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Issues: Whether the time stipulation in Section 7 of the Goods and Services Tax (Compensation to States) Act, 2017 for provisional release and final calculation of compensation to the States is mandatory or directory, and whether a writ of mandamus could be issued directing immediate payment of compensation.
Analysis: The statutory scheme provides for compensation to States during the transition period, with provisional release every two months and final adjustment on audited figures. The use of the word "shall" is not ative by itself; its effect depends on the object of the enactment, the statutory context, and legislative intent. The Act does not prescribe any consequence for non-compliance with the time line in Section 7, and the Court applied settled principles of construction that a time prescription without specified consequences is ordinarily directory when it regulates performance of a public obligation. On that basis, the provision governing the timing of release was treated as directory rather than mandatory, and the pandemic-related hardship was held not to justify a coercive direction against the Union.
Conclusion: The time line in Section 7 was held to be directory, not mandatory, and the prayer for a positive direction to compel immediate compensation payment was rejected.
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