1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.6262 OF 2010
Industrial Infrastructure Development
Corporation(Gwalior) M.P. Ltd. ….Appellant(s)
VERSUS
Commissioner of Income Tax,
Gwalior …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. This appeal is directed against the final
judgment and order dated 14.03.2007 passed by
the High Court of Madhya Pradesh at Gwalior in
Misc. Appeal(Income Tax) No.6 of 2005 whereby the
Division Bench of the High Court allowed the appeal
filed by the respondent and set aside the order
2
passed by the ITAT and restored the order of the
Commissioner of Income Tax.
2. The question involved in the appeal lies in a
narrow compass. Few facts, however, need mention
to appreciate the same.
3. The appellant is a limited company registered
under the Companies Act. It is a State Government
Undertaking which is established with a view to
develop and assist the State in the development of
industrial growth centers/areas, to promote,
encourage and assist the establishment growth and
development of industries in the State of M.P. The
appellant is an "assesse" under the Income Tax Act,
1961 (hereinafter referred to as “the Act”).
4. On 10.02.1999, the appellant filed an
application in the format prescribed under Section
12-A of the Act to the Commissioner of Income Tax
(hereinafter referred to as “the CIT”) for grant of
registration. According to the appellant, since they
3
were engaged in public utility activity which,
according to them, was for a charitable purpose
under Section 2(15) of the Act, they were entitled to
claim registration as provided under Section 12 (A)
of the Act. Since the application for registration was
delayed in its filing, the appellant also made an
application for condonation of delay in filing the
application.
5. By order dated 13.04.1999, the CIT (Gwalior)
condoned the delay and granted the registration
certificate as prayed for by the appellant. In clause
3 of the registration certificate, it was mentioned
that the certificate is granted without prejudice to
the examination on merits of the claim of exemption
after the return is filed.
6. On 27.11.2000, the CIT issued a show cause
notice to the appellant stating therein as to why the
registration certificate granted to the appellant by
order dated 10.02.1999 under Section 12A of the
4
Act be not cancelled/withdrawn. The show cause
notice also set out the factual grounds for the
withdrawal of the registration certificate. The
appellant was asked to reply the show cause notice.
The appellant accordingly filed their reply and
opposed the grounds on which the
withdrawal/cancellation of the certificate was
proposed.
7. By order dated 29.04.2002, the CIT did not
find any substance in the stand taken by the
appellant in their reply and accordingly
cancelled/withdrawn the certificate issued to the
appellant.
8. The appellant felt aggrieved and filed
rectification application under Section 154 of the
Act before the CIT on 04.07.2002 contending
therein that the order of the CIT dated 29.04.2002
cancelling/withdrawing the registration certificate
contains an error apparent and, therefore, it is
5
required to be rectified or/and recalled. It was
contended that once the CIT grants the registration
certificate under Section 12A, he has no power to
cancel/recall the certificate granted to the Assessee.
9. On 20.12.2002, the CIT rejected the
application filed by the appellant for rectification
holding that there was no error in his order
cancelling the registration certificate granted to the
appellant. In other words, the CIT held that he had
the power to cancel the certificate once granted by
him and, therefore, the order for cancelling the
registration certificate is legal and proper.
10. Aggrieved by the said order, the appellant filed
an appeal before the Income Tax Appellate Tribunal,
Agra Bench. By order dated 26.08.2004, the ITAT
allowed the appellant's appeal and set aside the
order dated 29.04.2002 passed by the CIT by which
he had cancelled/withdrawn the registration
certificate.
6
11. The Revenue felt aggrieved by the order of the
ITAT and filed appeal in the High Court at Gwalior
Bench under Section 260-A of the Act. The High
Court, by impugned order, allowed the appeal filed
by the Revenue and set aside the order passed by
the ITAT and restored the order of the CIT.
12. The Division Bench of the High Court placed
reliance on Section 21 of the General Clauses Act
and held that since there is no express power in the
Act for cancelling the registration certificate under
Section 12A of the Act and hence power to cancel
can be traced from Section 21 of the General
Clauses Act to support such order. In other words,
in the opinion of the High Court, Section 21 is the
source of power to pass cancellation of the
certification granted by the CIT when there is no
express power available under Section 12A of the
Act.
7
13. It is against this order, the assessee felt
aggrieved and filed this appeal by way of special
leave before this Court.
14. None appeared for the appellant (assessee). Mr.
Radhakrishan, learned Counsel appeared for the
respondent (Revenue).
