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AFR

Court No. 3

Case : WRIT TAX No. 511 of 2017

Petitioner : M/S Ansaldo STS Transports System India

Pvt. Ltd.

Respondent : State Of U.P. And 3 Others

Counsel for Petitioner : Nishant Mishra

Counsel for Respondent : C.S.C.

Hon'ble Naheed Ara Moonis,J.

Hon'ble Saumitra Dayal Singh,J.

1.Heard Sri Nishant Mishra, learned counsel for the

petitioner and Sri Manu Ghildayal, learned counsel for the

Revenue.

2.Originally, the present petition was filed to challenge the

notice dated 29.05.2017 issued to the petitioner by its

assessing authority, under Section 31 of the U.P.V.A.T. Act,

2008 (hereinafter referred to as the “Act”) for the A.Y. 2008-09,

seeking to rectify the order dated 22.02.2014 passed by the

then assessing authority of the petitioner, under Section 32 of

the Act. During pendency of this petition, proceedings pursuant

to that notice concluded. Thus, the order dated 21.06.2017

came into existence. Thereby, the assessing authority of the

petitioner concluded, the order dated 22.02.2014 and

consequentially, the orders dated 18.07.2014 and 3.10.2015

[for A.Y. 2008-09 (U.P., Central and, Entry Tax)] suffered from a

mistake apparent on the face of record. The order dated

21.06.2017 has been challenged through amendment made to

this writ petition. It may be noted, by composite order dated

18.07.2014 the third ex-parte assessment order had been

framed against the petitioner. That ex-parte order had been

recalled by the order dated 03.10.2015. Thus, at present, the

second composite ex-parte assessment order dated

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18.09.2013, framed in the case of the petitioner for A.Y. 2008-

09 (U.P., Central and, Entry Tax), has been revived.

3.Briefly, the petitioner is a duly incorporated company. It is

a registered dealer engaged in executing works contracts,

mainly for the Indian Railways. For the A.Y. 2008-09, it was first

subjected to ex-parte assessment orders, all dated 30.6.2012,

framed under the Act, the Central Sales Tax Act, 1956

(hereinafter referred to as the “Central Act”) and the Uttar

Pradesh Tax on Entry of Goods Act, 2007 (hereinafter referred

to as the “Entry Tax Act”). The petitioner filed applications under

Section 32 of the Act, to set aside the aforesaid first ex-parte

assessment orders dated 30.06.2012. Those applications were

allowed by orders dated 11.01.2013. The ex-parte assessment

orders dated 30.06.2012 were set aside. Thereafter, on

18.09.2013, the second - composite ex-parte assessment order

was framed against the petitioner, for the A.Y. 2008-09 (U.P.,

Central and, Entry Tax Act). Thereby, tax was assessed – under

the Act, Rs. 18,20,000/-; under the Central Act, Rs.

1,08,40,000/- and under the Entry Tax Act, Rs. 52,01,708/-.

Against that order, the petitioner filed (within time), another

application under Section 32 of the Act. It was allowed on

22.02.2014 and the aforesaid second-composite ex parte order

dated 18.09.2013 was set aside. Consequently, the third -

composite ex-parte assessment order came to be framed

against the petitioner for the A.Y. 2008-09 (U.P., Central and,

Entry Tax), on 18.07.2014. Upon further application filed by the

petitioner under Section 32 of the Act, that ex-parte assessment

order was also set aside by order dated 03.10.2015. Apparently,

no further assessment order/s was/were framed in the case of

the petitioner for A.Y. 2008-09 (U.P., Central and, Entry Tax) up

to 30.09.2016. Thereafter, those assessment proceedings

became time barred.

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4.In these facts, on 19.12.2017, the petitioner was served

with an ex-parte order dated 16.08.2016 passed under Section

31 of the Act referable to the power of the assessing authority

to rectify mistakes apparent on the face of the record - in the

order dated 22.02.2014 i.e., the order passed under Section 32

of the Act, to recall the second - composite ex-parte

assessment order for A.Y. 2008-09 (U.P., Central and, Entry

Tax). Therein, the petitioner’s assessing authority took a view

that the order dated 22.02.2014 had been passed outside the

prescribed period of limitation to frame a fresh/second

assessment order. It was therefore, time barred. Consequently,

the assessing authority also passed order under Section 32 of

the Act (referable to the power of the assessing authority to

recall an ex-parte order), and dismissed the further applications

filed by the petitioner to recall the order dated 18.09.2013. If

sustained, those orders would attach finality to the second -

composite ex-parte assessment order dated 18.09.2013.

5.That order dated 16.08.2016, was challenged by the

petitioner in Writ Tax No.97 of 2017 (M/S Ansaldo STS

Transports System India Pvt. Ltd. Noida Vs. State of U.P. And 3

Others). It was allowed vide order dated 21.2.2017. For ready

reference that order is quoted below:

“We have heard Sri Nishant Mishra, learned counsel for the

petitioner and Sri C.B. Tripathi, the special counsel for the State.

An ex parte assessment order was passed on 18.09.2013 for the

year 200809. The said ex parte assessment order was set aside by

the order dated 22.02.2014, on the ground that it was an ex parte

order and no notice was given to the petitioner.

Subsequently, assessment order of 18.07.2014 the petitioner again

moved recall application which was allowed and the ex parte

assessment order dated 18.07.2014 was set aside by an order

dated 03.10.2015. Subsequently, the Assessing Authority passed

ex parte two orders dated 16.08.2016. One of them is purported to

an order under Section 31 of the U.P Vat Act, 2008 modifying the

earlier order.

