ORDER
K.L. Pandey, J.
1. This petition under Articles 226 and 227 of the Constitution is directed against an order of the Sales Tax Officer, Circle No. 1, Jabalpur, whereby he overruled the petitioner's objection to the effect that he could not be reassessed under Section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter called the new Act).
2. The petitioner is a registered dealer, who carries on the business of selling parts of motor vehicles, typewriters, sewing machines etc. under the name and style of 'Modern Machinery Agency, Katni'. He had furnished in the usual manner his returns for the period 3rd November, 1956, to 23rd October, 1957. Since the Sales Tax Officer did not accept those returns as correct and complete, he issued on 10th March, 1959, a notice in Form XII to the petitioner. In due course, on 23rd May, 1959, the petitioner's sales were assessed to tax under Section 11(4)(a) of the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter called the repealed Act). On 23rd October, 1962, a notice under Section 19(1) of the new Act was issued to the petitioner for assessing to tax his sales for the same period which had escaped assessment. Thereupon, the petitioner raised a preliminary objection that for taxing the sales which allegedly escaped assessment, the limitation was three years as prescribed by Section 11-A of the repealed Act. By the impugned order, the Sales Tax Officer rejected that objection and decided to proceed with the assessment.
3. The two relevant provisions, Section 11-A of the repealed Act and Section 19 of the new Act, are reproduced :
11-A. (1) If, in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess, as the case may be, the tax payable on any such turnover ; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount.
(2) The assessment or reassessment made under Sub-section (1) shall be at the rate at which it would have been made, had there been no under-assessment or escapement.
'19. (1) Where an assessment has been made under this Act and the Commissioner, in consequence of any information which has come into his possession, is satisfied that any sale or purchase of goods charge-able to tax under this Act, during any year has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years from the expiry of such year, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to reassess the tax payable on any such sale or purchase and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount:
Provided that in the case of an assessment made under any Act repealed by Section 52, the period for reassessment on the ground of under-assessment, escapement or wrong deduction shall be as provided in such Act notwithstanding the repeal thereof.
(2) The reassessment made under Sub-section (1) shall be at the rate at which it would have been made had there been no under-assess-ment or escapement or wrong deduction.
(3) If for any reason the licence fee, registration fee or exemption fee has escaped levy or has been charged at a lower rate in any year, the Commissioner may, at any time within a period of three calendar years next succeeding that to which such fee relates, levy the correct amount of the fee payable in respect of that year after issuing a notice to the dealer and after making such enquiry as he considers necessary; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of fee so levied, a sum not exceeding that amount.
It is obvious, and is also not disputed, that if the limitation of three years prescribed by Section 11-A of the repealed Act applies, the proceedings initiated for taxing the sales which had escaped assessment are long out of time. On the other hand, if the limitation of five years enacted in Section 19(1) of the new Act governs this case, the proceedings may be within time.
4. The question for consideration is whether the period of limitation for taxing the sales made during the relevant period, which escaped assessment, is the one prescribed by Section 11-A of the repealed Act or the one enacted in Section 19(1) of the new Act. In our opinion, the proviso to Section 19(1) ibid furnishes the answer. It reads :
Provided that in the case of an assessment made under any Act repealed by Section 52, the period for reassessment on the ground of under-assessment, escapement or wrong deduction shall be as provided in such Act notwithstanding the repeal thereof.
Since the original assessment in this case was expressly made under the repealed Act, the period for reassessment was, notwithstanding the repeal, the one prescribed by the repealed Act, namely, three calendar years from the expiry of the period 3rd November, 1956 to 23rd October, 1957. That being so, the proceedings initiated on 23rd October, 1962, for taxing the sales made during the period, which had escaped assessment, must be regarded as out of time.
5. It is, however, urged that the original assessment, which was made on 23rd May, 1959, after the repealed Act ceased to be in force on 1st April, 1959, must, in view of the proviso to Section 52(1) of the new Act, be deemed to have been made under that Act and not under the repealed Act. Section 52(1) reads:
52. (1) The Central Provinces and Berar Sales Tax Act, 1947, the Madhya Bharat Sales Tax Act, Samvat 2007, the Central Provinces and Berar Sales Tax Act, 1947 as extended to Vindhya Pradesh and Bhopal regions and as in force in those regions immediately before the commencement of this Act, and the Rajasthan Sales Tax Act, 1954, as in force in Sironi region, are hereby repealed:
Provided that such repeal shall not affect the previous operation of the said Acts or any right, title, obligation or liability already acquired, accrued or incurred thereunder, and subject thereto, anything done or any action taken (including any appointment, notification, notice, order, rule, form, regulation, certificate or licence) in the exercise of any power conferred by or under the said Acts shall, in so far as it is not inconsistent with the provisions of this Act, 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.
