LEGAL ISSUE: Whether revisional power under the Haryana General Sales Tax Act, 1973 can be exercised after its repeal.
CASE TYPE: Tax Law
Case Name: The State of Haryana and Others vs. Hindustan Construction Company Ltd.
Judgment Date: 15 September 2017
Can a state government use old tax laws to review past tax assessments after the law has been repealed? The Supreme Court of India addressed this question in a case concerning the Haryana General Sales Tax Act, 1973. The core issue was whether the state could exercise revisional powers under the old law after it had been replaced by a new one. This judgment clarifies the extent to which old laws can be used after their repeal.
The judgment was delivered by a bench of Justice Ranjan Gogoi and Justice Navin Sinha. The majority opinion was authored by Justice Navin Sinha.
Case Background
The respondent, Hindustan Construction Company Ltd., had its sales tax assessment completed for the year 1998-99 under the Haryana General Sales Tax Act, 1973. On May 12, 2000, a refund was ordered. Subsequently, on April 1, 2003, the 1973 Act was repealed by the Haryana Value Added Tax Act, 2003.
However, on June 7, 2004, the state issued a show cause notice to the respondent. This notice was regarding the earlier refund. The state was using its suo-moto revisional powers under Section 40 of the repealed 1973 Act. On July 12, 2004, the state ordered the respondent to pay back Rs. 65,35,632.
Timeline
| Date | Event |
|---|---|
| 1998-99 | Sales tax assessment of the respondent completed. |
| May 12, 2000 | Refund ordered to the respondent under the 1973 Act. |
| April 1, 2003 | The Haryana General Sales Tax Act, 1973 was repealed by the Haryana Value Added Tax Act, 2003. |
| June 7, 2004 | Show cause notice issued to the respondent under Section 40 of the 1973 Act. |
| July 12, 2004 | Order for recovery of Rs. 65,35,632/- issued against the respondent. |
Course of Proceedings
The respondent challenged the recovery order in the High Court. The High Court held that using Section 40 of the 1973 Act after the new Act came into force was not valid. The High Court reasoned that the saving clause in Section 61 of the 2003 Act only protected pending proceedings. Since no proceedings were pending against the respondent under the repealed Act, the High Court did not allow the proceedings.
Legal Framework
The core legal issue revolves around the interpretation of Section 61 of the Haryana Value Added Tax Act, 2003, and Section 40 of the Haryana General Sales Tax Act, 1973. Additionally, Section 4 of the Punjab General Clauses Act, 1898, was also considered.
Section 61 of the Haryana Value Added Tax Act, 2003, deals with the repeal and saving of the old Act. The unamended Section 61(1) stated:
“The Haryana General Sales Tax Act, 1973 (20 of 1973), is hereby repealed.”
The unamended Section 61(2)(a) stated that any pending application, appeal, revision, or other proceedings made under the old Act would be transferred to and disposed of by the appropriate authority under the new Act.
Section 40 of the Haryana General Sales Tax Act, 1973, provided the revisional powers to the state.
Section 4 of the Punjab General Clauses Act, 1898, generally saves rights and liabilities under a repealed act, unless a different intention appears.
Arguments
Arguments by the State of Haryana:
- The state argued that the refund was wrongly obtained. Therefore, using suo-moto revision under Section 40 of the 1973 Act was justified. They stated that this was within the five-year limitation period.
- The state contended that the wrong refund was a “privilege, obligation, or liability” under the repealed Act. Therefore, it was saved by Section 4 of the Punjab General Clauses Act, 1898.
- The state relied on Raymond Ltd. and Anr. vs. State of Chhattisgarh & Ors., (2007) 3 SCC 79, to argue that revisional power is not a stand-alone provision. Rather, it enables the authority to ensure assessments are according to the law.
- The state also cited Swastik Oil Mills Ltd vs. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay, 1968 (2) SCR 492, and Gammon India Ltd. vs. Special Chief Secretary and Ors., (2006) 3 SCC 354, to support the applicability of Section 4 of the Punjab General Clauses Act, 1898.
