M/S. Naresh Kumar Gupta vs The State Of Punjab

2025 INSC 719 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4033 OF 2025

M/s. NARESH KUMAR GUPTA APPELLANT

VERSUS

STATE OF PUNJAB & ANOTHER RESPONDENTS

WITH

CIVIL APPEAL NO.4034 OF 2025 CIVIL APPEAL NO.4035 OF 2025 CIVIL APPEAL NO.4036 OF 2025 CIVIL APPEAL NO.4037 OF 2025 CIVIL APPEAL NO.4038 OF 2025 CIVIL APPEAL NO.4039 OF 2025 CIVIL APPEAL NO.4040 OF 2025 CIVIL APPEAL NO.4041 OF 2025 CIVIL APPEAL NO.4042 OF 2025 CIVIL APPEAL NO.4043 OF 2025 CIVIL APPEAL NO.4044 OF 2025 CIVIL APPEAL NO.4045 OF 2025 CIVIL APPEAL NO.4046 OF 2025 Signature Not Verified CIVIL APPEAL NO.4048 OF 2025 Digitally signed by

CIVIL APPEAL NO.4049 OF 2025 RADHA SHARMA Date: 2025.05.17 10:02:39 IST Reason:

Page 1 of 17 CIVIL APPEAL NO.4050 OF 2025 CIVIL APPEAL NO.4051 OF 2025 TRANSFERRED CASE(C) NO.41 OF 2023 TRANSFERRED CASE(C) NO.42 OF 2023 TRANSFERRED CASE(C) NO.43 OF 2023 TRANSFERRED CASE (C) NO.44 OF 2023 TRANSFERRED CASE(C) NO.7 OF 2024 TRANSFERRED CASE(C) NO.8 OF 2024 TRANSFERRED CASE(C) NO.9 OF 2024 TRANSFERRED CASE(C) NO.37 OF 2024

JUDGMENT

NAGARATHNA, J.

CIVIL APPEAL NO.4033/2025, CIVIL APPEAL NO.4035/2025, CIVIL APPEAL NO.4037/2025, CIVIL APPEAL NO.4039/2025, CIVIL APPEAL NO.4034/2025, CIVIL APPEAL NO.4038/2025, CIVIL APPEAL NO.4036/2025, CIVIL APPEAL NO.4045/2025, CIVIL APPEAL NO.4043/2025, CIVIL APPEAL NO.4040/2025, CIVIL APPEAL NO.4041/2025, CIVIL APPEAL NO.4042/2025, CIVIL APPEAL NO.4046/2025, CIVIL APPEAL NO.4048/2025, CIVIL APPEAL NO.4049/2025, CIVIL APPEAL NO.4050/2025, CIVIL APPEAL NO.4051/2025:

1. The above appeals are disposed of in terms of the following

common judgment.

2. All the impugned orders in these Civil Appeals followed the

result in Amrit Banaspati Company Ltd. vs. State of Punjab &

Page 2 of 17 Others, Civil Writ Petition No.21811 of 2014 (“Amrit

Banaspati”) which was disposed of by a separate order and

judgment dated 07.08.2015 by the High Court of Punjab &

Haryana at Chandigarh. An appeal against the above judgment

before this Court by the aforesaid assessee was dismissed as

withdrawn vide order of this Court dated 04.05.2016 in SLP (Civil)

No.26731 of 2015.

3. The common question of law arising in these appeals is

whether the amendment to section 29 of the Punjab Value Added

Tax Act, 2005 [henceforth “PVAT Act”] by the Punjab Value Added

Tax Act, 2013 is constitutionally valid or not. For the sake of

immediate reference, Section 29 of the PVAT Act, before and after

it was amended, is extracted herewith:

Section 29(4) [before the Section 29(4) [after the amendment on 15.11.2013] amendment on 15.11.2013]

29. Assessment of tax. 29. Assessment of tax.

*** *** (4) An assessment under sub (4) An assessment under section (2) or sub-section (3) subsection (2) or sub-section may be made within three (3), may be made within six years, after the date when the years after the date when the annual statement was filed or annual statement was filed or

Page 3 of 17 Section 29(4) [before the Section 29(4) [after the amendment on 15.11.2013] amendment on 15.11.2013]

due to be filed whichever is due to be filed whichever is later. later.

Provided that where Provided that the assessment circumstances so warrant, the under sub section (2) or sub- Commissioner may by an order section (3), in respect of which in writing, allow assessment of annual statement for the a taxable person or a registered assessment year 2006-07 has person after three years, but already been filed, can be made not later than six years, from till the 20th day of November, the date, when annual 2014.

statement was filed or due to be filed by such person, whichever Explanations:

is later. (1) The limitation period of six years for an assessment under sub-section (2) or sub-section (3), shall also apply to those cases in which the aforesaid period of six years has yet not expired.

