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The General Clauses Act, 1897
The Trade Marks Act, 1999
Section 6 in The General Clauses Act, 1897
Section 6(c) in The General Clauses Act, 1897
Section 6 in The Trade Marks Act, 1999

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Allahabad High Court
Ramraj Rice Mills vs Commissioner, Trade Tax on 9 August, 2000
Equivalent citations: 2001 123 STC 430 All
Author: R Agrawal
Bench: R Agrawal



JUDGMENT


 

 R.K. Agrawal, J.   

1. Feeling aggrieved by the order dated January 29, 2000, passed by the Trade Tax Tribunal, Meerut, Bench II, Meerut, in Appeal Nos. 93 of 1999, 94 of 1999 and 96 of 1999 relating to the assessment years 1986-87, 1987-88 and 1992-93 the assessee-applicant has filed these three revisions under Section 11 of the U.P. Trade Tax Act, 1948.

2. The facts of the case giving rise to the present revisions are as follows :

The applicant is a registered dealer and runs a rice mill. It is engaged in the business of manufacture and sale of rice. The applicant holds a recognition certificate under Section 4-B(2) of the U.P. Trade Tax Act, 1948--hereinafter referred to as "the Act". It had made purchase of paddy directly from the farmers without issuing any form III-B to them as also from the wholesalers against form III-B without payment of any tax on its purchases. The rice manufactured by the applicant out of paddy so purchased has been sold by the applicant in the State of U.P., in the course of inter-State trade and commerce and to the Regional Food Controller under the Rice Levy Scheme. Apart from it the applicant had effected sale of rice amounting to Rs. 13,80,942.65, during the assessment year 1986-87 ; Rs. 9,12,002.76 during the assessment year 1987-88 and Rs. 5,52,931 during the assessment year 1992-93 through commission agents outside the State of U.P. The applicant claimed that it is not liable to pay any tax on such sales of rice which it had effected outside the U.P. through commission agents. The Sales Tax Officer (A), Mawana, initiated proceedings under Section 4-B(6) of the Act on the ground that the applicant being a recognition certificate holder and having purchased paddy from the farmers and also from the registered dealers had claimed exemption from payment of tax on such purchases on the strength of the recognition certificate was not entitled to effect sale of rice manufactured out of such paddy through commission agents outside the State of U.P. The assessing officer vide separate orders for all the three years imposed penalty under Section 4-B(6) of the Act. The applicant filed three first appeals under Section 9 of the Act before the Deputy Commissioner (Appeals), Trade Tax, who vide order dated January 13, 1999 had upheld the imposition of penalty. The second appeals filed under Section 10 of the Act had been dismissed by the Trade Tax Tribunal, Meerut, vide order dated January 29, 2000.

3. I have heard Shri Kunwar Saxena, learned counsel appearing for the applicant and Shri S.D. Singh, learned Standing Counsel who represents the respondent. The learned counsel for the applicant submitted that the notices under Section 4-B(6) were issued by the assessing officer in the month of March, 1996 and the final order was also passed by him in the same month of March, 1996 when Section 4-B(6) of the Act was not on the statute book having been deleted by U.P. Sales Tax (Amendment) Act, 1995 (U.P. Act No. 31 of 1995) with effect from May 14, 1994. Thus the proceedings for imposition of penalty under Section 4-B(6) were wholly without authority of law. He pointed out that in the U.P. Act No. 31 of 1995 there was no saving clause in so far as Section 4-B(6) of the Act is concerned. In support of his plea the learned counsel for the applicant relied upon a decision of the honourable Supreme Court in the case of Kolhapur Cane Sugar Works Ltd. v. Union of India reported in (2000) 1 JT SC 453. He strongly relied upon the paragraphs 32, 35, 38, 39 and 41 of the aforesaid judgment of the honourable Supreme Court and submitted that since it did not contain any saving clause for continuance of the proceedings initiated under the rule which was deleted/omitted and there being no provisions in U.P. Act No. 31 of 1995 saving the proceedings initiated in the deleted/omitted provisions, the entire proceedings lapsed.

