Milan Supari Stores Vs. Commissioner of Commercial Tax and ors. - Court Judgment

Excerpt:
sales tax - reassessment - sections 27(8) and 27(9) of madhya pradesh commercial tax act, 1994 and sections 19 (1) and 44(1) of madhya pradesh general sales tax act, 1958 - appellant was registered partnership firm - reassessment proceedings initiated against appellant's firm on basis of report of flying squad - being aggrieved, appellant preferred appeals before appellate authorities - appeals dismissed and order of assessing authority upheld - appellant filed reference application before board of revenue under section 44(1) of act, 1958 - board of revenue decided matter in appellant's favour and held that as no opportunity of cross-examination of witnesses afforded to appellant, proceedings were not in conformity with section 19(1) of act, 1958 - matter remitted back to assessing officer (ao) for granting opportunity of hearing and cross-examination to appellant - ao, however, without providing opportunity of cross-examination of witnesses to appellant, raised demand and directed appellant to pay additional tax - against said order, appellant preferred revision before commissioner who held that appellant was not given proper opportunity of being heard and remanded matter back to ao for afresh consideration - however, instead of prosecuting case before ao, appellant filed writ petition challenging assessment order on ground of limitation - petition dismissed - hence, present appeal - held, on careful consideration of fact and record it apparent that appellant having been denied opportunity of being heard and cross-examination in first round of litigation, not availed fresh opportunity to contest on this point by participating in proceedings before assessing authority after case was again remanded by revisional authority nor did he move this court by way of contempt petition or otherwise for enforcement of that direction - further, state government empowered under section 27(9) of act, 1994 to extend period of limitation in respect of cases falling in section 27(8) of act, 1994 including its proviso by issuing notification - as in present case, notification for extension of time issued and present case fall under proviso (a) of section 27(8) of act, 1994, assessment order passed was well within limitation - no infirmity in impugned order - appeal dismissed as without merit - section 2(f): [dipak misra, k.k. lahoti & rajendra menon, jj] service tax - packaging and bottling of liquor whether amounts to manufacture within meaning of section 2(f) of central excise act 1944? finance act 932 of 1994), section 65 (76 b) (as amended on 16.6.2005) - held, the first limb of the inclusive definition of the manufacture under section 2(f) of central excise act has a very wide connotation. as the definition clause lays down an inclusive facet, the term manufacture has to be construed in a natural and plain manner and would include any process incidental or ancillary to the completion of a manufactured product. keeping in view the context in which the term manufacture has been used, it would take in its fold incidental and ancillary process in the manufacture or finishing of any manufactured product. it does not leave any room for doubt that an allied process should be integral and inextricable part of manufacture of completeness and presentability of the manufactured product. section 65(76b) of finance act used the words but it does not include. thus it is a definition which has the inclusive as well as exclusive facet. by virtue of the same it may include certain things and exclude others. it is well settled principle of law that a definition is not to be read in isolation and has to read in context of phrase which it defines, releasing that function of a definition is to give precision and certainty to the word or phrase which would otherwise be vague and uncertain. regard being had to the exclusionary fact in the finance act, though a limited one it would exclude the manufacturing process as defined under section 2(f) of the 1944 act. keeping in view the aforesaid dictionary clauses and circulars issued by the c.b.e.c. it is quite luminescent that would manufacture has to be understood in a broader sense and not to be confined or restricted to the excisable product in the act. it would include all processes which amount to manufacture whether or not the final product is an excisable product. in the process of manufacturing of country spirit, the over proof spirit which is not potable is reduced to issuable strength, which is potable. colouring and flavouring agents are added at the time of maturation. thereafter the liquor is supplied in sealed bottles to the retail contractors. this is the process of treatment given to over proof spirit in order to render it fit for human consumption in the form of country liquor. if the process is analysed there cannot be any scintilla of doubt that the process involves the manufacturing one under the provisions of section 2(f) of central excise act, 1944. as per the m.p. country spirits rules as well as clause 6 of the tender conditions it is mandatory for a distiller to supply country liquor in sealed bottles and not otherwise. therefore, packaging and bottling of liquor come within the ambit and sweep of manufacture within the meaning of clause (f) of section 2 central excise act, 1944 in view of the definition contained in section 65(76b) of the finance act especially keeping in view the exclusionary facet and further regard being had to the circular issued by central board of excise and customs. - and (emphasis supplied) (ii) in respect of a dealer who has failed to apply for registration, within a period of two calendar years from the commencement of proceedings under sub-section (6): (emphasis supplied) provided that--(a) where a fresh assessment has to be made to give effect to any finding or direction, contained in any order under sections 61, 62 or 70 or to any order of the civil court, high court or supreme court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or g direction or the order of the civil court, high court or supreme court, as the case may be. and (ii) in respect of a dealer who has failed to apply for registration, within a period of (two calendar years) from the commencement of proceedings under sub-section (6): (emphasis supplied) provided that--(a) where a fresh assessment has to be made to give effect to any finding or direction contained in any order under sections 38, 39 or 44 or to any order of the civil court, high court or supreme court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or direction or the order of the civil court, high court or supreme court, as the case may be. a-3-76-2000-(st-v-(85) dated the 20th december, 2000. whereas, the state government is satisfied that--(i) there has been a considerable increase in the number of a dealers liable to pay tax under the madhya pradesh vanijyik kar adhiniyam, 1994 (no. krishna warriar [1964]53itr176(sc) also it has been held that the language of the substantive provision as well as the proviso may establish that the proviso is not a qualifying clause of the main provision, but is in itself a substantive provision.orderuma nath singh, j.1. this letters patent appeal has been preferred by the assessee-appellant against an order dated september 16, 2003 passed by learned single judge dismissing the writ petition (w.p. no. 674 of 2002) while holding that a notification issued under sub-section (9) of section 27 of the madhya pradesh commercial tax act, 1994 (hereinafter referred to as 'the mpct act') extending the period of limitation would not only cover the limitation prescribed under sub-section (8) of section 27 but it would also cover the one provided under proviso (a) of sub-section (8).2. the appellant's case, in brief, is that it is a partnership firm engaged in the business of purchase and sale of supari, elaichi and khopra, etc. the firm is a registered dealer under the provisions of the madhya pradesh general sales tax act, 1958 (for short 'the mpgst act') now known the madhya pradesh commercial tax act, 1994, the central sales tax act, 1956 and the m.p. entry tax act, 1976. the appellant's original assessments for the period from april 1, 1978 to march 31, 