
the Revenue were saved by the DVAT Act on the
repeal of the DST Act and the Works Contract Act
on March 31, 2005?
3. What is the effect (if any) of the omission, in the
DVAT Act, of the power to revise an assessment
that was available to the Commissioner under
Section 16 of the Works Contract Act read with
Section 46 of the DST Act."
15. While dealing with the first question, the Bench referred to the
decisions in Gajraj Singh v. State Transport Appellate Tribunal, [1997] 1
SCC 650, Gammon India Ltd. (supra) and opined thus:
"The effect of this is, quite clearly, that the process of a
revisionary proceeding, not having been initiated by the
Revenue, dies a natural death on the repeal of the DST
Act and the Works Contract Act - unless the right of the
Revenue is otherwise saved by the DVAT Act; an issue
that we will presently consider."
16. Thereafter, the Bench came to hold as follows:
"The matter may be looked at from another point of
view. Before the order dated August 12, 2004 could be
acted upon, its operation was stayed by this Court on
September 20, 2004 in a miscellaneous application filed
by the Petitioner in the first writ petition. No steps were
taken by the Revenue to have that stay lifted or vacated
and so the interim stay continued till November 18, 2005
by which time the DST Act and the Works Contract Act
were repealed.
In other words, as on April 1, 2005 there was no
operative order as far as the Petitioner is concerned. It
was submitted by learned counsel for the Revenue that
WP(C) Nos. 3001/10, 274/10, 974/10 Page 14 of 21
the order dated August 12, 2004 nevertheless existed. As
far as a theoretical and academic existence is concerned,
learned counsel may be correct but the existence was
purely academic and theoretical, since the order dated
August 12, 2004 was set aside by this Court in the
November 3, 2006 in the second writ petition. The effect
of such a setting aside is explained in Shree Chamundi
Mopeds Ltd. v. Church of South India Trust Association
[1992] 3 SCC 1 wherein it is held in paragraph 10 of the
report:
"Quashing of an order results in the restoration of
the position as it stood on the date of the passing of
the order which has been quashed."
Therefore, whichever way one considers the matter, the
inevitable conclusion is that no proceedings for revising
the assessment order were pending on April 1, 2005.
What existed, if at all, was a direction given by the
Commissioner to the concerned Assistant Commissioner
to revise the assessment order and that direction had not
even been implemented by that officer. Moreover, that
direction was stayed before it could be implemented and
to make matters worse for the Revenue, the order dated
August 12, 2004 was eventually struck down by this
Court in the second writ petition. Therefore, even if the
Commissioner had any right to revise the assessment
order, neither he, nor his delegate ever exercised that
right (assuming it to be a right) till April 1, 2005. The
effect of this is that the "right" stood extinguished when
the DST Act and the Works Contract Act were repealed.
17. While dealing with the second question, namely, whether the
revisionary proceedings (if they were initiated) were saved by the DVAT
Act, the Bench looked into two "sub-issues" and, thereafter, addressed
whether notwithstanding anything else, Section 106(3) of the DVAT Act
comes to the rescue of the revenue and whether Section 106(2) of the DVAT
Act saves the previous operation of the DST Act. The Division Bench
WP(C) Nos. 3001/10, 274/10, 974/10 Page 15 of 21
referred to the decision in Indira Sohanlal v. Custodian of Evacuee
Property, AIR 1956 SC 77 and came to hold as follows:
"Therefore, even if revisionary proceedings had been
initiated in respect of the petitioner under Section 46 of
the DST Act, they would have to be dealt with under the
DVAT Act (which is not what has happened in the
present case that we are dealing with). But, as the
Legislature would have it, the DVAT Act did not provide
for revisionary proceedings in the first instance.
Consequently, even if it were to be argued that the
revisionary proceedings initiated by the Revenue were
somehow or the other "saved", they died a legal death
because they could not be dealt with under the DVAT
Act since no revisionary jurisdiction was provided for
under the DVAT Act."
