Page 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.      2506-2511 OF 2016   (ARISING OUT OF SLP (C) NOS. 21712-21717 OF 2009)

STATE OF PUNJAB & ORS. …..APPELLANT(S)

VERSUS

M/S. SHREYANS INDUS LTD. ETC. .....RESPONDENT(S)

WITH

CIVIL APPEAL NO. 2512 OF 2016 (ARISING OUT OF SLP (C) NO. 31488 OF 2009)

CIVIL APPEAL NOS.      2513-2514 OF 2016   (ARISING OUT OF SLP (C) NOS. 35619-35620 OF 2009)

CIVIL APPEAL NO. 2515 OF 2016 (ARISING OUT OF SLP (C) NO. 1672 OF 2010)

CIVIL APPEAL NOS. 2516-2517 OF 2016 (ARISING OUT OF SLP (C) NOS. 13237-13238 OF 2010)

CIVIL APPEAL NOS.      2518-2519 OF 2016   (ARISING OUT OF SLP (C) NOS. 5076-5077 OF 2011)

CIVIL APPEAL NO. 2520 OF 2016 (ARISING OUT OF SLP (C) NO. 33095 OF 2011)

AND

CIVIL APPEAL NO. 2521 OF 2016 (ARISING OUT OF SLP (C) NO. 12305 OF 2015)

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 1 of 23

Page 2

J U D G M E N T

A.K. SIKRI, J.

Leave granted.

2) In these appeals, the judgment which is impugned is passed by  

the High Court of Punjab & Haryana.  The issue involved in these  

appeals is identical which pertains to the interpretation that is to  

be accorded to sub-section (10) of Section 11 of Punjab General  

Sales Tax Act, 1948 (hereinafter referred to as the “Act”).  It is for  

this reason that all these appeals were heard together and can  

conveniently be disposed of  by one common judgment.  Since  

SLP (C) Nos. 21712-21717 of 2009 was taken as the lead case,  

for  understanding the nature  of  lis  that  is  involved,  the factual  

narration can be addressed from the said appeal.

3) In these appeals, we are concerned with Assessment Years 2000-

01, 2001-02, 2002-03 and  2003-04.  Obviously, assessment in  

respect of these Assessment Years was to be made under the  

said Act.  The assessee had filed quarterly returns in respect of  

the aforesaid Assessment Years.  In terms of Section 11(3) of the  

Act, time-limit for completing the assessment provided therein is  

three years from the end of the year.  Accordingly, assessments  

were to  be made by 30th April,  2004 for  the Assessment  Year  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 2 of 23

Page 3

2000-01, 30th April, 2005 for the Assessment Year 2001-02, 30 th  

April, 2006 for the Assessment Year 2002-03 and 30 th April, 2007  

for the Assessment Year 2003-04.  It is an admitted case that no  

assessment  was made in respect  of  any of  these Assessment  

Years by the aforesaid stipulated dates.

4) The Assessing Officer, however, sent notices to the respondent-  

assessee in Form ST-XIV for  the aforesaid Assessment Years,  

i.e.,  after  the  expiry  of  three  years.  The  assessee  took  an  

objection  that  these  notices were  sent  beyond  the  period  of  

assessment  and,  therefore,  it  was  not  permissible  for  the  

Assessing Officer to issue notice after the expiry of three years  

and carry on with the assessment proceedings.

5) We  may  point  out  that  under  Section  11(10)  of  the  Act,  the  

Commissioner is empowered to extend the period of three years  

for passing the order of assessment for such further period as he  

may deem fit, after recording in writing the reasons for extending  

such period.  When the objection was taken by the assessee that  

the  notices  were  time  barred,  the  Excise  and  Taxation  

Commissioner,  Patiala  passed  orders  dated  August  17,  2007  

granting extension of time.  Reason given for extension of time  

was that the case of the assessee for the year 1999-2000 was  

pending with the Tribunal. This order of extension was challenged  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 3 of 23