1979 and april 1, 1979 to march 31, 1980 though were completed by the then assessing authority but subsequently they were reopened under section 19(1) of the mpgst act, 1958 on the basis of a report of a flying squad forwarded to the assessing authority. the said report was prepared and forwarded by the flying squad authorities purportedly exercising powers under section 29-d of the mpgst act, 1958. it appears that though on the basis of the said report, reassessment proceedings were completed by the assessing authority but a copy thereof was not supplied to the appellant nor was it given an opportunity to cross-examine the witnesses who deposed against it and were relied upon by the department for reassessment. the reassessment proceedings were completed, vide the order dated september 14, 1984. it is further the appellant's case that similar assessments were also done on the basis of the same report of the flying squad for the period from april 1, 1980 to march 31, 1981, vide an order also passed on september 14, 1984. however, assessment done in respect of the period 1980-81 was different from the earlier assessments, inasmuch as this assessment was an irregular assessment and it was not done under section 19(1) of the mpgst act. being aggrieved by the aforesaid assessments, the appellant preferred appeals before the first and the second appellate authorities, who however, upheld the order of the assessing authority passed on the basis of the flying squad's report. thereafter the appellant filed a reference application before the board of revenue under section 44(1) of the mpgst act, 1958, which referred the questions of law to this court for opinion, seemingly, on three points, namely; (i) as to whether the dealer was entitled to have an opportunity to cross-examine the witnesses who had deposed against him so as to meet the allegations levelled in the inspection report of the flying squad; (ii) as to whether there could be a reassessment against the original assessment order against which appeals had already been filed and disposed of; and (iii) as to whether the burden of explaining, proving and reconciling the information discovered by the flying squad against the dealer-appellant lay upon it.3. a division bench of this high court vide the order dated october 16, 1996 passed in misc. civil case no. 547 of 1992 and misc. civil case no. 389 of 1994 only answered the question no. 1 in favour of the assessee and in view of this answer, the court declined to answer the questions nos. 2 and 3 and the same were not pressed before the court. the court further held that it was necessary for the authority to afford the opportunity of cross-examination of witnesses by the appellant so as to make the proceedings in conformity with section 19(1) of the mpgst act, 1958 which reads as under:19. assessment of turnover escaping assessment.--(1) where an assessment has been made under this act or any act repealed by section 52 and if for any reason any sale or purchase of goods chargeable to tax under this act or any act repealed by section 52 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 five calendar years from the date of order of assessment, 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 within a period of two calendar years from the commencement of such proceedings, the tax payable by such dealer and the commissioner may, where the omission leading to such reassessment is attributable to the dealer, 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.looking to the above provisions, this court held that the tribunal committed an error of law in holding that a reasonable opportunity had been afforded to the assessee for meeting the allegations against it based on an inspection report of the flying squad and also in further holding that there was no necessity to afford it an opportunity to cross-examine witnesses. thus, the court found that the tribunal decided the case in a manner being contrary to the provisions of a section 19(1) of the mpgst act, 1958.4. towards compliance of the aforesaid order, the revenue board, being the competent tribunal, heard the contentions of both the parties and transmitted the case to the assessor for granting assessee-appellant an opportunity of hearing and cross-examination of witnesses. accordingly assistant commissioner being assessing officer in this case started proceedings and issued notices to the parties in terms of the order passed on may 28, 2001. it appears that despite service having been effected on the assessee-appellant, it did not turn up to present its case before the assessor. the assessing officer, thus, recorded that since the case was 18 to 20 years old, it was not possible to cross-examine the witnesses, therefore, he reiterated the demand raised vide the earlier order of assessment dated september 14, 1984 and the assessee was directed to pay rs. 1,09,630 as additional tax amount. against the said order the appellant preferred a revision before the commissioner of commercial tax, indore. in that revision the assessee came with a new plea on the ground of limitation that the board of revenue (tribunal) had passed the order on january 31, 1998 whereas assistant commissioner being the assessing authority passed the order on may 28, 2001 which was beyond the period of limitation that was two calendar years from the date of the tribunal's order. the assessee also pleaded that the assessing authority passed an ex parte reassessment order without following the directions of the high court and the tribunal. the assessee took another plea that the flying squad was not constituted as per the provisions of section 29-d of the mpgst act, 1958. the commissioner, vide his order dated january 31, 2002 passed in revisions nos. 52 and 53 of 2001 held that the assessee was not given proper opportunity of being heard as the first notice was issued on may 21, 2001 and the case was listed only on may 28, 2001 for hearing. further, the notice was only affixed at the address of the assessee. however, as per panchnama, it was said that the assessee had declined to accept the notice. as regards the principal plea of the assessee that the fresh assessment was not done within the period of limitation as prescribed under proviso (a) to sub-section (8) of section 27 of mpct act, 1994 (which contained the provision that in such cases where the court passed an order remanding a case for fresh assessment, the assessment should be done within two calendar years, from the date of such order) the revisional authority/ commissioner found the contention devoid of substance on the ground that the state government extended the period of limitation up to may 31, 2001 under section 27(9) of the mpct act, 1994, vide notification no. (85) dated december 20, 2000 and notification no. (36) dated april 30, 2001. the revisional authority also held that in terms of proviso (c) of section 18(8) of the mpgst act, the period of limitation prescribed under this sub-section would not apply to an order passed under section 19(1) of the mpgst act. on reproduction the said proviso reads as under:(c) nothing contained in this sub-section shall apply to proceedings initiated under section 19 or any proceedings other than assessment of tax that may be instituted under any other provisions of this act.as regards constitution of flying squad in terms of section 29-d of the act, the commissioner found the contention not sustainable as this plea was not taken either in the first appeal before deputy commissioner against the original order of assessment or in the second appeal before the revenue board or before the high court in reference. thus, the case was again remanded to the assessing officer for afresh consideration to pass appropriate order after hearing the assessee.5. however, instead of prosecuting the case before the assessor, the petitioner filed writ petition no. 674 of 2002 challenging the assessment order and the order of the commissioner in revision on the grounds that the assessment order was illegal and it was a nullity in the eye of law inasmuch as it was passed beyond the period of limitation as prescribed under proviso (a) to section 27(8) of the mpct act, 1994 read with similar provisions as contained insection 18(8) of mpgst act, 1958 and proviso (a) thereof. it was also contended that for proviso (a) a special notification was needed and the notifications referred to in the revisional order were not issued in respect of the said proviso. that apart the appellant also contended that he was served notice by affixture without satisfying the provisions of rule 63 of the mpgst rules, 1959, read with corresponding rule 86 of the mpct rules, 1995. the appellant also questioned the validity of the constitution of flying squad under section 29-d of the mpgst act, 1958. the appellant also pleaded that it was not given proper opportunity for cross-examination of the witnesses.by the impugned order, the learned single judge has rejected the principal contention of the appellant on the point of limitation holding that proviso (a) to sub-section (8) of section 27 cannot be read separately, when the provisions of the sub-section of which the proviso forms a part, are controlled by the non obstante clause of sub-section (9) of section 27 of the mpct act, 1994. therefore, the learned single judge has found that no separate notification was necessary a for the purpose of proviso (a) to extend the period of limitation.6. we have heard learned counsel for the parties and perused the records.7. shri p.m. choudhary, learned counsel appearing for the appellant, reiterated his contentions as raised before the learned single judge. the main emphasis of his arguments was again directed to the point of limitation. to deal with the question of extension of limitation period by the impugned notification issued under section (9) of section 27 of the mpct act, 1994 in respect of cases of fresh assessment under courts' orders, it would be necessary to extract and reproduce the relevant provisions of the mpct act, 1994 and the corresponding provisions of the mpgst act, 1958 (not been referred to in the impugned order) which read as under:section 27(8) and (9) of the mpct act, 1994.(8) the assessment shall be made under this section--(i) in respect of a registered dealer and a dealer referred to in clause (b) of sub-section (6) within a period of two calendar years from the end of the period for which assessment is to be made; and(emphasis supplied)(ii) in respect of a dealer who has failed to apply for registration, within a period of two calendar years from the commencement of proceedings under sub-section (6): (emphasis supplied) provided that--(a) where a fresh assessment has to be made to give effect to any finding or direction, contained in any order under sections 61, 62 or 70 or to any order of the civil court, high court or supreme court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or g direction or the order of the civil court, high court or supreme court, as the case may be. if for any reason such fresh assessment is not made within the specified period, the commissioner shall take steps to ensure that assessment is made as expeditiously as possible;(emphasis supplied) (b) where an order of assessment ex parts is set aside and case reopened under section 72 for making a fresh assessment, such fresh assessment shall be made within a period of six calendar months from the date of setting aside the ex parts, order of assessment or within the period laid down in clause (i) whichever is later; and(c) nothing contained in this sub-section shall apply to proceedings initiated under section 28 or section 29 or any proceeding other than assessment of tax that may be instituted under any other pro-b visions of this act.(9) notwithstanding anything contained in sub-section (8), where assessment proceedings in respect of any dealer relating to any year cannot be completed before the expiry of the period specified therefor in the said sub-section, the state government, may by notification, for reasons to be recorded in writing, extend the period for the completion of the assessment proceedings in respect of such dealers by such further period as may be specified in such notification.(emphasis supplied) section 18(8) of the mpgst act, 1958.(8) the assessment shall be made under this section--(i) in respect of a registered dealer and a dealer referred to in clause (b) of sub-section (6), within a period of (two calendar years) from the end of the period for which assessment is to be made; and (ii) in respect of a dealer who has failed to apply for registration, within a period of (two calendar years) from the commencement of proceedings under sub-section (6): (emphasis supplied) provided that--(a) where a fresh assessment has to be made to give effect to any finding or direction contained in any order under sections 38, 39 or 44 or to any order of the civil court, high court or supreme court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or direction or the order of the civil court, high court or supreme court, as the case may be. if for any reason such fresh assessment is not made within the specified period, the commissioner shall take steps to ensure that assessment is made as expeditiously as possible.(emphasis supplied) the notifications dated 20th december, 2000 and 30th april, 2001 issued under sub-section (9) of section 27 of the mpct act, 1994. notification no. a-3-76-2000-(st-v-(85) dated the 20th december, 2000. whereas, the state government is satisfied that-- (i) there has been a considerable increase in the number of a dealers liable to pay tax under the madhya pradesh vanijyik kar adhiniyam, 1994 (no. 5 of 1995), the central sales tax act, 1956 (no. 74 of 1956) and the madhya pradesh sthaniya kshetra me mal ke pravesh par kar adhiniyam, 1976 (no. 52 of 1976);(ii) there has been no increase in the number of authorities competent to make assessment of such dealers under the said acts, commensurate with the increase in the number of such dealers and their assessment cases;(iii) the assessment proceedings of all such dealers due for completion by the end of the calendar year, 2000 under the provisions of sub-section (8) of section 27 of the madhya pradesh vanijyik kar adhiniyam, 1994 (no. 5 of 1995), have to be completed before the expiry of the calendar year, 2000.(iv) correct assessment of such dealers, on merits have to be made by the said authorities after affording them a reasonable opportunity of being heard;(v) despite efforts being made by the said authorities to complete such assessment proceedings by the end of the calendar year, 2000 such proceedings cannot be completed by the end of the said period; and(vi) the aforesaid proceedings need to be completed. now, therefore, in exercise of the powers conferred by sub-section (9) of section 27 of the madhya pradesh vanijyik kar adhiniyam, 1994 (no. 5 of 1995), the state government hereby extends up to 30th april, 2001 the period for completion of every such assessment proceedings in respect of every dealer which is not completed by the 31st december, 2000.(published in m.p. rajpatra, dated 20th december, 2000 at page 1486) (emphasis supplied) notification no. a-3-76-2000-st-v-(36) dated 30th april, 2001. in exercise of the powers conferred by sub-section (9) of section 27 of the madhya pradesh vanijyik kar adhiniyam, 1994 (no. 5 of 1995), the state government hereby makes the following amendments in this department notification no. a-3-76-2000-st-v(85) dated 20th december, 2000, namely: amendments.--in the said notification for the figures and words '30th april, 2001' the figures and word '31st may, 2001' shall be substituted.