In paragraph 41 of the writ petition, it has been stated that the

impugned orders passed under Section 31 & 32 are ex parte orders

without issuing any notice to the petitioner and without giving any

opportunity of hearing.

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Sri C.B. Tripathi, learned counsel for the State upon instructions

received to him and upon a perusal of the impugned order fairly

concedes that the impugned orders have been passed ex parte

without giving opportunity of hearing to the petitioner.

It is settled law that when an order has been passed and if the

same requires modification, it is necessary for the Assessing

Authority to issue a notice and give an opportunity of hearing before

recalling the order or modifying the said order. Since the same was

not given the impugned orders are clearly in violation of the

principles of natural justice as embodied under Article 143 of the

Constitution of India.

Consequently, without going into any other grounds, we allow the

writ petition at the admission stage itself.

We quash the impugned orders at the admission stage itself without

calling for a counter affidavit.

The writ petition is allowed.

It would be open to the Assessing Authority to pass fresh order after

giving due notice and opportunity of hearing to the petitioner.”

6.Thereafter, the petitioner's assessing authority issued

fresh/impugned notice to the petitioner, on 29.05.2017, under

Section 31 of the Act, again seeking to rectify the order dated

22.02.2014. No other order was sought to be set-aside or

rectified. By the impugned order dated 21.06.2017, the

assessing authority has reasoned, since the limitation to frame

the second assessment order for A.Y. 2008-09 (U.P., Central

and, Entry Tax), expired on 30.09.2013, the order dated

22.02.2014 passed thereafter, was beyond the time limitation

prescribed under Section 29(6) of the Act. Hence, the further

assessment proceedings (reopened in the case of the

petitioner) for the A.Y. 2008-09 (U.P., Central and, Entry Tax)

were void-ab-initio. Consequently, he has cancelled the

subsequent orders dated 18.07.2014 & 03.10.2015. Thus, the

second - composite ex-parte assessment order dated

18.09.2013, for A.Y. 2007-08 (U.P., Central, and, Entry Tax) has

been revived and rendered final.

7.Relying on the provisions of Section 31, 32 & 29(6) of the

Act, learned counsel for the petitioner first submitted, the order

dated 21.06.2017 was passed well beyond the statutory period

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of three years prescribed under Section 31(1) of the Act. It is

time barred. Then, it is his submission, while allowing the earlier

writ petition vide order dated 21.02.2017, this Court did not

grant or create any fresh period of limitation as may have

allowed the assessing authority to pass any order under

Section 31 of the Act, beyond the original period of limitation

that expired on 22.02.2017. In the context of suo moto exercise

of power, the limitation of three years must be computed from

the date 22.02.2014 when the order sought to be rectified was

passed. In absence of consent or waiver by the petitioner, such

limitation did not exist/survive. Therefore, the order dated

21.06.2017 is wholly time barred, for reason of it being passed

after the date 22.02.2017.

8.Reliance has been placed on a division bench decision of

this Court in the case of CST Vs. Sukhlal Ice & Cold Storage

Co., 2008 NTN (Vol. 36) 30, wherein, a co-ordinate bench had,

in the context of pari materia provisions of Section 22 of the

U.P. Trade Tax Act, 1948, held - power to rectify any order could

be exercised suo-motu, by the competent authority/Court within

a period of three years from the date of such order being

passed.

9.Next, reliance has also been placed on a five-Judge

Constitution bench decision of the Supreme Court in Padma

Sundara Rao (Dead) & Ors. Vs. State of T.N. & Ors., (2002)

3 SCC 533 to submit, a Writ Court could not, and, in the present

facts, it did not create any fresh period of limitation, while

allowing the petitioner's earlier writ petition on 21.2.2017.

10.Then, reliance has been placed on another five-Judge

Constitution bench decision of the Supreme Court in Supdt. Of

Taxes, Dhubri & Ors. Vs. Onkarmal Nathmal Trust, (1976) 1

SCC 766 to submit, jurisdiction could neither be waived nor

created and that, issue of notice under the provisions of an Act

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relates to exercise of jurisdiction. In the present facts, the

limitation expired on 22.02.2017. The notice dated 29.05.2017,

issued thereafter was wholly without jurisdiction.

11.Also, reliance has been placed on another decision of the

Supreme Court in Baswaraj & Anr. Vs. Special Land Acquisition

Officer, (2013)14 SCC81 to submit, the Courts cannot extend the

period of limitation that had otherwise expired.

12.Next, reliance has been placed on a seven-Judge

Constitution bench decision of the Supreme Court in P.

Ramachandra Rao Vs. State of Karnataka, (2002) 4 SCC

578, to submit, the Court cannot legislate - specifically, to

provide for the period of limitation, that may otherwise not exist.

13.In view of the above law, a distinction has been claimed to

the ratio in Director of Inspection of Income Tax

(Investigation), New Delhi and Another Vs. Pooran Mal &

Sons and Another, (1975) 4 SCC 568. Therein, the bar of

limitation was found to have been specifically waived by the

assessee. It has been thus submitted, in absence of any

consent or waiver granted by the present petitioner, the bar of

limitation exists in the undisputed facts of the present case.

14.With reference to the decision in the case of the Supreme

Court in Grindlays Bank Limited Vs. Income Tax Officer,

Calcutta & Ors., (1980) 2 SCC 191, it has been submitted, the

said decision may not come to the aid of the revenue in face of

the clear position of law arising from the larger/Constitution

bench decision of the Supreme Court.

