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PETITIONER: COMMISSIONER OF TRADE TAX, U.P.

       Vs.

RESPONDENT: M/S UPPER DOAB SUGAR MILLS LTD.

DATE OF JUDGMENT:       15/03/2000

BENCH: S.R.Babu, S.N.Phukan

JUDGMENT:

     RAJENDRA BABU, J.  :

     In   these   batch   of   cases,  the   question   for consideration  is  the interpretation of Section 39  of  the Uttar Pradesh Sales Tax (Amendment) Act, 1995 [U.P.Act No.31 of  1995] [hereinafter referred to as the Amendment  Act]. The  turnover  in respect of rectified spirit and  denatured spirit  was held to be non-taxable under the U.P.  Sales Tax Act,  1948 [hereinafter referred to as the Principal  Act] by  the  Trade  Tax Tribunal,  Muzaffar  Nagar  [hereinafter referred  to  as  the Tribunal] in respect  of  assessment years  1974-75  to 1983-84, except 1977-78, as there was  no levy  on  such  items  at the relevant point  of  time.   An application  was filed by the Department before the Tribunal for review on the basis of the amendment of Sections 3-A and Section  4 of the Principal Act as amended by the  Amendment Act.   By  amendment to Section 3-A of the Principal Act,  a specific  clause was added to bring the turnover of  alcohol as  defined  under  the  United  Provinces  Sale  of  [Motor Spirits, Diesel Oil and Alcohol] Taxation Act, 1939, amongst other  goods,  at such point and at such rate not  exceeding twenty  six  percent,  as  the   State  Government  may,  by notification  declare.  The result is that in the  Principal Act  sale of alcohol as defined in the U.P.  Sale of  [Motor Spirits,  Diesel Oil and Alcohol] Taxation Act, 1939  became taxable.   The  review applications filed on behalf  of  the Revenue  was oppossed by the respondents on various grounds. The  Tribunal,  however, rejected the contentions raised  on behalf of the respondents and allowed the review application of  the Department and levied the tax on the turnover of the respondents.

     The  matter was carried in revision to the High Court. The  learned Single Judge took the view that the  provisions of  Section  39  of  the Amendment Act  merely  enabled  the Assessing,  Appellate  or Revising Authority to rectify  the orders  passed prior to the commencement of the said section in  conformity with the amendment made in the Principal  Act within  a time frame.  It was observed that Section 39(2) of the  Amendment Act made abundantly clear that an application has  to be filed by September 30, 1995 and orders of  review or  rectification are to be made either within one year from the  commencement  of  Section  39   or  within  the  period prescribed  in  Section  22 of the Principal Act,  that  is, three  years  from  the  date  of the  order  sought  to  be

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rectified  and  proviso to Section 22 has no application  to such  a  case.   The period prescribed by Section  22(1)  is three years and there is no other period and, therefore, the learned  Single Judge held that the question of extension of the  period  of limitation for the passing of the  order  as provided  under  the proviso to Section 22 has no  relevance while  interpreting  the  provisions of Section  39  of  the Amendment  Act.  He took the view that such orders of review or  rectification should have been passed on or before March 14,  1996 and not beyond that time.  In the present case the orders of the Tribunal had been passed on March 22, 1997, as such,  the  same were held to have been made beyond time  as prescribed  under  Section  39 of the Amendment  Act.   This order is called in question in these appeals.

     For  purposes  of clear understanding, we may set  out the  relevant  provisions  here under:  Section 22  of  the Principal Act:

     Section  22.   Rectification of mistakes.    (1)  The Assessing,  Appellate or Revising Authority or the  Tribunal may,  on its own motion or on the application of the  dealer or  any  other interested person rectify any mistake in  its order,  apparent  on the record within three years from  the date of the order sought to be rectified:

     Provided   that  where  an   application  under   this sub-section has been made within such period of three years, it may be disposed of even beyond such period:

     Provided further that no such rectification as has the effect  of enhancing the assessment, penalty, fees or  other dues  shall  be made unless reasonable opportunity of  being heard has been given to the dealer or other person likely to be affected by such enhancement.

     (2)  Where  such  rectification   has  the  effect  of enhancing  the assessment, the authority shall serve on  the dealer a revised notice of demand in the prescribed form and therefrom all the provisions of the Act and the Rules framed thereunder  shall apply as if such notice had been served in the first instance.

     Section 39 of the Amendment Act:

     Section  39.  Validation.-(1) Notwithstanding anything in  any judgment, decree or order of any court or authority, any notification issued or anything done or any action taken before  the  commencement of this section which conforms  to the  provisions of the Principal Act as amended by this  Act shall  be  deemed  to be and always to have been  valid  and lawful as if the provision of this Act where in force at all material times.

     (2)  Where before the commencement of this section any authority  or court, in any proceeding made any  assessment, levy  or collection of any tax or passed any order  imposing any  penalty or making any other demand under the  Principal Act,  or  passed  any  other  modifying,  setting  aside  or quashing   (wholly  or  in   part),  such  assessment  levy, connection,  penalty or demand and such assessment or  other order  becomes  inconsistent  with  the  provisions  of  the Principal  Act  as amended by this Act then, subject to  the provisions  of sub-section (3), any party to the  proceeding or  the Commissioner of Trade Tax may by September 30, 1995,

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make an application to such authority or court for review of the  assessment order and thereupon such authority or  Court may  review  the  proceeding  make such  order,  varying  or revising  the order previously made, as may be necessary  to give  effect  to  the  provisions of the  Principal  Act  as amended by this Act.

