TaxTMI 
TaxTMI 
2011 (2) TMI 1254
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.... W.P. No. 18501 of 2010:- For the assessment years 2004-05 to 2008-09, the second respondent completed assessment and, by order dated October 5, 2009, levied tax. For the assessment year 2004-05, the tax levied was Rs. 3,20,760. Aggrieved thereby, the petitioner carried the matter in appeal to the Appellate Deputy Commissioner (first respondent) who issued show-cause notice dated December 31, 2009 directing the petitioner to furnish proof of payment, of 12.5 per cent of the disputed tax, within seven days from the date of receipt of the notice. The petitioner claims that the notices were served on their authorized representative on February 4, 2010, they had filed a letter dated February 9, 2010 stating that they had paid 12.5 per cent of the disputed tax for the assessment years 2004-05 and 2005-06 vide cheque dated January 28, 2010, for the assessment years 2006-07 by cheque dated February 15, 2010, for the assessment year 2007-08 vide cheque dated February 7, 2010, and for the assessment year 2008-09 vide cheque dated February 2, 2010. The first respondent, however, rejected the appeal by order dated April 17, 2010, a copy of which the petitioner claims to have rece....
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....d illegal. A consequential direction is sought to the first respondent to take the appeal on file, and to hear the same on the merits. The second respondent passed an order of assessment on January 19, 2010, levying tax of Rs. 10,64,877 on the petitioner. Aggrieved thereby, the petitioner preferred an appeal before the Appellate Deputy Commissioner on February 20, 2010. They did not, however, pay 12.5 per cent of the disputed tax by that date. The first respondent, by proceedings dated March 30, 2010, informed the petitioner that, when the appeal was posted for hearing on admission on March 20, 2010, their authorized representative had appeared and had stated that the petitioner was not in a position to pay 12.5 per cent of the disputed tax and, since the petitioner did not comply with section 31 of the A. P. VAT Act, 2005 read with rule 38(2) of the A. P. VAT Rules, the appeal could not be admitted. The appeal was, therefore, rejected. The petitioner claims to have paid Rs. 1,17,091 at the time of filing the appeal, and to have paid Rs. 16,091 vide challan No. 1798 dated April 19, 2010 towards 12.5 per cent of the disputed tax. It is their case that their authorized repr....
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....epresentation dated May 5, 2009, enclosing thereto proof of payment of 12.5 per cent of the disputed tax, for admission of the appeal. The second respondent passed an order of assessment on May 28, 2008 for the assessment year 2002-03 (CST) levying tax of Rs. 43,808. Aggrieved thereby the petitioner preferred an appeal in form I. They were informed by proceedings dated January 9, 2009 that, while they had preferred an appeal in form I, they had not filed proof of payment of 12.5 per cent of the disputed tax ; a notice was issued on June 27, 2008 calling upon them to comply with the omissions pointed out therein ; even though six months had elapsed they did not comply with the omissions ; and, in the absence of proof of payment of 12.5 per cent of the disputed tax and the remaining admitted tax, the first respondent had no other alternative but to reject the appeal at the admission stage. The petitioner claims to have received a copy of the said order on March 31, 2009 ; to have submitted a representation on May 5, 2009 (which is said to have been received by the respondents on May 6, 2009) enclosing thereto proof of payment of Rs. 5,000 towards 12.5 per cent of the disput....
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....d on him, appeal to such authority as may be prescribed:- Provided that the appellate authority may within a further period of thirty days admit the appeal preferred after a period of thirty days if he is satisfied that the VAT dealer or TOT dealer or any other dealer had sufficient cause for not preferring the appeal within that period:- Provided further that an appeal so preferred shall not be admitted by the appellate authority concerned unless the dealer produces proof of payment of tax admitted to be due, or of such instalments as have been granted, and the proof of payment of twelve and half per cent of the difference of the tax assessed by the authority prescribed and the tax admitted by the appellant, for the relevant tax period, in respect of which the appeal is preferred. 21. Appeal to the Appellate Tribunal:- (1) Any dealer objecting to an order passed or proceeding recorded:- (a) by any prescribed authority on appeal under section 19, or (b) by an Additional Commissioner or Joint Commissioner or Deputy Commissioner suo motu under subsection (4C) of section 14 or under sub-section (2) of section 20, may appeal to the Appellate Tribunal within sixty days from the date ....