Arguments by Hindustan Construction Company Ltd.:
- The respondent argued that the saving clause in Section 61 of the 2003 Act only saved pending proceedings. This excluded the application of the Punjab General Clauses Act, 1898, due to a different intention in the repealing Act.
- The respondent pointed out that the legislature amended Section 61 of the 2003 Act on April 2, 2010, which further supported their argument.
| State of Haryana | Hindustan Construction Company Ltd. |
|---|---|
| The refund was wrongly obtained. | The saving clause in Section 61 of the 2003 Act only saved pending proceedings. |
| Suo-moto revision under Section 40 of the 1973 Act was justified within the five year limitation. | This excluded the application of the Punjab General Clauses Act, 1898. |
| The wrong refund was a “privilege, obligation, or liability” saved by Section 4 of the Punjab General Clauses Act, 1898. | The legislature amended Section 61 of the 2003 Act on April 2, 2010. |
| Revisional power is not a stand-alone provision. It enables the authority to ensure assessments are according to the law. | |
| Reliance on Raymond Ltd., Swastik Oil Mills Ltd, and Gammon India Ltd. |
Issues Framed by the Supreme Court
The Supreme Court considered the following issue:
- Whether the exercise of revisional power under Section 40 of the Haryana General Sales Tax Act, 1973, after its repeal on 1.4.2003, by the Haryana Value Added Tax, 2003, is sustainable.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the exercise of revisional power under Section 40 of the Haryana General Sales Tax Act, 1973, after its repeal on 1.4.2003, by the Haryana Value Added Tax, 2003, is sustainable. | The Supreme Court held that the exercise of revisional power under Section 40 of the 1973 Act after its repeal was not sustainable. The court reasoned that Section 61 of the 2003 Act only saved pending proceedings and expressed a contrary intention to the application of the Punjab General Clauses Act, 1898. |
Authorities
The Court considered the following authorities:
| Authority | Court | How it was used |
|---|---|---|
| Raymond Ltd. and Anr. vs. State of Chhattisgarh & Ors., (2007) 3 SCC 79 | Supreme Court of India | The State relied on this case to argue that revisional power is not a stand-alone provision. Rather, it enables the authority to ensure assessments are according to the law. |
| Swastik Oil Mills Ltd vs. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay, 1968 (2) SCR 492 | Supreme Court of India | The State relied on this case to support the applicability of Section 4 of the Punjab General Clauses Act, 1898. |
| Gammon India Ltd. vs. Special Chief Secretary and Ors., (2006) 3 SCC 354 | Supreme Court of India | The State relied on this case to support the applicability of Section 4 of the Punjab General Clauses Act, 1898. |
| State of Punjab vs. Mohar Singh Pratap Singh, (1955) 1 SCR 893 | Supreme Court of India | The Court referred to this case to highlight that when a repeal is followed by fresh legislation, the new Act must be examined to see if it expresses a different intention. |
The Court also considered the following legal provisions:
- Section 40 of the Haryana General Sales Tax Act, 1973
- Section 61 of the Haryana Value Added Tax Act, 2003
- Section 4 of the Punjab General Clauses Act, 1898
Judgment
| Submission | Court’s Treatment |
|---|---|
| The State’s submission that the refund was wrongly obtained and revisional power was justified under Section 40 of the 1973 Act. | The Court rejected this argument, stating that the saving clause in Section 61 of the 2003 Act only saved pending proceedings. |
| The State’s submission that the wrong refund was a “privilege, obligation, or liability” saved by Section 4 of the Punjab General Clauses Act, 1898. | The Court rejected this, stating that the new Act expressed a contrary intention, thus excluding the application of the Punjab General Clauses Act, 1898. |
| The State’s reliance on Raymond Ltd., Swastik Oil Mills Ltd, and Gammon India Ltd. | The Court held that the legislative provisions in those cases were different and not relevant to the current issue. |
| The Respondent’s argument that Section 61 of the 2003 Act only saved pending proceedings. | The Court accepted this argument, holding that the saving clause in Section 61 of the 2003 Act only saved pending proceedings. |
| The Respondent’s argument that the Punjab General Clauses Act, 1898, was excluded due to a different intention in the repealing Act. | The Court accepted this argument. |
How each authority was viewed by the Court:
- Raymond Ltd. and Anr. vs. State of Chhattisgarh & Ors., (2007) 3 SCC 79: The Court found this case not relevant due to different legislative provisions.