18. After so stating, the Bench referred to the decisions in Bishambhar
Nath Kohli v. State of Uttar Pradesh, AIR 1966 SC 573 and Gajraj Singh
(supra) and expressed the view thus:
"Applying the law laid down by the Supreme Court, it
must be held that by virtue of Section 106(2) of the
DVAT Act since the previous operation of the DST Act
and the Works Contract Act was saved, the assessment
order being a transaction past and closed under those
statutes, was also saved. As far as Section 106(3) of the
DVAT Act is concerned, the deeming provision only
means that an order passed under the repealed statute
would have to be dealt with as if the repealing Act was in
force on that day and the powers and jurisdiction of the
authorities under the repealing Act must also be deemed
to have been in force on the date when that order was
passed. But, it must be remembered that the DVAT Act
did not provide for any revisionary power and so, no such
power or jurisdiction was available on the date of the
assessment order, if the deeming fiction is taken to its
logical conclusion. However, it is not necessary for us to
go to that extent, because the next issue that we are
required to consider is the right or entitlement (if any) of
the Revenue to revise the order of assessment. Is that
saved by the provisions of the DVAT Act, even if
everything is assumed in favor of the Revenue?"
WP(C) Nos. 3001/10, 274/10, 974/10 Page 16 of 21
19. Thereafter, the Bench adverted to three kinds of revisionary powers
and referred to the decisions in Siemens India Ltd. v. State of Maharashtra,
[1986] 62 STC 40, Hari Shankar (supra), Swastik Oil Mills Ltd. v. H.B.
Munshi, Deputy Commissioner of Sales Tax, [1968] 21 STC 383 (SC) :
AIR 1968 SC 843, Shiv Shakti Coop. Housing Society (supra), Hindustan
Construction Company Ltd. (supra) and eventually held thus:
"The power of revision is an enabling power available to
a superior authority to correct an error committed by a
subordinate authority. Shiv Shakti (supra) is not limited
in its application to Section 115 of the Code of Civil
Procedure but follows the law earlier laid down,
generally, on the revisionary power of an authority.
The power of revision being only an enabling power and
not a substantive right, it is not saved by Section 106(2)
of the DVAT Act, which only saves a "right" or an
"entitlement", both being synonymous. Consequently,
whichever way one considers the problem, the
assessment order dated March 31, 2003 could not have
been re-opened by the Revenue in the manner that we are
concerned with."
20. Being noted, after dealing with second issue the Division Bench
proceeded to address the third issue which pertains to the effect of omission
of a provision in a legislation subsequent to the repeal of an earlier
legislation. The Bench noted the fact that no revisionary proceedings were
initiated by the revenue till 1.4.2005 and, thereafter further referred to the
certain aspects in Gajraj Singh (supra), Kolhapur Canesugar Works Ltd.
(supra), Shiv Shakti Coop. Housing Society (supra), Gammon India Ltd.
(supra) and opined thus:
WP(C) Nos. 3001/10, 274/10, 974/10 Page 17 of 21
"It is clear, therefore, that the Supreme Court is emphatic
in holding that where an existing power is not conferred
on the given authority by the repealing statute, it cannot
survive the repeal; nor can its ghost be invoked to revive
a transaction that gets closed on the repeal of an
enactment. Furthermore, if a power does survive, it does
so under the new statute and not under the repealed
statute.
Learned Counsel for the Revenue, however, contended
that the taxable event is when the petitioner incurs a
liability. Reliance was placed on Tata Iron and Steel Co.
Ltd. v. State of Bihar [1958] 9 STC 267 (SC); AIR 1958
SC 452, Kedarnath Jute Mfg. Co. Ltd. v. Commissioner
of Income-tax [1971] 82 ITR 363(SC); [1972] 3 SCC 252
and T.K. Khadar Mohiuddin v. State of Andhra Pradesh
[1968] 21 STC 45 (AP). It was submitted that since the
petitioner had incurred a liability to pay tax, all
subsequent actions taken by the Revenue to recover the
tax are permissible and survive. We do not think this is
correct for two reasons. The question of the liability of
the petitioner to pay tax had come to an end on the
passing of the assessment order, which gave it an
entitlement to a refund. The liability of the petitioner to
tax would have arisen (if at all) only after the revision of
the assessment order - until then the Revenue was liable
for a refund. The liability of the Petitioner could have
arisen only if the assessment order was validly revised,
and not otherwise or until then.
21. After so holding, the Division Bench repealed the stand of the revenue
and expressed thus:
"The intention of the legislature was clear on April 1,
2005 that it did not wish the Commissioner to have the
power of revision, otherwise it would certainly have been
provided for. In any event, we cannot read into the
repealing statute a substantive provision that is not
provided for.