(2) It is clarified that prior to commencement of the Punjab Value Added Tax (Second Amendment) Act, 2013, the Commissioner was not required to issue any notice to the concerned person before extending the limitation period of assessment.

29(10A) Notwithstanding anything to the contrary contained in any judgment, decree or order of any Court, tribunal or other authority, an order passed by the Commissioner under

Page 4 of 17 Section 29(4) [before the Section 29(4) [after the amendment on 15.11.2013] amendment on 15.11.2013] subsection (4) prior to commencement of the Punjab Value Added Tax (Second Amendment) Act, 2013, shall not be invalid on the ground of prior service of notice or communication of such order to the concerned person.

4. The aforesaid amendments to Section 29 of PVAT Act were

challenged by the appellants herein before the Punjab and Haryana

High Court on the grounds that i) they were prospective; and if not,

then ii) they reverse/over-rule several judgments of the High Court;

iii) Explanation (2) is contrary to principles of natural justice; iv)

they violate Articles 14 and 19 of the Constitution; v) they extend

the period of reassessment even where the original period for

assessment has expired; and vi) the proviso to the amended section

29(4) is contrary to the main section.

5. The High Court, vide the judgment dated 07.08.2015 in Amrit

Banaspati, observed that the amendment cannot by any stretch

of imagination be held to be so unreasonable or excessive as to

warrant it being declared invalid. On a survey of cases, it

Page 5 of 17 highlighted that the principle was that the proceedings which have

attained finality under the existing law due to a bar of limitation

cannot be held to be open for revival unless the amended provision

is clearly given a retrospective operation so as to allow unsettling

of proceedings, which had already been concluded and attained

finality. That the purpose and effect of the entire amendment was

to obviate the consequences of the proviso to the unamended

section. Following the above judgment, the High Court dismissed

the writ petitions filed by the appellants herein.

6. Aggrieved by the impugned orders of the High Court, the

appellants have approached this Court by preferring these appeals.

7. We have heard learned senior counsel for the appellants and

learned counsel for the State, learned senior counsel and learned

counsel for the respective appellants and learned A.A.G. for the

respondent-State and perused the material on record.

8. The statement of objects and reasons for bringing forth an

amendment to section 29 of the PVAT Act, 2005 by the Punjab

Value Added Tax Act, 2013 is extracted as follows:

Page 6 of 17

“Amendment in Section 29 of the Punjab VAT Act, 2005:

Due to the provision of self-assessment in Punjab Value Added Tax Act, 2005, cases are selected by the Departmental Officers for the assessment on the basis of certain risk parameters or in which revenue is involved. According to Section 29(4), the assessment of a case has to be framed within 3 years of filing the Annual Statement. It is pertinent to mention here that due to heavy work load and shortage of staff in the Department, by the time the Designated Officer detects a tax due in a particular case, the limitation period of 3 years is near to end. The Commissioner has the power to extend the period of assessment upto 6 years. By exercising this power, limitation periods were extended by the Commissioner in respect of various years which led to a lot of litigation. The Hon’ble High Court and the Hon’ble VAT Tribunal have quashed many such extension orders on technical ground of no prior service of notice to the concerned person before passing an order of such extension of limitation period and not passing individual orders, resulting in a huge revenue loss. Therefore, in order to safeguard the Revenue on account of cases becoming time barred and to undo the effect of the judgment dated 01.09.2009 of the Hon’ble High Court in case of A.B. Sugars Ltd. it has become necessary and expedient to amend sub-Section 4 of Section 29 and insert sub section (10-A) in Section 29 of the Punjab VAT Act, 2005.”

9. On a perusal of the un-amended Section 29 of the Act and its

amended version, it is evident that under the un-amended

provision, the initial limitation period of three years could be

extended to six years by the Commissioner by an order in writing

where circumstances so warranted. According to the legislature, as

Page 7 of 17 expressed in the Statement of Objects and Reasons, firstly, by the

time a Designated Officer detected a tax due in a particular case,

the limitation period of three years would near its end. Secondly,

the order of the Commissioner extending the limitation period to

six years had been a subject matter of litigation before the High

Court in several cases, which had resulted in huge revenue loss. It

was to obviate such consequences that the Legislature of the State

of Punjab thought it fit to amend Section 29 of the PVAT Act.

10. The High Court, vide impugned judgment dated 07.08.2015,

found this amendment as not so unreasonable or excessive as to

warrant it being declared invalid. It held that the proviso itself

establishes that the opening part of the amended Section 29(4) is

retrospective and that to construe the opening part of Section 29(4)

as being prospective would render the proviso and Explanation (1)

thereto otiose. It noted that a legislature has the power to enact the

laws, including laws dealing with taxation, with retrospective

effect.

