# SALES-TAX OFFICER, CIRCLE-I, JABALPUR v. HANUMAN PRASAD

- **Citation:** [1967] 1 S.C.R. 831
- **Court:** Supreme Court of India
- **Decided:** 1966-10-11
- **Case number:** Civil Appeal No. 548 of 1965
- **Bench:** J. C. Shah, V. RAMAsWAMI, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sales-tax-officer-circle-i-jabalpur-v-hanuman-prasad-3922
- **Pages:** 5

## Headnote

Madhya Pradesh General Sales Tax Act (M. P. Act 2 of 1959) ss.
19(1) and 52-Assessment under repealed.Act-Reassessment-Perio4 of
limitation-Amendment of s. 19(1)-Proviso--Efject.
Pending assessment to Sales-tax of respondent's turnover under the
Central Provinces and Berar Sales Tax Act, 194 7, the Madhya · Pradesh
General Sales Tax Act, 1958, came into force repealing the former Act.
Thereupon, the respondent was assessed to tax under s. 11-A(l) of the
repealed Act. After more than three years from this assessment, the Sales
Tax Officer issued a notice for reassessment under s. 19(1) of the new Act,
which provided five years period for reopening escaped assessment. Tho
:respondent objected that his sales had been assessed under the repealed
Act, where the limitation of three years for reassessment was prescribed
and the proviso to s. 19(1) of the new Act preserved the rights acquired
under the repealed Act. The Sales-tax Officer rejected the objection. The
respondent filed a writ petition in the High Court which was allowed.
Thereafter, the principal clause of s. 19(1) was amended retrospectively
to include a56essments under the repealed Act. In appeal to this Court. the
appellant Sales-tax Officer, contended that the main clause of s. 19(1) was
applicable and that by the subsequent amendment to s. 19(1), the principal
cliuse became applicable to cases assessed under the repealed Act and not
the proviso.
HELD : The appeal must be dismissed.
The mere enforcement of the new Act by the time the order of asseosment was passed by the Sales-tax Officer could not lead to the conclusion
that the assessment was made under the new Act and not under repealed
Act. [833 HI
-
The assessment, after enforcement of the new Act, was an assessment in
accordance with the rights and liabilities of the respondent under the repealed Act; so the proviso to s. 19{ 1) of the new Act was appllcable. The
proviso to s. 52 of the new Act also preserved this right of the respondent.
[834 El
Even if the effect of the subsequent amending Act was that under the
principal clause of s. 19(1) the reassessment could be taken up within a
period of five years, that provision became ineffective because of the continued existence of the proviso.
A proviso is added to a principal clause primarily with the object of
talrlng out of the scope of that principal clause what is included in it. and
what the Legislature desires should be excluded. [835 DJ

