Appeal preferred after 1st April 2005 is maintainable u/s. 81 of Delhi Value Added Tax

Calcom Electronics Ltd Vs Commissioner Vat The Trade And Tax Department (Delhi High Court)

Delhi High Court held that appeal pertaining to period prior to 01 April 2005 is maintainable under Section 81 of the Delhi Value Added Tax Act, 2004 (DVAT) instead of section 45 of the Delhi Sales Tax Act, 1975 since appeal is preferred after 01 April 2005.

Facts- In this batch of appeals, the respondents take a preliminary objection with respect to maintainability, asserting that the appeals would have to follow the procedure as contemplated under Section 45 of the Delhi Sales Tax Act, 1975, a statute which now stands repealed by virtue of the Delhi Value Added Tax Act, 2004 and which came to be promulgated on 01 April 2005.

Conclusion- All that Section 81 of the DVAT Act now prescribes is that such an appeal would be entertainable only if it involves a “substantial question of law” There is thus no fundamental alteration of the right that otherwise stood enshrined under the DST Act. As we view sub­section (4) of Section 106, it becomes apparent that all that it essentially seeks to save is the right in respect of input or credit of inputs, tax exemption, deferment of tax or the imposition of penalties, interest or forfeiture or sums pertaining to any period prior to 01 April 2005.

Held that we thus find ourselves unable to either construe or read that provision as mandating appeals preferred after 01 April 2005 being subject to the rigors of procedure which stood constructed in terms of Section 45 of the erstwhile enactment, namely, the DST Act. The fact that some of the decisions noticed above omitted to advert to sub­section (4) would not convince us to take a contrary view. Accordingly, and for all the aforesaid reasons, we negate the preliminary objection that stands raised. The appeals as instituted before this Court in accordance with Section 81 of the DVAT are, consequently, held to be maintainable.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. In this batch of appeals, the respondents take a preliminary objection with respect to maintainability, asserting that the appeals would have to follow the procedure as contemplated under Section 45 of the Delhi Sales Tax Act, 1975¹, a statute which now stands repealed by virtue of the Delhi Value Added Tax Act, 2004² and which came to be promulgated on 01 April 2005. Mr. Aggarwal, learned counsel appearing for the respondents, would contend that in light of the provisions enshrined in Section 106 of the DVAT Act, the appellants would have been legally obliged to approach the Appellate Tribunal for drawing up a ^„stat Witt of Q SW’ for the consideration of this Court and that the appeals which have come to be directly instituted would not be maintainable. According to learned counsel, while the issue of maintainability of the instant appeals and identical questions would appear to have been ostensibly considered and answered in favour of the appellants, those judgments are clearly distinguishable since none of them have engaged with the provisions which came to be introduced in Section 106 by virtue of the DVAT (Amendment) Act, 2012 ³ and which saw sub-section (4) coming to be incorporated therein, with retrospective effect from 01 April 2005. According to Mr. Aggarwal, since these appeals pertain to a tax period prior to 01 April 2005, it is the stipulated procedure enshrined in Section 45 of the DST Act which would consequently apply and be liable to be adhered to.

2. For the purposes of appreciating the preliminary objection which stands raised, we deem it apposite to extract Section 45 of the DST Act and which read as follows:

“45. Statement of case to the High Court.(1) Within sixty days from the date of an order passed by the Appellate Tribunal under sub-section (6) of section 43, the dealer or the Commissioner may, by application in writing, and accompanied, where the application is made by a dealer, by a fee of fifty rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court:

Provided that the Appellate Tribunal may, if it is satisfied that the dealer or the Commissioner was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days.

(2) If the Appellate Tribunal refuses to state the case which it has been required to do, on the ground that no question of law arises, the dealer or the Commissioner, as the case may be, within thirty days of the communication of such refusal either withdraw his application (and if he does so, any fee paid shall be refunded), or apply to the High Court against such refusal.

(3) If upon receipt of an application under sub-section (2), the High Court is not satisfied as to the correctness of the decision of the Appellate Tribunal, it may require the Appellate Tribunal to state the case and refer it, and on receipt of such requisition, the Appellate Tribunal shall state the case and refer it accordingly.

(4) If the High Court is not satisfied that the statement in a case referred to it are sufficient to enable it to determine the questions raised thereby, the Court may refer the case back to the Appellate Tribunal for the purpose of making such additions thereto or alternations therein as it may direct in that behalf.

(5) The High Court upon the hearing of any such case shall decide the question of law raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and shall send to the Appellate Tribunal a copy of such judgment under the seal of the Court and the signature of the Registrar, and the Appellate Tribunal shall dispose of the case accordingly.

(6) Where a reference is made to the High Court under this section, the costs [which shall not include the fee referred to in sub­section (1)] shall be in the discretion of the Court.

(7) The payment of the amount of tax and penalty (if any) due in accordance with the order of the Appellate Tribunal in respect of which an application has been made under sub-section (1) shall not be stayed pending the disposal of such application or any reference made in consequence thereof but if such amount is reduced as a result of such reference, the excess tax paid shall be refunded in accordance with the provisions of section 30.’

