Commissioner Of Trade And Taxes, Delhi vs Jaycon Infrastructure Pvt. Ltd.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S).15605-15606 OF 2017 [Arising out of Special Leave Petition (Civil) No.9631-9632 of 2017]

COMMISSIONER OF TRADE AND TAXES AND ORS. ...APPELLANTS

VERSUS

M/S AHLUWALIA CONTRACTS (INDIA) LTD. ...RESPONDENT

WITH CIVIL APPEAL NO(S). 15608 OF 2017 [Arising out of Special Leave Petition (Civil) No.10485 of 2017]

CIVIL APPEAL NO(S). 15607 OF 2017 [Arising out of Special Leave Petition (Civil) No.9633 of 2017]

JUDGMENT

RANJAN GOGOI, J.

1. Leave granted.

2. A recital of the facts of the

Civil Appeals arising out of Special Leave

Petition (Civil) Nos.9631-9632 of 2017

Signature Not Verified alone are being made as the facts in the Digitally signed by NEETU KHAJURIA Date: 2017.10.05 17:42:53 IST Reason: other connected proceedings [i.e. Civil

Appeals arising out of Special Leave 2

Petition (Civil) Nos.10485/2017 and

9633/2017] are largely similar.

3. The challenge by the Revenue is to

an order of the High Court of Delhi by

which the High Court has allowed the writ

petitions filed by the respondents –

Assessees challenging the orders issued by

the Designated Authority i.e. Additional

Commissioner of Income Tax rejecting the

applications filed by the Respondent writ

petitioners under the Delhi Tax Compliance

Achievement Scheme, 2013 (hereinafter

referred to as “the Amnesty Scheme”),

details of which are noted below.

4. Under Section 107 of the Delhi

Value Added Tax Act, 2004 (hereinafter

referred to as “the DVAT Act”), the

Government of National Capital Territory

of Delhi (“GNCTD” for short) is empowered

to notify amnesty scheme(s) covering

payment of tax, interest, penalty or any 3

other dues under the DVAT Act relating to

any period ending before 1st April, 2013.

5. In exercise of powers under

Section 107 of the DVAT Act, an Amnesty

Scheme was notified by the GNCDT on 20th

September, 2013. Clause 2(c) of the

Amnesty Scheme which defines the

'designated authority'; clause 4 which

delineates the procedure for making

declaration and payment of tax dues;

clause 5 which deals with immunity from

interest, penalty and other proceedings;

and the provisions of clause 8 which deals

with the failure to make true declarations

would require a consideration of the

Court. The same are, therefore, reproduced

below for convenience:

“2(c) “designated authority” means officer(s) not below the rank of Joint Commisioner as notified by the Commissioner, Value Added Tax for the purposes of this Scheme;

4 *** *** ***

4. Procedure for making

declaration and payment of tax dues – (1) Subject to the other provisions of this Scheme, a person may make a declaration of the tax dues to the designated authority on or before the 31st day of January 2014 in Form DSC-1 appended to this notification.

(2) The designated authority shall acknowledge the receipt of declaration in Form DSC-2 appended to this notification, within a period of fifteen working days from the date of receipt of the declaration.

(3) The declarant shall pay not less than fifty per cent of the tax dues declared under sub-clause (1) along with the declaration and submit proof of such payment to the designated authority.

(4) The remaining amount of tax dues or part thereof remaining to be paid after adjusting the payment made under sub-clause (3) shall be paid by the declarant on or before the 21st day of March, 2014.

(5) Notwithstanding anything contained in sub-clause (3) and sub-clause (4), any tax which becomes due or payable by the declarant for the tax period(s) beginning from 1 day of April, 2013 and thereafter shall be paid by him in accordance with the provisions of the Act:

5 Provided that where an unregistered dealer has made declaration referred to in

sub-clause (1) of this clause, such dealer shall obtain registration and pay net tax for the period from 1 day of April, 2013 to the date of regisration and furnish return in Form DVAT-16 for that period along with proof of payment in Form DVAT-20 to the designated authority at the time of furnishing of declaration under this Scheme. Such a dealer shall be eligible for immunity under clause 5 ofteh Scheme for late payment of such tax and non-filing of return under the Act.

