THE COMMERCIAL TAX OFFICER AND ORS.versusM/S. BISWANATH JHUNJHUNWALA AND ANR.

A             THE COMMERCIAL TAX OFFICER AND ORS.
                                        v.
             MIS. BISWANATH JHUNJHUNWALA AND ANR.

                               AUGUST 20, 1996

B            [S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.)

         SALES TAX:

         Bengal Finance (Sales Tax) Act 1941 and Bengal Sales Tax Rules 1941,
C Rule 80(5)(ii) as amended-Amendment in 1974, made effective from
    November j; 1991, enabling Revenue to reopen assessments made more than
    six years previously-Whether amendment prospective and applied only to
    assessments made after November 1, 1971--Held, no; on a plain meaning,
    amendment enabled reopening of assessments having become final six years
    previousl~-lnterpretation of Statutes.
D
           The assessment of first respondent, a registered dealer under the
    Bengal Finance (Sales Tax) Act, 1941 for the assessment year Chaitra Sudi
    2023 and 2024 were completed on February 17 and March 26, 1969 respec-
    tively. Under the unamended Rule 80(5) of the Bengal Sales Tax Rules,
E   1941, the assessment could have been reopened only within a period of four
    years. l}nder Bengal Finance (Sales Tax) (3rd Amendment) Act 1974 s.
    26(1) of the Act was substituted to enable the State Government to make
    Rules with retrospective effect Pursuant thereto, a government notifica-
    tion was issued on March 30, 1974 amending with effect from November
    1, 1971, Rule 80(S)(ii) to enali>le assessments made more than six years
F   previously to be reopened.

           The tax authorities issued notices on November 7, 1974 to the
    respondent reopening the completed assessments for the years Chaitra
    Sudi 2023-2024. The respondent in a writ Petition before the Calcutta High
G   Court challenged the legality of the notices. The High Court held that the
    reopening of the assessments stood barred on the date the amendment was
    made andl that the notification did not confer any power of revision of
    assessment which stood barred on the date on which it was issued. Accord-
    ingly, High Court quashed the notice.

H         In this court, the appellant contended that since the notification
                                       286
    COMMERCIAL TAX OFFICER v. BISWANATHJHUN.IHUNWALA                   'lf37

provided that from which the amended period of six years would operate,        A
the notices were valid. The respondent on the other hand contended that
the words "with effect from November 1, 1971" has to be read as meaning
that the amended provision would be applicable to assessments made after
November l, 1971.

         Allowing the appeal, this court                                       B

      HELD : 1. By. reason of the Notification, with effect from November
1, 1971, Rule 80(5)(ii) has to be read as barring the Commissioner (or
other authority to whom power in this behalf had been delegated by the
Commissioner), from revising of his own motion any assessment made or C
order passed under the Act or the rules if the assessment has been made
or the order has been passed more than six years previous to 1st Novem-
ber, 1971. This being the plain meaning, the said Notification has to be
given full effect. Full effect could be given only if the said Notification is
read as being applicable not only to assessments which were incomplete
but also to assessments which had reached finality by reason of the earlier D
prescribed period of four years having elapsed. Where language as unam-
biguous 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. [294-A-B]                                                           E
       S.S. Gadgil, Income Tax Officer, Bombay v. Lal and Co., [1964] 8 SCR
72; J.P. Jani, Income Tax Officer v. Induprasad Devshanker Bhatt, 72 l.T.R
595; The Income Tax Offiw; Madras v. S.K. Habibullah, Madras, [1962]
Supp. 2 SCR 716 and Ahmedabad Manufacturing and Calico P1inti11g Co.
Ltd. v. S.C. Mehta, Income Tax Officer and Anotlw; [1963] Supp. 2 SCR          F
92 , referred to.

         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 716 of
1981.

     From the Judgment and Order dated 23.5.78 of the Calcutta High G
Court in 0.0. No. 848 of 1976.

         Tapas Ray, G.S. Chaltarje, Ms. Aruna Banerjee for Sinha and Das.

         H.N. Salve, Anil Agrawala and K.V. Viswanathan for the Respon-
dents.                                                                         H
    288                    SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R.

A           The Judgment of the Court was delivered by

          BHARUCHA, J. The correctness of the judgment and order of a
    Division Bench of the High Court at Calcutta is under challenge in this
    appeal by the Commercial Tax authorities of the State of West Bengal.