3. The provision of appeal under the DVAT Act stands comprised in Section 81 and is constructed in the following terms:

“81. Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed by the Appellate Tribunal in appeal under this Act, if the High Court is satisfied that the case involves a substantial question of law.

(2) The Commissioner or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be –

(a) filed within sixty days from the date on which the order appealed against is received by the Commissioner or [served upon] the other party.

[Provided that the High Court may entertain an appeal after the expiry of the period of sixty days, if it is satisfied that there was sufficient cause for not filing it within that period.]

[Provided further that the above proviso shall be deemed to have come into force with effect from the First day of April, 2005.]

(b) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.

(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:

Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.

(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.

(6) The High Court may determine any issue which-

(a) has not been determined by the Appellate Tribunal;

(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1).

(7) Where an appeal has been filed before the High Court, it shall be heard by a bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges.

(8) Where there is no such majority, the judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other judges of the High Court and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it.

(9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.’

4. Section 106 of the DVAT Act represents the repeal and savings clause and is reproduced below:

“106. Repeal and savings. (1) The Delhi Sales Tax Act, 1975 (Act 43 of 1975), the Delhi Tax on Entry of Motor Vehicles into Local Areas Act, 1994 (Delhi Act 4 of 1995), the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999), and the [Delhi Sales Tax on Right to Use Goods Act, 2002 (Delhi Act 13 of 2002)] as in force in Delhi (referred to in this section as the “said Acts’), are hereby repealed.

(2) Notwithstanding sub-section (1) of this section, such repeal shall not affect the previous operation of the said Acts or any right, title, entitlement, obligation or liability already acquired, accrued or incurred thereunder.

(3) For the purposes of sub-section (2) of this section, anything done or any action taken including any appointment, notification, notice, order, rule, form or certificate in the exercise of any powers conferred by or under the said Acts shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amounts due at the commencement of this Act may be recovered as if they had accrued under this Act.

[(4) Notwithstanding anything contained in this Act, for the purpose of the levy, assessment, deemed assessment, reassessment, appeal, revision, review, rectification, reference, registration, collection, refund or input or credit of input tax of allowing benefit of exemption or deferment of tax, imposition of any penalty or of interest or forfeiture of any sum, which relates to any period ending before 1st day of April, 2005 or for any other purpose whatsoever connected with or incidental to any of the purposes aforesaid, and whether or not the tax, penalty, interest or sum forfeited, if any, in relation to such proceedings, is paid before, on or after 1st day of April, 2005, the repealed Act and all rules, regulations, orders, notifications, forms and notices issued thereunder and in force immediately before 1st day of April, 2005 shall continue to have effect as if this Act has not been passed.]’

5. In one of the earliest decisions which this Court came to render post the repeal of the DST Act was in the matter of Shiv Shakti Kirana Kendra vs. Commissioner, VAT⁴. The Court in Shiv Shakti Kirana Kendra was called upon to answer the question whether a further appeal after the repeal of the DST Act would lie under the provisions of Section 81 of the DVAT Act or whether the appellant would have to seek a reference as contemplated under Section 45 of the repealed enactment. Dealing with the aforesaid question, the Division Bench in Shiv Shakti Kirana Kendra held as follows:

“8. Before, however, we proceed to do so, it would be relevant to refer to two other judgments of the Supreme Court, namely, Maria Cristinia Desouza Sordu v. Amaria Jhurana Parera Pinta, (1979) 1 SCC 92 and P. Mohd v. Thisumalaya, AIR 1966 SC 430. In Maria’s case (supra), the Supreme Court has laid down that though the right of appeal is a vested right/substantive right, however the forum with respect to exercise of such right of appeal is not a vested right. It was held in the said case that the forum of filing of an appeal is a procedural matter and the Savings clause in a repealing statute and Section 6 of the General” Clause Act has nothing to do with the forum where the remedy of appeal has to be pursued. The forum of appeal was thus held only to be a procedural matter and not a substantive or a vested rights issue. In the second case of P. Mohd. the appeal instead of being heard by the two Judges of the High Court was heard by a Single Judge and it was held that there is no vested right in getting the matter heard by two Judges. It was held that the hearing of an appeal, whether by one Judge or by two Judges is merely a matter of procedure.

9. In view of the above, when we examine the provision of appeal under Section 81 of the Delhi VAT Act and the provision of reference under Section 45(1) and 45(2) of the Delhi Sales Tax Act, it becomes clear that no vested right has been taken away by passing of the Delhi VAT Act and in fact only the forum has changed. Under the old Delhi Sales Tax Act, to approach the High Court, either an application had to be made before the. Tribunal or before the High Court which would call for the question of law with the statement of case from the Tribunal. However under the new Delhi VAT Act, 2004, the only difference is that the procedure has changed and a party has been given a right to directly approach the High Court which will frame a question of law. In fact, the right of appeal has been further strengthened and the procedure has been simplified by passing of the Delhi VAT Act, 2004 and it is not as if any vested right of appeal has been taken away. As already stated above, and so held in Maria’s case, there is no vested right in a forum of appeal and which is only a procedural matter.