(6) The declarant shall furnish to the designated authority, details of payment made from time to time under this Scheme along with a copy of acknowledgement issued to him under sub-clause (2).

(7) On furnishing the details of full payment of declared tax dues payable under sub-clause (4), the designated authority shall issue an acknowledgement of discharge of such dues within fifteen days to the declarant in Form DSC-3 appended to this notification.

(8) A dealer who has not taken registration shall obtain registration prior to filing of declaration as referred in 6

sub-clause (1) of clause 4.

Likewise, a person who is responsible for making deduction of tax under section 36A of the Act, shall obtain a Tax Deduction Account Number (TAN), if not already obtained.

*** *** ***

5. Immunity from interest, penalty and other proceedings.-(1) Notwithstanding anything contained in any provision of the Scheme, the declarant, upon payment of the tax dues declared by him under sub-clause (1) of clause 4, shall get immunity from penalty or penalties, interest other than interest payable in terms of sub-clauses (2) and (4) of clause 3, prosecution or any other proceedings under the Act or, as the case may be, under the Central Sales Tax Act, 1956 or the erstwhile Delhi Sales Tax Act, 1975 (43 of 1975) or the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999) or the Delhi Sales Tax on Right to Use Goods Act, 2002 (Delhi Act 13 of 2002) or the Delhi Tax on Entry of Motor Vehicles into Local areas Act, 1994 (Delhi Act 4 of 1995), in relation to the tax dues declared by the declarant; and from penalty and prosecution for non-registration and non-furnishing of returns in time.

Explanation.- For the purpose of this sub-clause, the term 7

“declarant” shall include-

(i) in relation to the declarant being a contractee, who has awarded the works contract under section 36A(1) of the Act, his immediate contractor to whom he has awarded the works contract, to the extent of amount declared by the contractee; and

(ii) in relation to the declarant being a contractor, his immediate contractee who has awarded the works contract under section 36A(1) of the Act.

Explanation -For removal of doubts, it is hereby declared that, to avoid double taxation, if the contractee has declared tax dues, his immediate contractor will also get immunity to that extent, and vice-versa.

(2) Subject to the provisions of clause 8, a declaration made under sub-clause (1) of clause 4 shall become conclusive upon issuance of acknowledgement of discharge under sub-clause (7) of clause 4 and no matter shall be reopened/ reassessed/ reviewed thereafter in any proceedings under this Scheme or under the Act before any authority or court relating to the period covered by such declaration to the extent of tax dues declared by the declarant.

(3) All statutory appeals/ revisions pending before 8

quasi-judcial forums upto the

stage of Tribunal shall be deemed to have been withdrawn once the Scheme is opted for. Further, all matters pending in the High Court and Supreme Court shall be withdrawn by the declarant and he will need to submit the application filed for withdrawl with the declaration. for the case to be withdrawn before the court.

(4) No proceeding shall be instituted within 48 hours of securing a registration, provided, the registrant declares his intent of opting under the Scheme at the time of applying for TIN/ TAN.

(5) The information gathered vide a declaration under the scheme shall be kept confidential and shall not be used except under the Scheme and the same shall not be shared with any other person/ government department/agency.

*** *** ***

8. Failure to make true

declaration.- (1) Notwithstanding anything contained in clause 5 of the Scheme, where the Commissioner has, for a period beginning from 1st April, 2009, reasons to believe that the declaration was false in material particulars, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such declaration requiring him to show cause as to why he should not be required to 9

pay the tax dues unpaid or short-paid as per the provisions of the Scheme.