4. Shri S.D. Singh, however, submitted that even though Section 4-B(6) of the Act was deleted by U.P. Act No. 31 of 1995, yet the provisions of Section 4-B(6) of the Act was incorporated in the newly substituted Sub-section (5) of Section 4-B by Section 14 of the U.P. Act No. 31 of 1995 and therefore the assessing officer was well within its jurisdiction to initiate proceedings under Section 4-B(6) of the Act. He further relied upon Sub-sections (c) and (d) of Section 6 of the U.P. General Clauses Act, 1904 and submitted that since the applicant had incurred the liability and had exposed himself for levy of penalty under Section 4-B(6) of the Act before its omission, it would not affect the initiation of penalty proceedings. He further relied upon a decision of the honourable Supreme Court in the case of Brij Mohan v. Commissioner of Income-tax reported in [1979] 120 ITR 1 ; AIR 1979 SC 1897 and submitted that even the Supreme Court had upheld the levy of penalty where the provisions for levy of penalty has been amended and different quantum of penalty were provided in the old section and the amended section.

5. For considering the merit of the submissions made by the learned counsel for the parties, the various provisions are reproduced below :

Section 4-B(6) of the Act as it stood during the assessment year 1986-87 reads as follows :

"(6). Where a dealer, in contravention of the terms and conditions laid down in Sub-section (2) for the grant of a recognition certificate, sells or otherwise disposes of the notified goods, for the raw material of which he has been granted such certificate, he shall be liable to pay as penalty such amount, as the assessing authority may fix, which shall be not less than the amount of tax that would have been payable under the provisions of this Act on the sale of such notified goods in the State and not more than three times the amount of such tax."

It was again substituted by U.P. Act No. 17 of 1987 with effect from July 29, 1987. The amended Sub-section (6) is reproduced below :

"(6). Where a dealer, in whose favour a recognition certificate has been granted under Sub-section (2), purchase of any goods for use in the manufacture or packing of any notified goods without payment of tax or by paying tax at concessional rate of less than four per cent and such notified goods are sold or disposed of by such dealer otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of India, such dealer shall be liable to pay as penalty such amount as the assessing authority may fix, which shall not be less than the amount of tax that would have been payable under the provisions of this Act, on the sale or purchase of such goods and not more than double the amount of such tax, less any amount which he may have actually paid as tax on the purchase of such goods."

The aforesaid Sub-section (6) was omitted by Section 14(d) of U.P. Act No. 31 of 1995. However, by Section 14(c), Sub-section (5) of Section 4-B was substituted by the following :

"(5) Where a dealer in whose favour a recognition certificate has been granted under Sub-section (2) has purchased the goods after payment of tax at concessional rate under this section or, as the case may be, without payment of tax and,--

(a) has used such goods for a purpose other than that for which the recognition certificate was granted or has otherwise disposed of the said goods ; or

(b) the goods manufactured out of such raw material or processing material or the manufactured goods after being packed with such packing material are sold or disposed of otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of the territory of India such dealer shall be liable to pay as penalty such amount as the assessing authority may fix which shall not be less than the difference between the amount of tax on the sale or purchase of such goods payable under this section and the amount of tax payable under any other provisions of this Act but not exceeding three times the amount of such difference."

Newly substituted Clause (b) of Section 4-B(5) is same or similar to earlier Section 4-B(6) of the Act,

6. Section 41 of the U.P. Act No. 31 of 1995 provided for repeal and saving, it did not provide for any saving so far as the omission of Section 4-B(6) of the Act is concerned, Section 41 of the U.P. Act No. 31 of 1995 is reproduced below :

"41. Repeal and saving.-- (1) The Uttar Pradesh Sales Tax (Amendment) Ordinance, 1995 (U.P. Ordinance No. 16 of 1996), is hereby repealed.