10. The decision of the Punjab and Haryana High Court without relying upon the decision of the Gammon India’s case has independently arrived at a decision that an appeal will lie under the new VAT Act. We, respectfully agree with this view as expressed in the said decision of the Punjab and Haryana High Court, also for additional reasons which we have indicated above.

11. Even if we look at the issue from the aspect of retrospectivity of a legislation, even then in such a case, we find that the legislature, qua the forum of appeal, has taken a conscious decision on retrospective operation of Delhi VAT Act as regards forum of a second appeal to the High Court by virtue of Section 106(3) and which provision makes it clear that all orders passed under the Delhi Sales Tax Act will be treated as if they have been passed under the Delhi VAT Act. Thus vide Section 106(3) the order passed by the Appellate Tribunal will be an order, not under Section 44 of the Delhi Sales Tax Act, but one under Section 74 of the Delhi VAT The unambiguous language of Section 106(2) can lead to no other conclusion than that the appeal will now lie to the High Court under Section 81 of the Delhi VAT Act even if the order which is passed by the Tribunal is in respect to proceedings which were initiated when the Delhi Sales Tax Act was in force.

12. We accordingly hold that the present appeals under Section 81 of the Delhi VAT Act are maintainable. The preliminary objection of the respondent is accordingly rejected. Post the appeals for hearing on 3rd December, 2009.’

6. It becomes pertinent to note that although the Court in Shiv Shakti Kirana Kendra had noticed Section 106 of the DVAT Act, it had no occasion to examine the scope of sub-section (4) which came to be introduced in that provision subsequently in terms of the 2012 Amendment, albeit with retrospective effect from 01 April 2005.

7. The second decision which would merit consideration was the judgment of the Court rendered on a Review Petition in Kumagai Skanska HCC Itochu Group vs. The Commissioner of Value Added Tax & Anr.⁵ [Kumagai I’]. It would appear that the Court, by its judgment dated 22 May 2012, had initially taken the view that a revision under the DVAT Act initiated after 01 April 2005 would be governed by the period of limitation of four years as constructed in terms of Section 74A(2)(b) thereof. The Court in terms of its original judgment had negatived that contention and held that the period of limitation would be governed by Section 46 of the repealed DST Act. However, on the Review Petition, the attention of the Court was specifically invited to sub-section (4) of Section 106 of the DVAT Act, and which was inserted in that provision after the original judgment was rendered. In view of the aforesaid, the Division Bench proceeded to recall its original judgment which had been pronounced on 22 May 2012.

8. The original writ petition in Kumagai I was taken up for consideration thereafter and came to be finally allowed on 26 April 2016 in Kumagai Skanska HCC Itochu Group vs. The Commissioner of Value Added Tax & Anr.⁶ [‘Kumagai II^‟]. While dealing with the scope of the revisional power under the DVAT Act, the Court in Kumagai II observed as follows:

^“Revisional power under the DVAT Act

12. Section 74A of the DVAT Act provides for powers of revision of the Commissioner. Section 74A (1) of DVAT Act states that the Commissioner may, of his own motion or upon information received by him, call for the record of any order or assessment passed under this Act by any officer or person subordinate to him and examine whether (a) any turnover of sales has not been brought to tax or has been brought to tax at lower rate or has been incorrectly classified or any claims incorrectly granted or that that liability to tax is understated or (b) in any case, the order is erroneous, insofar as it is prejudicial to the interest of Revenue and after examination, the Commissioner may pass an order to the best of his judgment, where necessary.

13. By way of Amendment to the DVAT Act, by the Delhi Value Added Tax (Amendment) Act, 2009 notified on 6th January 2010, sub-Section 5 was inserted in Section 74A of the DVAT Act which stated that notwithstanding anything contained in any judgment, decree or order of any Court, “the provisions of this Section shall be deemed to have come into effect with effect from the 1st April 2005.” In other words, the power of the Commissioner to revise the order of the subordinate officer in terms of Section 74A of DVAT Act was made effective from 1st April 2005. Section 74A itself was inserted and notified with effect from 16th November 2005. Therefore, during the period from 1st April 2005 to 16th November 2005 there was no provision under the DVAT Act which was similar to Section 46 of the DST Act which granted to the Commissioner the suo motu power of revision.

The decision in International Metro Civil Contractors

14. In International Metro Civil Contractors v. CST/VAT (2008) 16 VST 329 (Del) this Court held that Section 74A “did not resuscitate or resurrect the long-dead revisionary power conferred on the Commissioner under Section 46 of the DST Act. It had no retrospective effect.” The said Special Leave Petition („SLP‟) filed by the Department against the aforesaid judgment was disposed of by the Supreme Court by its order dated 31st March 2008 with the observation that “the larger issue regarding the applicability of the Delhi Value Added Tax Act, 2004 as also question of repeal of the Delhi Sales Tax Act and related issues discussed in the impugned judgment of the High Court are kept open.”