15. Having heard the learned counsel for the
Revenue and on perusal of the record of the case,
we are inclined to allow the appeal and while setting
aside the impugned order, restore the order of the
ITAT.
16. The main questions, that arise for
consideration in this appeal, are four:
17. First, whether the CIT has express power to
cancel/withdraw/recall the registration certificate
once granted by him under Section 12A of the Act
and, if so, under which provision of the Act?
18. Second, when the CIT grants registration
certificate under Section 12A of the Act to the
8
assessee, whether grant of certificate is his quasi
judicial function and, if so, its effect on exercise of
his power of cancellation of such grant of
registration certificate?
19. Third, whether Section 21 of the General
Clauses Act can be applied to support the order of
cancellation of the registration certificate granted by
the CIT under Section 12A of the Act, in case, if it
is held that there is no express power of
cancellation of registration certificate available to
the CIT under Section 12A of the Act? and
20. Fourth, what is the effect of the amendment
made in Section 12AA introducing sub-clause(3)
therein by Finance (No-2) Act 2004 w.e.f.
01.10.2004 conferring express power on the CIT to
cancel the registration certificate granted to the
assessee under Section 12A of the Act.
21. In our considered opinion, the CIT had no
express power of cancellation of the registration
9
certificate once granted by him to the assessee
under Section 12A till 01.10.2004. It is for the
reasons that, first, there was no express provision in
the Act vesting the CIT with the power to cancel the
registration certificate granted under Section 12A of
the Act. Second, the order passed under Section
12A by the CIT is a quasi judicial order and being
quasi judicial in nature, it could be
withdrawn/recalled by the CIT only when there was
express power vested in him under the Act to do so.
In this case there was no such express power.
22. Indeed, the functions exercisable by the CIT
under Section 12A are neither legislative and nor
executive but as mentioned above they are
essentially quasi judicial in nature.
23. Third, an order of the CIT passed under
Section 12A does not fall in the category of "orders"
mentioned in Section 21 of the General Clauses Act.
The expression "order" employed in Section 21
10
would show that such "order" must be in the nature
of a "notification", "rules" and "bye laws" etc. ( see –
Indian National Congress(I) vs. Institute of
Social Welfare & Ors., 2002 (5) SCC 685).
24. In other words, the order, which can be
modified or rescinded by applying Section 21, has
to be either executive or legislative in nature
whereas the order, which the CIT is required to pass
under Section 12A of the Act, is neither legislative
nor an executive order but it is a "quasi judicial
order". It is for this reason, Section 21 has no
application in this case.
25. The general power, under Section 21 of the
General Clauses Act, to rescind a notification or
order has to be understood in the light of the
subject matter, context and the effect of the relevant
provisions of the statute under which the
notification or order is issued and the power is not
available after an enforceable right has accrued
11
under the notification or order. Moreover, Section
21 has no application to vary or amend or review a
quasi judicial order. A quasi judicial order can be
generally varied or reviewed when obtained by fraud
or when such power is conferred by the Act or Rules
under which it is made. (See Interpretation of
Statutes, Ninth Edition by G.P. Singh page 893).
26. Relying upon the aforementioned rule of
interpretation, this Court has held that the
Government has no power to cancel or supersede a
reference once made under Section 10(1) of the
Industrial Disputes Act, 1947. [See- State of Bihar
vs. D.N. Ganguly & Ors. (AIR 1958 SC 1018)].
Similarly, on the same principle it is held that the
application of Section 21 of the General Clauses Act
has no application to amend or rescind or vary a
notification issued under Section 3 of the
Commissions of Enquiry Act for reconstituting the
commission by replacement or substitution of its
12
sole member except applicable for a limited purpose
for extending the time for completing the enquiry.
(See- State of Madhya Pradesh vs. Ajay Singh,
AIR 1993 SC 825). It is also held while construing
the provisions of Citizenship Act that the certificate
of registration of citizenship issued under Section
5(1)C of the Citizenship Act cannot be cancelled by
the authority granting the registration by recourse
to Section 21 of the General Clauses Act. (SeeGhaurul
Hasan vs. State of Rajasthan, AIR 1967
SC 107 and Hari Shanker Jain vs. Sonia Gandhi,
AIR 2001 SC 3689). And lastly, while construing
the provisions of the Representation of People Act, it
is held that the Election Commission cannot, by
recourse to Section 21 of the General Clauses Act,
deregister or cancel the registration of a political
party under Section 29A of the Act for the decision
of the Commission to register a political party under
13
Section 29A(7) of the Act is a quasi judicial in
nature. [See Indian National Congress(I) (supra)]
27. It is not in dispute that an express power was
conferred on the CIT to cancel the registration for
the first time by enacting sub-Section (3) in Section
12AA only with effect from 01.10.2004 by the
Finance (No.2) Act 2004 (23 of 2004) and hence
such power could be exercised by the CIT only on
and after 01.10.2004, i.e., (assessment year
2004-2005) because the amendment in question
was not retrospective but was prospective in nature.