Page 4

by the respondent along with the order of assessment passed by  

the  Assessing  Officer.   The  Tribunal,  however,  dismissed  the  

appeal  of  the  assessee  vide  its  orders  September  13,  2007  

holding that since there was a power of extension conferred upon  

the  Commissioner  under  Section  11(10)  of  the  Act,  the  

Commissioner was within his powers to extend the period.  The  

contention of the assessee was that though there was a power of  

extension,  such  a  power  could  be  exercised  only  within  the  

limitation prescribed.  In other words, it was contended that when  

the normal period of limitation for passing assessment order by  

the Assessing Officer was three years, as per Section 11(3) of the  

Act, the power to extend the period could be exercised within the  

said period of three years and not after the expiry of  limitation  

period.  This plea of the assessee was rejected by the Tribunal.

6) The assessee took up the matter further by filing appeals before  

the  High  Court.   Here,  the  assessee  has  succeeded  in  its  

submission  as  the  High  Court  of  Punjab  and  Haryana  vide  

impugned  judgment  dated  September  26,  2008  has  held  that  

once the period of limitation expires, the immunity from subjecting  

itself to the assessment sets in and the right to make assessment  

gets  extinguished.   Therefore,  when  the  period  of  limitation  

prescribed in the Act for passing the assessment order expires,  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 4 of 23

Page 5

thereafter,  the  Commissioner  is  debarred  from  exercising  his  

powers under sub-section (10) of Section 11 of the Act and cannot  

extend the period of limitation for the purposes of assessment.  

This  order  is  assailed  by  the  Revenue  in  the  instant  appeals  

before us.

7) It would also be pertinent to note, at this stage, that while arriving  

at the aforesaid conclusion, the Punjab and Haryana High Court  

has  placed  heavy  reliance  upon  the  view taken  by  a  Division  

Bench of Karnataka High Court in Bharat Heavy Electricals Ltd.   

v.  Assistant  Commissioner  of  Commercial  Taxes  (INT-I),   

South  Zone,  Bangalore  and  others1 which  judgment  of  

Karnataka  High  Court,  in  turn,  refers  to  similar  view taken  by  

Gujarat  High  Court  in  Javer  Jivan  Mehta v. Assistant  

Commissioner of Sales Tax (Appeal)2.  Thus, three High Courts  

have taken identical view, namely,  though power to extend time  

of three years for a further period of passing the assessment is  

there  with  the  Commissioner,  the  same  has  to  be  exercised  

before  the  expiry  of  normal  period  of  three  years  and  not  

subsequent there to.   

8) As the submissions of the parties on either side would be better  

understood once the relevant statutory provision is noted, it would  

1 (2006) 143 STC 10 2 (1998) 111 STC 199 Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 5 of 23

Page 6

be apposite to reproduce the provisions of Section 11 of the Act,  

which are as follows:

“11.  Assessment  of  tax.  -  (1)  If  the  Assessing  Authority is satisfied without requiring the presence  of dealer or the production by him of any evidence  that the returns furnished in respect of any period  are correct and complete, he shall pass an order of  assessment on the basis of such returns  within a  period  of  three  years  from  the  last  date  prescribed  for  furnished  the  last  return  in  respect of such period.

(2) If the Assessing Authority is not satisfied without  requiring the presence of dealer who furnished the  returns or production of evidence    that the returns  furnished in respect of any period are correct and  complete, he shall serve on such dealer a notice in  the prescribed manner requiring him, on a date and  at place specified therein, either to attend in person  or  to  produce  or  to  cause  to  be  produced  any  evidence on which such dealer may rely in support  of such returns.

(3) On  the  day  specified  in  the  notice  or  as  soon  afterwards  as  may  be,  the  Assessing  Authority shall, after hearing such evidence as the  dealer may produce, and such other evidence as  the Assessing Authority  may require  on specified  points,  [pass an order of  assessment within a  period  of  three  years  from  the  last  date  prescribed  for  furnishing  the  last  return  in  respect of nay period.]

(4) If  a  dealer  having  furnished  returns  in  respect of a period, fails to comply with the terms of  notice issued under sub-section (2), the Assessing  Authority shall, [within a period of three years from  the 1st date prescribed for furnishing the last return  in   respect  of  such  period,  pass  an  order  of  assessment to the best of his judgment.]