15. It may be also noticed at this stage that with retrospective effect from 1st April 2005 sub-section (4) in Section 106 of the DVAT Act was introduced. Section 106 was the „repeal and savings ‟provision. Section 106 (4) stated that notwithstanding anything contained in the DVAT Act, for the purpose of levy, assessment, deemed assessment, reassessment, appeal, revision, review etc. which relates to any period ending before 1st April 2005 “the repealed Act, and all rules, regulations, orders, notifications, forms and notices issued thereunder and in force immediately before 1st day of April 2005 shall continue to have effect as if this Act has not been passed.”

9. Insofar as the scope and ambit of the revisional power is concerned and its interplay with Section 106(4), the same ultimately came to be authoritatively laid to rest by a Full Bench of the Court in Dharam Pal Satya Pal Ltd. vs. Commissioner, VAT (Del)⁷ in the following terms:

“62. We have referred to the aforesaid decisions to highlight three aspects, namely, while interpreting a repeal and saving provision of a new enactment, the intention of the Legislature is to be seen whether it intends to keep alive the old rights and liabilities or whether it manifests an intention to destroy the same, secondly, if the provision relating to repeal and saving is clear and the rights, obligations and liabilities accrued thereunder are saved, the reliance on the General Clauses Act is not necessary and, thirdly, how the liability subsists and is governed by the limitation provided under the repealed Act and the new Act.

63. In the present factual matrix, an order of assessment passed under the Delhi Sales tax Act was subject to revision under section 46 of the DST Act. The assessee was given a right to prefer revision under section 47 of the DST Act. The said order of assessment was subject to appeal and revision under the DST Act. The core issue that has emerged in this batch of petitions is whether by virtue of the language employed under section 106 of the DVAT Act, the exercise of revisionary power gets totally extinguished.

64. It would not be out of place to refer to a passage from Craies on Statute Law, Seventh Edition, page 403, wherein it has been stated thus :

“If the three months’ limit imposed by the Act of 1885 had expired before the commencement of the Act of 1904, the offender’s

prosecution would have been then barred by prescription, and the new Act would not, on coming into force, have destroyed a prescription already acquired.”

65. From the aforesaid pronouncements in the field, the following principles can safely be culled out :

(i) The concept of liability “accrued” or “incurred therein” and “obligation” have different connotations.

(ii) The meaning of “right accrued” and “vested right” will depend upon the language of the statute and the intention expressed by the Legislature.

(iii) The intention of the Legislature must be absolutely clear whether it intends to destroy the old liabilities and it would depend upon the entire scheme of the Act.

(iv) An order of assessment is final subject to the provisions relating to appeal, revision, reassessment and rectification.

(v) A statute is not to be interpreted to be retrospective or retroactive to touch the existing final orders.

(vi) Even if no action is taken under the repealed Act, the civil as well as the criminal liability that had incurred under the repealed statute are not obliterated and are kept alive if there is a saving provision.

(vii) A legal proceeding which could have been initiated under the repealed Act continues to subsist if the savings and repeal provision so stipulates subject to the law of limitation. To elaborate, the right to initiate a legal proceeding can only be obliterated or effaced or meet its legal death if the period of limitation thereon has expired.

66. Regard being had to the aforesaid principles the Scheme of section 106 of the DVAT Act is required to be scanned. The basic facet of section 106 of the DVAT Act has to be interpreted on the touchstone of the above culled out principles. Sub-section (1) of section 106 of the DVAT Act, as it clearly reveals, is a simple repeal of the DST Act. Sub-section (2) saves the right, title, entitlement, obligation or liability already acquired, accrued or incurred under the repealed Act. Sub-section (3) postulates that anything done under the DST Act shall be deemed to be done or taken in exercise of the power conferred by or under the DVAT Act. Thus, three situations, namely, (i) assessment completed and already revised ; (ii) assessment completed and revisional power invoked but the process not completed ; and (iii) assessment completed, but no revisional power invoked, do contextually emanate.

67. Thus, it is quite clear to us that section 106(2) of the DVAT Act not only saves the right, title and entitlement but also saves the obligations and the liability. The term “obligation” includes every duty enforceable by law. It is an expression which includes not only duty but something more. The expression “liability incurred thereunder” has a larger canvas and makes one remain liable under law subject to statutory boundaries. The term “finality” has to be understood in its truest denotation and an order of assessment by itself does not earn the status of being final unless it is totally barred by law to be touched. Section 106(3) of the DVAT Act clearly lays a postulate that an order passed under section 46 of the DST Act and the process of assessment leading to it is deemed to have been done in exercise of the power conferred under the DVAT Act. What is provided under section 106(2) is that the repeal shall not affect the previous operation of the DST Act or any right, title, entitlement, obligation or liability already acquired, accrued or incurred On a seemly scanning of the provision engrafted under section 46 of the DST Act, a suo motu revision could be initiated and concluded within five years of the order of assessment. In sub­section (2)(b) of section 74A of the DVAT Act, a rigor has been attached that no order under this section shall be passed after the expiry of four years from the end of the year in which the order passed by the subordinate officer has been served on the dealer. Section 74A(2)(c) carves out a period of five years under certain other circumstances. The right to a dealer would have attained finality and become a vested or ripened right after the expiry of the period of limitation under the DST Act and if the proceedings are initiated within the period of limitation, the exercise of the suo motu power of revision cannot be treated as illegal. In other words, if the time to exercise the revisionary power had not expired before coming into force of the DVAT Act, the said power could be exercised in respect of an order under the DST Act in terms of section 74A of the DVAT Act read with section 106 of that Act.