(published in m.p. rajpatra, dated april 30, 2001 at page 542).learned counsel for the appellant has argued that if a fresh assessment has to be made to give effect to any finding or direction contained in any order under section 61, 62 or 70 or to any order of a civil court, high court or the supreme court, then such assessment would be made only within a period of two calendar years from the date of the order, and if for any reason such fresh assessment is not made within the specified period, the commissioner shall take steps to ensure that assessment is made as expeditiously as possible. learned counsel has further argued that the notifications extending the period of limitation issued on december 20, 2000 and april 30, 2001 would not apply to the cases to be covered under proviso (a), as aforesaid.learned counsel has also reiterated other contentions which he had raised before the assessing authority, the revisional authority and the learned single judge and he has submitted that these points were not considered by the learned single judge nor were they referred to in the impugned order. the learned counsel informed the court that a petition challenging validity of the constitution of plying squad is pending before the learned single judge. to substantiate his aforesaid submissions, the learned counsel has also referred to the following citations which he had relied upon also before the learned single judge. they are: kedarnath jute . v. commercial tax officer : [1965]3scr626 , commissioner of sales tax, orissa v. halari store : air1998sc1517 , state of orissa v. debaki debi : [1964]5scr253 and commissioner of income-tax, kerala v. p. krishna warriar : [1964]53itr176(sc) . elucidating the ratio of the aforesaid judgments in support of his arguments learnedcounsel has urged that in taxing statutes, a proviso to section can be read as an independent provision as it carves out an exception to the section and qualifies the provisions thereof. he has also referred to craies on statute law (seventh edition by s.g.g. edgar, page 218) to contend that in respect of construction of proviso, the effect of anexcepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it [leveridge v. kennedy (1960) nzlr 1]. similarly he has also referred to another authoritative treatise on the subject being principles of statutory interpretation by justice g.p. singh (eighth edition, page 181) which says that 'proviso is a used to remove special cases from the general enactment and provide for them specially'.8. on the other hand, shri amit agrawal, learned government advocate appearing for the respondent/state supported the impugned order and pointed out that learned counsel for the appellant had only argued the first question of law on the point of opportunity of being heard and cross-examination of witnesses, and he had given up two other questions of law which had been referred to by the tribunal for opinion to the high court. learned counsel further submitted that in view of sub-section (9) of section 27 of the mpct act, 1994, c proviso (a) to sub-section (8) thereof does not constitute a different class and, therefore, no separate notification was required to be issued.9. on a careful consideration of the rival submissions, we are of the view that the impugned order does not call for any interference. the appellant having been denied opportunity of being heard and cross-examination of witnesses in the first round of litigation, has not availed of the fresh opportunity to contest on this point by participating in the proceedings before the assessing authority after the case was again remanded by the revisional authority nor did he move this court by way of a contempt petition or otherwise for the enforce- ment of that direction. on the other hand, learned counsel for the appellant has only concentrated on the point of limitation under proviso (a) to sub-section (8) of section 27 of the mpct act, 1994. needless to say that in view of sub-section (9) thereof containing non obstante clause, it cannot be ruled that proviso (a) to sub-section (8) bears a distinct character and can be read independently of section 27(8). rather the substantive provisions of the sub-section and the proviso, both, on plain reading seem to belong to the same genesis. had the intention of the legislature been otherwise, it would not have prescribed the same period of limitation, i.e., two years for both types of cases, that is, one, to be covered under the provisions of sub-section (8) and two, the cases of fresh assessment to be covered by proviso (a) thereof. similarly, had the legislative intent been different it would not have brought in only proviso to cover the cases of fresh assessment under the courts' orders but rather it would have created a different class for such cases by way of introducing a separate sub-section or section in the act. it also appears that the legislature did not want to leave a vacuum or ambiguity in respect of such cases which have been covered under the proviso and that is why this area has been specifically covered by way of proviso (a) of sub-section (8). further in a taxing statute if the limitation is provided in the act itself and the act also empowers the government to extend the period of limitation, the court in a given case, can only examine as to whether the assessment has been done within the period of limitation as contained in the provisions or the extended period of limitation under a valid notification issued by the government or a competent authority as empowered by the act. in the instant case, the state government is empowered under sub-section (9) to extend the period of limitation in respect of cases falling in section 27(8) including its proviso (a). the sub-section (8) so also its proviso only deal with the period of limitation which in both the cases is the same, that is two calendar years, hence, it would be contrary to the legislative intent and the scheme of the act to read the proviso independently of the sub-section. further on being asked as to whether the appellant would not have availed of benefits, if any, in his favour under such notification only because he understands that his case is covered under the proviso, the answer was 'would have'.10. now coming to the citations referred to herein above, with great respect, we are inclined to say that none of them has direct bearing on the point in issue. as regards the cases of kedarnath jute . : [1965]3scr626 and halari store : air1998sc1517 , the learned counsel has only referred to the head note that the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso, would be within it. there is no quarrel about the principles of law but in the instant case the genesis of the sub-section and the proviso is the same as both the provisions deal with the same subject and prescribe the same period of limitation with only distinction that proviso is to cover the cases of fresh assessment under the orders of the court. thus, the legislative intent does not appear to make any distinction to create a separate class for the cases falling under the proviso. the only qualification or exception which could be carved out by the proviso is that in such cases the limitation for the purpose of fresh assessment is to be calculated from the date of the court's orders.11. in the case of debaki debi : [1964]5scr253 , proviso in section 12(6) has not been found to be a real proviso to the--provisions of the main section and thus it has no connection with the provisions of the first part of the section as it was introduced not by way of saving or exception to that main provision, whereas proviso (a) of section 27(8) of the mpct act, 1994 cannot be construed to be an independent provision so much so it only creates a limited exception in respect of cases of fresh assessment under a court's orders and nothing further.12. likewise in the case of p. krishna warriar : [1964]53itr176(sc) also it has been held that the language of the substantive provision as well as the proviso may establish that the proviso is not a qualifying clause of the main provision, but is in itself a substantive provision. this is not the case under controversy.on the other hand, the language and the content of proviso (a) of section 27(8), being more or less similar to the substantive provisions of the sub-section do not bestow any separate and independent identity on the proviso except to create denture for superficial bites. similarly, c the aforesaid principles of interpretation would also not apply for elucidating and interpreting the proviso in question and thus they do not seem to help the appellant in any manner.13. hence, on a careful consideration of the materials on record and in the premises of aforesaid discussion on law, we do not find any infirmity in the impugned order which rather appears to be the only correct interpretation of proviso (a) of sub-section (8) of section 27 and, therefore, we hold that the impugned notifications issued under sub-section (9) would also cover the categories of cases as contained in the proviso. resultantly, this appeal, being devoid of merits, is hereby dismissed.