(2) Notwithstanding such repeal anything done or any action taken under the provisions of the principal Act as amended by the Ordinance referred to in Sub-section (1) or by the Uttar Pradesh Sales Tax (Amendment) Ordinance, 1994 (U.P. Ordinance No. 7 of 1994) or by the Uttar Pradesh Sales Tax (Amendment) (Second) Ordinance, 1994 (U.P. Ordinance No. 21 of 1994) shall be deemed to have been done or taken under the corresponding provisions of the principal Act as amended by this Act as if the provisions of this Act were in force at all material times."

7. According to the learned counsel for the applicant since U.P. Act No. 31 of 1995 did not provide for any saving in respect of Section 4-B(6), the entire proceedings under Section 4-B(6) of the Act taken by the assessing authority was wholly without jurisdiction. He referred to the observations made by the honourable Supreme Court in paragraph 32 of Kolhapur Canesugar Works Ltd. case (2000) 1 JT 453 and submitted that Section 6 of the General Clauses Act only applies to repeals and not to omission. He further submitted that honourable Supreme Court had categorically laid down in para 35 of the said report that :

"It is our considered view that in such a case the court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceeding shall continue and be disposed of under the old rule as if the rule has not been deleted, or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari materia provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceeding was initiated being deleted/omitted."

He further relied upon paragraph 38 and 39 of the aforesaid decision of the honourable Supreme Court wherein the honourable Supreme Court observed as follows :

"38. The position is well-known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. In a case where a particular provision in a statute is omitted and in its place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonably inferred that the intention of the Legislature is that the pending proceeding shall not continue but a fresh proceeding for the same purpose may be initiated under the new provision.

39. In the present case, as noted earlier, Section 6 of the General Clauses Act has no application. There is no saving provision in favour of pending proceedings. Therefore, action for realisation of the amount refunded can only be taken under the new provision in accordance with the terms thereof."

8. It may be mentioned here that present case is not of omission of any rule but omission of a sub-section, namely 4-B(6) of the Act. Section 6(c) and (d) of the U.P. General Clauses Act saves any liability incurred or any penalty incurred in respect of any offence committed against any enactment so repealed. Section 6(c) and (d) of the U.P. General Clauses Act is reproduced below :

"6. Effect of repeal.--Where any Uttar Pradesh Act repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not--

(a)..........................

(b)...........................

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed ; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed ; or

(e)............................."

Section 6(c) and (d) of U.P. General Clauses Act can saves the liabilities and penalty incurred under the repealed provisions of any enactment. The saving clause in Section 41 of U.P. Act No. 31 of 1995 does not destroy the liability which have been incurred under the old statute. The honourable Supreme Court in the case of Commissioner of Income-tax, U.P. v. Shah Sadiq & Sons [1987] 166 ITR 102 at page 110 ; AIR 1987 SC 1217 at page 1221 had laid down that on a reading of Section 6 of the General Clauses Act, 1897 it was clear that unless to the contrary intention appear, the repeal of an Act does not affect any existing right, penalty, obligation or liability. In paragraph 15 of the reports the honourable Supreme Court had further held that :

"15. In this case the 'savings' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever rights are expressly saved by the 'savings' provision stand saved. But, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c) of the General Clauses Act, 1897."

9. The aforesaid view was reiterated by the honourable Supreme Court in the case of Bansidhar v. State of Rajasthan reported in AIR 1989 SC 1614.

The provisions of Section 6 of the U.P, General Clauses Act is in pari materia with Section 6 of the General Clauses Act, 1897. The said provisions are applicable to all type of repeals whether the repeal is entire or partial as has been held by the honourable Supreme Court in the case of G. Ekambarappa v. Excess Profits Tax Officer reported in [1967] 65 ITR 656 ; AIR 1967 SC 1541. Thus, where only Section 4-B(6) of the Act has been omitted, it is a case of partial repeal and, therefore, Section 6 of the U.P, General Clauses Act would be applicable. The decision of the honourable Supreme Court in the case of Kolhapur Cane Sugar Works Ltd. (2000) 1 JT 453 (SC), is not applicable to the facts of the present case inasmuch as in the said case, the honourable Supreme Court was considering a case where a rule has been omitted and not where an Act has been repealed. When we look to Section 41 of U.P, Act No. 31 of 1995 which deals with the saving clause, it does not deal with any rights or liabilities incurred under the omitted Section 4-B(6) of the Act. Applying the principles laid down by the honourable Supreme Court in the case of Commissioner of Income-tax v. Shah Sadiq and Sons [1987] 166 ITR 102 ; AIR 1987 SC 1217, the liabilities and penalties incurred under the omitted Section 4-B(6) are not destroyed by Section 41 of U.P. Act No. 31 of 1995 and, therefore, the penalty proceedings under the omitted Section 4-B(6) is saved and the penalty proceedings initiated by the assessing officer cannot be said to be without jurisdiction.