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....admitted under sub-section (1) or sub-section (2) of this section unless it is accompanied by satisfactory proof of the payment of fifty per cent of the tax, penalty, interest or any other amount as ordered by the appellate authority under section 31. Section 19(1), its provisos and the second proviso to section 21(2) of the APGST Act, 1957 (hereinafter referred to as, "the Act") are in pari materia with section 31(1), its provisos, and the first proviso to section, 33(2) of the A. P. VAT Act, 2005 (hereinafter called, "the VAT Act"), respectively. It is convenient, therefore, to hereinafter refer to sections 19 and 21 of the APGST Act (unless otherwise necessary), irrespective of whether the order under challenge arises under the APGST Act or the A. P. VAT Act. I. Does the second proviso permit payment of tax, and production of its proof, within a reasonable time beyond sixty days?:- It is contended, on behalf of the petitioners, that the only embargo under the second proviso to section 19(1) is against admission of the appeal without there being evidence of payment of the admitted tax/12.5 per cent of the disputed tax ; the initial period of 30 days prescri....
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....prescribed in the Act and the Rules. The first proviso to section 19(1) confers discretion on the appellate authority to admit an appeal preferred by a dealer beyond 30 days of receipt of the order passed by the authority. Exercise of such discretion is fettered by two conditions:- (1) the appeal ought to have been preferred within a further period of 30 days, after the period of 30 days from the date of receipt of the order passed by the authority; and (2) the appellate authority must be satisfied that the dealer had sufficient cause for not preferring the appeal within the original period of 30 days prescribed under section 19(1) of the Act. It is only if the appeal is preferred between the 31st and 60th day from the date of receipt of a copy of the order passed by the authority, and the dealer has shown sufficient cause for no filing the appeal within the prescribed period of 30 days under section 19(1) of the Act, can the appellate authority exercise discretion to admit the appeal. Such exercise of discretion to admit the appeal is neither ministerial nor a mere formality. If sufficient cause is not shown, the appellate authority is not o....
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....authority for the proposition that, in revisional proceedings before the sales tax authorities functioning under the U. P. Sales Tax Act, section 29(2) would apply. Both the judgments of the Supreme Court, in Parson Tools and Plants [1975] 35 STC 413 (SC) ; [1975] 4 SCC 22 and Mukri Gopalan AIR 1995 SC 2272, were considered by the Division Bench of this court, in A V. U. Engineers Pvt. Ltd. v. Appellate Deputy Commissioner (CT), Hyderabad [2005] 142 STC 52 (AP), while interpreting the scope of the amended first proviso to section 19(1) of the Act. Prior to its amendment, by A. P. Act 8 of 1997, the first proviso to section 19(1) enabled the appellate authority to admit an appeal, preferred after the period of thirty days prescribed in section 19(1), if he was satisfied that the dealer had sufficient cause for not preferring the appeal within that period. The words "within a further period of thirty days" was inserted to the said proviso on its amendment by A. P. Act 8 of 1997. As a result the appellate authority could, within a further period of 30 days, admit the appeal preferred after the period of 30 days if he was satisfied that the dealer had sufficient cause for not....
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....med to have accepted the interpretation of the court. (Sakal Deep Sahai Srivastava v. Union of India [1974] 1 SCC 338). That the Legislature, even after repeal of the APGST Act, has chosen to restrict the power of the appellate authority to condone the delay in preferring the appeal only to 30 days, under the first proviso to section 31(1) of the VAT Act, (as was prescribed under the repealed first proviso to section 19(1) of the APGST Act), would necessarily mean that the construction placed on the first proviso to section 19(1) of the APGST Act by the Division Bench of this court, in A. V. U., Engineers Pvt. Ltd. [2005] 142 STC 52 (AP), Would equally apply in interpreting the first proviso to section 31(1) of the VAT Act. Consequently, even under the first proviso to section 31(1) of the VAT Act, the appellate authority would not have the power to condone the delay in preferring, or to admit, the appeal beyond a period of 60 days (30 + 30 days). By use of the words "shall not . . . unless" in the second proviso, the Legislature has prohibited the appellate authority from admitting the appeal, preferred under section 19(1) or the first proviso thereto, unless the dealer ....