## Text

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SALES-TAX OFFICER, CIRCLE-I, JABALPUR
V.
HANUMAN PRASAD
October 11, 1966
(J. C. SHAH, V. RAMAsWAMI AND V. BHARGAVA, JJ.j
Madhya Pradesh General Sales Tax Act (M. P. Act 2 of 1959) ss.
19(1) and 52-Assessment under repealed.Act-Reassessment-Perio4 of
limitation-Amendment of s. 19(1)-Proviso--Efject.
Pending assessment to Sales-tax of respondent's turnover under the
Central Provinces and Berar Sales Tax Act, 194 7, the Madhya · Pradesh
General Sales Tax Act, 1958, came into force repealing the former Act.
Thereupon, the respondent was assessed to tax under s. 11-A(l) of the
repealed Act. After more than three years from this assessment, the Sales
Tax Officer issued a notice for reassessment under s. 19(1) of the new Act,
which provided five years period for reopening escaped assessment. Tho
:respondent objected that his sales had been assessed under the repealed
Act, where the limitation of three years for reassessment was prescribed
and the proviso to s. 19(1) of the new Act preserved the rights acquired
under the repealed Act. The Sales-tax Officer rejected the objection. The
respondent filed a writ petition in the High Court which was allowed.
Thereafter, the principal clause of s. 19(1) was amended retrospectively
to include a56essments under the repealed Act. In appeal to this Court. the
appellant Sales-tax Officer, contended that the main clause of s. 19(1) was
applicable and that by the subsequent amendment to s. 19(1), the principal
cliuse became applicable to cases assessed under the repealed Act and not
the proviso.
HELD : The appeal must be dismissed.
The mere enforcement of the new Act by the time the order of asseosment was passed by the Sales-tax Officer could not lead to the conclusion
that the assessment was made under the new Act and not under repealed
Act. [833 HI
-
The assessment, after enforcement of the new Act, was an assessment in
accordance with the rights and liabilities of the respondent under the repealed Act; so the proviso to s. 19{ 1) of the new Act was appllcable. The
proviso to s. 52 of the new Act also preserved this right of the respondent.
[834 El
Even if the effect of the subsequent amending Act was that under the
principal clause of s. 19(1) the reassessment could be taken up within a
period of five years, that provision became ineffective because of the continued existence of the proviso.
A proviso is added to a principal clause primarily with the object of
talrlng out of the scope of that principal clause what is included in it. and
what the Legislature desires should be excluded. [835 DJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 548 of 1965.
Appeal by special leave from the judgment and order dated
February 28, 1963 of the Madhya Pradesh High Court in Misc.
Petition No. 381 of 1962.
A. P. Sen, Advocate-General, Madhya Pradesh and I. N.
Shroff, for the appellant.
Yogeshwar Prasad and M .. V. Goswami, for the respondent.
832
SUPREME COUllT REPORTS
(1967] I S.C.R.
The Judgment of the Court was delivered by
Bbargan, J, The respondent was a registered dealer carrying
on the business of selling goods liable to sales-tax under the Central Provinces and Bcrar Sales Tax Act, 1947 (hereinafter referred
to as "the repealed Act"). For the period from 3rd November,
1956 to 23rd October, 1957, the respondent filed his return, which
was not accepted by. the Sales-tax Officer, who, on March 10, 1959,
issued a notice in Form XII to the respondent. Subsequent to this
notice, on May 23, 1959, the turnover of the sales of the respondent was assessed to tax under s. I 1(4)(a) of the repealed Act. In
the meantime, on April I, 1959 the Madhya Pradesh General Sales
Tax Act, 1958 (Act No. II of 1959) (hereinafter referred to as "the
new Act") came into force.
On October 23, 1962, the Sales-tax
Officer discovered that part of the turnover of the respondent for
the period mentioned above had escaped assessment and issued a
notice under s. 19(1) of the new Act. The respondent raised a
preliminary objection that his sales had been assessed under the
repealed Act. under which the Limitation of a period of three years
was prescribed by section 11-A for assessment of escaped turnover.
The Sales-tax Officer rejected that objection by his order dated
29th October, 1962, and decided to proceed with the reassessment.
Thereupon, the respondent moved a petition under Articles 226 and
227 of the Constitution before the High Court of Madhya Pradesh,
Jabalpur, praying for the quashing of the order of the Sales-tax
Officer dated 29th October, 1962, and the notice dated 23rd October,
1962. The High Court held that the period of limitation governing the proceedings instituted by the notice dated 23rd October,
1962, was that laid down under s. 11-A(I) of the repealed Act, so
that the proceedings were barred by time. The notice dated 23rd
October, 1962, and the subsequent order dated 29th October,
1962 were consequently quashed. The Sales-tax Officer of Jabalpur has now come up to this Court in this appeal by special leave
against this order of the High Court.
Secti"n 19(1) of the new Act, on which reliance was placed by
the Sales-tax Olliccr, reads as follows :
"19. (I) Where an assessment has been made under
this Act and the Commissioner, in consequence of any
information which has come into his possession, is satisfied
that any sale or purchase of goods chargeable to ta,it under
this Act, during any year, has been under-assessed or has
escaped assessment or assessed at a lower rate or any
deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years
from the expiry of such year, after giving the dealer a
reru;onable opportunity of being heard and after making
such enquiry as he considers necessary, proceed, in such
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s. T. OFFICER v. HANUMAN PRASAD (Bhargava, 1.)
833
manner as may be prescribed, to re-assess the tax payable
on any· such sale or purchase and the Commissioner
may direct that the dealer shall pay, by way of penalty
in addition to the amount of tax so assessed, a sum not
exceeding that amount :
Provided that in the case of an assessment made
under any Act repealed by Section 52, the period of reassessment on the ground of under-assessment, escapement
or wrong deduction shall be as provided in such Act
notwithstanding the repeal thereof."
The contention on behalf of the Sales-tax Officer was that for the
sake of assessing the escaped turnover, the provision applicable
was that contained in the main clause of s. 19(1), and that the
proviso was not applicable in this case. On the other hand, the
respondent's contention was that, in his case, the assessment had
been made 11nder ~he repealed Act, so that the proviso was applicable and the period of limitation for issue of a valid notice was
that laid down ins. l lA(l) of the repealed Act which is as follows:
"11-A.(1). lf, in consequence of any information which
has come into his possession, the Commissioner is satisfied that any turnover· of a dealer during any period has
been under-assessed or has escaped assessment or assessed
at a lower rate or any deduction has been wrongly made
therefrom, the Commissioner may, at. any time within