11. Further, the High Court held that the legislature giving its

own meaning or interpretation to a provision through a legislative

Page 8 of 17 fiat does not encroach upon the Courts’ domain to interpret the

laws enacted by it. That the legislature could have done so

originally or subsequently by an amendment which could be both

prospective and retrospective. It held that sub-section (10A) to

Section 29 of the PVAT Act must be read along with the rest of the

Section and if read so, it would be clear that the defect in the

actions i.e. the manner in which the proviso to the unamended

Section 29(4) was implemented is removed.

12. The High Court also observed that the clarification provided

in Explanation 2 to the amended Section 29 of the PVAT Act does

not amount to a declaration that the judgments passed by it based

on the unamended Section 29 of the aforesaid Act were wrong. It

held that the legislature has simply removed the basis on which

those judgments were rendered and that the legislature was well

within its powers to do so.

13. To the question whether by an amendment the Legislature

could extend the period for assessment even though the original

period for assessment had expired, the High Court relied on the

judgment of this Court in Additional Commissioner (Legal) &

Page 9 of 17 Another v. Jyoti Traders & Another, (1999) 2 SCC 77, to answer

in the affirmative. In that case, the impugned provision before

amendment provided for a limitation of four years and the amended

provision increased the same to eight years. The assessment year

in that case was 1985-86 and the amendment came into force in

1991. Hence, the four-year period originally prescribed would have

expired prior to the date of the amendment. Despite the same, this

Court held that the amendment was applicable to the assessees.

14. For the above reasons, we hence do not find any reason to

interfere with the impugned orders of the High Court. In the

circumstance, the Civil Appeals stand dismissed. We reiterate the

liberty reserved by the High Courts in Amrit Banaspati.

15. However, liberty is reserved to the appellant/assessee(s) to

avail the appellate remedy if so advised within a period of three

months from today. If such an appellate remedy is availed by the

appellants herein, the State as well as the Appellate Authorities

shall not raise the issue of limitation. It is needless to observe that

the appeals so filed shall be disposed of in accordance with law.

Page 10 of 17 CIVIL APPEAL NO.4044 OF 2025, TRANSFERRED CASE (C) NO.7 OF 2024, TRANSFERRED CASE (C) NO.8 OF 2024, TRANSFERRED CASE (C) NO.9 OF 2024, TRANSFERRED CASE (C) NO.37 OF 2024, TRANSFERRED CASE (C) NO.41 OF 2023, TRANSFERRED CASE (C) NO.42 OF 2023, TRANSFERRED CASE (C) NO.43 OF 2023, AND, TRANSFERRED CASE (C) NO.44 OF 2023:

16. We have heard the arguments advanced at the bar by learned

senior counsel for the appellant-assessee(s) and learned senior

counsel and learned A.A.G. appearing for the State of Punjab and

learned counsel for Union Territory of Chandigarh at length.

Bearing in mind the controversy in these cases arising from State

of Punjab and Union Territory of Chandigarh only are concerned,

we find that the judgment of this Court in State of Punjab vs.

Nokia India Pvt. Ltd., (2014) 16 SCC 410 (“Nokia”), is heavily

relied upon by the learned Additional Advocate General (AAG)

appearing for the State of Punjab and learned ASG appearing for

Union Territory of Chandigarh. However, learned senior counsel

appearing for the appellants have sought to distinguish the ratio of

the said judgment of this Court in Nokia, insofar as the matters

pending before this Court are concerned, by placing reliance on the

judgment of the Allahabad High Court in M/s. Samsung (India)

Electronics Pvt. Ltd. vs. Commissioner of Commercial Tax, UP Page 11 of 17 bearing STRP NO. 479/2017 and connected matters disposed of

on 18.01.2018, which judgment we have affirmed by our order

dated 20.02.2025, as well as the judgment passed by Karnataka

High Court in State of Karnataka & Another vs. Intex

Technologies India Ltd. bearing STRP NO.8/2022 disposed of on

10.02.2023.

17. We, hence, propose to make the following order in these cases:

(a) Insofar as the State of Punjab as well as the Union Territory of

Chandigarh are concerned, the judgment of this Court in

Nokia is in favour of the Revenue and bearing in mind the

quantum of taxes that have to be paid by the appellant-

assessee(s), we do not intend to consider the correctness, or

otherwise of the said judgment of this Court as sought to be

persuaded by learned senior counsel Sri Datar appearing for

the appellants. This is for the pertinent reason that the period

under controversy is related to only the Assessment Years from

2005-2006 to 2011-2012 insofar as the State of Punjab is

concerned and Assessment Years from 2009-2010 to 2015-

2016 insofar as the Union Territory of Chandigarh is

concerned.