68. Turning to the previously mentioned three categories of cases, in the first category of cases, wherein assessment has been completed and already revised, by virtue of the language employed in section 106(3) of the DVAT Act, the order passed has to be considered as an order passed under the DVAT Act. In the second category of cases, wherein assessment has been completed and revisional power has been invoked though the process is not completed, the assessee has incurred the liability of the order of the assessing officer being scrutinized by the Commissioner which includes the revisional power and sub-section (3) gets attracted. In the third category of cases, where the assessments are completed but no revisional power is invoked, here again sub-section (3) of section 106 would be attracted as if the same is deemed to be an order passed under the DVAT Act. If the order of assessment could not have been revised under the DST Act as on April 1, 2005, the power of revision conferred under the DVAT Act cannot be exercised if the time span has expired. To elaborate, if an order of assessment has attained finality in toto and a right has vested in the assessee, no suo motu power can be exercised as the right fully accrues in favour of the assessee without having any obligation and further having no

69. Further we may note with profit that the Legislature made section 74A retrospective from the date the DVAT Act came into existence to reaffirm its intendment that it never intended not to confer the power of revision on the revisionary authority. The interpretation placed by us on the language employed under section 106(2) and 106(3), analysis made hereinbefore on the impact of insertion of section 74A initially from November 16, 2005 and thereafter to make the provision retrospective from April 1, 2005, clearly conveys that the Legislature at all point of time intended to protect the interest of the Revenue.

70. At this juncture, we may state with certitude that though a cavil was raised by learned counsel for both the sides with regard to the applicability of the Bengal General Clauses Act, 1891 to the Government of NCT of Delhi, the same has not been adverted to by us because of the interpretation placed by us under the repeal and savings provision. The said issue is kept open.

71. In view of our aforesaid premised reasons, we proceed to record our conclusions in seriatim :

(a) The interpretation placed by the Division Bench in International Metro Civil Contractors [2008] 16 VST 329 (Delhi) and L. G. Electronics (India) Ltd. [2008] 16 VST 361 (Delhi) on section 106 of the DVAT Act is not correct.

(b) The conclusion in International Metro Civil Contractors [2008] 16 VST 329 (Delhi) and L. G. Electronics (India) [2008] 16 VST 361 (Delhi) to the effect that despite incorporation of section 74A in the DVAT Act on November 16, 2005, the suo motu revisional proceeding could not be initiated at the commencement of the DVAT Act, i.e., April 1, 2005, as the legislative intendment was clear that on the date the Act came into force the provision pertaining to exercise of suo motu revisionary power did not exist in respect of the proceedings under the DST Act as the assessment had attained finality and were closed, is incorrect.

(c) The order of assessment framed under the DST Act is deemed to be an order framed under the DVAT Act and on reading of sections 106(2) and 106(3) in a conjoint manner, it is not correct to state that once the order of assessment has been passed, the transaction is closed and, therefore, the assessment/order is not revisable under section 74A of the DVAT Act.

(d) The liability incurred or accrued under the DST Act has a larger expanse and a broader canvas and it would in view of section 106(2) of DVAT Act include initiation of any legal proceeding which is permissible within the period of limitation and till then no final or vested right accrues in favour of the assessee.

(e) The amendment brought by the Legislature retrospectively incorporating section 74A with effect from April 1, 2005 has been done to further elucidate the legislative intention and has to be given full effect to. The said amendment has been brought in the statue book by ex abundanti cautela and in essence, removes the anomaly and is only curative in nature.

(f) The proceeding initiated under the DST Act is saved by the DVAT Act and further the proceedings could be initiated under section 74A during the period of limitation as stipulated under section 74A subject to the conditions precedent stipulated therein.

(g) The decisions in International Metro Civil Contractors [2008] 16VST 329 (Delhi) and L. G. Electronics (India) Ltd. [2008] 16 VST 361 (Delhi) are overruled to the extent indicated hereinabove.

72. The next decision which would merit consideration is that of Commissioner of VAT vs. Jupitor Exports⁸. The said judgment was rendered on an appeal instituted by the Commissioner of VAT directly before the High Court. While dealing with the maintainability of the appeal, the Court in Jupitor Exports observed as follows:

10. However, in these appeals, we are really not concerned with the revisional power since the objection which is raised stands confined to the procedure liable to be followed for the purposes of institution of an
appeal.