(5) If  a  dealer  does  not  furnish  returns  in  respect of  any period by the last  date prescribed  the assessing authority shall within a period of five  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 6 of 23

Page 7

years from the last  date prescribed for furnishing  the return in respect of such period and after giving  the dealer a reasonable opportunity of being heard,  pass  an  order  of  assessment  to  the  best  of  his  judgment.

(6) IF upon information which has come into his  possession, the Assessing Authority is satisfied that  any dealer has been liable to pay tax under this Act  in respect of any period but has failed to apply for  registration,  the  Assessing  Authority  shall,  within  five  years  after  the  expiry  of  such  period,  after  giving the dealer a reasonable opportunity of being  heard,  proceed  to  access,  to  the  best  of  his  judgment the amount of tax,  if  any, due from the  dealer in respect of such period and all subsequent  periods and in case where such dealer has willfully  failed  to  apply  for  registration,  the  Assessing  Authority  may direct  that  the dealer  shall  pay by  way  of  penalty,  in  addition  to  the  amount  so  assessed, in addition to the amount so assessed, a  sum  not  exceeding  one  and  a  half  times  that  amount.

(7) The amount of any tax, penalty or interest  payavble under this Act shall be paid by the dealer  in the manner prescribed, by such date as may be  specified  in  the  notice  issued  by  the  Assessing  Authority for the purpose and the date so specified  shall  not  be less than fifteen days and not  more  than thirty days from the date of  service of  such  notice:

Provided that the Assessing Authority may, with the  prior approval of the Assistant Excise and Taxation  Commissioner, Incharge of the District extend the  date  of  such  payment  or  allow  payment  by  instalments against an adequate security or bank  guarantee.

(8) If  the  tax  assessed under  this  Act  or  any  instalment thereof is not paid b y any dealer within  the  time  specified  thereof  in  the  notice  of  assessment or in the order permitting payment in  installments,  the  Commissioner  or  any  other  person appointed to assist him under s9b-section  (1) of Section 3 may, after giving such dealer an  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 7 of 23

Page 8

opportunity  of  being  heard,  impose  on  him  a  penalty not exceeding in amount the sum due from  him.

(9) Any  assessment  made  under  this  section  shall be without prejudice to any penalty imposed  under this Act.

(10) The Commissioner,  may for  reasons to  be  recorded in  writing,  extends the  period  of  three  years,  for  passing  the  order  of  assessment for such further period as he may  deem fit.

(11) Where the proceedings of assessment are  stayed  by  an  order  of  any  court,  the  period  for  which such stay remains in force, shall not count  towards  computing  the  period  of  three  years  specified under this section for passing the order of  assessment.

(12) The  assessing  authority  may  on  his  own  motion,  review any  assessment  order  passed by  him and such review shall  be completed within a  period of  one year  from the date of  order  under  review.”

(emphasis supplied)

9) A mere  reading  of  the  aforesaid  provision  would  reflect  that  

wherever  return  is  filed  by the assessee,  assessment  is  to  be  

made within a period of three years from the last date prescribed  

for furnishing the return in respect of such period. On the other  

hand, in those cases where return is not filed or any dealer, who  

is  liable  to  pay  the  tax  under  the  Act,  does  not  get  himself  

registered  therein,  the  period  of  assessment  prescribed  is  five  

years.  We are not concerned with the alternate situation as in the  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 8 of 23

Page 9

instant  appeals not  only  the assessees are registered dealers,  

they had also filed their  returns regularly  within the prescribed  

period and, therefore, assessments were to be completed within a  

period of three years from the last date prescribed for furnishing  

the returns, which is the normal period prescribed.  At the same  

time,  sub-section  (10)  of  Section  11  gives  power  to  the  

Commissioner to extend a period of three years.  Interestingly,  

there is  no upper  limit  prescribed for  which the period can be  

extended,  meaning  thereby  such  an  extension  can  be  given,  

theoretically, for any length of time.  This discretion is, however,  

controlled by obligating the Commissioner to give his reasons for  

extension,  and  such  reasons  are  to  be  recorded  in  writing.  

