1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).15605-15606 OF 2017

[Arising out of Special Leave Petition

(Civil) No.9631-9632 of 2017]

COMMISSIONER OF TRADE AND

TAXES AND ORS. ...APPELLANTS

VERSUS

M/S AHLUWALIA CONTRACTS

(INDIA) LTD. ...RESPONDENT

WITH

CIVIL APPEAL NO(S). 15608 OF 2017

[Arising out of Special Leave Petition

(Civil) No.10485 of 2017]

CIVIL APPEAL NO(S). 15607 OF 2017

[Arising out of Special Leave Petition

(Civil) No.9633 of 2017]

JUDGMENT

RANJAN GOGOI, J.

1. Leave granted.

2. A recital of the facts of the

Civil Appeals arising out of Special Leave

Petition (Civil) Nos.9631-9632 of 2017

alone are being made as the facts in the

other connected proceedings [i.e. Civil

Appeals arising out of Special Leave

2

Petition (Civil) Nos.10485/2017 and

9633/2017] are largely similar.

3. The challenge by the Revenue is to

an order of the High Court of Delhi by

which the High Court has allowed the writ

petitions filed by the respondents –

Assessees challenging the orders issued by

the Designated Authority i.e. Additional

Commissioner of Income Tax rejecting the

applications filed by the Respondent writ

petitioners under the Delhi Tax Compliance

Achievement Scheme, 2013 (hereinafter

referred to as “the Amnesty Scheme”),

details of which are noted below.

4. Under Section 107 of the Delhi

Value Added Tax Act, 2004 (hereinafter

referred to as “the DVAT Act”), the

Government of National Capital Territory

of Delhi (“GNCTD” for short) is empowered

to notify amnesty scheme(s) covering

payment of tax, interest, penalty or any

3

other dues under the DVAT Act relating to

any period ending before 1

st

April, 2013.

5. In exercise of powers under

Section 107 of the DVAT Act, an Amnesty

Scheme was notified by the GNCDT on 20

th

September, 2013. Clause 2(c) of the

Amnesty Scheme which defines the

'designated authority'; clause 4 which

delineates the procedure for making

declaration and payment of tax dues;

clause 5 which deals with immunity from

interest, penalty and other proceedings;

and the provisions of clause 8 which deals

with the failure to make true declarations

would require a consideration of the

Court. The same are, therefore, reproduced

below for convenience:

“2(c) “ designated authority ”

means officer(s) not below the

rank of Joint Commisioner as

notified by the Commissioner,

Value Added Tax for the purposes

of this Scheme;

4

*** *** ***

4.Procedure for making

declaration and payment of tax

dues – (1) Subject to the other

provisions of this Scheme, a

person may make a declaration of

the tax dues to the designated

authority on or before the 31

st

day of January 2014 in Form DSC-1

appended to this notification.

(2)The designated authority

shall acknowledge the receipt of

declaration in Form DSC-2

appended to this notification,

within a period of fifteen

working days from the date of

receipt of the declaration.

(3)The declarant shall pay not

less than fifty per cent of the

tax dues declared under

sub-clause (1) along with the

declaration and submit proof of

such payment to the designated

authority.

(4)The remaining amount of tax

dues or part thereof remaining to

be paid after adjusting the

payment made under sub-clause (3)

shall be paid by the declarant on

or before the 21

st

day of March,

2014.

(5)Notwithstanding anything

contained in sub-clause (3) and

sub-clause (4), any tax which

becomes due or payable by the

declarant for the tax period(s)

beginning from 1 day of April,

2013 and thereafter shall be paid

by him in accordance with the

provisions of the Act:

5

Provided that where an

unregistered dealer has made

declaration referred to in

sub-clause (1) of this clause,

such dealer shall obtain

registration and pay net tax for

the period from 1 day of April,

2013 to the date of regisration

and furnish return in Form

DVAT-16 for that period along

with proof of payment in Form

DVAT-20 to the designated

authority at the time of

furnishing of declaration under

this Scheme. Such a dealer shall

be eligible for immunity under

clause 5 ofteh Scheme for late

payment of such tax and

non-filing of return under the

Act.