(2) If the Commissioner is satisfied, for reasons to be recorded in writing, that the declaration made by the dealer was substantially false,

(i) he shall within three months of service of notice under sub-clause (1) make assessment of tax and penalty under section 32 and 33 of the Act, as if that dealer had never made declaration under this Scheme. However, the dealer shall be entitled to the credit of tax paid by him under this Scheme; and

(ii) such dealer may be proceeded under sub-section (2) of section 89 of the Act for furnishing of false declaration.

(3) No notice shall be issued under sub-clause (1) of this clause after the expiry of one year from the date of declaration.”

6. There is no dispute between the

parties that on the basis of the

declaration filed by the respondent –

Assessee, the Designated Authority had

issued the “acknowledgement of discharge”

in favour of the respondent- Assessee. 10

However, on 16th January, 2015 a show cause

notice in exercise of powers under clause

8 of the Amnesty Scheme was issued by the

Additional Commissioner (Spl. Zone),

Department of Trade and Taxes, New Delhi

to which the respondent – Assessee

submitted its reply on 27th January, 2015.

In the reply so submitted, the respondent

– Assessee did not raise any question with

regard to the jurisdiction of the

Additional Commissioner to issue the show

cause notice under clause 8. The

adjudication was finalized by order dated

11th February, 2015 which was served to the

Assessee. The Assessee then filed the

writ petitions in question before the High

Court contending, inter alia, that the

show cause dated 16th January, 2015 was

unauthorized and without jurisdiction

inasmuch as the power to issue such notice

under clause 8 is vested with the

Commissioner and the same had not been

delegated to the Designated Authority i.e. 11

the concerned Additional Commissioner.

The said contention found favour with the

High Court. Accordingly, the writ

petitions filed by the respondents –

Assessees were allowed and the impugned

consequential proceedings were interfered

with. The High Court also took the view

that as under clause 8(3) of the Amnesty

Scheme show cause notice has to be issued

within one year of the date of declaration

which in the present case was made on 18th

February, 2014 and 28th February, 2014,

respectively, issuance of any

further/fresh show cause notice was time

barred. Aggrieved the Revenue is in

appeal before this Court.

7. Shri Maninder Singh, learned

Additional Solicitor General appearing for

the Revenue has vehemently contended that

the Government Order dated 30th April, 2014

contains a clear delegation of the power

under clause 8 of the Amnesty Scheme by 12

the Commissioner to the Designated

Authority. The power of disposal of the

application received under the Scheme,

according to the learned ASG, must

necessarily include the power to finalize

the matter after issuing the show cause

notice under clause 8 in an appropriate

case. Learned ASG has further urged that

under clause 4 the declarations are

required to be considered by the

Designated Authority i.e. the Additional

Commissioner. It is natural that the

power to reopen the cases concluded on

mistaken/suppressed facts must be

understood to have been available to the

Designated Authority at all times.

8. The above contentions are

contested by Shri S. Ganesh, learned

Senior Counsel appearing for the

respondents – Assessees who has urged that

keeping in mind the necessity of finality

of decisions under the Amnesty Scheme, the 13

power of reopening the concluded cases by

issuing show cause notices has been

conferred on a higher authority i.e. the

Commissioner. The said power has to be

distinguished from the power to decide an

application filed, which is vested in the

designated authority under Clause 4. It is

urged that in the present case the power

vested in the Commissioner under clause 8

has not been delegated to any other

authority, in the absence whereof, it was

not open for the Additional Commissioner

to issue the impugned show cause notice

dated 16th January, 2015. The fact that the

Assessee did not raise the issue of

jurisdiction before the Adjudicating

Authority would not clothe the Additional

Commissioner with the jurisdiction to

issue the show cause notice. As the said

issue is primarily a question of law which

goes to the root of the matter the

question could always have been raised

before the High Court. The same having 14

been so raised and answered by the High

Court, the answer provided needs to be

dealt with by this Court on merits and

ought not to be foreclosed merely on the

ground that the respondents – Assessees

had not raised the same in the course of

the adjudication of the show cause notice.