Judgment:
ORDER

Uma Nath Singh, J.

1. This letters patent appeal has been preferred by the assessee-appellant against an order dated September 16, 2003 passed by learned single Judge dismissing the writ petition (W.P. No. 674 of 2002) while holding that a notification issued under Sub-section (9) of Section 27 of the Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as 'the MPCT Act') extending the period of limitation would not only cover the limitation prescribed under Sub-section (8) of Section 27 but it would also cover the one provided under proviso (a) of Sub-section (8).

2. The appellant's case, in brief, is that it is a partnership firm engaged in the business of purchase and sale of supari, elaichi and khopra, etc. The firm is a registered dealer under the provisions of the Madhya Pradesh General Sales Tax Act, 1958 (for short 'the MPGST Act') now known the Madhya Pradesh Commercial Tax Act, 1994, the Central Sales Tax Act, 1956 and the M.P. Entry Tax Act, 1976. The appellant's original assessments for the period from April 1, 1978 to March 31, 1979 and April 1, 1979 to March 31, 1980 though were completed by the then assessing authority but subsequently they were reopened Under Section 19(1) of the MPGST Act, 1958 on the basis of a report of a Flying Squad forwarded to the assessing authority. The said report was prepared and forwarded by the Flying Squad Authorities purportedly exercising powers Under Section 29-D of the MPGST Act, 1958. It appears that though on the basis of the said report, reassessment proceedings were completed by the assessing authority but a copy thereof was not supplied to the appellant nor was it given an opportunity to cross-examine the witnesses who deposed against it and were relied upon by the department for reassessment. The reassessment proceedings were completed, vide the order dated September 14, 1984. It is further the appellant's case that similar assessments were also done on the basis of the same report of the Flying Squad for the period from April 1, 1980 to March 31, 1981, vide an order also passed on September 14, 1984. However, assessment done in respect of the period 1980-81 was different from the earlier assessments, inasmuch as this assessment was an irregular assessment and it was not done Under Section 19(1) of the MPGST Act. Being aggrieved by the aforesaid assessments, the appellant preferred appeals before the first and the second appellate authorities, who however, upheld the order of the assessing authority passed on the basis of the Flying Squad's report. Thereafter the appellant filed a reference application before the Board of Revenue Under Section 44(1) of the MPGST Act, 1958, which referred the questions of law to this Court for opinion, seemingly, on three points, namely; (i) as to whether the dealer was entitled to have an opportunity to cross-examine the witnesses who had deposed against him so as to meet the allegations levelled in the inspection report of the Flying Squad; (ii) as to whether there could be a reassessment against the original assessment order against which appeals had already been filed and disposed of; and (iii) as to whether the burden of explaining, proving and reconciling the information discovered by the Flying Squad against the dealer-appellant lay upon it.

3. A division Bench of this High Court vide the order dated October 16, 1996 passed in Misc. Civil Case No. 547 of 1992 and Misc. Civil Case No. 389 of 1994 only answered the Question No. 1 in favour of the assessee and in view of this answer, the court declined to answer the questions Nos. 2 and 3 and the same were not pressed before the court. The court further held that it was necessary for the authority to afford the opportunity of cross-examination of witnesses by the appellant so as to make the proceedings in conformity with Section 19(1) of the MPGST Act, 1958 which reads as under:

19. Assessment of turnover escaping assessment.--(1) Where an assessment has been made under this Act or any Act repealed by Section 52 and if for any reason any sale or purchase of goods chargeable to tax under this Act or any Act repealed by Section 52 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 five calendar years from the date of order of assessment, 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 within a period of two calendar years from the commencement of such proceedings, the tax payable by such dealer and the Commissioner may, where the omission leading to such reassessment is attributable to the dealer, 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.