(6)The declarant shall furnish

to the designated authority,

details of payment made from

time to time under this Scheme

along with a copy of

acknowledgement issued to him

under sub-clause (2).

(7) On furnishing the details

of full payment of declared tax

dues payable under sub-clause

(4), the designated authority

shall issue an acknowledgement of

discharge of such dues within

fifteen days to the declarant in

Form DSC-3 appended to this

notification.

(8)A dealer who has not taken

registration shall obtain

registration prior to filing of

declaration as referred in

6

sub-clause (1) of clause 4.

Likewise, a person who is

responsible for making deduction

of tax under section 36A of the

Act, shall obtain a Tax Deduction

Account Number (TAN), if not

already obtained.

*** *** ***

5. Immunity from interest,

penalty and other

proceedings.-(1) Notwithstanding

anything contained in any

provision of the Scheme, the

declarant, upon payment of the

tax dues declared by him under

sub-clause (1) of clause 4, shall

get immunity from penalty or

penalties, interest other than

interest payable in terms of

sub-clauses (2) and (4) of clause

3, prosecution or any other

proceedings under the Act or, as

the case may be, under the

Central Sales Tax Act, 1956 or

the erstwhile Delhi Sales Tax

Act, 1975 (43 of 1975) or the

Delhi Sales Tax on Works Contract

Act, 1999 (Delhi Act 9 of 1999)

or the Delhi Sales Tax on Right

to Use Goods Act, 2002 (Delhi Act

13 of 2002) or the Delhi Tax on

Entry of Motor Vehicles into

Local areas Act, 1994 (Delhi Act

4 of 1995), in relation to the

tax dues declared by the

declarant; and from penalty and

prosecution for non-registration

and non-furnishing of returns in

time.

Explanation.- For the purpose of

this sub-clause, the term

7

“declarant” shall include-

(i) in relation to the declarant

being a contractee, who has

awarded the works contract under

section 36A(1) of the Act, his

immediate contractor to whom he

has awarded the works contract,

to the extent of amount declared

by the contractee; and

(ii) in relation to the declarant

being a contractor, his immediate

contractee who has awarded the

works contract under section

36A(1) of the Act.

Explanation -For removal of

doubts, it is hereby declared

that, to avoid double taxation,

if the contractee has declared

tax dues, his immediate

contractor will also get immunity

to that extent, and vice-versa.

(2) Subject to the provisions of

clause 8, a declaration made

under sub-clause (1) of clause 4

shall become conclusive upon

issuance of acknowledgement of

discharge under sub-clause (7) of

clause 4 and no matter shall be

reopened/ reassessed/ reviewed

thereafter in any proceedings

under this Scheme or under the

Act before any authority or court

relating to the period covered by

such declaration to the extent of

tax dues declared by the

declarant.

(3) All statutory appeals/

revisions pending before

8

quasi-judcial forums upto the

stage of Tribunal shall be deemed

to have been withdrawn once the

Scheme is opted for. Further, all

matters pending in the High Court

and Supreme Court shall be

withdrawn by the declarant and he

will need to submit the

application filed for withdrawl

with the declaration. for the

case to be withdrawn before the

court.

(4) No proceeding shall be

instituted within 48 hours of

securing a registration,

provided, the registrant declares

his intent of opting under the

Scheme at the time of applying

for TIN/ TAN.

(5) The information gathered vide

a declaration under the scheme

shall be kept confidential and

shall not be used except under

the Scheme and the same shall not

be shared with any other person/

government department/agency.

*** *** ***

8. Failure to make true

declaration.- (1) Notwithstanding

anything contained in clause 5

of the Scheme, where the

Commissioner has, for a period

beginning from 1st April, 2009,

reasons to believe that the

declaration was false in material

particulars, he may, for reasons

to be recorded in writing, serve

notice on the declarant in

respect of such declaration

requiring him to show cause as to

why he should not be required to

9

pay the tax dues unpaid or

short-paid as per the provisions

of the Scheme.