28. The issue involved in this appeal had also
come up for consideration before three High Courts,
namely, Delhi High Court in the case of Director of
Income Tax (Exemptions) vs. Mool Chand Kairati
Ram Trust, (2011) 243 CTR(Del) 245, Uttaranchal
High Court in the case of Welham Boys’ School
Society vs. CBDT, (2006) 285 ITR 74(Uttaranchal)
and Allahabad High Court in the case of Oxford
14
Academy for Career Development vs. Chief
Commissioner of Income Tax & Ors. (2009) 315
ITR 382 (All).
29. All the three High Courts after examining the
issue, in the light of the object of Section 12A of the
Act and Section 21 of the General Clauses Act held
that the order of the CIT passed under Section 12A
is quasi judicial in nature. Second, there was no
express provision in the Act vesting the CIT with
power of cancellation of registration till 01.10.2004;
and lastly, Section 21 of the General Clauses Act has
no application to the order passed by the CIT under
Section 12A because the order is quasi judicial in
nature and it is for all these reasons the CIT had no
jurisdiction to cancel the registration certificate
once granted by him under Section 12A till the
power was expressly conferred on the CIT by
Section 12AA(3) of the Act w.e.f. 01.10.2004.
15
30. We are of the considered view that the view
taken by the abovementioned three High Courts in
the respective cases is in conformity with law and
we accordingly approve the said view taken by these
High Courts in three aforementioned decisions.
31. In the light of the foregoing discussion, the
appeal succeeds and is allowed. Impugned order is
set aside and the order of ITAT is restored.
32. Needless to say, the CIT would be free to
exercise his power of cancellation of registration
certificate under Section 12AA(3) of the Act in the
case at hand in accordance with law.
………...................................J.
[R. K. AGRAWAL]
…...……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
February 16, 2018
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.6262 OF 2010
Industrial Infrastructure Development
Corporation(Gwalior) M.P. Ltd. ….Appellant(s)
VERSUS
Commissioner of Income Tax,
Gwalior …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. This appeal is directed against the final
judgment and order dated 14.03.2007 passed by
the High Court of Madhya Pradesh at Gwalior in
Misc. Appeal(Income Tax) No.6 of 2005 whereby the
Division Bench of the High Court allowed the appeal
filed by the respondent and set aside the order
2
passed by the ITAT and restored the order of the
Commissioner of Income Tax.
2. The question involved in the appeal lies in a
narrow compass. Few facts, however, need mention
to appreciate the same.
3. The appellant is a limited company registered
under the Companies Act. It is a State Government
Undertaking which is established with a view to
develop and assist the State in the development of
industrial growth centers/areas, to promote,
encourage and assist the establishment growth and
development of industries in the State of M.P. The
appellant is an "assesse" under the Income Tax Act,
1961 (hereinafter referred to as “the Act”).
4. On 10.02.1999, the appellant filed an
application in the format prescribed under Section
12-A of the Act to the Commissioner of Income Tax
(hereinafter referred to as “the CIT”) for grant of
registration. According to the appellant, since they
3
were engaged in public utility activity which,
according to them, was for a charitable purpose
under Section 2(15) of the Act, they were entitled to
claim registration as provided under Section 12 (A)
of the Act. Since the application for registration was
delayed in its filing, the appellant also made an
application for condonation of delay in filing the
application.
5. By order dated 13.04.1999, the CIT (Gwalior)
condoned the delay and granted the registration
certificate as prayed for by the appellant. In clause
3 of the registration certificate, it was mentioned
that the certificate is granted without prejudice to
the examination on merits of the claim of exemption
after the return is filed.
6. On 27.11.2000, the CIT issued a show cause
notice to the appellant stating therein as to why the
registration certificate granted to the appellant by
order dated 10.02.1999 under Section 12A of the
4
Act be not cancelled/withdrawn. The show cause
notice also set out the factual grounds for the
withdrawal of the registration certificate. The
appellant was asked to reply the show cause notice.
The appellant accordingly filed their reply and
opposed the grounds on which the
withdrawal/cancellation of the certificate was
proposed.