10. Further by the same Amending Act, viz., U.P. Act No. 31 of 1995, Section 4-B(5) was substituted and Clause (b) of the substituted Section 4-B(5) contained similar provisions which was there in the earlier Section 4-B(6) of the Act. Thus, the submission made by the learned counsel for the applicant that the proceedings under Section 4-B(6) were wholly without jurisdiction, is without any force.

11. Learned counsel for the applicant submitted that the notices for imposing penalty has been issued by the assessing officer under Section 4-B(6) of the Act and not under Section 4-B(5) of the Act, when admittedly Section 4-B(6) was not on the statute book and, therefore, the penalty proceedings cannot be sustained. He submitted that the wordings of Section 4-B(5) are somewhat different than Section 4-B(6) and thus, the notices issued under Section 4-B(6) cannot be justified as having been issued under Section 4-B(6) of the Act. He relied upon a decision of the honourable Supreme Court in the case of Commissioner of Sales Tax v. Anoop Wines reported in [1988] 71 STC 262 ; 1988 UPTC 1238 in which the honourable Supreme Court has held that where a notice has been issued in a particular clause which was held to be inapplicable and the assessee was not given any opportunity or occasion to meet the case in sustaining the penalty in another clause, it would not be a question of sustaining jurisdiction by reference to a wrong section as was done in the case of L. Hazari Mal Kuthiala v. Income-tax Officer, Special Circle, Ambala Camp reported in [1961] 41 ITR 12 (SC). The honourable Supreme Court has held in the case of Anoop Wines [1988] 71 STC 262 ; 1988 UPTC 1238 that the principle if a particular action is valid in one section, it cannot be rendered invalid because reference was made to another section, and it makes no difference if the two provisions are in the same statute will have no application where in a penal action, no notice was given or resort to such a provision was made to the delinquent or the offending party. The principles laid down by the honourable Supreme Court in the aforesaid case is not applicable to the facts of the present case inasmuch as this Court has already come to a conclusion that notwithstanding the omission of Section 4-B(6) of the Act, the penalty and the liabilities incurred under the omitted section is saved by virtue of Section 6(c) and (d) of the U.P. General Clauses Act. Even if, it is assumed that the notices could not have been issued under Section 4-B(6) of the Act, since it had been omitted by U.P. Act No. 31 of 1995 with effect from May 14, 1994. Section 4-B(5) was substituted by same Amending Act with effect from the same date and it contained the similar provision as was contained in the omitted Section 4-B(6). Thus, it is a case of quoting a wrong provision in the notice and the principles laid down by the honourable Supreme Court in the case of L. Hazari Mal Kuthiala [1961] 41 ITR 12 would be applicable. Thus, there is no infirmity in the notices issued for imposing penalty under Section 4-B(6) of the Act. It may also be mentioned here that the notice issued under Section 4-B(6) recited and gave particulars of alleged offence committed by the applicant and, therefore, the applicant was very well aware and given an opportunity to meet the case.

