M.M. Dutt, J.
1. This appeal is directed against the judgment of a learned single Judge, whereby the learned Judge discharged the rule nisi obtained by the appellant on his application under Article 226 of the Constitution.
2. The appellant deals in gunny bags and is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, hereinafter referred to as the Act. In the writ petition out of which the said rule nisi arose, the appellant challenged the propriety and validity of two notices dated 7th November, 1974, and 7th December, 1974, issued by respondent No. 2, the Assistant Commissioner of Commercial Taxes, Chowringhee Circle, by which he proposed to reopen and reassess the sales tax payable by the appellant for the periods, namely, 4 quarters ending Chaitra Sudi 8, 2023, and 4 quarters ending Chaitra Sudi 8, 2024. The assessments for the above periods had been completed by the assessment orders dated 17th February, 1969, and 26th March, 1969, respectively of the Commercial Tax Officer. The reasons for reopening the assessments as stated in the impugned notices are that for the period, namely, 4 quarters ending Chaitra Sudi 8, 2023, the Commercial Tax Officer had wrongly allowed a taxable sale of Rs. 26,68,500 under Section 5(2) (a)(iii) of the Act as sales to a registered dealer named M/s. Luxmi Narayan Jute Mfg. Co. Ltd., but that was not supported by any declaration forms. In the subsequent period, namely, 4 quarters ending Chaitra Sudi 8, 2024,. the deduction granted was Rs. 48,01,200 as sales to the said registered dealer and that also was not supported by any declaration forms. In both the cases it was proposed to levy tax at the rate of 6 per cent on the amounts of taxable sales. The principal contention of the appellant in the writ petition was that there was initial lack of jurisdiction on the part of respondent No. 2 to issue the impugned orders and that the conditions precedent to the issue of the same were not fulfilled. The learned Judge came to the finding that there was no want of jurisdiction on the part of respondent No. 2 in issuing the said notices. In that view of the matter, he discharged the rule nisi. Hence this appeal.
3. During the pendency of this appeal, the appellant filed an application, praying for permission to agitate some new grounds at the hearing of the appeal. This Court, after hearing the learned Advocates of both sides, by its order dated 1st July, 1977, granted the permission as prayed for. In view of the said order, the appellant has urged certain new points. The first point relates to the constitutional validity of Sub-section (1) of Section 26 of the Act as substituted by Section 4(1) of the Bengal Sales Tax Ordinance, 1973. Sub-section (1) of Section 26 of the Act as substituted is as follows:
26. (1) The State Government may make rules, with prospective or retrospective effect, for carrying out the purposes of this Act.
4. It may be stated that the Ordinance has since been adopted by the Legislature by the Bengal Finance (Sales Tax) (Third Amendment) Act, 1974. It is contended on behalf of the appellant that Section 26(1) of the Act in so far as it authorises the Commissioner of Commercial Taxes to make rules with retrospective effect is illegal and ultra vires the Constitution inasmuch as it amounts to excessive delegation of power by the legislature. It is urged on behalf of the appellant that the provision of Section 26(1) of the Act as amended, purports to affect the vested right of the appellant by reopening the assessments. We do not find any substance in this contention. There can be no doubt that the legislature is competent to legislate on a subject with retrospective effect. It is also beyond doubt that the legislature has the authority to affect vested rights by necessary enactments in that regard. It is, however, argued that such retrospective legislation affecting vested rights is subject to the fundamental rights of citizens guaranteed under Article 19 of the Constitution. In the instant case, in our opinion, no fundamental right is involved. The appellant cannot claim that he has the fundamental right to evade payment of tax. There is also no question of excessive delegation. The contention is accordingly overruled.
5. The next point that has been argued on behalf of the appellant relates to the validity of the amendment made to Clause (ii) of Sub-rule (5) of Rule 80 of the Bengal Sales Tax Rules, 1941, hereinafter referred to as the Rules, by the Government notification dated 30th March, 1974. Sub-rule (5) of Rule 80, as it stood before the amendment by the said notification, inter alia, provided :
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-
(i) the time within which an appeal or application for revision, as the case may be, may be made before him has not expired ; or
(ii) the assessment has been made or the order has been passed more than four years previously.
6. Sub-rule (5) was amended by the said Government notification, the relevant portion of which is set out below :
Notification No. 1123 F. T. dated 30th March, 1974.