Learned Senior Counsel has referred to the

provisions of clause 8(3) of the Amnesty

Scheme to contend that the show cause

notice under clause 8 has to be issued

within one year of the date of

declaration/declarations and there is no

enabling provision to condone any delay

that has occurred or extend the time

stipulated by clause 8(3). As the period

of one year from the date of declaration

is long over, in the event this Court is

to hold that the impugned show cause

notice was issued by the Authority which

did not have the power and jurisdiction to

so act the question of issuance of any

fresh/revised notice does not arise. 15

9. On the rival contentions, two issues

arise for consideration in the present

appeal.

10. The first relates to the power and

jurisdiction of the Designated Authority

to issue the notice under clause 8 of the

Amnesty Scheme. Related, is whether, in

the present case, there has been any

delegation of the said power which is

vested in the Commissioner under the

aforesaid clause 8.

11. The second issue arising would depend

on an answer to the first, namely, if it

is to be held that the Designated

Authority is not empowered to act under

clause 8, whether a fresh notice under the

aforesaid clause of the scheme can still

be issued by the competent authority i.e.

the Commissioner or the delegatee of the

Commissioner.

16

12. What category of officers would come

within the expression “designated

authority” is contemplated by the

definition contained in clause 2 (c) of

the Amnesty Scheme. An Officer not below

the rank of Joint Commissioner as may be

notified by the Commissioner would be a

designated authority under the Scheme.

13. Clause 4 of the Scheme requires a

declaration of the tax due to be made to

the designated authority and, thereafter,

following the procedure prescribed by the

various sub-clauses of clause 4, the

Designated Authority is empowered to issue

the acknowledgment of discharge of dues

under clause 4 (7) of the Scheme.

14. Under clause 8 of the aforesaid

scheme, the Commissioner is vested with

the power, to be exercised for reasons

recorded in writing, to issue notice to 17

the assessee requiring him to show cause

as to why he should not pay the tax/ dues

unpaid or short paid as per the provisions

of the scheme. The power to issue the

notice under clause 8 is undoubtedly

vested with the Commissioner and not in

the Designated Authority. What is vested

in the Designated Authority is the power

under clause 4 of the Scheme which is the

power to hear and decide applications and

issue acknowledgments of discharge on due

satisfaction. The said power to hear and

decide applications, by no means, would

include the power to reopen a decided

matter which is what clause 8 specifically

contemplates. The Government order dated

30th April, 2014 relied upon by the Revenue

as a delegation of the power under clause

8, on a plain reading thereof, is only an

empowerment of a particular Additional

Commissioner of a particular Zone (a Zone

may have several Additional Commissioners)

to hear and decide applications filed 18

under the Scheme. The said G.O dated 30th

April, 2014 cannot be construed to be an

exercise of delegation of powers vested in

the Commissioner under Clause 8 to

Designated Authority. The plain language

contained in the said G.O is capable of

sustaining the above conclusion. We will,

therefore, have to hold that the

Additional Commissioner who had issued the

show cause notice under clause 8 in the

present case was not competent to do so

and on that basis we affirm the conclusion

of the High Court on the said question.

15. This will bring us to a consideration

of the second issue arising in the case

details of which have already been

mentioned in preceding paragraphs of the

present order.

16. The declarations in the present case

were issued to the assessee on 18th 19

February, 2014 and 28th February, 2014

respectively. The show cause notice under

Clause 8 was issued on 16th January, 2015.

The reply was submitted by the

respondent-assessee on 27th January, 2015.