Looking to the above provisions, this Court held that the Tribunal committed an error of law in holding that a reasonable opportunity had been afforded to the assessee for meeting the allegations against it based on an inspection report of the Flying Squad and also in further holding that there was no necessity to afford it an opportunity to cross-examine witnesses. Thus, the court found that the Tribunal decided the case in a manner being contrary to the provisions of A Section 19(1) of the MPGST Act, 1958.

4. Towards compliance of the aforesaid order, the Revenue Board, being the competent Tribunal, heard the contentions of both the parties and transmitted the case to the assessor for granting assessee-appellant an opportunity of hearing and cross-examination of witnesses. Accordingly Assistant Commissioner being assessing officer in this case started proceedings and issued notices to the parties in terms of the order passed on May 28, 2001. It appears that despite service having been effected on the assessee-appellant, it did not turn up to present its case before the assessor. The assessing officer, thus, recorded that since the case was 18 to 20 years old, it was not possible to cross-examine the witnesses, therefore, he reiterated the demand raised vide the earlier order of assessment dated September 14, 1984 and the assessee was directed to pay Rs. 1,09,630 as additional tax amount. Against the said order the appellant preferred a revision before the Commissioner of Commercial Tax, Indore. In that revision the assessee came with a new plea on the ground of limitation that the Board of Revenue (Tribunal) had passed the order on January 31, 1998 whereas Assistant Commissioner being the assessing authority passed the order on May 28, 2001 which was beyond the period of limitation that was two calendar years from the date of the Tribunal's order. The assessee also pleaded that the assessing authority passed an ex parte reassessment order without following the directions of the High Court and the Tribunal. The assessee took another plea that the Flying Squad was not constituted as per the provisions of Section 29-D of the MPGST Act, 1958. The Commissioner, vide his order dated January 31, 2002 passed in Revisions Nos. 52 and 53 of 2001 held that the assessee was not given proper opportunity of being heard as the first notice was issued on May 21, 2001 and the case was listed only on May 28, 2001 for hearing. Further, the notice was only affixed at the address of the assessee. However, as per panchnama, it was said that the assessee had declined to accept the notice. As regards the principal plea of the assessee that the fresh assessment was not done within the period of limitation as prescribed under proviso (a) to Sub-section (8) of Section 27 of MPCT Act, 1994 (which contained the provision that in such cases where the court passed an order remanding a case for fresh assessment, the assessment should be done within two calendar years, from the date of such order) the revisional authority/ Commissioner found the contention devoid of substance on the ground that the State Government extended the period of limitation up to May 31, 2001 Under Section 27(9) of the MPCT Act, 1994, vide Notification No. (85) dated December 20, 2000 and Notification No. (36) dated April 30, 2001. The revisional authority also held that in terms of proviso (c) of Section 18(8) of the MPGST Act, the period of limitation prescribed under this sub-section would not apply to an order passed Under Section 19(1) of the MPGST Act. On reproduction the said proviso reads as under:

(c) nothing contained in this sub-section shall apply to proceedings initiated Under Section 19 or any proceedings other than assessment of tax that may be instituted under any other provisions of this Act.

As regards constitution of Flying Squad in terms of Section 29-D of the Act, the Commissioner found the contention not sustainable as this plea was not taken either in the first appeal before Deputy Commissioner against the original order of assessment or in the second appeal before the Revenue Board or before the High Court in reference. Thus, the case was again remanded to the assessing officer for afresh consideration to pass appropriate order after hearing the assessee.

5. However, instead of prosecuting the case before the assessor, the petitioner filed Writ Petition No. 674 of 2002 challenging the assessment order and the order of the Commissioner in revision on the grounds that the assessment order was illegal and it was a nullity in the eye of law inasmuch as it was passed beyond the period of limitation as prescribed under proviso (a) to Section 27(8) of the MPCT Act, 1994 read with similar provisions as contained inSection 18(8) of MPGST Act, 1958 and proviso (a) thereof. It was also contended that for proviso (a) a special notification was needed and the notifications referred to in the revisional order were not issued in respect of the said proviso. That apart the appellant also contended that he was served notice by affixture without satisfying the provisions of rule 63 of the MPGST Rules, 1959, read with corresponding rule 86 of the MPCT Rules, 1995. The appellant also questioned the validity of the constitution of Flying Squad Under Section 29-D of the MPGST Act, 1958. The appellant also pleaded that it was not given proper opportunity for cross-examination of the witnesses.

By the impugned order, the learned single Judge has rejected the principal contention of the appellant on the point of limitation holding that proviso (a) to Sub-section (8) of Section 27 cannot be read separately, when the provisions of the sub-section of which the proviso forms a part, are controlled by the non obstante clause of Sub-section (9) of Section 27 of the MPCT Act, 1994. Therefore, the learned single Judge has found that no separate notification was necessary A for the purpose of proviso (a) to extend the period of limitation.

6. We have heard learned Counsel for the parties and perused the records.

7. Shri P.M. Choudhary, learned Counsel appearing for the appellant, reiterated his contentions as raised before the learned single Judge. The main emphasis of his arguments was again directed to the point of limitation. To deal with the question of extension of limitation period by the impugned notification issued under Section (9) of Section 27 of the MPCT Act, 1994 in respect of cases of fresh assessment under courts' orders, it would be necessary to extract and reproduce the relevant provisions of the MPCT Act, 1994 and the corresponding provisions of the MPGST Act, 1958 (not been referred to in the impugned order) which read as under:

Section 27(8) and (9) of the MPCT Act, 1994.