B         The first respondent was the sole proprietory concern of the late
    Biswanath Jhunjhunwala; the second respondent is his heir and legal
    representative. The first respondent carried on business, principally in
    gunny bags, and was a registered dealer under the Bengal Finance (Sales
    Tax) Act, 1941 (now called the 'Act'). We are concerned in this appeal
C   with the assessments of the first respondent for the Assessment Years
    Chaitra Sudi 2023 and 2024. These assessments were completed on 17th
    February, 1969, and 26th March, 1969. Under the law as it then stood,
    namely, Rule 80, sub-rule (5) of the Bengal Sales Tax Rules, 1941, the
    assessments could have been re-opened only within a period of 4 years for
    the relevant part of sub-rule (5) read thus :
D
              "(5) The Commissioner or any other authority to whom power in
              this behalf has been delegated by the Commissioner, shall not, of
              his own motion, revise any assessment made or order passed under
              the Act or the rules thereunder if -

E             xxx                         xxx                             xxx

              (ii) the assessment has been made or the order has been passed
              more than four years previously."

            The Bengal Sales Tax Ordinance, 1973, substituted sub-section (i) of
F Section 26 of the Act. As substituted, sub-section (i) of Section 26 read
    thus:

                 "26(1) The State Government may make rules, with prospective
              or retrospective effect, for carrying out the purposes of this Act."
G
    The Ordinance was replaced by the Bengal Finance (Sales Tax) (Third
    Amendment) Act, 1974.

          Pursuant to the amendment of Section 26(1) of the Act, a Govern-
    ment Notification was issued on 30th March, 1974, amending, "with
H   effect from the 1st November, 1971'', clause (ii) of sub-rule (5) of Rule
   COMMERCIAL TAX OFFICERv. BISWANATH .IHUNJHUNWALA [B.HARUCHA, J.)    289

80. Subsequent to such amendment, the relevant part of sub-rule (5) read     A
thus:

        "The Commissioner or any other authority to whom power in this
        behalf has been delegated by the Commissioner shall not, of his
        own motion, revise any assessment made or order passed under
        the Act or the rules thereunder it -                                 B

        xxx                          xxx                         xxx

        (ii) the assessment has been made or the order has been passed
        more than six years previously."                                     C

       On 7th November, 1974, the Commercial Tax authorities issued to
the first respondent notices reopening its completed assessments for the
Assessment Years Chaitra Sudi 2023 and 2024 under the provisions of the
amended sub-rule (5) of Rule 80. The then proprietor of the 1st respondent
filed a writ petition in the Calcutta High Court challenging the legality of D
these notices. The validity of the amendment of Section 26(1) of the Act
was called in question, and was upheld. (This contention need not detain
us because it is not pressed). It was argued on behalf of the first respondent
that the right to re-open the assessments dated 17th February, 1969, and
26th March, 1969, stood barred under the unamended provisions of Rule E
80(5)(ii) when the said Notification amending these provisions was issued
and, therefore, the notices were bad in law. The contention was upheld.
The High Court held that, by the amendment of the rule, assessments
which had been completed could be revised within 6 years of the date of
such completion, but when the right to revise the assessments under the
unamended provision of the rule stood barred on the date the amendment F
was made, such assessments could not be re-opened or revised. The said
Notification did not either expressly or by necessary implication confer any
power of revision of assessments which stood barred on the date on which
it was issued. The High Court relied upon the decisions of this Court in
S.S. Gadgil, Income-Tax Officer, Bombay v. Lal and Co., (1964) 8 S.C.R. 92 G
and J.P. Jani, Income-Tax Officer v. Induprasad Devshankar Bhatt, 72 I.T.R.
595. It quashed the notices.

     Hence, this appeal by special leave.

     Mr. Tapas Ray, learned counsel for the appellants, drew our atten- H
    290                   SUPREME COURT REPORTS [1996] SUPP. 5 S.C.R.

A tion to the judgments aforementioned. He submitted that the said Notifica-
    tion, issued under the provisions of Section 26(1) of the Act, as amended,
    expressly stated that the amendment of the period of 4 years to 6 years in
    Rule 80(5)(ii) was with effect from 1st November, 1971. The said Notifica-
    tion, therefore, in terms provided the date from which the amended period
    of 6 years would operate. The notices had been issued within such period
B   and were valid. The decisions of this Court in cases of S.S. Gadgil and J.P.
    Jani (ibid) were distinguishable in that no provision expressly indicating
    when the retrospectively amended period should start had been made.

