(1) The two questions referred to the Full Bench are:
'(1) Whether in view of the amendment introduced in section 11-A of the Central Provinces and Bearar Sales Tax Act, 1947 (XXI of 1947) by section 6 of the Bombay Sales Tax Laws (Validating Provinces and Amendment) Act, 1959, the Full Bench decision in Bissesar House v. State of Bombay, : AIR1959Bom130 , still holds good?
(2) Whether a notice under section 11(2) of the said Act can be issued more than three years after expiry of the period for which it is proposed to make the assessment?'
(2) In order to answer these questions, it is necessary to refer to certain sections of the Central Provinces and Berar Sales Tax Act, 1947 (XXI of 1947), (hereinafter referred to as the Act), Section 4 of the Act is charging section and it provides that every dealer whose dealer whose turnover exceeds the limits specified in sub-section (5) shall be liable to pay tax in accordance with the provisions of the Act on all sales effected after the commencement of the Act. Section 8 provides for the registration of dealers. Section 10 requires every dealer who is required to do so by the Commissioner by notice served in the prescribed manner and every registered dealer to furnish returns by such dates and to such authority as may be prescribed. Section 12 provides that before any registered dealer furnishes the returns required by sub-section (1) of section 10, he shall pay into a Government treasury in the prescribed manner the full amount of tax due from him under the Act according to such returns. Then comes section 11, which provides for the assessment of tax due from a dealer, and sub-section (1) of this section says that if the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them. Sub-section (2) of section 11 is in the following terms:
'If the Commissioner is not so satisfied he shall serve the dealer with a notice appointing a place and day and directing him-
(i) to appear in person or by an agent entitled to appear in accordance with the provisions of section 11-B;
(ii) to produce evidence or have it produced in support of the returns; or
(iii) to produce or cause to be produced any accounts, registers, cash memoranda or other documents as may be considered necessary by the Commissioner for the purpose.'
Sub- section (3) states that after hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub-section (2) and such further evidence as the Commissioner may require, the Commissioner shall assess him the tax. Sub-section (4) provides for a best judgment assessment in cases where the dealer has not furnished a return, or having furnished his return, has not complied with the notice issued under sub-section (2) or has not employed proper methods of accounting. Sub-section (5) provides that if the Commissioner is satisfied that any dealer liable to pay tax under the Act in respect of any period has wilfully failed to apply for registration, the Commissioner shall, at any time within three calendar years from the expiry of such period, after giving at dealer a reasonable opportunity of being heard proceed in such manner as may be prescribed to assess to the best of his judgment the amount of tax due from the dealer in respect of such period. Under this sub-section the Commissioner can proceed against unregistered dealers within three years from the expiry of period in respect of which the assessment is to be made.
(3) Section 11-A which was inserted in the Act in 1953, provides for the assessment of turnover which has escaped assessment. Sub-section (1) of this section states that any turnover of the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such tunity of being heard and after making such inquiry as he considers necessary, proceed in such manner as may be prescribed to re-assess or assess, as the case may be, the tax payable on any such turnover. Sub-section (2) of this section states that the assessment or re-assessment made under sub-section (1) shall be at the rate at which it would have been made, had there been no under-assessment or escapement. Sub-section (1) of section 11-A therefore prescribes a period of three years, within which proceedings must be initiated for the assessment of the turnover, which has escaped assessment. No such limitation is prescribed for proceedings taken under sub-section (2) of section 11.
(4) In : AIR1959Bom130 (FB) it was urged that the limitation prescribed under section 11-A must be imported into section 11 (2), because, if the Commissioner cannot proceed with regard to an escaped assessment beyond a period of three years, it was inconceivable that the Commissioner could have the power to issue a notice under section 11 (2) beyond the period of three years. In support of this argument, reliance was placed on the decision of this court in Commissioner of Income-tax v. Narsee Nagsee and Co., : 31ITR164(Bom) . That was a case under the Business Profits Tax act. Section 11 of that Act provided for the issue of a notice for furnishing a return of business profits. That section did not prescribe any period of limitation. Section 14 dealt with escaped assessment and prescribed a period of limitation of four years. This Court held that looking to the scheme of the Act as a whole and reading the Act as a whole, the Court must import into Section 11 the period of limitation prescribed in section 14. In the course of the judgment at page 953 (of Bom LR ) : (at p. 2 of AIR), it was observed:
' Therefore, it is clear from section 14 that the Legislature did not intend the put an assessed to the peril of an indefinite apprehension with regard to the payment of tax in respect of profits made under the Business Profits Tax Act. The intention of the Legislature was clear that after four years of the end of the chargeable accounting period the assessee should not be proceeded against even if profits had escaped assessment or his profits had been under-assessed or he had obtained a relief to which he was not entitled. Inasmuch as section 11 does not indicate any period of time with regard to the issuing of a notice, would it or would it not be right for us to import into Section 11 the consideration which led the Legislature to fix a limitation of time for the purpose of issuing a notice under section 14 if we were not to do that, we would arrive at this rather extraordinary conclusion shat the Legislature while saving the subject from harassment of proceedings with regard to escaped assessment or under assessment, permitted that harassment with regard to the very initiation of proceedings after the lapse of four years.'