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....essment order. Reliance placed on section 16(2)(a) to contend that there is no justification in stipulating the time-limit of 30 days, or 60 days, for pre-deposit of 12.5 per cent of the disputed tax is, therefore, misplaced. Though the second proviso to section 19(1) does not specifically mention the time within which such proof of payment is to be produced, the use of words "appeal so preferred shall not be admitted . . . unless" in the second proviso makes it clear that admission of the appeal mentioned therein is with reference to admission of the appeal under the first proviso to section 19(1) and, as such, the time-limit specified in the first proviso, for the appellate authority to admit the appeal, would also apply for production of proof of payment of tax under the second proviso. A dealer can, therefore, produce proof of payment of the admitted tax, and 12.5 per cent of the disputed tax, at any time before the period within which the appeal may be admitted, i.e., within 60 days from the date on which the dealer receives a copy of the order passed by the authority, and not thereafter. II. Is the defect in payment of the tax, stipulated in the second pro....
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.... Unlike section 28 of the Court Fees Act, and section 582A of the CPC, 1882, there is no provision either under the APGST Act or the A. P. VAT Act permitting payment of the prescribed tax beyond 60 days, and to treat such belated payment as having been made at the time of filing of the appeal itself. Reliance placed on Mannan Lal AIR 1971 SC 1374 is, therefore, misplaced, and the defect in belated payment of the admitted tax/12.5 per cent of the disputed tax, beyond sixty days of receipt of a copy of the assessment order, can neither be cured nor be treated as having been paid at the time when the appeal was originally filed. III. Is the second proviso a stand alone provision, independent of section 19(1) of the Act, and the first proviso thereto?:- It is contended on behalf of the petitioner that the second proviso is a stand alone provision, and does not operate in conjunction with section 19(1) of the first proviso thereto ; the time-limit set out in section 19(1) and the first proviso cannot be read into, or to operate vis-a-vis, the second proviso ; and, if the Legislature had intended to prescribe the same time-limit of 30 days, with a maximum per....
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....l object of the main section. (S. Sundaram Pillai v. V. R. Pattabiraman [1985] 1 SCC 591, Grazes in his book Statute Law (7th Edition). It is a fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso. It is to be construed harmoniously with the main enactment. (Abdul Jabar Butt v. State of Jammu and Kashmir AIR 1957 SC 281, Indo-Mercantile Bank Ltd. [1959] 36 ITR 1 (SC) ; [1959] Supp (2) SCR 256, Ram Narain Sons Ltd. [1955] 6 STC 627 (SC) ; [1955] 2 SCR 483 and State of Punjab v. Kailash Nath [1989] 1 SCC 321). In Sujana Metal Products Limited, Hyderabad [2008] 11 VST 476 (AP) ; [2006] 43 APSTJ 72, a Division Bench of this court held that a fair reading of the second proviso to section 19(1) of the APGST Act makes it clear that deposit of the difference of tax assessed by the assessing authority; and the tax admitted by the appellant, as a pre-condition as provided for under the second proviso is an integral part of section 19. A proviso cannot be read as divorced from its context. The proper course is to apply the broad general rule of construction which is that a section must be construed ....
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....ellate Deputy Commissioner ; the court, when called upon to interpret a provision, must keep in view the entire context in which the provision came to be enacted in order to determine whether it is directory or mandatory ; and what is mandatory and directory is to be understood in the context of the provisions of the statute. Reliance is placed on Salem Advocate Bar Association v. Union of India [2005] 6 SCC 344, Shaikh Salim Haji Abdul Khayumsab v. Kumar [2006] 1 SCC 46 and Raza Buland Sugar Co. Ltd. v. Municipal Board [1965] 1 SCR 970. In Salem Advocate Bar Association [2005] 6 SCC 344, the Supreme Court held that the use of the word "shall" is, ordinarily, indicative of the mandatory nature of the provision but, having regard to the context in which it is used, or having regard to the intention of the legislation, the same can be construed as directory. In Shaikh Salim Haji Abdul Khayumsab [2006] 1 SCC 46, the Supreme Court held that merely because a provision of law is couched in a negative language, implying mandatory character, the same is not without exceptions ; and courts, when called upon to interpret the nature of the provision, may, keeping in view the entire ....