The adjudication was completed by the

Order dated 11th February, 2015 against

which the respondent-Assessee filed a writ

petition before the High Court on 4th

March, 2015. In the reply filed by the

respondent-Assessee to the show cause

notice or in the proceedings pursuant

thereto, as already mentioned, no

objection was taken by the assessee to the

power and jurisdiction of the Additional

Commissioner to issue the notice in

question. The adjudication order,

therefore, did not deal with the said

issue. It is only after the period of one

year from the date of declaration was over

that the writ petition was filed wherein

the question of jurisdiction of the

Additional Commissioner was raised for the 20

first time. It is in these facts that the

High Court took the view that as the

period of limitation prescribed by Clause

8(3) was over, fresh proceedings stood

barred by time.

17. While it is correct that the failure

to raise the issue of jurisdiction by the

assessee will not necessarily clothe the

Additional Commissioner with the

jurisdiction if the same is not

contemplated by law, there are certain

aspects of the case which need to be

considered. Had the assessee raised the

question of jurisdiction in its reply or

in the course of the adjudication

proceedings there would have been still

time for the Commissioner to cure the

defect and issue a valid notice. Cases

under Amnesty Scheme would fall outside

the arena of ordinary and routine matters

and, therefore, it is possible to

attribute a genuine mistake on the part of 21

the Additional Commissioner in invoking

jurisdiction under Clause 8 of the Amnesty

Scheme. The question that looms large

before the Court is that whether in such a

situation the assessee should be allowed

to raise the question of limitation and

defeat the claim of the revenue to proceed

afresh in the matter on that basis.

18. Dealing with a somewhat similar

situation that arose before this Court in

Grindlays Bank Ltd. vs. Income Tax

Officer, Calcutta and Ors.1 it was observed

as follows in Para 7 of the report in the

following manner.

“7. The next point is whether the High Court possessed any power to make the order directing a fresh assessment. The principal relief sought in the writ petition was the quashing of the notice under Section 142(1) of the Income Tax Act, and inasmuch as the assess- ment order dated March 31, 1977 was made during the pendency of the proceeding consequent upon a purported non-compliance with that notice, it became necessary to ob- 1 (1980) 2 SCC 191 22

tain the quashing of the assess- ment order also. The character of an assessment proceeding, of which the impugned notice and the as- sessment order formed part, being quasi-judicial, the “certiorari” jurisdiction of the High Court un- der Article 226 was attracted. Or- dinarily, where the High Court ex- ercises such jurisdiction it merely quashes the offending order and the consequential legal effect is that but for the offending or- der the remaining part of the pro- ceeding stands automatically re- vived before the inferior court or tribunal with the need for fresh consideration and disposal by a fresh order. Ordinarily, the High Court does not substitute its own order for the order quashed by it. It is, of course, a different case where the adjudication by the High Court establishes a complete want of jurisdiction in the inferior court or tribunal to entertain or to take the proceeding at all. In that event on the quashing of the proceeding by the High Court there is no revival at all. But although in the former kind of case the High Court, after quashing the of- fending order, does not substitute its own order it has power none- theless to pass such further or- ders as the justice of the case requires. When passing such orders the High Court draws on its inher- ent power to make all such orders as are necessary for doing com- plete justice between the parties. The interests of justice require that any undeserved or unfair ad- vantage gained by a party invoking the jurisdiction of the court, by 23

the mere circumstance that it has initiated a proceeding in the court, must be neutralised. The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it. The present case goes further. The appellant would not have enjoyed the advantage of the bar of limi- tation if. notwithstanding his im- mediate grievance against the no- tice under Section 142(1) of the Income Tax Act, he had permitted the assessment proceeding to go on after registering his protest be- fore the Income Tax Officer, and allowed an assessment order to be made in the normal course. In an application under Section 146 against the assessment order, it would have been open to him to urge that the notice was unreason- able and invalid and he was pre- vented by sufficient cause from complying with it and therefore the assessment order should be cancelled. In that event, the fresh assessment made under Sec- tion 146 would not be fettered by the bar of limitation. Section 153(3)(i) removes the bar. But the appellant preferred the constitu- tional jurisdiction of the High Court under Article 226. If no or- der was made by the High Court di- recting a fresh assessment, he could contend as is the contention now before us, that a fresh as- sessment proceeding is barred by limitation. That is an advantage which the appellant seeks to de- rive by the mere circumstance of his filing a writ petition. It will be noted that the defect com- 24