The above argument was accepted by the Full Bench of this Court in Bissesar House's case, : AIR1959Bom130 (FB) and it was held that the notice under section 11 (2) of the Act cannot be issued more than three years after the expiry of the period for which it is proposed to make the assessment. This case was decided on the 23rd July, 1958. This decision rendered invalid several notices issued and proceedings instituted under sub-section (2) of section 11 of the Act. The Legislature, therefore, decided to intervene and enacted the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959 (XXII of 1959) to which I will hereafter refer as the amending Act. This amending Act came into force on 13th April 1959. Section 6 of the amending Act inserted a new sub-section (3) in section 11-A of the principal Act. And the reason for making this amendment, as stated in the Statement of Objects and Reasons, is as follows:
'In its judgment in Bissesar House v. Commissioner of Sales Tax, Nagpur, the Bombay High Court has held that the period of limitation laid down in section 11-A of the Central Provinces and Berar Sales Tax Act, 1947, for reassessment of the turnover which has escaped assessment applies to original assessment also. It has also been found that the said limitation applies to suo motu revisions also. The said decision affects the original assessments and suo motu revisions, which have been made after the expiry of the period of limitation laid down for the reassessment of turnovers escaping assessment under the different sales tax come necessary to establish the validity of all such assessments and to provide that the period of limitation prescribed for reassessment of escaped turnovers does not apply to original assessments and suo motu revisions. '
The new sub-section is as follows:
'(3) (a) Nothing in sub-sections (1) and (2) (I) shall apply to any proceeding (including any notice issued ) under section 11 or 22-A or 22-B and
(ii) notwithstanding any judgment, decree or order of a court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(B) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub-sections(1) and (2)'
(5) The first question, which has been referred to the Full Bench, is whether this new sub-section (3) of section 11-A secures the object which the Legislature had in view, viz., to get over the effect of the decision in Bissesar House's case, : AIR1959Bom130 and alter the law as laid down in this case. Mr. Phadke and Mr. Chandurkar, who have appeared on behalf of some assessees, have contended that the Full Bench did not apply section 11-A to proceedings under section 11, that the Full Bench only gave effect to the intention of the Legislature that no proceedings for assessment of the turnover, which has escaped assessment should be initiated after the lapse of three years and that the Full Bench also took into consideration that section 11 (5) prescribed the limitation of three years for taking proceedings against unregistered dealers. It has been conceded that the object of the Legislature in enacting the new sub-section (3) of section 11-A was, as stated in the Statement of Objects and Reasons, to provide that the period of limitation prescribed for reassessment of escaped turnovers does not apply to original assessments. It has however, been argued that this object has not been achieved. The Legislature has not stated that a notice under section 11 (2) may be issued more than three years after the expiry of the relevant period. Consequently, it has been urged that the amendment does not carry out the object. According to Mr. Phadke, the Legislature has misfired.
(6) In our opinion, there is no force in these arguments. A perusal of the judgment in Bissesar House's case, : AIR1959Bom130 makes it clear that the learned Judges imported in section 11 (2) the limitation prescribed in sub-section (1) of section 11-A . The whole basis of the decision is that as under section 11-A the Commissioner cannot assess or reassess the tax, when the turnover has escaped assessment after the expiry of three years, he cannot do the same by resorting to sub-section (2) of section 11. This will be clear from the following passage, which occurs in the judgment at page 1401 (of Bom LR) : (at p. 133 of AIR) :
'If, on the other hand, a case arises for the issue of notice under section 11 (2), then it is clear that that notice must be issued within three yeas, because if the notice is issued after three years it would infringe the provision of section 11-A because the Commissioner would be indirectly doing, if not doing directly what the law prohibits him from doing, viz., to bring to assessment an escaped turnover which he could not do beyond the period of three years.'