15.Then, with respect to the decision of another coordinate

bench of this Court, in the case of S.K. Traders Vs. Additional

Commissioner 2007 NTN (Vol. 34) 345, it has been similarly

submitted, that decision is also distinguishable. According to

learned counsel for the petitioner, the correct position of law

was laid down in another division bench decision of this Court

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in Ram Nivas Vs. State of U.P. and Others (2019) SCC

OnLine All 3537. Therein, after taking note of the entire gamut

of law, the division bench applied the law laid down by the

Constitution bench of the Supreme Court, in Padma Sundara

Rao (supra) and distinguished the ratio arising from the

decision of the Supreme Court in Director of Inspection of

Income Tax Vs. Pooran Mal (supra) and the division bench

decision of this Court in S.K. Traders (supra).

16.Further, it has been submitted, even otherwise, the order

dated 22.02.2014 did not suffer from any mistake apparent from

the face of record. Reliance has been placed on a decision of

the Supreme Court in Deva Metal Powders (P) Ltd. Vs. CTT

(2008) 2 SCC 439 to submit, a debatable question cannot be

subjected to proceedings to rectify a mistake apparent from the

face of record.

17.Last, it has been submitted, the limitation to frame the

third and all subsequent assessment order/s in consequence of

order/s passed under Section 32 of the Act, would be the same

as prescribed to frame the second assessment order, under

Section 29(6) of the Act read with the first and the second

provisos thereto. The order to set-aside the first ex-parte orders

(dated 30.06.2012) was passed on 11.01.2013. Therefore, the

limitation to frame the fresh/second assessment order existed

up to 30th September 2013. The second - composite ex-parte

assessment order was framed on 18.09.2013. Upon the

application to set aside that assessment order/s filed within

time, the assessing authority did not commit any jurisdictional

error in setting aside that order on 22.02.2014. Occasioned by

that order, the limitation to pass the fresh/third assessment

order/s for A.Y. 2008-09 (U.P., Central and Entry Tax), existed

up to 30.09.2014. The third composite assessment order was

framed on 18.07.2014. Similarly, upon a further application filed

by the petitioner (within time), under section 32 of the Act, the

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assessing authority did not commit any mistake in setting aside

that order on 03.10.2015.

18.Opposing the writ petition, learned standing counsel for

the revenue has strongly urged - in the present case, the order

dated 28.07.2017 did not suffer from any lack of limitation. This

Court had clearly permitted the assessing authority to pass a

fresh order in accordance with law. That direction had been

issued by this Court in exercise of its jurisdiction under Article

226 of the Constitution of India. Therefore, indisputably, the

consequential notice was issued within reasonable time

therefrom i.e., almost within three months. Hence, the bar of

limitation claimed by the petitioner, did not exist, or arise. He

would also submit, by virtue of the second proviso to section 29

(6) of the Act, the limitation to frame the third assessment order

(after the second – composite ex-parte assessment order had

been set aside), would stand curtailed to the balance period of

limitation that survived on the date of the second ex-parte

assessment order being framed i.e., up to 30.09.2013, only.

Therefore, the application to set aside the second – composite

ex-parte assessment order dated 18.09.2013 could not be

allowed after the date 30.09.2013.

19.In short, it has been submitted, in absence of surviving

period of limitation to frame a fresh assessment order, the order

seeking to recall the second - composite ex-parte assessment

order could not be passed, beyond the date 30.09.2013.

Consequentially, the order dated 22.02.2014 setting aside the

second - composite ex-parte assessment order dated

18.09.2013 was wholly time barred and therefore lacking in

jurisdiction. Hence, the assessing authority has not committed

any error in setting aside such order. That mistake was clearly a

mistake apparent on the face of record.

20.Having heard learned counsel for the parties and having

perused the record, as to the first limb of submission advanced

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by learned counsel for the petitioner, it is true, there was no

express consent given or waiver granted by the petitioner and

no such consent or waiver may be inferred from a plain reading

of the order dated 21.02.2017 passed in Writ Tax No. 97 of

2017. Therefore, that part of the ratio of the decision of the

Supreme Court in Director of Inspection of Income Tax Vs.

Pooran Mal & Sons (supra) is inapplicable to the facts of the

present case. However, this reasoning was taken note of in

Grindlays Bank Limited Vs. ITO (supra). It may be discussed

a little later.

21.At the same time, the five-Judge Constitution bench

decision of the Supreme Court in the case of Padma Sundara

Rao (Dead) Vs. State of Tamil Nadu and Ors. (supra) had

arisen on different facts and law. There, an issue had arisen,

whether upon the High Court having set aside the earlier

declaration made under Section 6 of the Land Acquisition Act

1894, any fresh or further period of limitation existed or could

be claimed under Clause (ii) of the first proviso to Section 6 (1)

of that Act. For ready reference, provisions of Section 6 of that

Act are quoted below:

“6. Declaration that land is required for a public purpose.

(1) Subject to the provisions of Part VII of this Act, when the

appropriate Government is satisfied, after considering the report, if

any, made under section 5A, subsection (2), that any particular land

is needed for a public purpose, or for a Company, a declaration

shall be made to that effect under the signature of a Secretary to

such Government or of some officer duly authorized to certify its

orders and different declarations may be made from time to time in

respect of different parcels of any land covered by the same

notification under section 4 subsection (1), irrespective of whether

one report or different reports has or have been made (wherever

required) under section 5A subsection (2)

Provided that no declaration in respect of any particular land

covered by a notification under section 4 subsection (1) –

(i) published after the commencement of the Land

Acquisition (Amendment and Validation) Ordinance, 1967 but

before the commencement of the Land Acquisition (Amendment)

Act, 1984, shall be made after the expiry of three years from the

date of the publication of the notification; or

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(ii) published after the commencement of the Land

Acquisition (Amendment) Act, 1984, shall be made after the expiry

of one year from the date of the publication of the notification:

Provided further that no such declaration shall be made

unless the compensation to be awarded for such property is to be

paid by a Company, or wholly or partly out of public revenues or

some fund controlled or managed by a local authority.