plained of by the appellant in the notice was a procedural lapse at best and one that could be readily corrected by serving an appropri- ate notice. It was not a defect affecting the fundamental juris- diction of the Income Tax Officer to make the assessment. In our opinion, the High Court was plainly right in making the direc- tion which it did. The observa- tions of this Court in Director of Inspection of Income Tax (Investi- gation) New Delhi v. Pooran Mall & Sons2 are relevant. It said:

The Court in exercising its powers under Article 226 has to mould the remedy to suit the facts of a case. If in a particular case a court takes the view that the Income Tax Officer while passing an order un-

der Section 132(5) did not give an adequate opportu-

nity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income Tax Officer was correct or dismissing the petition because otherwise the party would get an un- fair advantage. The power to quash an order under Ar-

ticle 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction 2 (1975) 4 SCC 568 25

in which case there can be no room for the same au-

thority to be directed to deal with it. But in the circumstances of a case the court might take the view that another authority has the jurisdiction to deal with the matter and may di-

rect that authority to deal with it or where the order of the authority which has the jurisdiction is viti-

ated by circumstances like failure to observe the principles of natural jus-

tice the court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a rea-

sonable opportunity of putting forward its case.

Otherwise, it would mean that where a court quashes an order because the prin-

ciples of natural justice have not been complied with, it should not while passing that order permit the tribunal or the author-

ity to deal with it again irrespective of the merits of the case.

The point was considered by the Calcutta High Court in Cachar Ply- wood Ltd. v. ITO3 and the High Court, after considering the pro- visions of Section 153 of the In- come Tax Act, considered it appro- priate. while deposing of the writ petition, to issue a direction to 3 (1978) 114 ITR 379 (Cal) 26

the Income Tax Officer to complete the assessment which, but for the direction of the High Court, would have been barred by limitation.”

19. Having considered the matter and the

manner in which this Court has approached

the issue arising in Grindlays Bank Ltd.

(supra) we are of the view that Clause

8(3) of the Amnesty Scheme will have no

application to the present case where the

initial show cause notice was issued

within time and its legitimacy was not

contested by the respondent-Assessee. Had

such legitimacy been questioned at the

stage of reply or even in the course of

the adjudication proceedings, there would

still have been room/ time for the revenue

to correct the error that had occurred. A

rectified Notice could even have been

issued after the order of adjudication was

passed on 11th February, 2015. The close

proximity of time between the reply

submitted by the assessee to the Show 27

Cause Notice (27.01.2015) and the

proceedings in adjudication Revenue on the

one hand and the date of filing of the

Writ Petition (4.3.2015) would permit us

to infer that the conduct of the assessee

in raising the issue in the writ petitions

and not earlier was not entirely bonafide.

The respondent-Assessee, therefore, cannot

be allowed to take advantage of its own

wrong. The courts exercising extraordinary

jurisdiction cannot be understood to be

helpless but concede to the assessee an

undeserved victory over the Revenue. The

power of the High Court under Article 226

of the Constitution, wide and pervasive as

it is, should have enabled the High Court

to appropriately deal with the situation

and issue consequential directions

permitting initiation of fresh

proceedings, if the Revenue was so

inclined. The High Court having failed to

so act, we now correct the error and issue

directions to enable the Revenue to issue 28

a fresh notice to the assessee under

clause 8 of the Amnesty Scheme, if it so

desires and is so advised.

20. In the light of the foregoing, we

allow these appeals in terms of the

directions as above and set aside the

order of the High Court impugned in the

appeals.

....................,J.

(RANJAN GOGOI)

....................,J.

(NAVIN SINHA)

NEW DELHI OCTOBER 4, 2017