Sub-section (5) of section 11 was referred to in the judgment only when the arguments advanced on behalf of the assessees were mentioned. But thereafter there is no reference to this sub-section in the remaining part of the judgment. This sub-section was therefore not relied upon for holding that the notice under sub-section (2) of section 11 cannot be issued after three years. The intention of the Legislature that a notice should not be issued after three years was also inferred from the provisions enacted in section 11-A . The decision was, therefore, based on the fact that section 11-A prescribes the limitation of three years. This limitation was imported in sub-section (2) of section 11. In other words, the provision regarding limitation contained in section 11-A was made applicable to proceedings under sub-section (2) of section 11.
(7) Clause (a) of the new sub-section (3) of section 11-A expressly provides that nothing in sub-sections (1) and (2) shall apply to any proceeding (including any notice issued ) under section 11. Clause (b) states that the validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub-sections (1) and (2) of section 11-A. The new sub-section (3) therefore clearly lays down that the provisions of section 11-A are not to be imported in section 11. The decision in Bissesar House's case, : AIR1959Bom130 therefore, can no longer be regarded as good law, in so far as it lays down that notice under sub-section (2) of section 11 cannot be issued more than three years after the expiry of the period for which it is proposed to make the assessment.
(8) It has, however, been urged by Mr. Bhagwati who appears on behalf of another assessee, that the new sub-section (3) of section 11-A authorises issue of fresh notices and commencement of fresh proceedings only in those cases, in which the right to issue notices or initiate proceedings had not become time-barred before the emending Act came into force. In support of his argument, Mr. Bhagwati has relied upon the decision of this court in S.C. Prashar v. Vasantsen, 58 Bom LR 184 it was observed:
'It seems to us that the proposition of law is settled beyond any doubt that although limitation is a procedural law and although it is open to the Legislature to extend the period of limitation, an important right accrues to a party when the remedy against him of another party is barred by the existing law of limitation and that vested right cannot be affected except by the clearest and most express terms used by the Legislature. It is not suggested that a sovereign Parliament cannot take away vested rights, but the Court must be loath to construe any legislation as interfering with vested rights unless the law-making authority has clearly so provided.'
(9) In Naranbhai Chhaganbhai v. Motibhai : AIR1955Bom406 it was held that even where a new period of limitation is prescribed by an amending Act, it does not revive the remedies in respect of a cause of action already barred before the amendment came into force. Mr. Bhagwati has also relied upon the rule of interpretation that a taxing statute must be interpreted strictly and that in cases of doubt the benefit shall go to the subject. He has also referred to the following observations of Bowen, L.J. in Reid v. Reid, (1886) 31 Ch D 402:
'Now the particular rule of construction which has been referred to, but which is valuable only when the words of an Act of Parliament are not plain, is embodied in the well-known trite maxim 'omnis nova constitutio futuris formam imponere debet noon praeteritis' that is, that except in special cases the new law ought to be construed so as to interfere as little as possible with vested right. It seems to me that even in construing, an Act which is to a certain extent retrospective, and in construing a section which is to a certain extent retrospective we ought nevertheless to bear in mind that maxim as applicable whenever we reach the line at which the words of the section cease to be plain. That is a necessary and logical corollary of the general proposition that you ought not to give a larger retrospective power to a section even in an act which is to some extent intended to be retrospective, than you can plainly see the Legislature meant. '
Mr. Bhagwati has contended that before the amendment was made, the law, as laid down in , Bissesar House's case, : AIR1959Bom130 (FB) , was that no notice could be issued under sub-section (2) of section 11 more than three years after the expiry of the period for which it was proposed to make the assessment. In cases in which no notices had been issued before the amendment and in which more than three years had already elapsed, the right to take action under sub-section (2) of section 11 of the Act had, therefore, become barred. Vested rights had accrued to the dealer concerned and those vested rights have not been taken away by the amendments There is nothing in the new sub-section (3) of section 11-A which affects vested rights in cases in which no notices had been already issued or which would indicate an intention on the part of the Legislature to interfere with or affect such rights. Mr. Bhagwati has also urged that if the Legislature wanted to take away vested rights, it would have used language, such as that used by it in section 2 of the amending Act, ' the following sub-section shall be and shall be deemed always to have been inserted.'
(10) Mr. Abhyankar on behalf of the State has, on the other hand, contended that as sub-section (2) of section 11 itself does not lay down any period of limitation and as the limitation prescribed in section 11-A has been imported into this section by a judicial decision in Bissesar House's case : AIR1959Bom130 (FB) a person could not acquire a vested right of no action being taken against him after three years under sub-section (2) of section 11. It is not necessary for us to decide this question, because it seems to us that although the language of the new sub-section (3) of section 11-A is not happy, it shows a clear intention on the part of the Legislature to take away rights, if any, which might be held to have been acquired as a result of the above decision.