Explanation. – In computing any of the periods referred to in

the first proviso, the period during which any action or proceeding

to be taken in pursuance of the notification issued under section 4

subsection (1), is stayed by an order of a Court shall be excluded.”

22.Considering that language of the proviso to Section 6 of

the Land Acquisition (Amendment) Act, 1894 and the complete

absence of any statutory remedy of appeal etc. provided

against a declaration made under Section 6 of the Act, the

Supreme Court reasoned - it was a distinctive feature viz-a-viz

Section 132(5) read with Section 132 (11) of the Income Tax

Act, 1961. It was held, under the Income Tax Act, a power

existed to remit a case to the original authority or, for a fresh

order to be passed. Thus, besides the distinction arising on

account of lack of consent or waiver granted by the petitioner

(in that case), it was recognized, even otherwise, the period of

limitation may survive in the context of a proceeding under

Section 132 (5) of the Income Tax Act. Thus, it was observed as

under:

“Learned counsel for the respondents referred to some

observations in Pooran Mal case [(1975) 4 SCC 568 : 1975

SCC (Tax) 346 : (1975) 2 SCR 104] which form the foundation

for decisions relied upon by him. It has to be noted that Pooran

Mal case [(1975) 4 SCC 568 : 1975 SCC (Tax) 346 : (1975) 2

SCR 104] was decided on entirely different factual and legal

backgrounds. The Court noticed that the assessee who wanted

the Court to strike down the action of the Revenue Authorities

on the ground of limitation had himself conceded to the passing

of an order by the Authorities. The Court, therefore, held that

the assessee cannot take undue advantage of his own action.

Additionally, it was noticed that the time-limit was to be

reckoned with reference to the period prescribed in respect of

Section 132(5) of the IT Act. It was noticed that once the order

has been made under Section 132(5) within ninety days, the

aggrieved person has got the right to approach the notified

authority under Section 132(11) within thirty days and that

authority can direct the Income Tax Officer to pass a fresh

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order. That is the distinctive feature vis-à-vis Section 6 of the

Act. The Court applied the principle of waiver and inter alia held

that the period of limitation prescribed therein was one intended

for the benefit of the person whose property has been seized

and it was open to that person to waive that benefit. It was

further observed that if the specified period is held to be

mandatory, it would cause more injury to the citizens than to the

Revenue. A distinction was made with statutes providing

periods of limitation for assessment. It was noticed that Section

132 does not deal with taxation of income. Considered in that

background, ratio of the decision in Pooran Mal case[(1975) 4

SCC 568 : 1975 SCC (Tax) 346 : (1975) 2 SCR 104] has no

application to the case at hand.”

23.That view had been taken by the Supreme Court in its

earlier decision in Grindlays Bank Limited Vs. ITO (supra) in

the context of a proceeding under the Income Tax Act, 1961.

Therein, after taking note of its earlier decision in Director of

Inspection of Income Tax (Investigation), New Delhi and

Another Vs. Pooran Mal & Sons (supra), with reference to an

assessment order passed consequent to an earlier direction

issued by the High Court, in writ jurisdiction, the Supreme Court

reasoned as under:

“7. …......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 C ourt, after quashing the offending order,

does not substitute its own order it has power nonetheless to pass

such further orders as the justice of the case requires. When

passing such orders the High court draws on its inherent power to

make all such orders as are necessary for doing complete justice

between the parties. The interests of justice require that any

undeserved or unfair advantage gained by a party invoking the

jurisdiction of the court, by 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 limitation if, notwithstanding his immediate

grievance against the notice under s. 142(1) of the Income Tax Act,

he had permitted the assessment proceeding to go on after

registering his protest before 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

unreasonable and invalid and he was prevented by sufficient cause

from complying with it and therefore the assessment order should

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be cancelled. In that event, the fresh assessment made under

section 146 would not be fettered by the bar of limitation. Section

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

constitutional jurisdiction of the High Court under Article 226. If no

order was made by the High Court directing a fresh assessment, he

could contend as is the contention now before us, that a fresh

assessment proceeding is barred by limitation. That is an advantage

which the appellant seeks to derive by the mere circumstance of his

filing a writ petition. It will be noted that the defect complained of by

the appellant in the notice was a procedural lapse at best and one

that could be readily corrected by serving an appropriate notice. It

was not a defect effecting the fundamental jurisdiction of the Income

tax Officer to make the assessment. In our opinion, the High Court

was plainly right in making the direction which it did. The

observations of this court in Director of Inspection of Income Tax

(Investigation), New Delhi vs. Pooran Mall & Sons 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 under section 132(5),

did not give an adequate opportunity 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 unfair advantage. The power to

quash an order under Article 226 can be exercised not

merely when the order sought to be quashed is one

made without jurisdiction in which case there can be no

room for the same authority 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 direct that authority to deal with

it or where the order of the authority which has the

jurisdiction is vitiated by circumstances like failure to

observe the principles of natural justice, the court may

quash the order and direct the authority to dispose of the

matter afresh after giving the aggrieved party a

reasonable opportunity of putting forward its case.

Otherwise, it would mean that where a court quashes an

order because the principles of natural justice have not

been complied with, it should not while passing that

order permit the tribunal or the authority to deal with it

again irrespective of the merits of the case."