Obviously, the purpose of giving reasons in writing is to ensure  

that the power to extend the period of limitation is exercised for  

valid reasons based on material considerations and that power is  

not  abused by exercising it  without any application of  mind, or  

mala  fide  or  on  irrelevant  considerations  or  for  extraneous  

purposes. Such an order of extension of time, naturally, is open to  

judicial review,  albeit  within the confines of law on the basis of  

which such judicial review is permissible.

10) Be that as it  may, the question before us is as to whether the  

power to extend time is to be necessarily exercised before the  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 9 of 23

Page 10

normal expiry of the said period of three years run out.

11) Mr.  Ganguli,  submitted  that  there  is  no  such  embargo  or  

impediment provided in sub-section (10) of Section 11 mandating  

the  Commissioner  to  pass  an  order  of  extension  necessarily  

within the normal  period of  three years.  He submitted that  the  

word  used  in  the  aforesaid  provision  'extension'  of  time  is  in  

contradistinction  to  the  word  'deferment'  which  appears  in  the  

Karnataka  Legislation.  On  that  basis,  he  argued  that  it  was  

inappropriate on the part of the High Court to refer to and rely  

upon  the  judgment  of  Karnataka  High  Court  inasmuch  as  

provision  of  law  contained  in  the  Karnataka  Sales  Tax  Act  is  

entirely  different.   He  further  submitted  that  since  in  Punjab  

Legislation, the expression used is 'extension of time', the Court  

was required to construe the provision keeping in mind the said  

language.   Mr.  Ganguli  argued  that  a  reading  of  meaning  of  

expression  'deferment'  and  'extension'  of  time  as  contained  in  

Black's Law Dictionary will clearly bring out the difference.

•“defer, vb. 1. To postpone; to delay <to defer taxes  to another year>” •“deferment,  n.  1.  The  act  of  delaying;  postponement <deferment of a judicial decision>”

It was submitted that the expressions 'defer' and 'deferment'  

as can be seen from the above definitions, clearly contemplate  

postponement, which presupposes that the time period originally  Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 10 of 23

Page 11

fixed  is  not  extinguished.   In  other  words,  an  action,  which  is  

deferred, (i.e. an action which is required to be completed within a  

specified time frame) can only be deferred of which the time so  

fixed has not expired.

It  was submitted that,  in  contrast,  Black's  Law Dictionary  

defines the expression 'extension' as follows:

“Extension, n. 3. Tax. A period of additional time to  file an income-tax return beyond its due date.  4. A  period of additional time to take an action, make a  decision, accept an offer, or complete a task”   

It  was  argued  that  the  word  'extension  has'  varied  

meanings,  dependent  on the context  in  which it  is  used.   The  

expression 'extension' in the context of surveillance orders, has  

been interpreted in the following manner:

“Where surveillance pursuant to order issued under  Title III of Omnibus Crime Control and Safe Streets  Act  is  of  same  premises,  involves  substantially  same persons, and is part  of  same investigation,  second Title  III  surveillance  order  issued after   expiration  of  first  order  is  'extension'  of  first   order for  purposes  of  requirement  of  sealing  of  recordings, even if there is gap of time in between  expiration of first order and entry of second.”   

       (Emphasis supplied)

12) Mr.  Ganguli  also  referred  to  the  concept  of  extension  as  

incorporated in Section 148 of the Code of Civil Procedure, 1908.  

He relied upon the judgment of this Court in D.V. Paul v. Manisha  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 11 of 23

Page 12

Lalwani3. This Court in paragraph 26 of the said judgment held as  

under:

“26. Insofar as the first aspect is concerned Section 148  CPC, in our opinion, clearly reserves in favour of the  court the power to enlarge the time required for doing  an  act  prescribed  or  allowed  by  the  Code  of  Civil  Procedure.  Section 148 of the Code may at this stage  be extracted.

“148.   Enlargement  of  time.—  Where  any  period is fixed or granted by the court for the  doing of any act prescribed or allowed by this  Code,  the  court  may,  it  its  discretion,  from  time  to  time,  enlarge  such  period  not  exceeding  thirty  days  in  total,  even though  the  period  originally  fixed  or  granted  may  have expired.”  