          Mr. H.N. Salve, learned counsel for the -respondents, laid stress on
C the fact even at the time when the amendment to Section 26(1) was made,
    the assessing officer had lost the power to re-open the assessments in
    question. He submitted that the words "with effect from 1st November,
    1971" in the said Notification should be read as meaning that the amended
    provision would be applicable lo assessments made after 1st November,
D   1971. So read, no assessments that had achieved finality would be affected.
    Re-opening was a matter of power, and of substantive law where assess-
    ments had reached finality. An intention should clearly be evinced in the
    amendment to confer the power to destroy such finality. Such intention was
    not evinced in the present case. Our attention was drawn to the judgment

E
    in 77ie Income Tax Officer, Madras v. S.K. Habibullah, Madras, [1962) Supp.
    2 S.C.R. 716.
                                                                                   [
           In the case of S.S. Gadgil, this Court said, and the passages are
    self-explanatory :

F           "Section 18 of the Finance Act, 1956, is, it is common ground, not
            given retrospective operation before April 1, 1956. The question
                                                                                   [
            then is, whether the Income-tax Officer may issue a notice of
            assessment to a person as an agent of a non-resident party under
            the amended provision when the period prescribed for such a
            notice had before the amended Act came into force expired?
G           Indisputably the period for serving a notice of re-assessment under
            the unamended section had expired, and there was in the Act as
            it then stood, no provision for extending the period beyond the
            end "f one year from the year of assessment. The Income-tax
            Officer could therefore commence a proceeding under s.34 on
H           March 27, 1957, only if the amended section applied and not .
   COMMERCIAL TAXOFFICERv. BISWANATHJHUNJHUNWALA[BHARUCHA,J.)         291

        otherwise. The amending Act came into force after the period A
        provided for the issue of a notice under s.34 before it was amended
        had expired. It is true that there was no determinable point of time
        between the expiry of the prescribed time within which the notice
        could have been issued against the assessee under s.34 proviso (iii)
        before it was amended. But there was no overlapping period either.
                                                                             B
        Prima facie, on the expiry of the period prescribed by s.34 as it
        originally stood, there was no scope for issuing a notice unless the
        Legislature expressly gave power to the Income-tax Officer to issue
        notice under the amended section notwithstanding the expiry of
        the period under the unamended provision or unless there was
        overlapping of the period within which notice could be issued       c
        under the old and the amended provision."


The court quoted with approval the following observations in Ahmedabad
Manufactwing and Calico Pli11ting Co. Ltd. v. S.C. Mehta, Income-tax Officer
and Another, (1963) Supp. 2 SCR 92 :                                         D


        "Once a final assessment has been made, it can only be reopr-ned
        to rectify a mistake apparent from the record (s.35) ·or to reassess
        where there has been an escapement of assessment of income for
        one reason or another (s.34). Both these sections which enable E
        reopening of back assessments provide their own periods of time
        for action but all these periods of time, whether for the first
        assessment or for rectification, or for reassessment, merely create
        a bar when that'time passed against the machinery set up by the
        Income-tax Act for the assessment and levy of the tax. They do F
        not create an exemption in favour of the assessee or grant an
        absolution on the expiry of the period. The liability is not enfor-
        ceable but the tax may again become exigible if the bar is removed
        and the taxpayer is brought within the jurisdiction of the said
        machinery by reason of a new power. This is, of course, subject to
        the condition that the law must say that such is the jurisdiction, G
        either expressly or by clear implication. If the language of the
        law has that clear meaning, it must be given that effect and
        where the language expressly so declares or clearly implies it,
        the retrospective operation is not controlled by the commence-
        ment clause."                                                        H
    292                   SUPREME COURT REPORTS (1996] SUPP. 5 S.C.R.

A The court said that the Legislature had given to Section 18 of the Finance
    Act, l 956, only a limited retrospective operation, i.e., upto 1st April, 1956.
    That provision had to be read subject to the rule, that in the absence of an
    express provision or clear implication, the Legislature did not intend to
    attribute to the amending provision a greater retrospectivity than was
    expressly mentioned not to authorise the Income-tax Officer to commence
B   proceedings which, before the new Act came into force, had, by expiry of
    the period provided, become time barred.             ·