The point was considered by the Calcutta High Court in Cachar

plywood Ltd. v. Income Tax Officer and the High court, after

considering the provisions of section 153 of the Income Tax Act,

considered it appropriate, while deposing of the writ petition, to

issue a direction to the Income Tax Officer to complete the

assessment which, but for the direction of the High court, would

have been barred by limitation.”

(emphasis supplied)

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24.Therefore, the distinction drawn by the five-Judge

Constitution bench decision of the Supreme Court in Padma

Sundar Rao (Dead) Vs St. of Tamil Nadu (supra) is material

and pertinent to the facts of the present case, as well. In the

context of an order passed under Section 32 of the Act, there

clearly existed a remedy of appeal under Section 55 of that Act.

In such appeal (where preferred), by virtue of Section 55 (5)(b)

(ii) of the Act, the appellate authority would be vested with

jurisdiction and power to set aside the order impugned before it

and to direct the assessing authority to pass a fresh order, after

conducting such inquiry as may be specified by the appeal

authority. For ready reference, provisions of Section 55 of the

Act may be noticed as under:

Section 55. Appeal

(1) Any dealer or other person aggrieved by an order made

by the assessing authority, other than an order mentioned in

subsection (7) of section 48 may, within thirty days from the date of

service of the copy of the order, after serving a copy of appeal

memo on the assessing authority or the Commissioner, appeal to

such authority (hereinafter referred to as appellate authority), as

may be prescribed:

Provided that where due to any reason, any appellant fails to

serve a copy of appeal memo on the assessing authority before

filing appeal, he may serve copy of such appeal memo within a

time of one week from the date on which appeal has been filed or

within such further time as the appellate authority may permit.

(2) Where an appeal has been filed against an order

referred to in subsection (1), the Commissioner may apply to the

appellate authority to examine the legality and propriety of such

order on such point as may be mentioned in the application. A copy

of such application shall be served on the appellant and shall be

decided along with the appeal filed by the appellant:

Provided that no application for examination of legality and

propriety shall be entertained after the disposal of appeal:

Provided further that where the Commissioner has filed an

application, the appellant shall not be entitled to withdraw appeal

filed by him.

Explanation For the purposes of this section Commissioner

includes an officer authorised to file appeal on behalf of the

Commissioner before the Tribunal under section 57.

(3) No appeal against an assessment order under this Act

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shall be entertained unless the appellant has furnished satisfactory

proof of the payment of the amount of tax or fee due under this Act

on the turnover of sale or purchase, or both, as the case may be,

admitted by the appellant in the tax returns filed by him or at any

stage in any proceedings under this Act, whichever is greater.

(4)The appeal shall be in the prescribed form and shall be

verified in the prescribed manner.

(5)The appellate authority may, after calling for and

examining the relevant records and after giving a reasonable

opportunity of being heard to the appellant and the Commissioner

(a) in the case of an order of assessment and penalty.

(i) confirm or annul such order ; or

(ii)vary such order by reducing or enhancing the

amount of assessment or penalty, as the case may

be, whether such reduction or enhancement arises

from a point raised in the grounds of appeal or

otherwise ; or

(iii) set aside the order and direct the assessing

authority to pass a fresh order after such inquiry as

may be specified; or

(iv) direct the assessing authority to make such

inquiry and to submit its report within such time as

may be specified in the direction or within such

extended time as it may allow from time to time, and

on the expiration of such time the appellate authority

may, whether the report has been submitted or not

decide the appeal in accordance with the provisions

of the preceding sub-clauses; or

(b) in the case of any other order

(i) confirm, cancel or vary such order; or

(ii) set aside the order and direct the assessing

authority to pass a fresh order after such inquiry as

may be specified:

Provided that nothing in this subsection shall preclude the

appellate authority from dismissing the appeal at any stage with

such observations as it deems fit where the appellant applies for

withdrawal of the same and no request for examination of legality

or propriety of order under appeal has been made by the

Commissioner.

(6) The appellate authority, may, on the application of the

appellant and after giving the Commissioner a reasonable

opportunity of being heard stay, except the operation of order

appealed against, the realisation of the disputed amount of tax, fee

or penalty payable by the appellant till the disposal of the appeal :

Provided that –

(i) where an order under appeal involves dispute

about tax, fee or penalty, no stay order shall remain in force after

thirty days from the date on which the same has been granted, if

the appellant does not furnish security to the satisfaction of the

assessing authority for payment of the amount, the realisation

whereof has been stayed within the aforesaid period of thirty days;

15

(ii) no such application shall be entertained unless it is

filed along with the memorandum of appeal under subsection (1);

(7) Section 5 of the Limitation Act, 1963, shall apply to

appeals or other applications under this section.

(8)The appellate authority shall be under the

superintendence and control of the Commissioner:

Provided that in the exercise of such superintendence and

control, no order, instructions or directions shall be given by the

Commissioner so as to interfere with the discretion of the Appellate

Authority in the exercise of its appellate functions.

(9) For the purposes of this section service of an order

passed by appellate authority under this section and service of

memo of appeal on the State Representative, as defined in the rules

framed under this Act, shall be deemed to be service on the

Commissioner.

(10) All appeals arising out of the same cause of action in

respect of an assessment year, as far as possible, shall be heard

and decided together.”