6. The proviso to Section 52(1) of the new Act may be conveniently separated into two parts as follows:
(i) The repeal shall not affect the previous operation of the Act repealed or any right, title, obligation or liability already acquired, accrued or incurred thereunder,
and subject thereto
(ii) anything done or any action taken in exercise of the powers conferred by or under the repealed Acts shall, in so far as not inconsistent with the provisions of the new Act, be deemed to have been done or taken in exercise of the powers conferred by or under the new Act as if it were in force on the date on which such thing was done or action was taken.
It is obvious that the fiction introduced in part (ii) is subject to, and without any effect upon, any right, title, obligation or liability already acquired, accrued or incurred under the repealed Act as specified in part (i). The three key-words 'and subject thereto' make this position very clear.
7. In the instant case, the notice in Form XII was issued before the commencement of the new Act on 1st April, 1959. The lis had, therefore, arisen before that Act came into force : Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh [1953] S.C.R. 987. That being so, the petitioner's liability under the repealed Act was preserved and he had a right to insist that his sales be taxed at the rates therein specified and not at the higher rates prescribed by the new Act. His remedial rights of appeal, revision and reference, except in so far as they were expressly taken away, were also preserved: Janardan Reddy v. The State [1950] S.C.R. 940, Ganpat Rai Hiralal v. Aggarwal Chamber of Commerce Ltd. [1953] S.C.R. 752, Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh [1953] S.C.R. 940, Garikapati Veeraya v. N. Subbiah Choudhry [1957] S.C.R. 488 and Nathulal Chholelal Shellac Factory v. Deputy Commissioner of Sales Tax [1962] M.P.L.J. 633.
8. It is urged that the proviso to Section 19(1) of the new Act refers only to assessments made before its commencement and it will not apply to assessments made after that Act came into force even in proceedings initiated earlier. In our opinion, the latter assessments are equally within the ambit of Section 19(1) by virtue of part (i) of the proviso to Section 52(1) of the new Act. The reason is that an enactment saving rights, obligations and liabilities has reference to such rights, obligations and liabilities as have not been fully worked out. The principle of interpretation is thus stated in Halsbury's Laws of England, Second Edition (Volume 31 at page 486):
It can only preserve things which were in esse at the time of its enactment, and therefore cannot affect transactions which were complete at the date of the repealing statute.
So far as the rights, obligations and liabilities are saved, the effect is that portions of the repealed Act pro tanto remain in force as if the repealing Act has not been passed.
Their effect is that portions of the repealed statute remain in force as if the second statute had not been passed; and, unlike exceptions from an enacting clause, they are liberally construed. [Halsbury's Laws of England, Second Edition, Volume 31, page 485].
9. No doubt the fiction introduced by part (ii) of the proviso to Section 52(1) of the new Act is widely worded and covers anything done or any action taken, including assessments already made, under the repealed Acts. Its effect is, however, considerably curtailed by two restrictions. In the first place, it is subject to part (i) of the proviso and cannot be read as overriding its effect. Secondly, it cannot be given effect to in so far as it is inconsistent with the provisions of the new Act. That being so, the fiction cannot be construed as overriding either the proviso to Section 19(1) or part (i) of the proviso to Section 52(1) of the new Act. The position, therefore, is that in the matter of assessment of sales tax for the year 1956-57, the petitioner was not only assessed under the repealed Act but he had also a right to be so assessed. It follows that the assessment made on 23rd May, 1959, is within the ambit of the proviso to Section 19(1) of the new Act.
10. Since the Sales Tax Officer has erroneously decided the ques-tion of limitation and proceeded to tax the sales which had escaped assessment more than three calendar years from 23rd October, I957, the proceedings initiated by him cannot be sustained.
11. The petition succeeds and is allowed. The proceedings initiated by the Sales Tax Officer, Circle No. 1, Jabalpur, for taxing the petitioner's sales during the period 3rd November, 1956, to 23rd October, 1957, which had escaped assessment, the notices issued by him for that purpose including the one dated 23rd October, 1962, and the order dated 29th October, 1962, are quashed. The respondent shall bear his own costs and pay those incurred by the petitioner to whom the security amount shall also be refunded. Hearing fee Rs. 50.