11. The next decision which would merit consideration is that of Commissioner of VAT vs. Jupitor Exports8 . The said judgment was rendered on an appeal instituted by the Commissioner of VAT directly before the High Court. While dealing with the maintainability of the appeal, the Court in Jupitor Exports observed as follows:

“1. This appeal under Section 81 of Delhi Value Added Tax, 2004 (hereinafter referred to as “the Delhi VAT Act”), is directed against the order dated 07.01.2014 passed by the Appellate Tribunal: Value Added Tax (VAT) Delhi (hereinafter referred to as “the Appellate Tribunal”) in appeal which had been preferred before it and registered vide No. 75/STT/-05-06, in turn, questioning the legality, correctness and propriety of the order dated 06.06.2005 passed by the Commissioner, Sales Tax (hereinafter, “the Commissioner”) rejecting the request of the respondent herein (“the Assessee”) for, compounding the offences allegedly committed by the latter under Section 50(1)(a) and (j) of Delhi Sales Tax Act, 1975 (hereinafter referred to as “the Delhi Sales Tax Act”) in terms of the provisions contained in Section 54 thereof.

2. It may be mentioned here that by Section 106 of Delhi VAT Act, amongst others, the Delhi Sales Tax Act was repealed with effect from 01.04.2005. Notwithstanding such repeal, right, title, entitlement, obligation or liability already acquired, accrued or incurred under the repealed legislation survived. The authorities under the Delhi VAT Act have replaced the authorities created under the Delhi Sales Tax Act. The remedies of appeal against orders of such authorities, thus, are available through the machinery created by the new law.

3. It must also be added here that in the regime governed by Delhi Sales Tax Act, there was no provision of appeal to the High Court. The appeals under the said law would lie only before the Appellate After adjudication on the appeal by such Tribunal, the aggrieved party (the dealer or the Commissioner) could, however, request for a reference to the High Court under Section 45 on question of law. However, the new law (Delhi VAT Act) having now provided for a second appeal (Section 81) to the High Court against orders of the Appellate Tribunal, though confined to substantial questions of law, the impugned order having been passed by the Appellate Tribunal (constituted under Section 76 of Delhi VAT Act) after coming into force of the new law, the appeal has been entertained by this court.

4. A view to above effect was taken by another Division Bench of this court in Shiv Shakti Kirana Kendra Commissioner, VAT, ILR (2010) I Delhi 237, inter alia, relying on the decision of Supreme Court in Gammon India Ltd. v. Spl. Chief Secretary [2006] 145 STC 1 (SC) setting out its conclusions, with which we respectfully agree and follow, in the following words:

“…we find that the legislature, qua the forum of appeal, has taken a conscious decision on retrospective operation of Delhi VAT Act as regards forum of a second appeal to the High Court by virtue of Section 106(3) and which provision makes it clear that all orders passed under the Delhi Sales Tax Act will be treated as if they have been passed under the Delhi VAT Act. Thus vide Section 106(3) the order passed by the Appellate Tribunal will be an order, not under Section 44 of the Delhi Sales Tax Act, but one under Section 74 of the Delhi VAT Act. The unambiguous language of Section 106(2) can lead to no other conclusion than that the appeal will now lie to the High Court under Section 81 of the Delhi VAT Act even if the order which is passed by the Tribunal is in respect to proceedings which were initiated when the Delhi Sales Tax Act was in force ”

[emphasis supplied]’

12. As is evident from a reading of Section 45 of the DST Act, a person desirous of challenging an order passed by the Appellate Tribunal, was required to submit a request to that Tribunal to refer a question of law arising out of such order for the consideration of the High Court. In terms of Section 45(2), if the Appellate Tribunal were to refuse to state the case on forming the opinion that no question of law arose, both the dealer as well as the Commissioner stood enabled to apply to the High Court against such refusal.

13. The hierarchy of remedies as created under the DST Act, insofar as appeals are concerned, is essentially replicated and re-enacted by the DVAT Act. Under the DVAT Act, the assessee stands accorded the remedy of preferring an appeal to the Appellate Tribunal which stands The DVAT Act further enables an aggrieved person to approach the High Court by way of an appeal in respect of every order passed by the Appellate Tribunal. The appeal to the High Court, however, is subject to the appellant establishing that the case involves a ^„substantial question of law^‟.

14. The fundamental difference between the two enactments, insofar as appeals to the High Court are concerned, lies in the fact that a person aggrieved, now and post the promulgation of the DVAT Act, is entitled to approach the High Court directly as opposed to petitioning the Tribunal for drawing up a ^„statement of case^‟ and referring the same to the Court.

15. The objection of the respondents, however, is founded on Section 106(4) of the DVAT Act, with it being submitted that since these appeals pertain to a period prior to 01 April 2005, it is the course as stipulated by Section 45 of the DST which would have to be adhered to.

16. As we view Section 106, we find that sub-section (1) thereof declares in explicit terms that the DST Act stands repealed. Section 106(2) constitutes the first of the saving clauses forming part of that provision and which declares that the repeal of the DST Act would not affect the previous operation of that Act or impact any right, title, entitlement, obligation or liability already acquired, accrued or incurred thereunder. Section 106(2) thus incorporates principles which are broadly spoken of in Section 6 of the General Clauses Act, 1897. By virtue of that provision, all rights, title, entitlements, obligations or liabilities acquired, accrued or incurred under the repealed enactment would thus remain unimpacted, and in any case, by virtue of sub­section (2) would not be obliterated upon the repeal of the DST Act. When we turn our gaze upon sub-section (3) of Section 106, it becomes apparent that the clear intent of that sub-section is to sustain and save all actions that may have been taken under the repealed enactment and to trace the same to the corresponding provisions enshrined in the DVAT Act.