25.Thus, it cannot be disputed, the petitioner had a remedy

of appeal against the orders dated 16.08.2016. Therefore, it

also cannot be further disputed, if those appeals had been filed,

the appellate authority would have been within its jurisdiction to

set aside the orders dated 16.08.2016 on a reasoning similar to

that adopted by this Court, in its order dated 21.02.2017. The

consequence of such a finding would naturally be - the matter

would have been remitted to the assessing authority to pass a

fresh order. Merely because the petitioner chose to approach

this Court under Article 226 of the Constitution of India against

the order dated 16.08.2016, it can never be said, the petitioner

was entitled to any better or other relief or rights.

26.It would have been one thing if while quashing the order

dated 16.08.2016, this Court had found, the said order suffered

from an inherent lack of jurisdiction. In that case, there would

be no question or occasion for any further proceedings to arise.

That is not the case here. On the contrary, the order dated

21.02.2017 passed by this Court distinctly records - the order

dated 16.08.2016 was laconic on account of non-compliance of

the rules of natural justice. Logically therefore, that order was

16

found competent in jurisdiction, but defective on procedural

aspects.

27.Looked in that light, the further direction issued by the

Court requiring the assessing authority to conduct fresh

proceeding in accordance with law clearly is an order that drew

on the inherent powers of this Court, consistent to the statutory

scheme arising from the plain language of Section 55 (5)(b)(ii)

of the Act. Therefore, that further direction would inhere in and it

would automatically attach to the order passed by the Writ

Court. The rule of expiry of limitation to pass the impugned

order dated 21.06.2017 (invoked by the petitioner), has no

applicability to the present facts.

28.Next, the ratio of the five-Judge Constitution bench of the

Supreme Court in Supdt. Of Taxes, Dhubri & Ors. Vs.

Onkarmal Nathmal Trust (supra) is also inapplicable and

distinguishable to the facts of the present case. There an issue

arose, if assessment notices could be first issued beyond the

statutory period prescribed. The State contended, the

stay/injunction against the assessment proceedings protected

the statutory period of limitation. Rejecting that objection, the

Supreme Court reasoned, an injunction order did not amount to

waiver of the statutory provisions. Further, issuance of notice to

assess was held to be related to exercise of jurisdiction. Only

the conduct or continuance of the assessment proceedings was

stayed/injuncted but not the exercise of jurisdiction to undertake

that journey. That not done during the available limitation, the

assessment notices subsequently issued were found not

protected on principle of waiver or consent. Illustratively, it was

held in paragraph 28 to 30 of that decision, as below:-

“28. In the present case, the respondent cannot be said to have

waived the provisions of the statute. There cannot be any

waiver of a statutory requirement or provision which goes to the

jurisdiction of assessment. The origin of the assessment is

17

either an assessee filing a return as contemplated in the Act or

an assessee being called upon to file a return as contemplated

in the Act. The respondents challenged the Act. The order of

injunction does not amount to a waiver of the statutory

provisions. The issue of a notice under the provisions of the Act

relates to the exercise of jurisdiction under the Act in all cases.

Revenue statutes are based on public policy. Revenue statutes

protect the public on the one hand and confer power on the

State on the other.

29. The decision in William Shepard v. O.E.D. Barron on which

the Solicitor general relied for the proposition that the

constitutionality of a rule of assessment can be waived does not

have any application in the present case. In the American

decision (supra) an objection against the frontage rule of

assessment for a public improvement, prescribed by the State

laws, was not allowed to be urged to defeat the collection of the

assessments. The reason was that the abutting owners who

petitioned for the improvement under the Act, actively

participated in carrying out the work, recognized the justice of

the assessments from time to time during its progress, and

signed a statement for the purpose of inducing the issuance

and purchase of country improvement bonds to the effect that

the work had been properly done. In the American decision the

work was done at the instance and request of the owners. The

Court found an implied contract arising from facts that the party

at whose request and for whose benefit the work had been

done would pay for it in the manner provided for by the Act

under which the work was done.

30. It is against principle to suggest that the appellants did

anything wrong or, they are taking advantage of anything wrong

Jessel, M.R. In Re. Hallett's Estate Knatchbull v. Hallett said:

Now, first upon principle, nothing can be better settled,

either in our own law, or, I suppose, the law of all

civilised countries, than this, that where a man does an

act which may be rightfully performed, he cannot say

that act was intentionally and in fact done wrongly.

The respondents were entitled to impeach the statue under

which they were made liable. The respondents have done no

wrong. The respondents are not taking any advantage of any

act of theirs. The State was entitled to resist the respondents.

The State did so by contending that the Act was valid, but the

State took no steps during the pendency of the litigation to take

directions from the Court to serve notices of demand upon the

appellants to keep alive the right of the respondents.”

(emphasis supplied)

29.In the present case, undisputedly, the prior notices

leading to the orders dated 16.08.2016 were issued well within

time. Those were not quashed by this Court in Writ Tax No. 97

of 2017. Such notices were therefore valid. Thus, the

18

jurisdiction had been exercised within time prescribed by law.

Upon the resulting orders dated 16.08.2016 being set aside by

this Court on 21.02.2017 and, the matter being remitted to the

assessing authority, strictly, there did not arise an issue or

question of jurisdiction being exercised outside limitation.

Therefore, the ratio in Supdt. Of Taxes, Dhubri & Ors. Vs.

Onkarmal Nathmal Trust (supra) is wholly inapposite.

30.As already discussed above, owing to completely

dissimilar legislative scheme under the Act and the Land

Acquisition Act, 1894, the reasoning obtaining with respect to

limitation to conduct proceedings in remand under the Land

Acquisition Act, 1894 is wholly inapplicable to the facts of the

present case. Thus, the ratio obtaining in Baswaraj & Anr. Vs.