The learned counsel for the Revenue referred to Southern
Petrochemical Industries Co. Ltd. v. Electricity Inspector
and ETIO [2007] 5 SCC 447. The submission was that
the provisions of Section 6 of the General Clauses Act,
1897 do not apply to the facts of the present case. This
was also the submission of learned counsel for the
WP(C) Nos. 3001/10, 274/10, 974/10 Page 18 of 21
petitioner, though his reasons were different. Therefore,
we need dwell at length on this decision. There is,
however, a passage in this decision in paragraph 92 of the
report, which is of some importance. This reads as
follows:
"...Omission of words in a particular statute may
play an important role. The intention of the
Legislature must be, as is well-known, gathered
from the words used in the statute at the first
instance and only when such a rule would give rise
to an anomalous situation, the court may take
recourse to purposive construction. It is also a
well-settled principles of law that casus omissus
cannot be supplied. (See J. Srinivasa Rao v.
Government of Andhra Pradesh [2006] 12 SCC
607)."
The consequence of this is that the repeal of the DST Act
and the Works Contract Act coupled with the omission of
the revisionary power of the Commissioner under the
new enactment, that is, the DVAT Act completely
obliterated or effaced that power such that it did not
survive after April 1, 2005. There is nothing in the
DVAT Act to suggest that the power was intended to
survive or be acted upon.
It is true that a fresh power of revision was conferred on
the Commissioner by an amendment brought about to the
DVAT Act on November 16, 2005 when Section 74A
was inserted in that Act but this did not resuscitate or
resurrect the long-dead revisionary power conferred on
the Commissioner under Section 46 of the DST Act. It
had no retrospective effect."
22. It is worth nothing that on the basis of the aforesaid analysis the
Division Bench has held that the power of revision earlier available with the
Commissioner has suffered a legal death. The submission of Mr. Tripathi,
learned Additional Solicitor General is that the Division Bench had
categorically opined that had Section 74A being in the statute book w.e.f.
1.4.2005 the revisional authority could have exercised the power and the
WP(C) Nos. 3001/10, 274/10, 974/10 Page 19 of 21
legislature by making the said provision retrospective w.e.f. 1.4.2005 has
clothed the authority with the said power. Per contra, Mr. Ganesh submitted
that this was an ancillary observation but the real rationale for allowing the
writ petition and holding that Section 74A is not applicable is that Section
106(2) does not enable the revisional authority to exercise the power and
secondly the General Clauses Act does not apply to Delhi and further the
principle that is being inferred by the learned Additional Solicitor General
that the retrospective amendment would confer the power to revise an order
in the absence of necessary amendment of Section 106 of the DVAT Act is
impermissible in law.
23. From the submissions raised at the Bar, it is noticeable that the
legislature has initially introduced Section 74A w.e.f. 24.11.2005 and after
the decision was rendered in International Metro Civil Contractors (supra)
has brought the said Section into effect from 1.4.2005. The question that
emerges is whether by such incorporation with retrospective effect the
revisional power is saved. That apart there has been a debate with regard to
the interpretation placed by the Division Bench under Section 106 of the
Act. Additionally, a further cavil has been raised with regard to the
applicability of Bengal Act to Delhi.
24. In view of the aforesaid, we are disposed to think that the decisions
rendered in International Metro Civil Contractors (supra) and LG
Electronics (India) Ltd. (supra) require reconsideration by a larger Bench
apart from the fact that there has to be an authoritative pronouncement of
WP(C) Nos. 3001/10, 274/10, 974/10 Page 20 of 21
law on this score. We are disposed to think so as the legislature has
presumed that the Division Bench possibly would have upheld the action
had the amendment would have come into effect w.e.f. 1.4.2005. That apart,
learned Additional Solicitor General has seriously contended that the
interpretation placed on Section 106 is not correct and the said submission
has been seriously opposed by Mr. Ganesh, learned senior counsel for the
petitioners. Ordinary, we would have proceeded to address the same but the
first question, we are inclined to think, really requires to be addressed.
24. In view of the preceding analysis, let this matter be placed before the
Hon‟ble Chief Justice for constitution of an appropriate larger Bench.
CHIEF JUSTICE
MANMOHAN, J.
November 1, 2010 dk WP(C) Nos. 3001/10, 274/10, 974/10 Page 21 of 21