In exercise of the power conferred by Section 26 of the Bengal Finance (Sales Tax) Act, 1941 (Ben. Act VI of 1941), the Governor is pleased hereby to make, with effect from the 1st November, 1971, the following amendments in the Bengal Sales Tax Rules, 1941, as subsequently amended (hereinafter referred to as the said rules), namely:-
Amendments
In Rule 80 of the said rules, in Sub-rule (5),-
(a) in Clause (ii), for the words 'four years', substitute the words 'six years';
(b) in the second proviso, for the words 'four years', substitute the words 'six years'.
7. It is contended on behalf of the appellant that the State Government has no authority to amend Sub-rule (5) with retrospective effect. It is now well-settled that a rule-making authority cannot make rules with retrospective effect unless such authority is conferred with power in that regard, either expressly or by necessary implication, by the Act under which such rules are made. It has been observed by the Supreme Court in State of Madhya Pradesh v. Tikamdas A.I.R. 1975 S.C. 1429, that there is no doubt that unlike legislation made by a sovereign legislature, subordinate legislation made by a delegate cannot have retrospective effect unless the rule-making power in the concerned statute expressly or by necessary implication confers power in this behalf. By the amendment of Section 26(1) of the Act, express power has been conferred on the State Government in clear and unambiguous terms to make rules with retrospective effect. Sub-rule (5) has been amended by the State Government by the said notification in exercise of its power under Section 26(1) of the Act. The State Government, in our opinion, had authority to amend Clause (ii) of Sub-rule (5) of Rule 80 with retrospective effect. The contention of the appellant challenging the authority of the State Government to amend Clause (ii) of Sub-rule (5) with retrospective effect is without any substance and is rejected.
8. Lastly, the appellant 'has challenged the jurisdiction of the Assistant Commissioner of Commercial Taxes to issue the impugned notices for the revision of the assessment orders. This challenge has been made on a ground different from that taken before the learned Judge at the hearing of the rule. The contention of the appellant in this regard is that as the right to revise the assessment orders stood barred under the unamended provision of Clause (ii) of Sub-rule (5) of Rule 80 of the Rules at the date of the said notification, the same cannot be revised under the amended provision of the rule. It has been already stated that by the Government notification dated 30th March, 1974, Clause (ii) of Sub-rule (5) of Rule 80 of the Rules has been amended. The effect of such amendment is that the Commissioner or any authority to whom power in this behalf has been delegated by the Commissioner, shall be entitled to revise any assessment made or order passed under the Act or the Rules within six years from the date of assessment. The amendment has taken effect from 1st November, 1971. Under the unamended provision of Clause (ii), the power of revision of any assessment was limited to four years from the date of assessment. It is not disputed that before the said amendment was made the right to revise the assessments of sales tax payable by the appellant for the periods in question had become barred on the expiry of four years from the date of assessment under the unamended provision of Clause (ii). It is urged by Mr. Bhattacharya for the appellant, that after such right was barred the assessments cannot be revised under the amended rule. It is contended that the amendment of Clause (ii) of Sub-rule (5) of Rule 80 of the Rules does not expressly or by necessary implication confer on the sales tax authorities the right to revise an assessment which had become barred before the amendment was made.
9. In support of his contention Mr. Bhattacharya has placed reliance on two decisions of the Supreme Court. In S. S. Gadgil v. Lal & Co. [1964] 53 I.T.R. 231 (S.C.), the facts were that on 27th March, 1957, the Income-tax Officer issued a notice on the assessee under Section 34 of the Income-tax Act for the assessment year 1954-55 as an agent of the non-resident party. It was contended by the assessee that the notice under Section 34 was barred because a notice of assessment or reassessment under proviso (iii) to Section 34(1)(b), as it stood prior to its amendment by Section 18 of the Finance Act, 1956, could not be issued after the expiry of one year from the end of the year of assessment and this period expired on 31st March, 1956. By Section 18 of the Finance Act, 1956, proviso (iii) was amended and the period of one year was extended to two years from the end of the assessment year and the Income-tax Officer sought recourse to the amended section for initiating the assessment proceeding. Shah, J., who delivered the judgment of the court, observed as follows :
As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income-tax Act before it was amended, ended on 31st March, 1956. It is true that under the amending Act by Section 18 of the Finance Act, 1956, authority was conferred upon the Income-tax Officer to assess a person as an agent of a foreign party under Section 43 within two years from the end of the year of assessment. But the authority of the Income-tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act. The legislature has given to Section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to 1st April, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred.