SLAO (supra) as also the division bench decision of the Court

in Ram Nivas Vs. State of U.P. and Others (supra), are wholly

distinguishable and inapplicable to the present case.

31.Consequently, the ratio in the seven-Judge Constitution

Bench decision of the Supreme Court in P. Ramachandra Rao

Vs. State of Karnataka (supra) relied upon by learned counsel

for the petitioner to submit - limitation cannot be created and

the Court cannot legislate to fill up casus omissus is found to be

distinguishable in the context of the clear and undisputed facts

of the present case discussed above and the clear language of

the provisions of Section 32 read with Section 29(6) of the Act.

32.For the above reasons, we do not find the proceedings

instituted by notice dated 29.05.2017 or the consequent order

dated 28.07.2017 to be lacking in inherent jurisdiction, on

account of the bar of limitation.

33.As to the next submission of learned counsel for the

petitioner, there can be no two opinions on the issue. A disputed

or debatable question cannot be gone into in a proceeding

19

seeking to rectify a mistake apparent on the face of record.

Such a mistake or error must be glaring or self-apparent and

not one that may be established upon elaborate argument or

debate. This principle was recognized and applied in the

context of taxation laws in Thungabhadra Industries Ltd. Vs.

The Government of Andhra Pradesh, AIR 1964 SC 1372 . It

has been consistently followed and applied in T.S. Balram Vs.

Volkart Bros. (1971) 2 SCC 526 (SC) and CIT Vs. Hero

Cycles Pvt. Ltd. (1997) 8 SCC 502, amongst others. Applying

that rule, we now consider the reasoning adopted by the

assessing authority - the limitation to pass the order to recall

the second composite ex-parte order would be the balance

period of limitation that survived upon the second-composite

ex-parte assessment order being passed on 18.09.2013 i.e., up

to 30.09.2013 only. Here, it would be apposite to take note of

the language of Section 29(6) and Section 32(1) of the Act. For

ready reference, Section 32(1) of the Act reads as under:

“Section 32. Power to set aside ex-parte order of assessment

or penalty

(1) In any case in which an order of assessment or

reassessment or rejection of application for registration or order of

penalty is passed ex-parte, the dealer may apply to the assessing

authority within thirty days of the service of the order to set aside

such order and reopen the case; and if such authority is satisfied

that the applicant did not receive notice or was prevented by

sufficient cause from appearing on the date fixed, it may set aside

the order and reopen the case for hearing:

Provided that no such application for setting aside an ex-

parte assessment order shall be entertained unless it is

accompanied by satisfactory proof of the payment of the amount of

tax to be due under this Act on the turnover of sales or purchases,

or both, as the case may be, admitted by the dealer in the returns

filed by him or at any stage in any proceeding under this Act,

whichever is greater”.

34.Then, Section 29(6) of the Act reads as under:

“29. Assessment of tax of turnover escaped from assessment.

(6). Where an order of assessment or re-assessment has been

set aside by the assessing authority himself under section 32, a

fresh order of assessment or re-assessment may be made

before expiry of the assessment year in which such order of

20

assessment or reassessment has been set aside:

Provided that if an order of assessment or re-assessment

made ex parte is set aside on or after first day of October in any

assessment year, fresh order of assessment or re-assessment

may be made on or before thirtieth day of September of the

assessment year succeeding the assessment year in which

such ex parte order of assessment or re-assessment was set

aside.

Provided further that where second or subsequent time

any order of assessment or reassessment is made ex parte and

where such second or subsequent ex parte order of

assessment or reassessment is to be set aside and a fresh

order of assessment or reassessment may be made within the

time aforementioned when the first ex parte order is set aside.”

35.Thus, in the first place, under the Section 29(6) of the Act,

the limitation to pass the fresh/second assessment order/s

existed up to the end of the Assessment Year in which such

(first) ex-parte assessment order was set aside. Since the first

ex-parte assessment order was set aside on 11.01.2013, such

limitation existed up to 31.03.2013. However, by virtue of the

first proviso to Section 29(6), that limitation stood extended up

to 30.09.2013. It was so because of the language of the first

proviso to Section 29(6) of the Act and the fact the order dated

11.01.2013 was passed after the cut-off date 1

st

October day of

the A.Y. 2013-14, prescribed under Sub-Section (6) of Section

29 of the Act.

36.The second proviso to Section 29(6) of the Act is only

clarificatory. It enforces that rule of limitation as exists under

Section 29(6) of the Act read with the first proviso thereto, to all

the subsequent assessment orders that may be passed, upon

further orders to set aside any/all subsequent or successive ex-

parte assessment order/s. Thus, the limitation to pass the fresh

assessment order/s after setting aside the second, third, fourth

or any other subsequent ex-parte assessment order would be

determined applying the rule contained in Section 29(6) of the

Act read with the first proviso thereto. The second proviso to

Section 29(6) of the Act does not prescribe a new or different

period of limitation.

21

37.Thus, as explained above, if the second or any

subsequent ex-parte assessment order was set aside (under

Section 32 of the Act), on or before 30

th

September of an

Assessment Year, the limitation to pass a fresh assessment

order thereafter, would exist up to 31

st

March of that

Assessment Year. If, however, the order to set aside the second

or the subsequent ex-parte assessment order was passed on

or after 1

st

October of an Assessment Year, the limitation to

pass the fresh assessment order would stand extended up to

30

th

September of the next Assessment Year.