Page 12 of 17

(b) Since we are not going into the correctness or otherwise of the

judgment of this Court in Nokia, we direct the appellants

herein to pay the outstanding tax dues. The said payment shall

be restricted only to the principal amount of tax dues and shall

not include interest and penalty therein insofar as these cases

are concerned.

(c) For the sake of clarity, we observe that since the judgment of

this Court in Nokia is now being restricted to the Act

applicable in State of Punjab and the Act applicable in the

Union of Territory of Chandigarh, the said judgment may not

be a binding precedent insofar as other States’ enactments are

concerned. In other words, liberty is reserved to any aggrieved

party to contend that the judgment of this Court in Nokia is

not applicable and therefore could be distinguished.

The aforesaid directions have been issued bearing in

mind the fact that from the year 2013 onwards, in the State of

Punjab there have been amendments made to the State Acts.

(d) Consequently, the Civil Appeal and the Transferred Cases filed

by the assessees as against the State of Punjab and the Union

Page 13 of 17 Territory of Chandigarh are disposed of in the aforesaid terms,

and only the principal amount of outstanding tax dues shall

be paid by the appellant-assessee(s) on or before 30.06.2025.

(e) Insofar as the matters which have been disposed of by this

Court and also in the cases which are pending before the

Punjab and Haryana High Court or before any other appellate

or Assessing Authority insofar as the State of Punjab and

Union Territory of Chandigarh are concerned, the aforesaid

order is also subject to the result of the cases pending

consideration in Civil Appeal No.4033 of 2025 and connected

cases which are pending before this Court.

(f) Insofar as the transferred cases arising from State of Andhra

Pradesh are concerned, since the provision to be considered

may be distinguished and the judgment of this Court in Nokia

may not be applicable, we reserve liberty to the appellants to

contend that the judgment of this Court in Nokia may not be

applicable to their cases by placing reliance on the judgments

of the Allahabad High Court as well as the judgment of the

Karnataka High Court referred to above, as affirmed by this

Page 14 of 17 Court, and bearing in mind the provisions to be considered

under the applicable Acts and Rules of general interpretation,

if applicable, in the State of Andhra Pradesh, and to raise any

other contention that is available to the parties, in accordance

with law.

(g) Insofar as the Transferred Cases arising from the High Court

of Andhra Pradesh at Amravati are concerned, those cases are

re-transferred and restored on the file of the High Court for

being considered and disposed of in accordance with law

including remanding the matters to the concerned Revenue

officers or reserving liberty to the appellants herein to avail the

appellate remedy.

(h) Alternatively, the Andhra Pradesh High Court may hear the

matters on the issues which are raised by the assessees

bearing in mind the observations made above. In case any

aggrieved party before the High Court intends to avail the

appellate remedy (alternate remedy), the issue of limitation

shall not be raised by the appellate authority or by the

respondent-State subject to the further orders to be passed by

the said High Court.

Page 15 of 17

(i) We again reiterate that we have made the aforesaid order

having regard to the fact that we have restricted the

ramification and implication of the judgment of this Court in

Nokia to the relevant assessment years in the State of Punjab

and Union Territory of Chandigarh only.

(j) Consequently, the binding effect of the said dictum insofar as

other States’ enactments are concerned may not arise,

particularly if the provisions are different from those under the

Punjab Act and the Act applicable in the Union Territory of

Chandigarh.

(k) It is needless to observe that liberty is reserved to any aggrieved

party to contend that the judgment passed by this Court in

Nokia is not applicable and is distinguishable in any other

State.

Insofar as the cases arising from Andhra Pradesh are

concerned, liberty is reserved to the State/Revenue to place

reliance on the judgment of this Court in Nokia.

(l) The aforesaid appeal and the transferred cases are disposed of

in the aforesaid terms.

Page 16 of 17

(m) The Registry of this Court is directed to intimate this order to

the Registry of the High Court of Andhra Pradesh and also to

take steps for smooth transfer of these cases so as to be

restored on the file of the Andhra Pradesh High Court as

expeditiously as possible.

(n) Having regard to the long pendency of the matters before the

High Court and the subsequent restoration of the cases before

the High Court of Andhra Pradesh, we request the High Court

to expedite the hearing and disposal of these cases.

Pending application(s), if any, shall stand disposed of.

…………………………………………..J. (B. V. NAGARATHNA)

…………………………………………..J. (SATISH CHANDRA SHARMA) NEW DELHI;

MAY 01, 2025

Page 17 of 17