A plain reading of the above would show that when  any period or time is granted by the court for doing  any act, the court has the discretion from time to time  to enlarge such period even if the time originally fixed  or granted by the court has expired.  It is evident from  the  language  employed  in  the  provision  that  the  power given to the court is discretionary and intended  to be exercised only to meet the ends of justice.”

13) Mr. Ganguli further submitted that even in the context of taxation  

law,  a  similar  reasoning  has  been  adopted  by  the  Court  in  

Commissioner  of  Income  Tax,  Jullundur v.  Ajanta  

Electricals4. While interpreting Section 139(2) of the Income Tax  

Act,  which  empowered  the  Assessing  Officer  to  grant  an  

extension of time for filing of the return of income, upholding the  

power of the Income Tax Officer to extend the time for filing of the  

3 (2010) 8 SCC 546 4 (!994) 5 SCC 182 Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 12 of 23

Page 13

Income Tax return by the assessee even after the expiry of the  

time originally granted, this Court held as follows:“

“9. In this context, the question whether a belated  application could be regarded as valid or not has to  be considered. As rightly pointed out by the Punjab  and  Haryana  High  Court  while  deciding  these  cases  under  Section  256(2)  and by  the  Calcutta  High Court in  Sunderdas Thackersay & Bros.(137  ITR 646), there are no words of limitation in Section  139(2)  to  the  effect  that  no  application  could  be  filed after  the period allowed had expired. As we  have stated earlier, it  was a procedural provision.  The limit of thirty days was not intended to be final  as discretion was given to the ITO to extend that  date.  The  ITO  could  have  been  called  upon  to  exercise  that  discretion  for  proper  reasons.  No  fetters were placed upon the discretion of the ITO  as regards the number of  times he could extend  the date or the period for which he could extend it.  It is conceded that repeated applications could be  made within the time allowed, in view of the clear  indication to that effect in Form No. 6, by the use of  words “it has not been possible”. If it was intended  that  the  application  for  extension  of  time  under  Section  139(2)  was  to  be  made  within  the  time  allowed originally or within the extended time then  the words “it has not been possible” were not at all  necessary and the words “it is not possible” would  have been sufficient. Though the rule cannot affect,  control or derogate from the section of the Act, so  long as it  does not have that effect,  it  has to be  regarded as having the same force as the section  of the Act. If Section 139(2) is read along with Rule  13  and  Form  No.  6  it  becomes  clear  that  an  application for extension could be made even after  the  period  allowed  originally  or  as  a  result  of  extension  granted  had  expired.  Keeping  in  mind  the object of giving discretion to the ITO and the  consequences that were to follow from not filing the  return  within  time,  we  see  no  justification  for  reading into the section any limitation to the effect  that  no application could  be made after  the time  allowed had expired.  We see no good reason to  construe the section so narrowly.”

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 13 of 23

Page 14

(emphasis supplied)

In  that  judgment,  applying  the  principles  contained  in  

Section 148, CPC, it was remarked as under:

“10. We  cannot  accept  the  contention  raised  on  behalf of the Revenue that the word ‘extend’ in the  proviso to Section 139(2) implies that at the time of  making the application the time allowed should not  have expired. Though the Civil Procedure Code by  itself does not apply to the proceedings under the  Income Tax Act, we see no reason why a principle  of procedure evolved for doing justice to a party to  the  proceeding  cannot  be  called  in  aid  to  while  interpreting a procedural provision contained in the  Act. Section 148 of the Code provides that where  any period is fixed or granted by the court for the  doing of any act prescribed or allowed by the Code,  the court may, in its discretion, from time to time,  enlarge  such  period,  even  though  the  period  originally  fixed  or  granted  may  have  expired.  Various situations can be envisaged where a party  to  the proceeding  is  prevented by  circumstances  beyond  his  control  from  doing  the  required  act  within the fixed period. The assessee may be able  to point out that because of a sudden death in the  family or because of his sudden illness of a serious  nature or because he had to leave for an outside  place  all  of  a  sudden  or  because  he  could  not  return from outside in spite of his best efforts, or for  other good reasons, as the case may be, he was  not able to file the return within time............”