38.Clearly, the above rule is a rule of prudence and

procedure to ensure compliance of rules of natural justice and

to ensure a minimum time of six months to the concerned

assessing authority, to conclude an assessment proceeding/s,

reopened upon an earlier ex-parte assessment order being set

aside under Section 32 of the Act. Unless that reasonable time

is allowed, the power/authority of such an assessing authority

to pass a third or other subsequent assessment order would be

defeated. Also, an undue benefit would arise to the concerned

assessee, unintendedly as no assessment order may come to

be framed in his case, owing to absence of time.

39.At the same time, the exercise of power to set aside an

ex parte assessment order, is statutorily governed by provisions

of Section 32(1) of the Act. It has been quoted above. Plainly,

that provision does not provide for any period of limitation to

pass the order on an application filed to recall an ex parte

assessment order. It only prescribes for a fixed limitation of

thirty (30) days (computed from the date of service), to file an

application to recall an ex-parte assessment order.

40.That provision does not restrict the right of an assessee to

seek recall of an ex parte assessment order, only once or twice,

with respect to an Assessment Year. In fact, the statute

22

contemplates or allows the assessee to seek recall of each and

every ex parte assessment order, every time such an order

comes into existence, irrespective of and, unaffected by the fact

that the assessee may have suffered such an ex parte

assessment order, for that Assessment Year, many times

earlier. Thus, every time an ex parte assessment order was

framed against the petitioner, for the A.Y. 2008-09 (U.P., Central

and, Entry Tax), a right accrued to the petitioner to seek its

recall, subject to the condition that such application seeking

recall be filed within thirty (30) days of service of such an ex

parte order.

41.There is nothing in the language of Section 32 and/or

Section 29(6) of the of the Act as may be read to introduce a

time limit on the power of the assessing authority to deal with

and/or allow an otherwise validly filed application. In the instant

case, it is not even alleged by the revenue that the application

filed by the petitioner to recall the ex parte order dated

18.09.2013 was filed beyond thirty (30) days of that order being

served. Therefore, it may be safely assumed that that

application was filed in time. Consequently, it had to be dealt

with and decided on its own merits, unaffected by any other or

further consideration of limitation to frame a fresh assessment

order. That stage had not yet arrived. That limitation would arise

under Section 29(6) of the Act, only in the event and at the

stage of the application filed under Section 32 being allowed. It

would be governed by Section 29(6) (read with the first proviso

thereto), of the Act.

42.Thus, both for reason of grammar as also to keep the

provision workable, the interpretation made by the assessing

authority and as canvassed by the learned Standing Counsel

cannot be accepted. An interpretation that makes the provision

23

unworkable or leads to absurd results must always be rejected.

In view of the above, we find that the assessing authority had

not committed any mistake less so a mistake apparent on the

face of record in passing the order dated 22.02.2014.

43.The last date to pass the second-composite ex-parte

assessment order was 30.09.2013. That order was passed

within time, on 18.09.2013. At the same time, those dates and

facts did not limit the exercise of power of the assessing

authority to set-aside that second-composite ex-parte order, on

or before the date 30.09.2013. There being no allegation of the

application dated 21.02.2014 filed beyond the period of thirty

days from the date of service of the order dated 18.09.2013, the

order dated 22.02.2014 was wholly within time.

44.As noted above, no limitation was prescribed under

Section 32 of the Act - to pass an order on an application filed

within time, under that Section, to recall the second-composite

ex parte assessment order dated 18.09.2013, for the A.Y. 2008-

09 (U.P., Central and Entry Tax). Therefore, the order dated

22.02.2014 was not time barred, on any count.

45. The time limitation to pass the subsequent/third set of

assessment order/s arose under Section 29(6) of the Act only

upon the order dated 22.02.2014 being passed. That limitation

arose with reference to that date, under Section 29(6) read with

the first and the second provisos thereto. As discussed above it

existed up to 30.09.2014. Hence, the surviving period of

limitation to pass the second set of assessment orders was

wholly extraneous to the issue involved in this case.

46.Consequently, the ratio in CST Vs Sukhlal Ice & Cold

Storage Co. (supra), is also irrelevant to the issue before us.

Therefore, the reasoning offered by the assessing authority

purportedly to rectify the order dated 22.02.2014 is wholly

24

unacceptable and contrary to law. Consequently, that order has

not been shown to suffer from any mistake apparent from the

face of record. No other reason has been stated in the order

dated 28.07.2017 or canvassed in the Counter Affidavit, to

justify the recall of the orders dated 22.02.2014, 18.07.2014

and 03.10.2015.

47.The fact that in the instant case the assessment

proceedings for A.Y. 2008-09 (U.P., Central and, Entry Tax)

became time barred on 30.09.2016 or that no assessment

order came to be passed in the case of the petitioner and

therefore taxable transactions performed by the petitioner may

have remained from being assessed, is of no concern to this

Court, in the facts of the present case. In a proverbial cat-and-

mouse game enacted by the revenue and the taxpayer, the Writ

Court sits an umpire. It may be guided strictly by the law alone.

Equity has less or no role to play. Therefore, it is not for us to

judge if the ‘mouse’ deserved to be caught by the ‘cat’. If the

‘cat’ has been lazy or mistaken, so be it. The ‘mouse’ lives. We

may only ensure strict adherence to the rule of law. That done,

the fact that revenue has suffered a loss due to an error on its

part, falls outside the domain of this Court, in these

proceedings. Remedial action lies elsewhere.

48.Accordingly, the impugned order dated 21.06.2017

passed under Section 31 of the Act, for the A.Y. 2008-09 (U.P.,

Central and, Entry Tax), is hereby quashed. The writ petition

succeeds and is accordingly allowed. No order as to costs.

Order Date : 26.10.2021

M. Tariq