(11) The words 'shall be deemed ever to have been applicable' in CL, (a) (ii) of the new sub-section (3) indicate that this sub-clause applies to proceedings. Which had been instituted before the e Act was amended. In respect of such proceedings, it has been provided that nothing in sub-sections (1) and (2) of section 11-A shall be deemed ever to have been applicable to such proceedings. It follows that in respect o such proceedings that is proceedings pending at the date of the amendment, it could not be contended that they should have been initiated within three years. If therefore rights had been acquired or had become vested then such rights have been taken away or extinguished at least in respect of proceedings commenced before the coming into force of the amending Act. It is difficult to believe that the Legislature intended to draw a distinction or to discriminate between cases in which notices had been issued before the amendment and those in which notices have been issued after the Act was amended or may be issued hereafter.
(12) Clause (a) (I) refers to any proceeding under section 11, and though the words 'shall apply' are prospective, the words 'any proceeding' would include both proceedings pending at the date of the amendment and those commenced subsequently. In respect of such proceedings, i,e, both pending and future proceedings it is provided that nothing in sub-section (1) and (2) of section 11-A shall apply to them.
(13) Any doubt on the point is removed by clause (b) which states that the validity of any such proceedings or notice shall not be called in question on the ground that such proceeding or notice was inconsistent with the provision of sub-section (1) and (2) of section 11-A . Mr.Bhagwati has urged that the word 'was' indicated that clause (b) was intended to apply only to past proceedings. I.e. those instituted before the Act was amended. This argument cannot be accepted, because the words 'such proceedings or notice' obviously have reference to the proceeding or notice referred to in CLAUSE (A) Clause (a) applies to both pending and future proceedings. Consequently clause (b) also applies not only to past or pending proceedings, but also to future proceedings i.e. those commenced after the coming into force of the emending Act. The words 'that such proceeding or notice was inconsistent with the provisions of sub-sections (1) and (2) ' have, in our opinion, reference to the time at which the proceeding was commenced or notice issued. This clause, therefore provided that the validity of any future proceedings or notice shall not be called in question on the ground that it is inconsistent with the provisions of sub-sections (1) and (2) of section 11-A . The only ground, on which it can be said to be inconsistent with the provisions of section 11-A, is that the proceeding was begun or that the notice was issued more than three years after the expiry of the relevant period. If, therefore, the validity of any proceeding commenced or notice issued after the Act was amended cannot be challenged on this ground it follows that proceedings may be commenced or notices may be issued more than three years after the expiry of the relevant period.
(14) The view, which we are taking, is in accordance with that taken in Manordas Kalidas v. V.V. Tatke 61 Bom LR 1560. Sections 14, 15 and 31 of the Bombay Sales Tax Act, 1953, correspond to sections 11,11-A and 22 of the Central Provinces and Berar Sales Tax Act, 1947. Section 15 of the Bombay Act was amended by section 3 of the amending Act. The amendment made in section 15 is identical with that made in section 11-a of the C.P. and Berar Act. The effect of the amendment made in section 15 was considered in 61 Bom LR 1560, it was observed :
' On the principle of the two cases, : 31ITR164(Bom) and : AIR1959Bom130 (FB) , to which we have referred the taxing authority was obliged to issue a notice requiring a dealer to made a return within the period prescribed by section 15 of the Bombay Sales Tax Act before it was amended, but the legislature has now expressly provided by sub-section (2) of section 15 that nothing in section 15 as it originally stood shall apply to any proceeding under section 14. Evidently since the enactment of Act XXII of 1959, the principle applied by this Court in the interpretation of provisions relating to calling for a return, even though no period of limitation has been prescribed in that behalf by a taxing statute must be regarded as super seeded . . . . . Clause (a) (I) of sub-section (2) of section 15 is undoubtedly prospective in terms, but by clause (b) of sub-section (2a0 the validity of any such proceeding or notice is not liable to be called in question merely on the ground that such proceeding or notice was inconsistent with sub-section (1). It is again provided by clause (a) (ii) of sub-section (2) that notwithstanding any judgment, decree or order of a Court or Tribunal, nothing in sub-section (1) shall be deemed ever to Have been applicable to such proceedings or notice. The widest retrospective operation is therefore, given to clause (a) (I) of sub-section (2) of section 15. The retrospective operation is given to all proceedings and notices .. .. .. It is evident that the Legislature intended by the amendment that in construing and provisions of section 31 of the Bombay Sales Tax Act, 1953, the obligation to initiate proceedings within the period not longer than the period prescribed by section 15 will not be implied.'
(15) The reply to the second question will, therefore, be in the affirmative.
(16) Costs costs in the petitions.
(17) Answer accordingly.