      [Emphasis supplied]  

14) Mr. Ganguli also drew sustenance from the Arbitration Act, 1940  

which gave power to the Court to extend time.  It was submitted  

that this Court has held in the matter  of  Hindustan Steelworks  

Construction Ltd. v. C. Rajasekhar Rao5 that the Court has got the  

power to extend time even after the award has been given or after  5 (1987) 4 SCC 93 Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 14 of 23

Page 15

the expiry of the period prescribed from the award.

15) Mr.  Ganguli  re-emphasised  that  reliance  upon  the  decision  of  

Gujarat High Court in the impugned judgment was untenable as  

the  provisions  of  Karnataka  Sales  Tax  Act  are  totally  different  

inasmuch as Section 12(6) of  the Karnataka Act  provided only  

'deferment'.  He submitted that even the judgment of Gujarat High  

Court in Javer Jivan Mehta2 case was distinguishable since that  

was also a case of exclusion of a period and the issue therein  

was the computation of period of limitation.

16) The aforesaid contentions were refuted by the learned counsel  

who appeared for assessees in these appeals.  It was submitted  

that sub-section (10) of Section 11 states, in no uncertain term,  

that the assessment order is to be passed 'within a period of three  

years......'.  It  was  emphasised  that  the  word  'within'  was  of  

significance.  It  was pointed out  that  before the year 1998, no  

period of limitation was prescribed and such a provision came to  

be inserted by way of amendment vide Act No. 12 of 1998 dated  

April  20, 1998 .  It  was further argued that sub-section (10) of  

Section  11  obligates  the  Commissioner  to  record  reasons  in  

writing  while  extending  the  period.   It  was  submitted  that  this  

requirement of  recording of  reasons came up for  consideration  

before  Punjab  &  Haryana  High  Court  and  in  a  series  of  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 15 of 23

Page 16

judgments, it is held that such an order of extension of time can  

be  passed  only  after  giving  an  opportunity  of  hearing  to  the  

assessee.   The  learned  counsel  referred  to  the  following  

judgments of the High Court:

(i) State  of  Punjab,  Through  Assistant  Excise  and  Taxation   Commissioner,  Bathinda v.  M/s.  Olam  Agro  India  Ltd.   (formerly  Olam Export  India  Ltd.); decided  by  the  Punjab  &  Haryana High Court on August 20, 2013.

(ii) State of Punjab v. M/s. Olam Agro India Ltd.; Daily Order;  Dismissed by the Supreme Court vide Oder dated May 08, 2015.

(iii) A.B. Sugars Limited v. The State of Punjab and others;   Decided by the Punjab & Haryana High Court on September 01,  2009.

17) It  was  also  argued  that  conceptually  there  was  no  difference  

between 'deferment'  and 'extension'  insofar  as it  related to the  

issue at hand which is concerned with the point of time at which  

Commissioner is to exercise his powers.  For that, the reasons  

given by Karnataka High Court  as  well  as  Gujarat  High Court  

holding that  such a power gets extinguished with the expiry of  

normal period of limitation prescribed and, therefore, cannot be  

exercised after the limitation period were germane and relevant  

while construing the provisions of sub-section (10) of Section 11  

of the Act as well and, therefore, those cases were rightly relied  

upon by the High Court in the impugned judgment.

18) In rejoinder, Mr. Ganguli refuted the aforesaid submissions of the  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 16 of 23

Page 17

learned counsel for the assessees.  The arguments advanced by  

him  was  that  the  submission  of  the  assessees  that  the  

Commissioner  has  to  afford  an  opportunity  of  hearing  to  the  

dealer before extending the period of limitation does not arise in  

the present case as this was not the issue raised in the Courts  

below.   He  argued  that  the  question  to  be  decided  in  these  

appeals was as to whether the power under sub-section (10) of  

Section 11 of  the Act  could  be exercised on the expiry  of  the  

period of  three years and this question is not  answered in the  

judgments referred to by the opposite party.  He further submitted  

that  it  is  a  question of  fact  to  be decided in  each case as to  

whether  assessee was entitled to such a right  of  hearing and,  

therefore,  this issue could not  be taken up for  the first  time in  

these appeals.