17. That takes us then to the principal provision which was sought to be pressed into aid by the respondents and on the basis of which it was contended that it was obligatory upon the appellants to follow the procedure as stipulated in Section 45 of the DST Act.

18. For our purposes, sub-section (4) would essentially read as postulating that notwithstanding anything contained in the DVAT Act, for the purposes of appeals which relate to any period ending before 01 April 2005 or for any other purpose connected with or incidental thereto, the repealed act, together with all rules, regulations or orders promulgated thereunder, shall continue to have effect as if the DVAT Act had not been passed. At least, that is how the respondents would bid us to read that provision.

19. In our considered opinion, sub-section (4) cannot possibly be construed or interpreted as requiring adherence to a procedure which existed under the erstwhile enactment. Undisputedly, the right of an appeal against an order passed by the Appellate Tribunal existed even under the erstwhile DST Act. That right has not been obliterated consequent to the promulgation of the DVAT Act. In fact, the said right stands preserved by virtue of Section 81 of that Act.

20. It also becomes pertinent to note that Section 106, while undoubtedly repealing the DST Act, also in unambiguous terms, seeks to preserve all rights, entitlements, obligations or liabilities acquired, accrued or incurred under the DST Act. The promulgation of the DVAT Act was thus, and in light of the express language of Section 106, not intended to be an annihilation of rights and liabilities which otherwise existed under the DST Act and were available to be exercised prior to 01 April 2005.

21. The effect of repeal and its impact on rights and liabilities which may have been incurred or had accrued was lucidly explained by the Supreme Court in Gammon India Ltd. vs. Spl. Chief Secy.⁹ We deem it apposite to extract the following passages from that decision:

^“38. In Pentheny, Ltd. v. Govt. of Virgin Islands [360 F. 2d 786 (3rd Cir. 1966)] the US Court of Appeals has observed as under:

Simultaneous repeal and re-enactment of substantially the same statute, or part thereof, is a substitution and not a repeal, and the statute, or part thereof, thus substituted is construed as a continuation of the original provisions to the extent re-enacted and jurisdiction of administrative agency under such statute is not disturbed as to those provisions which were continued under the QHHZVLI’STWH~´

xxxx xxxx xxxx

46. The principle which has been laid down in this case is that whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purposes of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. We cannot therefore, subscribe to the broad proposition that Section 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section.

xxxx xxxx xxxx

51. The Court examined the ambit and scope of Section 6 of the General Clauses Act, 1897 in Tulloch case [(1964) 4 SCR 461 : AIR 1964 SC 1284] . According to the ratio of the said judgment, the principle underlying Section 6 of the General Clauses Act, 1897 is that every later enactment which supersedes an earlier one or puts an end to an earlier state of the law is presumed to intend the continuance of rights accrued and liabilities incurred under the superseded enactment unless there were sufficient indications expressed or implied in the later enactment designed to completely obliterate the earlier state of the law.

52. In view of the interpretation what follows is absolutely clear that unless a different intention appears in the repealing Act, any legal proceeding can be instituted and continued in respect of any matter pending under the repealed Act as if that Act was in force at the time of repeal. In other words, whenever there is a repeal of an enactment the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears in the repealing statute.

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68. Francis Bennion in his book on Statutory Interpretation, (2nd Edn.) says that where an English Act passed after 1878, repeals and re-enacts the enactment (with or without modification) then, unless the contrary intention appears, anything done, or having effect as if done, under the enactment repealed, insofar as it could have been done under the provision re-enacted, has effect as if done under that

69. P. Singh in his book on Principles of Statutory Interpretation, 2006 Edn. enumerated the effect of clauses (c) to (e) of Section 6 of the General Clauses Act, namely, is to prevent the obliteration of a statute in spite of its repeal to keep intact rights acquired or accrued and liabilities incurred during its operation and permit continuance or institution of any legal proceedings or recourse to any remedy which may have been available before the repeal for enforcement of such rights and liabilities.

xxxx xxxx xxxx

71. Since the effect of a repeal is to obliterate the statute and to destroy its effective operation in future, or to suspend the operation of the common law, when it is a common law principle which is abrogated, any proceedings which have not culminated in a final judgment prior to the repeal are abated at the consummation of the repeal. When, however, the repeal does not contemplate either a substantive common law or statutory right, but merely the procedure prescribed to secure the enforcement of the right, the right itself is not annulled but remains in existence enforced by applying the new procedure.’

22. Undisputedly, the DVAT Act is a cognate statute, similar to the DST Act. The DVAT Act, as its Preamble itself states, constitutes a consolidating legislation relating to a levy of tax on the sale of goods, tax on the transfer of property in goods, tax on the transfer of a right to use and allied subjects. The tax which the DST Act sought to impose also pertained to sale of goods and the regulation of transactions in relation thereto. The DVAT Act thus would appear to be the re­enactment of a similar legislation pertaining to the levy of a tax on the sale of goods and other transactions made subject to the impost created in terms thereof.