(8) The assessment shall be made under this section--

(i) in respect of a registered dealer and a dealer referred to in Clause (b) of Sub-section (6) within a period of two calendar years from the end of the period for which assessment is to be made; and

(emphasis supplied)

(ii) in respect of a dealer who has failed to apply for registration, within a period of two calendar years from the commencement of proceedings under Sub-section (6):

(emphasis supplied)

Provided that--

(a) where a fresh assessment has to be made to give effect to any finding or direction, contained in any order under Sections 61, 62 or 70 or to any order of the Civil Court, High Court or Supreme Court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or G direction or the order of the Civil Court, High Court or Supreme Court, as the case may be. If for any reason such fresh assessment is not made within the specified period, the Commissioner shall take steps to ensure that assessment is made as expeditiously as possible;

(emphasis supplied)

(b) where an order of assessment ex parts is set aside and case reopened Under Section 72 for making a fresh assessment, such fresh assessment shall be made within a period of six calendar months from the date of setting aside the ex parts, order of assessment or within the period laid down in Clause (i) whichever is later; and

(c) nothing contained in this sub-section shall apply to proceedings initiated Under Section 28 or Section 29 or any proceeding other than assessment of tax that may be instituted under any other pro-B visions of this Act.

(9) Notwithstanding anything contained in Sub-section (8), where assessment proceedings in respect of any dealer relating to any year cannot be completed before the expiry of the period specified therefor in the said sub-section, the State Government, may by notification, for reasons to be recorded in writing, extend the period for the completion of the assessment proceedings in respect of such dealers by such further period as may be specified in such notification.

(emphasis supplied)

Section 18(8) of the MPGST Act, 1958.

(8) The assessment shall be made under this section--

(i) in respect of a registered dealer and a dealer referred to in Clause (b) of Sub-section (6), within a period of (two calendar years) from the end of the period for which assessment is to be made; and

(ii) in respect of a dealer who has failed to apply for registration, within a period of (two calendar years) from the commencement of proceedings under Sub-section (6):

(emphasis supplied)

Provided that--

(a) where a fresh assessment has to be made to give effect to any finding or direction contained in any order under Sections 38, 39 or 44 or to any order of the Civil Court, High Court or Supreme Court, such assessment shall be made within a period of two calendar years from the date of the order containing such finding or direction or the order of the Civil Court, High Court or Supreme Court, as the case may be. If for any reason such fresh assessment is not made within the specified period, the Commissioner shall take steps to ensure that assessment is made as expeditiously as possible.

(emphasis supplied)

The Notifications dated 20th December, 2000 and 30th April, 2001 issued under Sub-section (9) of Section 27 of the MPCT Act, 1994.

Notification No. A-3-76-2000-(ST-V-(85) dated the 20th December, 2000.

Whereas, the State Government is satisfied that--

(I) There has been a considerable increase in the number of A dealers liable to pay tax under the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995), the Central Sales Tax Act, 1956 (No. 74 of 1956) and the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (No. 52 of 1976);

(II) There has been no increase in the number of authorities competent to make assessment of such dealers under the said Acts, commensurate with the increase in the number of such dealers and their assessment cases;

(III) The assessment proceedings of all such dealers due for completion by the end of the calendar year, 2000 under the provisions of Sub-section (8) of Section 27 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995), have to be completed before the expiry of the calendar year, 2000.

(IV) Correct assessment of such dealers, on merits have to be made by the said authorities after affording them a reasonable opportunity of being heard;

(V) Despite efforts being made by the said authorities to complete such assessment proceedings by the end of the calendar year, 2000 such proceedings cannot be completed by the end of the said period; and

(VI) The aforesaid proceedings need to be completed.

Now, therefore, in exercise of the powers conferred by Sub-section (9) of Section 27 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995), the State Government hereby extends up to 30th April, 2001 the period for completion of every such assessment proceedings in respect of every dealer which is not completed by the 31st December, 2000.

(Published in M.P. Rajpatra, dated 20th December, 2000 at page 1486)

(Emphasis supplied)

Notification No. A-3-76-2000-ST-V-(36) dated 30th April, 2001.

In exercise of the powers conferred by Sub-section (9) of Section 27 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995), the State Government hereby makes the following amendments in this department Notification No. A-3-76-2000-ST-V(85) dated 20th December, 2000, namely:

AMENDMENTS.--In the said notification for the figures and words '30th April, 2001' the figures and word '31st May, 2001' shall be substituted.

(Published in M.P. Rajpatra, dated April 30, 2001 at page 542).

Learned Counsel for the appellant has argued that if a fresh assessment has to be made to give effect to any finding or direction contained in any order Under Section 61, 62 or 70 or to any order of a Civil Court, High Court or the Supreme Court, then such assessment would be made only within a period of two calendar years from the date of the order, and if for any reason such fresh assessment is not made within the specified period, the Commissioner shall take steps to ensure that assessment is made as expeditiously as possible. Learned Counsel has further argued that the notifications extending the period of limitation issued on December 20, 2000 and April 30, 2001 would not apply to the cases to be covered under proviso (a), as aforesaid.