19) We have bestowed our serious considerations to the submissions  

made by the counsel who argued the matter.

20) We may say at the outset that though provisions of the Punjab Act  

are couched in different language from Karnataka Act or Gujarat  

Act, the essence of these provisions is same.  As noticed above,  

insofar as scheme of Punjab Act is concerned, the assessment  

order is to be normally passed within a period of three years.  At  

the same time, power is given to the Commissioner under Section  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 17 of 23

Page 18

11(10) of the Act to extend the said period of three years.  Once  

such an extension is given, the order is passed even beyond the  

period of three years.  Significantly, no upper limit is fixed while  

giving  such  extension  which  means  that  the  power  can  be  

exercised for extending the period for any length of time, subject  

however  to  the  condition  that  the  Commissioner  is  bound  to  

record the reasons justifying such an extension.  Obviously, when  

the Commissioner passes such an order and give reasons, not  

only he would have to justify his action of extending time but also  

the  period  by  which  the  time  is  extended.   In  the  Karnataka  

Legislation,  the power is  of  'deferment'.   In  that  Legislation as  

well, the Assessment Order is to be passed within three years as  

sub-section  (5)  of  Section  12  of  Karnataka  Sales  Tax  Act  

stipulates that  no assessment  shall  be made after  a period of  

three years from the date on which the return under sub-section  

(1) of that order is submitted by a dealer subject to two provisos  

mentioned therein.  Sub-section (6) of Section 12 mentions as to  

how the period of limitation is to be computed and reads as under:

“(6)   In  computing  the  period  of  limitation  for  assessment under this Section,-

(a)   the  time  during  which  the  proceedings  for  assessment  in  question  have  been  deferred  on  account of any stay order granted by any Court or  any other authority shall be excluded;

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 18 of 23

Page 19

(b)   the  time  during  which  the  assessment  has  been deferred in any case or class of cases by the  Joint Commissioner for reasons to be recorded in  writing shall be excluded.”

 21) Clause (b) of sub-section (6) indicates that Joint Commissioner, in  

appropriate  cases,  may  pass  an  order  for  deferment  of  

Assessment Order to be passed by the Assessing Authority and  

once such an order is passed, that period has not to be counted  

while  computing  the  period  of  limitation.   Significantly,  this  

provision  also  mandates  the  Joint  Commissioner  to  record  

reasons  for  deferring  the  orders  of  assessment.   In  essence,  

therefore,  the  purport  and  objective  behind  the  provisions  in  

Punjab Act as well as in Karnataka Act remains the same.  By  

making any order of deferment under sub-section (6) of Section  

12 of Karnataka Sales Tax Act, the Joint Commissioner is, in fact,  

achieving  the  same  purpose  of  granting  more  time  to  the  

Assessing Officer to pass the Assessment Order.  Same is the  

purpose behind sub-section (11) of Section 10 of the Punjab Act.  

In view thereof, it may not be appropriate to go into the nuanced  

distinction  between  “deferment”  and  “extension”  as  per  the  

definitions contained Black's Law Dictionary in the given situation,  

which is dealt with in the instant appeals.

22) Even otherwise, it is important to understand the ratio laid down in  Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 19 of 23

Page 20

the  judgment  of  Karnataka  High  Court  in  Bharat  Heavy  

Electricals Ltd.  (supra).  The issue in the said case before the  

Karnataka High Court  was as to whether  the power to pass a  

deferment order is to be exercised even after the expiry of the  

period of  limitation which was answered in  the negative.   The  

reasons given in support of this conclusion are as follows:

“...Deferment  of  assessment  has  the  effect  of  enlarging  the  period  of  limitation which  did  not  expire  by  the  time  the  deferment  order  is  contemplated to be passed.  When once the period  of  limitation  expires,  the  immunity  against  being  subject to assessment sets in and the right to make  assessment  gets  extinguished.   Resort  to  deferment  provisions  does  not  retrieve  the  situation.   There  is  no  question  of  deferring  assessment  which  has  already  become  time- barred.   The  provision  for  exclusion  of  time  in  computing the period of limitation of deferment of  assessment is meant to prevent further running of  time against the Revenue if the limitation had not  expired.”