(2)If the Commissioner is

satisfied, for reasons to be

recorded in writing, that the

declaration made by the dealer

was substantially false,

(i) he shall within three

months of service of notice under

sub-clause (1) make assessment of

tax and penalty under section 32

and 33 of the Act, as if that

dealer had never made declaration

under this Scheme. However, the

dealer shall be entitled to the

credit of tax paid by him under

this Scheme; and

(ii) such dealer may be

proceeded under sub-section (2)

of section 89 of the Act for

furnishing of false declaration.

(3)No notice shall be issued

under sub-clause (1) of this

clause after the expiry of one

year from the date of

declaration.”

6. There is no dispute between the

parties that on the basis of the

declaration filed by the respondent –

Assessee, the Designated Authority had

issued the “acknowledgement of discharge”

in favour of the respondent- Assessee.

10

However, on 16

th

January, 2015 a show cause

notice in exercise of powers under clause

8 of the Amnesty Scheme was issued by the

Additional Commissioner (Spl. Zone),

Department of Trade and Taxes, New Delhi

to which the respondent – Assessee

submitted its reply on 27

th

January, 2015.

In the reply so submitted, the respondent

– Assessee did not raise any question with

regard to the jurisdiction of the

Additional Commissioner to issue the show

cause notice under clause 8. The

adjudication was finalized by order dated

11

th

February, 2015 which was served to the

Assessee. The Assessee then filed the

writ petitions in question before the High

Court contending, inter alia, that the

show cause dated 16

th

January, 2015 was

unauthorized and without jurisdiction

inasmuch as the power to issue such notice

under clause 8 is vested with the

Commissioner and the same had not been

delegated to the Designated Authority i.e.

11

the concerned Additional Commissioner.

The said contention found favour with the

High Court. Accordingly, the writ

petitions filed by the respondents –

Assessees were allowed and the impugned

consequential proceedings were interfered

with. The High Court also took the view

that as under clause 8(3) of the Amnesty

Scheme show cause notice has to be issued

within one year of the date of declaration

which in the present case was made on 18

th

February, 2014 and 28

th

February, 2014,

respectively, issuance of any

further/fresh show cause notice was time

barred. Aggrieved the Revenue is in

appeal before this Court.

7.Shri Maninder Singh, learned

Additional Solicitor General appearing for

the Revenue has vehemently contended that

the Government Order dated 30

th

April, 2014

contains a clear delegation of the power

under clause 8 of the Amnesty Scheme by

12

the Commissioner to the Designated

Authority. The power of disposal of the

application received under the Scheme,

according to the learned ASG, must

necessarily include the power to finalize

the matter after issuing the show cause

notice under clause 8 in an appropriate

case. Learned ASG has further urged that

under clause 4 the declarations are

required to be considered by the

Designated Authority i.e. the Additional

Commissioner. It is natural that the

power to reopen the cases concluded on

mistaken/suppressed facts must be

understood to have been available to the

Designated Authority at all times.

8. The above contentions are

contested by Shri S. Ganesh, learned

Senior Counsel appearing for the

respondents – Assessees who has urged that

keeping in mind the necessity of finality

of decisions under the Amnesty Scheme, the

13

power of reopening the concluded cases by

issuing show cause notices has been

conferred on a higher authority i.e. the

Commissioner. The said power has to be

distinguished from the power to decide an

application filed, which is vested in the

designated authority under Clause 4. It is

urged that in the present case the power

vested in the Commissioner under clause 8

has not been delegated to any other

authority, in the absence whereof, it was

not open for the Additional Commissioner

to issue the impugned show cause notice

dated 16

th

January, 2015. The fact that the

Assessee did not raise the issue of

jurisdiction before the Adjudicating

Authority would not clothe the Additional

Commissioner with the jurisdiction to

issue the show cause notice. As the said

issue is primarily a question of law which

goes to the root of the matter the

question could always have been raised

before the High Court. The same having

14

been so raised and answered by the High

Court, the answer provided needs to be

dealt with by this Court on merits and

ought not to be foreclosed merely on the

ground that the respondents – Assessees

had not raised the same in the course of

the adjudication of the show cause notice.

