[Sales Tax] The State of Haryana and others v/s Hindustan Company Ltd. (2017)

Case NameThe State of Haryana and Others v/s Hindustan Construction Company Ltd. (2017)
Case NumberCIVIL APPEAL NO(s). 10792-10794 OF 2011
CourtBefore the Supreme Court of India
BenchJustice Ranjan Gogoi, Justice Navin Sinha
Author of the judgmentJustice Navin Sinha
Advocate for the appellantSh. Manish Paliwal
Advocate for the respondentSh. P.H. Parekh
Decided OnSeptember 15, 2017
Relevant Act/Sections Haryana General Sales Tax, 1973 - Section 40, Haryana Value Added Tax, 2003 - Section 61, Punjab General Clauses Act, 1898 - Section 4
Author of the briefAditya Gor.

The sales tax assessment of the respondent was completed and the refund was ordered under the 1973 act. But the 1973 act was subsequently repealed by the act of 2003. A show cause notice was given to the respondent under section 40 of the 1973 act and the respondent was held liable for the recovery of Rs 65, 35, 632/-. This order was challenged before the High Court whereby the High Court held that resort to section 40 of the 1973 act, after coming into force the 2003 act, is unsustainable. According to High Court, such resort to the earlier act is not permissible because:

  1. The repeal and saving clause in section 61 of the 2003 act allowed only pending proceedings before the former.
  2. Since there were no proceedings pending against the respondent, the proceedings were not justified by reference to section 4 of the Punjab General Clauses Act, 1898 (Para 1, 2 and 3)

Whether the exercise of revisional power under section 40 of the Haryana General Sales Tax Act, 1973 after its repeal on 01/04/2003, by the Haryana Value Added Tax, 2003 is sustainable or not?

Arguments of the appellant: It was argued on behalf of the state of Haryana that (Para 4 & 5):

  1. Since refund was wrongly obtained resort to section 40 of the 1973 act was justified if exercised within limitation of 5 years.
  2. The wrong benefit of refund clearly fell within the expression privileges obligation or liability acquired or incurred under the repealed act and was therefore saved under section 4 of the Punjab General Clauses Act.
  3. It was contended that the revisional power conferred on the revenue in a fiscal legislation should not be construed as a stand-alone provision, but as a provision intended to enable the revisional authority to ensure that the assessment had been carried out in accordance with law.

Arguments of the respondent: The arguments raised by the Counsel of Hindustan Company are:

  1. The repeal and saving clause in section 61 of the act of 2003 exclusively saved pending proceedings only.
  2. The application of the Punjab General Clauses Act, 1898, therefore, stood excluded by the expression of a different intention in the repealing act.

There were no pending proceedings against the respondent under the 1973 act. The repeal and saving clause in section 61 of 2003 act saved only pending proceedings under the repealed act. The intention was to make sure that the matters which stood close under 1973 act were not reopened again. (Para 9)

Thus the application of the Punjab General Clauses Act, 1858 will have no application here in view of the contrary intendment expressed in section 61 of the 2003 act. Doing so would otherwise render the purpose of the legislature ineffective. The appeal was thus dismissed. (Para 10 and 14)

 
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