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.... the Legislature has used a language of compulsive force is always of great relevance and, in the absence of anything contrary in the context indicating that a permissive interpretation is permissible, the provision ought to be construed as peremptory. (Govindlal Chhaganlal Patel [1975] 2 SCC 482). If the words of a statute are themselves precise and unambiguous, no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such; case best declaring the intention of the Legislature. (Govindlal Chhaganlal Patel [1975] 2 SCC 482). Employment of the said two monosyllables "may" and "shall" in the same provision must have two different imports. (Mahaluxmi Rice Mills v. State of U. P. [1998] 6 SCC 590). The use of the word "may" in the first proviso, and of the word "shall" in the second proviso to section 19(1) of the Act, establishes the difference that the first proviso gives a discretionary power, but the second proviso is mandatory. (Jamatraj Kewalji Govani v. State of Maharashtra [1967] 3 SCR 415, T. R. Sharma v. Prithvi Singh [1976] 1 SCC 226). The word "unless" has been defined in The Concise Oxford Dictionary to mean "if....
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....ceipt of a copy of the order, provided of course that the other conditions in the first proviso to section 19(1) are satisfied. VI. Rules made under the Act must be in accordance with the provisions of the statute, and not contrary thereto:- Rule 38(2)(d) of the A. P. VAT Rules, 2005 requires the appeal to be in form APP 400, and to be accompanied by a declaration in form APP 400A stating that the amount, specified in the second proviso to section 31(1), has been paid and proof of payment of the disputed tax is enclosed. Form 400A requires the dealer to declare that the admitted tax, and 12.5 per cent of the disputed tax, has been paid. In case of conflict between the provisions of the Act and the Rules, the former will prevail. The Rules should be interpreted in a manner so as to be in conformity with the provisions of the Act. (Ispat Industries Ltd. v. Commissioner of Customs [2006] 12 SCC 583), and not the other way round. A rule has to be read as supplemental to the provisions of the parent Act. It cannot be interpreted in a way as to come into conflict with the parent Act, in whch case the Act will prevail. (S.T.O., Moradabad v. H. Farid Ahmed and Sons [197....
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....scretion to grant time to pay 12.5 per cent of the disputed tax before the appeal is taken up for hearing. The appellate authority, in exercising jurisdiction under section 19(1) of the Act and 31(1) of the VAT Act, is a creature of the said Acts and must function within the four corners of these enactments. The quasi-judicial authorities, under the Act, being creatures of the statute have limited jurisdiction and have to function within the four corners of the statute creating them. (O. P. Gupta v. Rattan Singh [1964] 1 SCR 259). It is not open to them to travel beyond the provisions of the statute. (D. Ramakrishna Reddy v. Addl. Revenue Divisional Officers [2000] 7 SCC 12). It is neither open to the appellate authority to act contrary to the provisions of these statutes on the basis of practices prevalent in the Commercial Tax Department, nor would such practices weigh with the court in construing statutory- provisions. Where the meaning of an enactment is obscure, the court may resort to contemporary construction, that is the construction which the authorities have put upon it by thek usage and conduct for a long period of time. (National and Grindlays Bank Ltd. v. Mun....
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....re are handmaids of justice ; in an adversarial system no party should, ordinarily, be denied the opportunity of participating in the process of justice dispensation ; and, unless compelled by express and specific language of the statute, a procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. In Salem Advocate Bar Association [2005] 6 SCC 344, the Supreme Court held that rules of procedure are made to advance the cause of justice arid not to defeat it ; construction of a rule of procedure which promotes justice and prevents miscarriage has to be preferred ; and rules of procedure are the handmaid of justice, and not its mistress. A distinction has to be made by the court, while interpreting the provisions of a taxing statute, between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax, the levy, collection of the tax imposed, etc. The rule of strict construction of a taxing statute does not apply to a machinery provision. (ITC Ltd. v. Commissioner of Central Excise, New Delhi [2004] 7 SCC ....