Learned Senior Counsel has referred to the

provisions of clause 8(3) of the Amnesty

Scheme to contend that the show cause

notice under clause 8 has to be issued

within one year of the date of

declaration/declarations and there is no

enabling provision to condone any delay

that has occurred or extend the time

stipulated by clause 8(3). As the period

of one year from the date of declaration

is long over, in the event this Court is

to hold that the impugned show cause

notice was issued by the Authority which

did not have the power and jurisdiction to

so act the question of issuance of any

fresh/revised notice does not arise.

15

9.On the rival contentions, two issues

arise for consideration in the present

appeal.

10.The first relates to the power and

jurisdiction of the Designated Authority

to issue the notice under clause 8 of the

Amnesty Scheme. Related, is whether, in

the present case, there has been any

delegation of the said power which is

vested in the Commissioner under the

aforesaid clause 8.

11.The second issue arising would depend

on an answer to the first, namely, if it

is to be held that the Designated

Authority is not empowered to act under

clause 8, whether a fresh notice under the

aforesaid clause of the scheme can still

be issued by the competent authority i.e.

the Commissioner or the delegatee of the

Commissioner.

16

12.What category of officers would come

within the expression “designated

authority” is contemplated by the

definition contained in clause 2 (c) of

the Amnesty Scheme. An Officer not below

the rank of Joint Commissioner as may be

notified by the Commissioner would be a

designated authority under the Scheme.

13.Clause 4 of the Scheme requires a

declaration of the tax due to be made to

the designated authority and, thereafter,

following the procedure prescribed by the

various sub-clauses of clause 4, the

Designated Authority is empowered to issue

the acknowledgment of discharge of dues

under clause 4 (7) of the Scheme.

14.Under clause 8 of the aforesaid

scheme, the Commissioner is vested with

the power, to be exercised for reasons

recorded in writing, to issue notice to

17

the assessee requiring him to show cause

as to why he should not pay the tax/ dues

unpaid or short paid as per the provisions

of the scheme. The power to issue the

notice under clause 8 is undoubtedly

vested with the Commissioner and not in

the Designated Authority. What is vested

in the Designated Authority is the power

under clause 4 of the Scheme which is the

power to hear and decide applications and

issue acknowledgments of discharge on due

satisfaction. The said power to hear and

decide applications, by no means, would

include the power to reopen a decided

matter which is what clause 8 specifically

contemplates. The Government order dated

30

th

April, 2014 relied upon by the Revenue

as a delegation of the power under clause

8, on a plain reading thereof, is only an

empowerment of a particular Additional

Commissioner of a particular Zone (a Zone

may have several Additional Commissioners)

to hear and decide applications filed

18

under the Scheme. The said G.O dated 30

th

April, 2014 cannot be construed to be an

exercise of delegation of powers vested in

the Commissioner under Clause 8 to

Designated Authority. The plain language

contained in the said G.O is capable of

sustaining the above conclusion. We will,

therefore, have to hold that the

Additional Commissioner who had issued the

show cause notice under clause 8 in the

present case was not competent to do so

and on that basis we affirm the conclusion

of the High Court on the said question.

15.This will bring us to a consideration

of the second issue arising in the case

details of which have already been

mentioned in preceding paragraphs of the

present order.

16.The declarations in the present case

were issued to the assessee on 18

th

19

February, 2014 and 28

th

February, 2014

respectively. The show cause notice under

Clause 8 was issued on 16

th

January, 2015.

The reply was submitted by the

respondent-assessee on 27

th

January, 2015.

The adjudication was completed by the

Order dated 11

th

February, 2015 against

which the respondent-Assessee filed a writ

petition before the High Court on 4

th

March, 2015. In the reply filed by the

respondent-Assessee to the show cause

notice or in the proceedings pursuant

thereto, as already mentioned, no

objection was taken by the assessee to the

power and jurisdiction of the Additional

Commissioner to issue the notice in

question. The adjudication order,

therefore, did not deal with the said

issue. It is only after the period of one

year from the date of declaration was over

that the writ petition was filed wherein

the question of jurisdiction of the

Additional Commissioner was raised for the

20

first time. It is in these facts that the

High Court took the view that as the

period of limitation prescribed by Clause

8(3) was over, fresh proceedings stood

barred by time.