12. The learned counsel for the applicant then submitted that rice was not a notified commodity so as effecting sale on consignment basis outside the State of U.P. may make it an offence liable to penalty under Section 4-B(6) of the Act. He submitted that there was no notification issued under Section 4-B(2) of the Act prior to August 29, 1987 notifying rice as notified commodity under Section 4-B(2) of the Act. He referred to the notification dated August 31, 1977 which was modified on March 19, 1979 and submitted that the aforesaid two notifications having not been issued under Section 4-B(2) of the Act and, therefore, till such time rice is notified under Section 4-B(2), the applicant had not incurred any liability for penalty under the provisions of Section 4-B(6) merely because it had effected sales of rice on consignment outside U.P. The submission made by the learned counsel for the applicant is without any substance. Section 4-B(6) of the Act does not speak of any goods to be notified under Section 4-B(2) of the Act. It only speaks of notified goods. The notification dated August 31, 1977 and March 19, 1979 have all. been issued under Section 4-B of the Act where rice has been notified. Thus, for all material times, rice continued to be a notified goods.

13. The learned counsel for the applicant then submitted that the applicant had not issued any form III-B to its sellers at the time of purchasing paddy and, therefore, no penalty under Section 4-B(6) of the Act can be imposed as it had not contravened the provisions of Section 4-B(2). He has submitted that the applicant had purchased paddy mostly from the cultivators and, therefore, in the event of form III-B having been issued at best, the applicant was liable for payment of purchase tax in the course of assessment proceedings and not liable for penalty under Section 4-B(6) of the Act. It is not in dispute that the paddy is a commodity liable to tax at the point of first purchase. Section 4-B(1)(a) of the Act deals With commodity liable to tax at the point of first purchase. Mere holding of recognition certificate under Section 4-B(2) of the Act is sufficient for claiming exemption from payment of tax. The applicant having purchased paddy mostly from the cultivators and the cultivators being unregistered dealer, the liability for payment of tax being at the point of purchase at the hands of the applicant and in the course of the assessment proceedings on the strength of the recognition certificate issued under Section 4-B(2) of the Act, the assessing officer granted exemption. Thus, there is no force in the submission of the learned counsel for the applicant that the exemption has been wrongly allowed by the assessing authority. It is also not correct to say that since the applicant had not complied with the terms of the recognition certificate inasmuch as it had effected the sale of rice manufactured out of paddy on consignment basis outside U.P. which was not permissible under Section 4-B(2) of the Act the exemption could not have been allowed and there was no justification for initiating penalty proceedings. At the time of making the purchase, the liability for payment of purchase tax is attracted, though it is imposed at the time of making assessment. The rice manufactured out of paddy purchased in a particular assessment year may or may not have been sold in terms of Section 4-B(2) of the Act. It is only when the assessing officer comes to the conclusion that the recognition certificate holders have contravened or violated the terms and conditions of the recognition certificate that proceedings for levy of penalty under Section 4-B(6) are initiated. Thus, it is not correct to say that in the present circumstances, penalty under Section 4-B(6) of the Act should not have been leviable.

14. Learned counsel for the applicant next submitted that the applicant had made an application for granting exemption under Section 4-A of the Act and was granted exemption for the period October 18, 1984 to March 31, 1986 It had made an application for review claiming exemption up to October 18, 1989 and under the bona fide belief that the review application would be allowed and the period of exemption will be extended, it had effected sales of rice on consignment basis out of U.P. as there was no liability for payment of tax on the sale of rice effected by it if the exemption period would have been extended. It may be mentioned here that the present revisions relate to the assessment years subsequent to the period of exemption, i.e., after April 1, 1986. It is also not in dispute that the applicant has not been granted exemption from payment of tax under Section 4-A of the Act beyond March 31, 1986.

15. There is no question of any bona fide or mens rea for imposition of penalty under Section 4-B(6) of the Act as Section 4-B(6) does not mention "without reasonable cause" being there, unlike mention of such words in other penal provisions of the Act. In the last, the learned counsel for the applicant submitted that; the Tribunal ought to have determined the exact quantity of paddy purchased by the applicant without payment of tax and the quantity of rice manufactured and sold on consignment basis outside U.P. while determining the quantum of penalty. No such argument appears to have been advanced by the learned counsel for the applicant before the Tribunal and thus, the learned counsel for the applicant cannot be permitted to raise the said argument for the first time before this Court in revision under Section 11 of the Act.

16. In the result, all the three revision petitions fail and are dismissed. There will be no order as to costs.