(emphasis supplied)

23) It was also observed that upon the lapse of the period of limitation  

prescribed, the right  of the Department to assess an assessee  

gets extinguished and this extension confers a very valuable right  

on the assessee.

24) If one is to go by the aforesaid dicta, with which we entirely agree,  

the same shall apply in the instant cases as well.  In the context of  

the  Punjab  Act,  it  can  be  said  that  extension  of  time  for  

assessment  has the effect  of  enlarging the period of  limitation  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 20 of 23

Page 21

and, therefore, once the period of limitation expires, the immunity  

against being subject to assessment sets in and the right to make  

assessment  gets  extinguished.   Therefore,  there  would  be  no  

question  of  extending  the  time  for  assessment  when  the  

assessment has already become time barred.  A valuable right  

has also accrued in favour of the assessee when the period of  

limitation expires.  If the Commissioner is permitted to grant the  

extension  even  after  the  expiry  of  original  period  of  limitation  

prescribed under the Act, it will give him right to exercise such a  

power at any time even much after the last date of assessment.  

In the instant appeals itself, when the last dates of assessment  

were 30th April,  2004, 30th April,  2005, 30th April,  2006 and 30th  

April, 2007, order extending the time under Section 11(10) of the  

Act were passed on August 17, 2007, August 17, 2007, August  

17,  2007  and  May  25,  2007  respectively.   Thus,  for  the  

Assessment Year 2000-2001, order of extension is passed more  

than three years after the last date and for the Assessment Year  

2001-2002, it is more than two years after the last date.  Such a  

situation  cannot  be  countenanced  as  rightly  held  by  the  High  

Court.   When the last  date of  assessment  in  respect  of  these  

Assessment  Years  expired,  it  vested  a  valuable  right  in  the  

assessee which cannot be lightly taken away.  As a consequence,  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 21 of 23

Page 22

sub-section (11) of Section 10 has to be interpreted in the manner  

which is equitable to both the parties.  Therefore, the only way to  

interpret the same is that by holding that power to extend the time  

is  to  be  exercised  before  the  normal  period  of  assessment  

expires. On the aforesaid interpretation, other arguments of Mr.  

Ganguli lose all significance.  Argument of learned senior counsel  

for the appellants based on Section 148 of the CPC would be of  

no consequence.  This Section categorically states that power to  

enlarge the period can be exercised even when period originally  

fixed has expired.  Likewise, reliance upon Section 139(2) of the  

Income Tax Act is misconceived.  That provision is made for the  

benefit of the assessee which empowers the Assessing Officer to  

grant an extension of time for filing of the return of income and,  

therefore, obviously will  have no bearing on the issue at hand.  

Moreover, this Court in Ajantha Electricals's case (supra), which  

is relied upon by the learned counsel for the appellant, held that  

the time can be extended even after the time allowed originally  

has expired on the interpretation of the words  “it  has not been  

possible” occurring in Section 133(2) of the Act.  The Court, thus,  

opined that the aforesaid expression would mean that the time  

can be extended even after original time prescribed in the said  

provision has expired.  Same is our answer to the argument of Mr.  

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 22 of 23

Page 23

Ganguli predicated on Section 28 of the Arbitration Act, 1940 as  

that provision was in altogether different context.

25) We,  thus,  do not  find any error  in  the impugned judgments of  

Punjab and Haryana High Court and as a consequence, dismiss  

all  these appeals.  Parties are, however,  left  to bear their  own  

cost.

.............................................CJI. (T.S. THAKUR)

................................................J. (A.K. SIKRI)

................................................J. (R. BANUMATHI)

NEW DELHI; MARCH 04, 2016.

Civil Appeal Nos. 2506-2511 of 2016 & Ors. [arising out of SLP (C) Nos. 21712-21717 of 2009] & Ors. Page 23 of 23