10. In the next Supreme Court case of J. P. Jani v. Induprasad Devshanker Bhatt [1969] 72 I.T.R. 595 at 001 (S.C.), what happened was, inter alia, that the respondent was assessed by the Income-tax Officer for the assessment year 1947-48 by an assessment order dated 31st January, 1952. Under Section 34(1) of the Income-tax Act, 1922, the Income-tax Officer had power to assess or reopen assessment of any year in cases falling under Clause (a) of Section 34(1) at any time within 8 years and in cases falling under Clause (b) of that section at any time within 4 years of the end of that year. The Income-tax Act, 1922, was repealed by the Income-tax Act, 1961. Under the new Act, the corresponding provisions of Section 34 of the old Act are Sections 147 to 153. The time for taking action for assessment or reassessment in case of escaped income exceeding Rs. 50,000 but less than Rs. 1,00,000 was enlarged from 8 years to 16 years by Section 149(1)(a)(ii) of the new Act. On 4th January, 1963, the Income-tax Officer issued a notice calling upon the respondent to show cause why proceedings should not be taken under Section 147(a) of the new Act for bringing to tax the escaped profit of the respondent. The respondent protested against the new notice on the ground that action under the old Act had become time-barred and the new Act had no application to his case. Subsequently, a notice under Section 148 of the new Act was issued on 13th November, 1963, and this notice was followed by another notice dated 9th January, 1964, issued under Section 142(1). The respondent filed a writ petition before the Gujarat High Court. That High Court set aside the said notices on the ground that as the right of the Income-tax Officer to reopen the assessment of the respondent was admittedly barred under Section 34(1 )(a) of the old Act at the commencement of the new Act, it was, therefore, not competent for the Income-tax Officer to issue a notice under Section 148 of the new Act in order to reopen the assessment of the respondent and to reassess the income-tax of the respondent. On behalf of the Income-tax Officer reliance was placed on Section 297(2)(d)(ii) of the new Act, which inter alia provides as follows:
297. Repeals and savings.-(1)....
(2) Notwithstanding the repeal of the Indian Income-tax Act (11 of 1922) (hereinafter referred to as the repealed Act)....
(d) where in respect of any assessment year after the year ending on the 31st day of March, 1940:....
(ii) any income chargeable to tax had escaped assessment within the meaning of that expression in Section 147 and no proceedings under Section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under Section 148 may, subject to the provisions contained in Section 149 or Section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly.
11. The Supreme Court observed as follows :
In our opinion it is not permissible to construe Section 297(2)(d)(ii) of the new Act as reviving the right of the Income-tax Officer to reopen the assessment which was already barred under the old Act. The reason is that such a construction of Section 297(2)(d)(ii) would be tantamount to giving of retrospective operation to that section which is not warranted either by the express language of the section or by necessary implication. The principle is based on the well-known rule of interpretation that, unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time. On behalf of the appellants reference was made to the opening phrase 'where in respect of any assessment year after the year ending on the 31st day of March, 1940' occurring in Section 297(2)(d)(ii) of the new Act, but these general words cannot take in their sweep all assessment years subsequent to the year ending on 31st March, 1940, without regard to the question whether the right to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act. We consider that the language of the new section must be read as applicable only to those cases where the right of the Income-tax Officer to reopen the assessment was not barred under the repealed section. In our view, the new statute does 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 old Act.
12. There can be no doubt that the above two decisions of the Supreme Court clearly support the contention of the appellant that the amended provision of Clause (ii) of Sub-rule (5) of Rule 80 of the Rules does not, either expressly or by necessary implication, confer any power on the sales tax authorities to revise or reopen the assessment which had become barred under the unamended provision of that rule. It is no doubt true that Clause (ii) of Sub-rule (5) of Rule 80 has been amended with retrospective effect, but it is of a limited retrospective operation. By the amendment of the rule, revision of assessments which have been completed can be revised within six years of the date of such completion, but when the right to revise the assessment which, under the unamended provision of the rule, stood barred at the date the amendment was made, such assessment, though made within six years of the date of the proposed revision, cannot be reopened or revised. The said notification by which Clause (ii) of Sub-rule (5) of Rule 80 has been amended does not, in our opinion, either expressly or by necessary implication, confer any such power of revision of an assessment which stood barred on the date the notification was issued. In view of the principles of law laid down in the above Supreme Court decisions, this appeal must succeed.
13. The appeal is accordingly allowed. The impugned notices dated 7th November, 1974, and 7th December, 1974, of the Assistant Commissioner of Commercial Taxes, Chowringhee Circle, are quashed. Let an appropriate writ issue in that regard. The rule nisi is made absolute. There will, however, be no order for costs.
14. As prayed for by the learned Advocate for the respondents there will be a stay of operation of this order for a period of six weeks from date.
D.C. Chakravorti, J.
15. I agree.