17.While it is correct that the failure

to raise the issue of jurisdiction by the

assessee will not necessarily clothe the

Additional Commissioner with the

jurisdiction if the same is not

contemplated by law, there are certain

aspects of the case which need to be

considered. Had the assessee raised the

question of jurisdiction in its reply or

in the course of the adjudication

proceedings there would have been still

time for the Commissioner to cure the

defect and issue a valid notice. Cases

under Amnesty Scheme would fall outside

the arena of ordinary and routine matters

and, therefore, it is possible to

attribute a genuine mistake on the part of

21

the Additional Commissioner in invoking

jurisdiction under Clause 8 of the Amnesty

Scheme. The question that looms large

before the Court is that whether in such a

situation the assessee should be allowed

to raise the question of limitation and

defeat the claim of the revenue to proceed

afresh in the matter on that basis.

18.Dealing with a somewhat similar

situation that arose before this Court in

Grindlays Bank Ltd. vs. Income Tax

Officer, Calcutta and Ors.

1

it was observed

as follows in Para 7 of the report in the

following manner.

“7. The next point is whether the

High Court possessed any power to

make the order directing a fresh

assessment. The principal relief

sought in the writ petition was

the quashing of the notice under

Section 142(1) of the Income Tax

Act, and inasmuch as the assess -

ment order dated March 31, 1977

was made during the pendency of

the proceeding consequent upon a

purported non-compliance with that

notice, it became necessary to ob -

1 (1980) 2 SCC 191

22

tain the quashing of the assess -

ment order also. The character of

an assessment proceeding, of which

the impugned notice and the as -

sessment order formed part, being

quasi-judicial, the “certiorari”

jurisdiction of the High Court un -

der Article 226 was attracted. Or -

dinarily, where the High Court ex -

ercises such jurisdiction it

merely quashes the offending order

and the consequential legal effect

is that but for the offending or -

der the remaining part of the pro -

ceeding stands automatically re -

vived before the inferior court or

tribunal with the need for fresh

consideration and disposal by a

fresh order. Ordinarily, the High

Court does not substitute its own

order for the order quashed by it.

It is, of course, a different case

where the adjudication by the High

Court establishes a complete want

of jurisdiction in the inferior

court or tribunal to entertain or

to take the proceeding at all. In

that event on the quashing of the

proceeding by the High Court there

is no revival at all. But although

in the former kind of case the

High Court, after quashing the of -

fending order, does not substitute

its own order it has power none -

theless to pass such further or -

ders as the justice of the case

requires. When passing such orders

the High Court draws on its inher -

ent power to make all such orders

as are necessary for doing com -

plete justice between the parties.

The interests of justice require

that any undeserved or unfair ad -

vantage gained by a party invoking

the jurisdiction of the court, by

23

the mere circumstance that it has

initiated a proceeding in the

court, must be neutralised. The

simple fact of the institution of

litigation by itself should not be

permitted to confer an advantage

on the party responsible for it.

The present case goes further. The

appellant would not have enjoyed

the advantage of the bar of limi -

tation if. notwithstanding his im -

mediate grievance against the no -

tice under Section 142(1) of the

Income Tax Act, he had permitted

the assessment proceeding to go on

after registering his protest be -

fore the Income Tax Officer, and

allowed an assessment order to be

made in the normal course. In an

application under Section 146

against the assessment order, it

would have been open to him to

urge that the notice was unreason -

able and invalid and he was pre -

vented by sufficient cause from

complying with it and therefore

the assessment order should be

cancelled. In that event, the

fresh assessment made under Sec -

tion 146 would not be fettered by

the bar of limitation. Section

153(3)(i) removes the bar. But the

appellant preferred the constitu -

tional jurisdiction of the High

Court under Article 226. If no or -

der was made by the High Court di -

recting a fresh assessment, he

could contend as is the contention

now before us, that a fresh as -

sessment proceeding is barred by

limitation. That is an advantage

which the appellant seeks to de -

rive by the mere circumstance of

his filing a writ petition. It

will be noted that the defect com -

24

plained of by the appellant in the

notice was a procedural lapse at

best and one that could be readily

corrected by serving an appropri -

ate notice. It was not a defect

affecting the fundamental juris -

diction of the Income Tax Officer

to make the assessment. In our

opinion, the High Court was

plainly right in making the direc -

tion which it did. The observa -

tions of this Court in Director of

Inspection of Income Tax (Investi -

gation) New Delhi v. Pooran Mall &

Sons

2

are relevant. It said:

The Court in exercising

its powers under Article

226 has to mould the remedy

to suit the facts of a

case. If in a particular

case a court takes the view

that the Income Tax Officer

while passing an order un -

der Section 132(5) did not

give an adequate opportu -

nity to the party concerned

it should not be left with

the only option of quashing

it and putting the party at

an advantage even though it

may be satisfied that on

the material before him the

conclusion arrived at by

the Income Tax Officer was

correct or dismissing the

petition because otherwise

the party would get an un -

fair advantage. The power

to quash an order under Ar -

ticle 226 can be exercised

not merely when the order

sought to be quashed is one

made without jurisdiction

2 (1975) 4 SCC 568

25

in which case there can be

no room for the same au -

thority to be directed to

deal with it. But in the

circumstances of a case the

court might take the view

that another authority has

the jurisdiction to deal

with the matter and may di -

rect that authority to deal

with it or where the order

of the authority which has

the jurisdiction is viti -

ated by circumstances like

failure to observe the

principles of natural jus -

tice the court may quash

the order and direct the

authority to dispose of the

matter afresh after giving

the aggrieved party a rea -

sonable opportunity of

putting forward its case.

Otherwise, it would mean

that where a court quashes

an order because the prin -

ciples of natural justice

have not been complied

with, it should not while

passing that order permit

the tribunal or the author -

ity to deal with it again

irrespective of the merits

of the case.

The point was considered by the

Calcutta High Court in Cachar Ply-

wood Ltd. v. ITO

3

and the High

Court, after considering the pro -

visions of Section 153 of the In -

come Tax Act, considered it appro -

priate. while deposing of the writ

petition, to issue a direction to

3 (1978) 114 ITR 379 (Cal)

26

the Income Tax Officer to complete

the assessment which, but for the

direction of the High Court, would

have been barred by limitation.”

19.Having considered the matter and the

manner in which this Court has approached

the issue arising in Grindlays Bank Ltd.

(supra) we are of the view that Clause

8(3) of the Amnesty Scheme will have no

application to the present case where the

initial show cause notice was issued

within time and its legitimacy was not

contested by the respondent-Assessee. Had

such legitimacy been questioned at the

stage of reply or even in the course of

the adjudication proceedings, there would

still have been room/ time for the revenue

to correct the error that had occurred. A

rectified Notice could even have been

issued after the order of adjudication was

passed on 11

th

February, 2015. The close

proximity of time between the reply

submitted by the assessee to the Show

27

Cause Notice (27.01.2015) and the

proceedings in adjudication Revenue on the

one hand and the date of filing of the

Writ Petition (4.3.2015) would permit us

to infer that the conduct of the assessee

in raising the issue in the writ petitions

and not earlier was not entirely bonafide.

The respondent-Assessee, therefore, cannot

be allowed to take advantage of its own

wrong. The courts exercising extraordinary

jurisdiction cannot be understood to be

helpless but concede to the assessee an

undeserved victory over the Revenue. The

power of the High Court under Article 226

of the Constitution, wide and pervasive as

it is, should have enabled the High Court

to appropriately deal with the situation

and issue consequential directions

permitting initiation of fresh

proceedings, if the Revenue was so

inclined. The High Court having failed to

so act, we now correct the error and issue

directions to enable the Revenue to issue

28

a fresh notice to the assessee under

clause 8 of the Amnesty Scheme, if it so

desires and is so advised.

20.In the light of the foregoing, we

allow these appeals in terms of the

directions as above and set aside the

order of the High Court impugned in the

appeals.

....................,J.

(RANJAN GOGOI)

....................,J.

(NAVIN SINHA)

NEW DELHI

OCTOBER 4, 2017