three calendar years from the expiry of such period, after
giving the dealer a reasonable opportunity of being heard
and after making such enquiry as he considers necessary,
proceed, in such manner as may be prescribed, to reassess or assess, as the case may be, the tax payable
on any such turnover; and the Commissioner may
direct that the dealer shall pay, by way of penalty in
addition to the amount of tax so assessed, a sum not exceeding that amount."
The High Court has accepted the plea put forward .on behalf of the
respondent.
The facts given by us above clearly show that the original
assessment of the respondent was in respect of a period when the
new Act had not come into force. The respondent had filed the
return, and even the notice in that connection was issued by the
Sales-tax Officer prior to the enforcement of the new Act. The
actual order of assessment was made on 23rd May, 1959, shortly
after the new Act had come into force. The mere enforcement
of that Act by the time the order of assessment was passed by the
Sales-tax Officer cannot lead to the conclusion that the assessment
of the respondent was made under the new Act and not under the
repealed Act. It was under s. 52 of the new Act that the repealed
834
SUPl.IMI OOUl.T UPOl.TS
[l 967] I S.C.R.
Act was repealed, and that section itself, under the proviso, laid
down that such repeal shall not affect the previous operation of the
said Act or .any right, title, obligation or liability already acquired,
accrued or incurred thereunder. There was also the further addition that subject thereto, anything done or any· action taken (including any appointment, notification, notice, order, rule, form,
regulation, certificate or licence) in the exercise of any power conferred by or under the said Ac\ shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done
or taken in 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.
In view· of this proviso it has to be held that
when this new Act came into force on !st April, 1959, all rights,
title, obligation or liability already acquired, accrued or incurred
under the repealed Act by the respondent remained unaffected
and intact.
The rights and liabilities, which had been acquired
or incurred under the repealed Act, included the right or liability
to be assessed in accordance with the provisions of the repealed
Act in respect of turnover of sales effected during the time when
that Act was in force.
The repealed Act laid down that turnover
was taxable, how it was to be computed, and at what rate the tax
was to be charged. These provisions clearly created rights as well
as liabilities of dealers. Those rights and liabilities were thus
preserved by s. 52 of the new Act. The assessment which was
completed in the case of the respondent on 23rd May, 1959, was,
therefore, an assessment in accordance with the rights and liabilitiC5
of the respondent under the repealed Act ; and this being so, it
has to be held that the proviso to s. 19(1) of the new Act was aj>'-
plicable to the case of the respondent. As a result of this proviso,
the period of re-assessment on the ground of under-assessment,
escapement or wrong deduction in the case of the respondent had
to be as provided in s. 11-A(I) of the repealed Act, so that the
period was three years and not five years as laid down by s. 19(1)
of the new Act. The notice dated 23rd October, 1962, was clearly
issued beyond the period of limitation prescribed bys. 11-A(I) of
the repealed Act, and the proceedings in pursuance of it were timebarred.
In the alternative, this question may be examined in another
aspect. Section 11-A(I) of the repealed Act itself created a .right
in favour of the respondent not to be assessed in respect of turnover
that was under-assessed or had escaped assessment after the expiry
of the period prescribed in that sub-section. The proviso to s. 52
of the new Act preserved this right of the respondent, and on thi.5
ground also, the Sales-tax Officer was not competent to issue the
notice for re-assessment after that period of limitation had expired.
(n this connection, learned counsel for the Sales-tax Officer
drew our attention to two subsequent pieces of legislation that
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s. T. OFFICER v. HANUMAN PRASAD (Bfiargava, !.)
835·
amended the new Act. The first one of these is the Madhya Pradesh
General Sales Tax (Second Amendment) Act, 1963 (Act 23 of 1963)
(hereinafter referred to as "the Amending Act"). By section 3
of this Amending Act, section 19(1) of the new Act was amended,
so as to introduce some words in the principal clause of s. 19(1).
The words introduced were : "or any Act repealed by section 52",
and they were to be inserted at both the places where the words
"this Act" occurred in the principal clause. It was urged that,
as a result of this amendment, this principal clause became applicable even to cases in which assessment had been made under the
repealed Act, and, taking into account the effect of this subsequent
amendment, we should hold that the Sales-tax Officer was not
incompetent to make the assessment when he purported to issue
the notice on 23rd October, 1%2, as the notice was issued within
the period of five years laid down in the principal clause of s. 19(1)
of the new Act. It is, however, significant that, though the principal clause of s. 19(1) was amended, the proviso to it was not
deleted by the Amending Act. The proviso, therefore, continued
to remain in force. It is well-recognised that a proviso is added
to a principal clause primarily with the object of taking out of the
scope of that principal clause what is included in it. and what the
legislature desires should be excluded. Consequently, even if it
be held that the effect of the Amending Act was that, under the
principal clause of s. 19(1), the re-assessment of the under-assessed
or escaped turnover in the case of the respondent ·could be taken
up within a period of five calendar years, that provision became
ineffective because of the continued existence of the proviso. The
Amending Act had not come into force when the High Court decided the petition, and consequently, the High Court had no occasion to consider its effect.
However, as we have indicated
above, the order made by the High Court remains unaffected even
after this amendment, and the decision given that the limitation applicable to the case of the respondent is that laid down by
s. 11-A(l) of the repealed Act is correct. It is true that the amendment is s. 19(1) of the new Act made by the Amending Act was
given retrospective effect under s. 5 of the Amending Act, but that
also is immaterial, because, even after the ·amendment, the provision contained in the proviso had to prevail over the principal
clause of s. 19(1).
The second piece of legislation brought to our notice was the·
Madhya Pradesh. General Sales Tax (Second Amendment) Act,
1964 (Act 20 of 1964) by which also s. 19(1) of the new Act was
slightly amended. That amendment, however, has no bearing on
the point which we are called upon to decide in this appeal, and
consequently, needs no consideration.
The appeal fails and is dismissed with costs.
Y. P.
Appeal dismissed.