7. By order dated 29.04.2002, the CIT did not
find any substance in the stand taken by the
appellant in their reply and accordingly
cancelled/withdrawn the certificate issued to the
appellant.
8. The appellant felt aggrieved and filed
rectification application under Section 154 of the
Act before the CIT on 04.07.2002 contending
therein that the order of the CIT dated 29.04.2002
cancelling/withdrawing the registration certificate
contains an error apparent and, therefore, it is
5
required to be rectified or/and recalled. It was
contended that once the CIT grants the registration
certificate under Section 12A, he has no power to
cancel/recall the certificate granted to the Assessee.
9. On 20.12.2002, the CIT rejected the
application filed by the appellant for rectification
holding that there was no error in his order
cancelling the registration certificate granted to the
appellant. In other words, the CIT held that he had
the power to cancel the certificate once granted by
him and, therefore, the order for cancelling the
registration certificate is legal and proper.
10. Aggrieved by the said order, the appellant filed
an appeal before the Income Tax Appellate Tribunal,
Agra Bench. By order dated 26.08.2004, the ITAT
allowed the appellant's appeal and set aside the
order dated 29.04.2002 passed by the CIT by which
he had cancelled/withdrawn the registration
certificate.
6
11. The Revenue felt aggrieved by the order of the
ITAT and filed appeal in the High Court at Gwalior
Bench under Section 260-A of the Act. The High
Court, by impugned order, allowed the appeal filed
by the Revenue and set aside the order passed by
the ITAT and restored the order of the CIT.
12. The Division Bench of the High Court placed
reliance on Section 21 of the General Clauses Act
and held that since there is no express power in the
Act for cancelling the registration certificate under
Section 12A of the Act and hence power to cancel
can be traced from Section 21 of the General
Clauses Act to support such order. In other words,
in the opinion of the High Court, Section 21 is the
source of power to pass cancellation of the
certification granted by the CIT when there is no
express power available under Section 12A of the
Act.
7
13. It is against this order, the assessee felt
aggrieved and filed this appeal by way of special
leave before this Court.
14. None appeared for the appellant (assessee). Mr.
Radhakrishan, learned Counsel appeared for the
respondent (Revenue).
15. Having heard the learned counsel for the
Revenue and on perusal of the record of the case,
we are inclined to allow the appeal and while setting
aside the impugned order, restore the order of the
ITAT.
16. The main questions, that arise for
consideration in this appeal, are four:
17. First, whether the CIT has express power to
cancel/withdraw/recall the registration certificate
once granted by him under Section 12A of the Act
and, if so, under which provision of the Act?
18. Second, when the CIT grants registration
certificate under Section 12A of the Act to the
8
assessee, whether grant of certificate is his quasi
judicial function and, if so, its effect on exercise of
his power of cancellation of such grant of
registration certificate?
19. Third, whether Section 21 of the General
Clauses Act can be applied to support the order of
cancellation of the registration certificate granted by
the CIT under Section 12A of the Act, in case, if it
is held that there is no express power of
cancellation of registration certificate available to
the CIT under Section 12A of the Act? and
20. Fourth, what is the effect of the amendment
made in Section 12AA introducing sub-clause(3)
therein by Finance (No-2) Act 2004 w.e.f.
01.10.2004 conferring express power on the CIT to
cancel the registration certificate granted to the
assessee under Section 12A of the Act.
21. In our considered opinion, the CIT had no
express power of cancellation of the registration
9
certificate once granted by him to the assessee
under Section 12A till 01.10.2004. It is for the
reasons that, first, there was no express provision in
the Act vesting the CIT with the power to cancel the
registration certificate granted under Section 12A of
the Act. Second, the order passed under Section
12A by the CIT is a quasi judicial order and being
quasi judicial in nature, it could be
withdrawn/recalled by the CIT only when there was
express power vested in him under the Act to do so.
In this case there was no such express power.
22. Indeed, the functions exercisable by the CIT
under Section 12A are neither legislative and nor
executive but as mentioned above they are
essentially quasi judicial in nature.
23. Third, an order of the CIT passed under
Section 12A does not fall in the category of "orders"
mentioned in Section 21 of the General Clauses Act.
The expression "order" employed in Section 21
10
would show that such "order" must be in the nature
of a "notification", "rules" and "bye laws" etc. ( see –
Indian National Congress(I) vs. Institute of
Social Welfare & Ors., 2002 (5) SCC 685).