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..... In construing a statutory provision, the first and foremost rule of construction is the literal construction. If the provision is unambiguous and, if from that provision, the legislative intent is clear, the court need not call into aid other rules of construction of statutes. (Raghunath Rai Bareja [2007] 2 SCC 230, Hira Lal Rattan Lal v. Sales Tax Officer [1973] 31 STC 178 (SC) ; [1973] 1 SCC 216). A provision is not ambiguous merely because it contains a word which, in different contexts, is capable of different meanings. It would be hard to find anywhere a sentence of any length which does not contain such a word. A provision is ambiguous only if it contains a word or phrase which, in that particular context, is capable of having more than one meaning. (Kirkness (Inspector of Taxes) v. John Hudson and Co. Ltd. [1955] AC 696 (HL)). A procedural/machinery provision must also be given a literal construction, and the most natural meaning which is appropriate. As noted here-inabove, the Legislature may impose accompanying liability on a party upon whom a statutory right of appeal is conferred, or to prescribe conditions for the exercise of that right. Such limitations, as....
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....appeal itself as the time-limit fixed therefor under section 31(4) of the VAT Act, is two years from the admission of the appeal. Admission of an appeal precedes its final disposal, and both are seldom co-terminus. It is no doubt true that the appellate authority would cease to have the power to admit an appeal after expiry of thirty or sixty days as specified in section 19(1), and its first proviso. That, by itself, does not render the said provision anomalous or arbitrary. The contention that such a construction would render the provision unreasonable does not merit acceptance. It is, normally, not the concern of courts to examine the reasonableness of a statutory provision or consider its consequences. Lord Halsbury as early as 1901, in Cooke v. Charles A. Vogeler Co. [1901] AC 102, stated the law:- "court of law, has nothing to do with the reasonableness or unreasonableness of a provision of a statute except so far as it may help it in interpreting what the Legislature has said. If the language of a statute be plain, admitting of only one meaning, the Legislature must be taken to have meant and intended what it has plainly expressed, and whatever it has in c....
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.... of the Delhi Municipal Corporation Act. Section 170 of the said Act qualified this right of appeal and provided that no appeal "shall be heard or determined" under section 169 unless:- (a) the appeal is made within thirty days; and (b) the amount, if any, in dispute in the appeal has been deposited by the appellant in the office of the Corporation. The proviso to clause (a) of section 170 provided that an appeal may be admitted, after expiration of the period prescribed, if the appellant satisfied the court that he had sufficient cause for not preferring the appeal within that period. The Supreme Court held that, in the statutory context, it was a plausible construction that, while such an appeal could be admitted or entertained, it could not be heard or disposed of without pre-deposit of thedisputed tax. Unlike section 170 of the Delhi Municipal Corporation Act, the second proviso to section 19(1) uses the words "shall not be admitted . . . unless" which would go to show that payment of the admitted tax/12.5 per cent of the disputed tax is a condition precedent for admission of the appeal. Reliance placed on Shyam Kishore AIR 1992 SC 2279 is, therefo....
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....275, ICICI Bank v. Municipal Corpn. of Greater Bombay [2005] 6 SCC 404). What is binding is the ratio of the decision, and not any finding of fact. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the court that forms the ratio and not any particular word or sentence. (Director of Settlements, A. P. v. M. R. Apparao [2002] 4 SCC 638). XI. Is a harmonious construction of the second proviso to avoid hardship necessary?:- It is contended on behalf of the petitioners that the real intention of the Legislature must be ascertained ; the object and purpose of substituting the second proviso to section 19(1) of the Act, with effect from November 20, 2001, must be taken into consideration ; a harmonious construction of the first and second provisos would show that the time-limit for payment of 12.5 per cent of the disputed tax is directory in nature ; and such a construction would remove the hardship faced by the assessee in complying with the requirement of payment of 12.5 per cent of the disputed tax within the time-limit specified in section 19(1), or the first proviso thereto. A harmonious construct....