Learned Counsel has also reiterated other contentions which he had raised before the assessing authority, the revisional authority and the learned single Judge and he has submitted that these points were not considered by the learned single Judge nor were they referred to in the impugned order. The learned Counsel informed the court that a petition challenging validity of the constitution of Plying Squad is pending before the learned single Judge. To substantiate his aforesaid submissions, the learned Counsel has also referred to the following citations which he had relied upon also before the learned single Judge. They are: Kedarnath Jute . v. Commercial Tax Officer : [1965]3SCR626 , Commissioner of Sales Tax, Orissa v. Halari Store : AIR1998SC1517 , State of Orissa v. Debaki Debi : [1964]5SCR253 and Commissioner of Income-tax, Kerala v. P. Krishna Warriar : [1964]53ITR176(SC) . Elucidating the ratio of the aforesaid judgments in support of his arguments learnedcounsel has urged that in taxing statutes, a proviso to section can be read as an independent provision as it carves out an exception to the section and qualifies the provisions thereof. He has also referred to Craies on Statute Law (Seventh Edition by S.G.G. Edgar, page 218) to contend that in respect of construction of proviso, the effect of anexcepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it [Leveridge v. Kennedy (1960) NZLR 1]. Similarly he has also referred to another authoritative treatise on the subject being Principles of Statutory Interpretation by Justice G.P. Singh (Eighth Edition, page 181) which says that 'proviso is A used to remove special cases from the general enactment and provide for them specially'.

8. On the other hand, Shri Amit Agrawal, learned Government Advocate appearing for the respondent/State supported the impugned order and pointed out that learned Counsel for the appellant had only argued the first question of law on the point of opportunity of being heard and cross-examination of witnesses, and he had given up two other questions of law which had been referred to by the Tribunal for opinion to the High Court. Learned Counsel further submitted that in view of Sub-section (9) of Section 27 of the MPCT Act, 1994, c proviso (a) to Sub-section (8) thereof does not constitute a different class and, therefore, no separate notification was required to be issued.

9. On a careful consideration of the rival submissions, we are of the view that the impugned order does not call for any interference. The appellant having been denied opportunity of being heard and cross-examination of witnesses in the first round of litigation, has not availed of the fresh opportunity to contest on this point by participating in the proceedings before the assessing authority after the case was again remanded by the revisional authority nor did he move this Court by way of a contempt petition or otherwise for the enforce- ment of that direction. On the other hand, learned Counsel for the appellant has only concentrated on the point of limitation under proviso (a) to Sub-section (8) of Section 27 of the MPCT Act, 1994. Needless to say that in view of Sub-section (9) thereof containing non obstante clause, it cannot be ruled that proviso (a) to Sub-section (8) bears a distinct character and can be read independently of Section 27(8). Rather the substantive provisions of the sub-section and the proviso, both, on plain reading seem to belong to the same genesis. Had the intention of the Legislature been otherwise, it would not have prescribed the same period of limitation, i.e., two years for both types of cases, that is, one, to be covered under the provisions of Sub-section (8) and two, the cases of fresh assessment to be covered by proviso (a) thereof. Similarly, had the legislative intent been different it would not have brought in only proviso to cover the cases of fresh assessment under the courts' orders but rather it would have created a different class for such cases by way of introducing a separate Sub-section or section in the Act. It also appears that the Legislature did not want to leave a vacuum or ambiguity in respect of such cases which have been covered under the proviso and that is why this area has been specifically covered by way of proviso (a) of Sub-section (8). Further in a taxing statute if the limitation is provided in the Act itself and the Act also empowers the Government to extend the period of limitation, the court in a given case, can only examine as to whether the assessment has been done within the period of limitation as contained in the provisions or the extended period of limitation under a valid notification issued by the Government or a competent authority as empowered by the Act. In the instant case, the State Government is empowered under Sub-section (9) to extend the period of limitation in respect of cases falling in Section 27(8) including its proviso (a). The Sub-section (8) so also its proviso only deal with the period of limitation which in both the cases is the same, that is two calendar years, hence, it would be contrary to the legislative intent and the scheme of the Act to read the proviso independently of the sub-section. Further on being asked as to whether the appellant would not have availed of benefits, if any, in his favour under such notification only because he understands that his case is covered under the proviso, the answer was 'would have'.

10. Now coming to the citations referred to herein above, with great respect, we are inclined to say that none of them has direct bearing on the point in issue. As regards the cases of Kedarnath Jute . : [1965]3SCR626 and Halari Store : AIR1998SC1517 , the learned Counsel has only referred to the head note that the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso, would be within it. There is no quarrel about the principles of law but in the instant case the genesis of the sub-section and the proviso is the same as both the provisions deal with the same subject and prescribe the same period of limitation with only distinction that proviso is to cover the cases of fresh assessment under the orders of the court. Thus, the legislative intent does not appear to make any distinction to create a separate class for the cases falling under the proviso. The only qualification or exception which could be carved out by the proviso is that in such cases the limitation for the purpose of fresh assessment is to be calculated from the date of the court's orders.

11. In the case of Debaki Debi : [1964]5SCR253 , proviso in Section 12(6) has not been found to be a real proviso to the--provisions of the main section and thus it has no connection with the provisions of the first part of the section as it was introduced not by way of saving or exception to that main provision, whereas proviso (a) of Section 27(8) of the MPCT Act, 1994 cannot be construed to be an independent provision so much so it only creates a limited exception in respect of cases of fresh assessment under A court's orders and nothing further.

12. Likewise in the case of P. Krishna Warriar : [1964]53ITR176(SC) also it has been held that the language of the substantive provision as well as the proviso may establish that the proviso is not a qualifying clause of the main provision, but is in itself a substantive provision. This is not the case under controversy.

On the other hand, the language and the content of proviso (a) of Section 27(8), being more or less similar to the substantive provisions of the sub-section do not bestow any separate and independent identity on the proviso except to create denture for superficial bites. Similarly, c the aforesaid principles of interpretation would also not apply for elucidating and interpreting the proviso in question and thus they do not seem to help the appellant in any manner.

13. Hence, on a careful consideration of the materials on record and in the premises of aforesaid discussion on law, we do not find any infirmity in the impugned order which rather appears to be the only correct interpretation of proviso (a) of Sub-section (8) of Section 27 and, therefore, we hold that the impugned notifications issued under Sub-section (9) would also cover the categories of cases as contained in the proviso. Resultantly, this appeal, being devoid of merits, is hereby dismissed.