           In the case of J.P. Jani, the decision in the case ofS.S. Gadgil was
    followed. It was contended on behalf of the Revenue that Section
C   297(2)(d)(ii) of the Income-Tax Act, 1961, was wide in its sweep and it
    took in all assessment years after the· year ending 31st March, 1940,
    irrespective of the question whether the right to reopen the assessment in
    respect of any such assessment years was barred or not under the 1922 Act
    when the 1961 Act came into force. The argument was found unacceptable
D   because such construction was tantamount to giving retrospective opera-
    tion to the provision which was not warranted either by its express language
    or by necessary implication. The provision did not disclose in express terms
    or by necessary implication that there was a revival of the right of the
    Income Tax Officer to reopen an assessment which was already barred
    under the 1922 Act.
E
          In the case of S.K Habibullah, the Income-tax Officer had sought to
    rely upon Section 35(5) which had been incorporated by Section 19 of the
    Indian Income-tax (Amendment) Act, 1953, with effect from 1st April,
    1952. Clause (5) was one of a group of clauses added by the Amending
p   Act which dealt with the rectification of assessments. It dealt with the
    inclusion of income or correction of the income of a partner in a firm
    consequent upon assessment or re-assessment of the firm of which he was
    a partner. The Legislature by a fiction had regarded the inclusion and
    correction as the rectification of a mistake apparent from the record and
    prescribed a special terminal reckoning for the period of four years within
G   which the rectification had to be made. Under clause (5) the inclusion of
    the shares in the assessment of the partners or the correction thereof was
    deemed to be a mistake apparent from the record within the meaning of
    the section and sub-section (1) applied thereto accordingly, the period of
    four years being computed from the date of the final order passed in the
H   case of the firm. The discrepancy disclosed a.s a result of the assessment
   COMMERCIAL TAX OFFICER" BISWANATHJHUNJHUNWALA[BHARUCHA,J.]           293

or re-assessment of a firm between the share of a partner included in the A
individual assessment of that partner and his share disclosed in the assess-
ment of the firm was not an error apparent from the record within the
meaning of Section 35(1) and the Legislature enacted a fiction making the
inclusion of the share in the assessment or correction thereof such a
mistake. If the inclusion of the share or correction of the assessment were
                                                                              B
an .error apparent from the record and falling under clause (1) of Section
35, the enactment of clause (5) was unnecessary. The Legislature having
deliberately enacted a fiction of the nature set out in clause (5), the court
rejected the contention raised by counsel for the Revenue that the enact-
ment of the fiction was ex-abundanti cautela. Rectification of the nature
contemplated by clause (5) could not have been effected under clause {1). c
The Legislature declared that what was not a mistake should for the
purpose of rectification of assessment be regarded as a mistake apparent
from the record and provided a terminus for the computation of the period
of four years. The question which fell to be considered was whether, relying
upon clause (5) of Section 35, an Income-tax Officer could rectify the D
assessment of a person who was a partner in a firm when the assessment
of the firm was completed before 1st April, 1952. The Legislature had given
to clause (5) a partial retrospective operation. The provision enacted by
clause (5) was not procedural in character : it affected the vested rights of
the assessee. Therelore, in the absence of compelling reasons the court
would not be justi{ied in giving a greater retrospectivity to the provision E
than was warranted by the plain words used by the Legislature. If, by the
law prevailing at the time when the assessment was made, no such result
as was contemplated by the new clause (5) arose, to give a larger retrospec-
tive operation than was directed was to as~ribe to the Legislature an
intention different from the one expressed and to make a larger inroad F
upon the finali~y of the assessment than was permitted _by the Legislature.

        What, therefore, we have to seek is the clear meaning of the said
Notification. if there be no doubt about the 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 G
with effect from 1st November, 1971, so as to encompass all assessments
made within the period of six years therefore, whether they have become
fJ,nal by reason of the expiry of the period of four years or not.

      By reason of the said Notification, with effect from 1st November, H
    294                    SUPREME COURT REPORTS [1996] SUPP. 5 S.C.R.

A   1971, Ruic 18(5)(ii) has to be read as barring the Commissioner (or other
    authority to whom power in this behalf has been delegated by the Com-
    missioner) from revising of his own motion any assessment made or order
    passed under the Act or the rules if the assessment has been made or the
    order has been passed more than s~~ years previous to 1st November, 1971.
    Put conversely, with effect from 1st November, 1971, Rule 18(5)(ii) permits
B   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, the said Notification must be
    given full effect. Full effect can be given only if the said Notification is read
c   as being applicable not only to asses~.ments which were incomplete but also
    to assessments which had reached finality by reason of the earlier
    prescribed Period of four year 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
D   become final; if the intention was otherwise, the Legislature would have so
    stated.

           In the result, the appeal is allowed. The judgment and order under
    appeal is set aside. The respondents shall be entitled to proceed upon the
    notices dated 7th November, 1974 issued to the 1st respondent reopening
E   its assessments for the Assessment Years Chaitri Sudi 2023 and 2024.

            There shall. be no order as to costs.

     S.M.                                                          Appeal allowed.