24. In other words, the order, which can be
modified or rescinded by applying Section 21, has
to be either executive or legislative in nature
whereas the order, which the CIT is required to pass
under Section 12A of the Act, is neither legislative
nor an executive order but it is a "quasi judicial
order". It is for this reason, Section 21 has no
application in this case.
25. The general power, under Section 21 of the
General Clauses Act, to rescind a notification or
order has to be understood in the light of the
subject matter, context and the effect of the relevant
provisions of the statute under which the
notification or order is issued and the power is not
available after an enforceable right has accrued
11
under the notification or order. Moreover, Section
21 has no application to vary or amend or review a
quasi judicial order. A quasi judicial order can be
generally varied or reviewed when obtained by fraud
or when such power is conferred by the Act or Rules
under which it is made. (See Interpretation of
Statutes, Ninth Edition by G.P. Singh page 893).
26. Relying upon the aforementioned rule of
interpretation, this Court has held that the
Government has no power to cancel or supersede a
reference once made under Section 10(1) of the
Industrial Disputes Act, 1947. [See- State of Bihar
vs. D.N. Ganguly & Ors. (AIR 1958 SC 1018)].
Similarly, on the same principle it is held that the
application of Section 21 of the General Clauses Act
has no application to amend or rescind or vary a
notification issued under Section 3 of the
Commissions of Enquiry Act for reconstituting the
commission by replacement or substitution of its
12
sole member except applicable for a limited purpose
for extending the time for completing the enquiry.
(See- State of Madhya Pradesh vs. Ajay Singh,
AIR 1993 SC 825). It is also held while construing
the provisions of Citizenship Act that the certificate
of registration of citizenship issued under Section
5(1)C of the Citizenship Act cannot be cancelled by
the authority granting the registration by recourse
to Section 21 of the General Clauses Act. (SeeGhaurul
Hasan vs. State of Rajasthan, AIR 1967
SC 107 and Hari Shanker Jain vs. Sonia Gandhi,
AIR 2001 SC 3689). And lastly, while construing
the provisions of the Representation of People Act, it
is held that the Election Commission cannot, by
recourse to Section 21 of the General Clauses Act,
deregister or cancel the registration of a political
party under Section 29A of the Act for the decision
of the Commission to register a political party under
13
Section 29A(7) of the Act is a quasi judicial in
nature. [See Indian National Congress(I) (supra)]
27. It is not in dispute that an express power was
conferred on the CIT to cancel the registration for
the first time by enacting sub-Section (3) in Section
12AA only with effect from 01.10.2004 by the
Finance (No.2) Act 2004 (23 of 2004) and hence
such power could be exercised by the CIT only on
and after 01.10.2004, i.e., (assessment year
2004-2005) because the amendment in question
was not retrospective but was prospective in nature.
28. The issue involved in this appeal had also
come up for consideration before three High Courts,
namely, Delhi High Court in the case of Director of
Income Tax (Exemptions) vs. Mool Chand Kairati
Ram Trust, (2011) 243 CTR(Del) 245, Uttaranchal
High Court in the case of Welham Boys’ School
Society vs. CBDT, (2006) 285 ITR 74(Uttaranchal)
and Allahabad High Court in the case of Oxford
14
Academy for Career Development vs. Chief
Commissioner of Income Tax & Ors. (2009) 315
ITR 382 (All).
29. All the three High Courts after examining the
issue, in the light of the object of Section 12A of the
Act and Section 21 of the General Clauses Act held
that the order of the CIT passed under Section 12A
is quasi judicial in nature. Second, there was no
express provision in the Act vesting the CIT with
power of cancellation of registration till 01.10.2004;
and lastly, Section 21 of the General Clauses Act has
no application to the order passed by the CIT under
Section 12A because the order is quasi judicial in
nature and it is for all these reasons the CIT had no
jurisdiction to cancel the registration certificate
once granted by him under Section 12A till the
power was expressly conferred on the CIT by
Section 12AA(3) of the Act w.e.f. 01.10.2004.
15
30. We are of the considered view that the view
taken by the abovementioned three High Courts in
the respective cases is in conformity with law and
we accordingly approve the said view taken by these
High Courts in three aforementioned decisions.
31. In the light of the foregoing discussion, the
appeal succeeds and is allowed. Impugned order is
set aside and the order of ITAT is restored.
32. Needless to say, the CIT would be free to
exercise his power of cancellation of registration
certificate under Section 12AA(3) of the Act in the
case at hand in accordance with law.
………...................................J.
[R. K. AGRAWAL]
…...……..................................J.
[ABHAY MANOHAR SAPRE]
New Delhi;
February 16, 2018