23. The repeal and savings provision of Section 106 and more particularly sub-section (4) thereof is clearly not liable to be construed as seeking or intending to regulate matters of procedure. Undoubtedly, Section 106(4) too is a savings clause, and which seeks to preserve and secure benefits flowing from or accrued under the DST Act as well as any liabilities that may have been already acquired or incurred. We find that the Statement of Objects and Reasons¹⁰ which accompanied of 2012 Amendment would be of critical importance and sheds light on the intended purpose underlying the introduction of sub-section (4) of Section 106 with retrospective effect. The SOR is extracted hereinbelow: –

“STATEMENT OF OBJECTS AND REASONS

To bring uniformity in the definition of purchase and sale turnover in section 2, the definition of purchase turnover is proposed to be amended.

To smoothen the tax planning and make it more efficient, time for payment of Net Tax is proposed to be reduced from 28 days to 21 days by amending section 3.

To reduce the limitation period for revision of returns and filing of objection for correction of deficiencies in return from four years to one year, section 28 is proposed to be amended.

To provide for treating any return having been digitally signed as per the provisions of clause (p) of sub-section (1) of section 2 of the Information Technology Act, 2000 (No.21 of 2000) at par with electronic return to mean returns in the Act 29 is proposed to be amended.

To further extend the period of limitation prescribed under sub-section (10) of section 74 of the DVAT Act by another year, which would mean that these appeals would have to be decided by 31.03.2013 instead of 31.03.2012, section 74 is proposed to be amended.

For conferring power on the High Court to condone the delay in filing of appeals, a proviso was inserted in the Section 81 through the Delhi Act 12 of 2010 which took effect from 1st February 2011. While the intended purpose of the amendment was to make the provision applicable to some appeals which were dismissed by the High Court for delayed filing, before the amendment, the earlier amendment can achieve its useful purpose/objective only if the amendment is given effect retrospectively, which is being attempted through the proposed amendment in section 81.

To provide for a specific saving clause in respect of the power of revision under the Delhi Sales Tax Act, 1975, section 106 of the Delhi Value Added Tax Act, 2004 is proposed to be amended on the suggestion of the Additional Solicitor General of India.

The Bills seek to achieve the aforesaid objectives.

(SHEILA DIKSHIT)

CHIEF MINISTER / MINISTER OF FINANCE

NEW DELHI’

24. As is evident from the above, Section 106(4) appears to have been introduced with the primary objective of inserting a specific savings clause in respect of the power of revision which otherwise existed under the DST Act. Viewed in that light, it becomes manifest that Section 106(4) was clearly not intended to regulate the procedure for the institution of an appeal. Undisputedly, the remedy of appeal was preserved by virtue of the savings clauses forming part of Section 106. Both the respondent as well as the appellants had the right to prefer an appeal against an order passed by the Appellate Tribunal if it were recognized to give rise to a question of law under the DST Act. There is thus no substantial modification or variation of the right of appeal which existed. Section 81 of the DVAT Act merely changes the procedure liable to be followed for the purposes of petitioning the High Court against an order passed by the Tribunal. That provision cannot possibly be construed or interpreted as regulating a matter of procedure. It is concerned with preservation of positive rights which had accrued as well as liabilities incurred or accrued.

25. All that Section 81 of the DVAT Act now prescribes is that such an appeal would be entertainable only if it involves a “substantial question of law” There is thus no fundamental alteration of the right that otherwise stood enshrined under the DST Act. As we view sub­section (4) of Section 106, it becomes apparent that all that it essentially seeks to save is the right in respect of input or credit of inputs, tax exemption, deferment of tax or the imposition of penalties, interest or forfeiture or sums pertaining to any period prior to 01 April 2005.

More importantly, the obligation to petition the Tribunal for drawal of a statement of case cannot be construed as a liability accrued or incurred. It was merely a matter of procedure and which did not impair the right of appeal. This more so since a referral by the Tribunal to draw a statement of case was subject to review and correction.

27. We thus find ourselves unable to either construe or read that provision as mandating appeals preferred after 01 April 2005 being subject to the rigors of procedure which stood constructed in terms of Section 45 of the erstwhile enactment, namely, the DST Act. The fact that some of the decisions noticed above omitted to advert to sub­section (4) would not convince us to take a contrary view.

28. Accordingly, and for all the aforesaid reasons, we negate the preliminary objection that stands raised. The appeals as instituted before this Court in accordance with Section 81 of the DVAT are, consequently, held to be maintainable.

29. Consequently, let these matters be listed on 17.12.2024.

Notes :

¹ DST Act

² DVAT Ac

³ 2012 Amendment

⁴ 2009 SCC OnLine Del 2487

⁵ 2014:DHC:2330-DB

⁶ 2016:DHC:3181-DB

⁷ 2011 SCC OnLine Del 3708

⁸ 2015 SCC OnLine Del 7520

⁹ (2006) 3 SCC 354

¹⁰ SOR