- Swastik Oil Mills Ltd vs. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay, 1968 (2) SCR 492: The Court found this case not relevant due to different legislative provisions.
- Gammon India Ltd. vs. Special Chief Secretary and Ors., (2006) 3 SCC 354: The Court found this case not relevant due to different legislative provisions.
- State of Punjab vs. Mohar Singh Pratap Singh, (1955) 1 SCR 893: The Court used this case to highlight the principle that when a repeal is followed by fresh legislation, the new Act must be examined to see if it expresses a different intention.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the specific language of Section 61 of the Haryana Value Added Tax Act, 2003. The court emphasized that the saving clause in the new act only protected pending proceedings under the repealed act. This indicated a clear intention to not allow reopening of closed matters under the old act. The court also noted that if the intention was to allow the application of the Punjab General Clauses Act, 1898, the amendment to Section 61 of the new act would be redundant.
| Reason | Percentage |
|---|---|
| Specific language of Section 61 of the Haryana Value Added Tax Act, 2003 | 40% |
| Saving clause only protected pending proceedings | 30% |
| Intention to not allow reopening of closed matters | 20% |
| Redundancy of amendment if Punjab General Clauses Act, 1898, applied | 10% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The court’s reasoning was based on the principle that a new law can override the general saving clause of the General Clauses Act if it expresses a different intention. The court also emphasized that legislative amendments should not be interpreted in a way that renders them meaningless.
Logical Reasoning
The Supreme Court rejected the argument that the revisional power under Section 40 of the 1973 Act could be exercised after its repeal. The court emphasized that the new Act expressed a clear intention to not allow reopening of closed matters under the old act.
The court stated:
“The intendment clearly was that matters which stood closed under the Act of 1973 had to be given a quietus and could not be reopened.”
The court also noted:
“Any interpretation saving the revisional power under Section 40 of the Act of 1973, without any proceedings pending on the relevant date, by resort to Section 4 of the Punjab General Clause Act, 1858 would render the amendment redundant, and an exercise in futility, something which the legislature never intended to do.”
The Court concluded:
“The legislative provisions being different in the precedents cited on behalf of the appellants, the same have no relevance to the issue in controversy. The order of the High Court calls for no interference.”
There were no dissenting opinions in this case.
Key Takeaways
- When a new law repeals an old one, the saving clause in the new law determines the extent to which the old law can still be applied.
- If a new law specifies that only pending proceedings under the old law are saved, then closed matters under the old law cannot be reopened.
- General saving clauses in acts like the Punjab General Clauses Act, 1898, can be overridden by a clear expression of a different intention in a repealing act.
- Legislative amendments should be interpreted in a way that gives them meaning and avoids redundancy.
Directions
The Supreme Court dismissed the appeals.
Development of Law
The ratio decidendi of this case is that the revisional power under a repealed act cannot be exercised if the repealing act clearly expresses an intention to only save pending proceedings. This judgment clarifies that a new law can override general saving clauses if it expresses a different intention. This is a significant development in the interpretation of tax laws and the application of general clauses acts.
Conclusion
The Supreme Court held that the state could not exercise revisional powers under the repealed Haryana General Sales Tax Act, 1973, after the new Haryana Value Added Tax Act, 2003, came into force. The court reasoned that the saving clause in the new act only protected pending proceedings and thus, closed matters could not be reopened. This decision clarifies the interplay between repealing acts and general clauses acts, emphasizing the importance of specific language in new legislation.