     (3) the assessing, appellate or revising authority, as the  case may be, may within the period specified in Section 22  of the Principal Act, whichever expires later, make  any rectification  in  any  order  passed   by  it  where   such rectification  becomes  necessary  in   consequence  of  the amendment of the Principal Act :

     Provided   that  no  rectification   which   has   the assessment,  penalty or other dues, shall be made unless the authority concerned has given notice to the dealer or person concerned  of  his intention to do so and has allowed him  a reasonable opportunity of being heard.

     It  is the contention of the Department that the  view taken  by the High Court is erroneous and does not correctly interpret  the provisions of Section 39(2) of the  Amendment Act.  It is submitted that the whole object of Section 39(2) is  that any order passed, modified, set aside or quashed by the assessing, appellate or revising authority or by a court will have to be brought in conformity with the provisions of the  Principal  Act  as amended by the Amendment  Act.   The expression  subject  to the provisions of sub-section  (3) would  only  provide for rectification also.  Otherwise,  if the  provisions  relating  to rectification  alone  will  be applicable  and  there  is no need to have  provided  for  a specific   provision   for  review  at   all.    Review   or rectification  in  this  case would arise only to  bring  in conformity  an order with the amended provisions, and either of  these  powers is distinct and separate though they  have certain restrictions which have to be adhered to.

     The  respondents would, however, contend that  Section 39(2)  and  (3) have to be read together and it  would  mean that an application made under Section 39(2) can be disposed of  only within one year from the date of enforcement of the Amendment  Act or within three years of the order sought  to be  reviewed, whichever is later.  It was further  submitted that  proviso to Section 22(1), which does not prescribe any limitation  for  passing  an  order on  an  application  for rectification,  is  not applicable to the  application  made under  Section 39(2) of the Amendment Act and that otherwise the  whole  purpose  of providing limitation  under  Section 39(3)  becomes superfluous.  On that basis, the  respondents sought  to  support  the view taken by the High  Court.   On behalf  of the respondents, certain other additional grounds were raised to which we shall advert later.

     A  validating Act can render ineffective judgments and orders  of a competent court or an authority provided it  by retrospective legislation removes the cause of invalidity or the  basis which had led to those judgments.  In the present case,  the provisions have been made in the Amendment Act to remove  certain  defects, which had been pointed out by  the Tribunal  or other authorities on earlier occasions.   Thus, it enabled the turnover relating to alcohol to be brought to taxation.   Section  22  of the Principal Act  provides  for rectification  of mistakes.  Proviso to Clause (1) makes  it

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very  clear that where an application under sub-section  (1) has been made within the period of three years from the date of  the  orders sought to be rectified, such an  application could be disposed of even beyond such period.  In clause (3) of  Section 39, with which we are concerned now, it is  made clear  that the Assessing, Appellate or Revising  Authority, as the case may be, may within a period of one year from the date  of  commencement  of this section or within  a  period specified  in  Section  22 of the Principal  Act,  whichever expires later, make any rectification in any order passed by it where such rectification becomes necessary in consequence of  the  amendment  to  the Principal  Act.   Section  39(2) enables  the  Authority, Tribunal or the Court to review  as may  be  necessary to give effect to the provisions  of  the Principal  Act,  the requirement being that  an  application should  be made before to that effect September 30, 1995.  A specific   date  has  been   prescribed  within  which   the application  has to be made for review and no time limit has been  fixed  to  dispose of such an application.   While  in Section  39(3), specific period is mentioned for purposes of rectification.

     It  is  well known that the scope of rectification  is different from the scope of review though sometimes they may overlap.   From the scheme of the Amendment Act, it is clear that  both  the  powers  of review  and  rectification  were conferred  upon different authorities to modify the  earlier order  to  give  necessary effect to the provisions  of  the Principal  Act  as amended by the Amendment Act.   When  two specific and independent powers have been conferred upon the authorities, both the powers can be exercised alternatively. In  the  present case, if the interpretation adopted by  the High  Court is to be accepted then the provision for  review becomes  totally  redundant or otiose and there will  be  no difference  between  the  power  of   review  and  power  of rectification.   As  stated  earlier,   the  scheme  of  the Amendment Act is that an application will have to be made to an  authority  within the specified date for review  of  the assessment  order  or such other order, as the case may  be, for varying the same to bring it in terms with the Amendment Act  while  the  period  of making  the  order  pursuant  to rectification  is coalesced with Section 39 of the Amendment Act imposing certain limitations of time.  Those limitations cannot  be  read into sub-section (2) of Section 39  of  the Amendment Act.

     In  that view of the matter, we have no hesitation  in setting aside the order made by the High Court and restoring that  of the Tribunal.  The appeals are allowed accordingly. In the circumstances, there shall be no orders as to costs.