R. Gururajan J.
1. The petitioners in these petitions are challenging the proceedings initiated by the Assistant Commissioner of Agricultural Income-tax, the facts in both these cases are the same or similar.
2. The petitioner in W. Ps. Nos. 32256-257 of 2000 owns coffee plantations in Kodagu District. He submitted his agricultural income-tax returns in terms of the Agricultural Income-tax Act. Section 66 provides for composition of agricultural income-tax payable by the petitioner under the Act. The petitioner made application for composition and the same was accepted. Thereafter, the petitioner wrote letters claiming the benefit for the subsequent assessment years in the light of earlier permission. The respondents, however, directed the petitioner to file his returns for the assessment year 2000-01 in the light of an amendment in terms of the Act No. 5 of 2000. The petitioner is challenging the said endorsement in these petitions.
3. The petitioner in W. P No. 47091 of 2001 state that the respondents granted permission under Section 66 in the light of an application for the purpose of composition under the Act. The petitioner filed Form No. 3 with a demand draft towards composition tax payable for the subsequent years. Notice was issued to produce various documents in terms of annexure A. The petitioner submitted a reply in terms of annexure B and endorsement was issued by the respondent rejecting the request of the petitioner. The petitioner in this petition is therefore before me.
4. The respondents have entered appearance and they oppose the petitions. They strongly rely on the amendment made to the Act for the purpose of their demand in terms of the Act.
5. Heard learned counsel for the parties, Sri Sarangan, learned senior counsel, invites my attention to the scheme of the Act in the matter of composition. Learned counsel says that the petitioners are entitled for exemption for the next two years immediately following, in terms of Section 66(5) of the Act. According to him, the subsequent amendment cannot render ineffective the earlier composition permission in terms of the Act. He relies on three judgments with regard to a vested right in his favour. Per contra, the learned Government advocate says that in terms of the amendment, the petitioners are liable to pay the tax and the grant of permission is based on the earlier provision before amendment and that permission cannot come to the aid of the petitioner.
6. After hearing learned counsel, I have carefully perused the material on record. Section 66(1) provides for composition of agricultural income-tax. The said provision reads as under :
'66 Composition of agricultural income-tax.--(1) Where the total extent of land under plantation crop held by any person does not exceed fifty acres such person may subject to such rules as may be prescribed, apply to the prescribed officer for permission to compound the agricultural income-tax payable by him and to pay in lieu thereof a lump sum at the rate specified in the table.'
7. Sub-section (5) of Section 66 reads as under :
'The permission granted under Sub-section (4) shall be in force for the year for which it is granted and shall continue to be in force for the next two years immediately following or until such time the extent of land holding exceeds the maximum specified in Sub-section (1) whichever is earlier, and in respect of that period the provisions of this Act relating to the submission of returns, accounts or other documents or the assessment to agricultural income-tax shall not apply to the grantee.'
8. A combined reading of Section 66(1) with Sub-section (5) would show that once the composition is accepted and permission is granted, the same has a life of three years including the relevant assessment year. Admittedly, the petitioner has the benefit of permission in terms of Section 66 of the Act. Let me see as to whether the amendment effected to Section 66 would in any way alter the situation prior to the amendment dated April 1, 2000. A careful reading of Sub-section (5) of Section 66 would show that the permission granted is to continue for the next two years immediately following. The said permission cannot be withdrawn or nullified on the ground that the same is not available to the company after April 1, 2000, in terms of the amendment. The law is fairly well settled that unless retrospective effect is given to a statute, the same is not to be extended in taxing statutes. In this connection it is necessary to notice the three judgments of the Supreme Court relied on by learned counsel for the petitioner.
9. The Supreme Court in J.P. Jani, ITO v. Induprasad Devshanker Bhatt : [1969]72ITR595(SC) has categorically ruled as under (headnote) :
'Unless the terms of a 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'.
10. This finding of the Supreme Court is based on its earlier judgment reported in S. S. Gadgil v. Lal and Co, : [1964]53ITR231(SC) . In the subsequent judgment reported in CED v. M. A, Merchant : [1989]177ITR490(SC) , the Supreme Court has ruled as under (headnote) :
'There is a well settled principle against interference with vested rights by subsequent legislation unless the legislation has been made retrospective expressly or by necessary implication.'
11. The Supreme Court in K.M. Sharma v. ITO : [2002]254ITR772(SC) based on its earlier judgment reported in S. S. Gadgil v. Lal and Co. : [1964]53ITR231(SC) has ruled as under (headnote) :
'A taxing provision imposing liability is governed by the normal presumption that it is not retrospective and the settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot, in the absence of clear contrary intendment expressed therein, be given greater retrospectivity than is expressly mentioned so as to enable the authorities to affect finality of tax assessments or to reopen liabilities which have become barred by lapse of time.'
12. In the case on hand, admittedly, the petitioners have claimed right in terms of Section 66(1) as it stood prior to April 1, 2000, with regard to extension of permission for the subsequent two years. That right cannot be rendered ineffective in the light of non-availability of composition to the company by subsequent prospective amendment. The proceedings initiated by the respondent would not in any way provide a retrospective operation to the amendment, that is not the intention of the legislation and that is not the law in so far as retrospective nature is concerned particularly in fiscal statutes. In these circumstances, Sri Sarangan, learned senior counsel is fully justified in contending that the subsequent proceedings are without jurisdiction This finding of mine finds support in the light of the subsequent amendment in the year 2002. The Legislature at any rate has chosen to omit the words 'and shall continue to be in force for the next two years immediately following or until such time the extent of land holding exceeds the maximum specified in Sub-section (1) whichever is earlier' and also the words 'of three years' in Sub-section (6) of Section 66. A reading of the amended provision would show that the Government never intended to withdraw or nullify the permission granted for the subsequent two years in terms of Section 66(5) of the Act. The argument of the Government that the authorities are right, cannot be accepted and any acceptance of such submission would result in retrospective nature to the amendment which is not the case in terms of my finding.
13. In these circumstances, these petitions stand allowed. The proceedings initiated by the respondent are set aside. A direction is issued to the respondent not to proceed under the Act until the period of three years in terms of Section 66(5) comes to an end including the relevant assessment year. Liberty is reserved to the authorities to initiate action subsequent to three years in accordance with law.
14. Ordered accordingly. Parties are to bear their respective costs.