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2009 (1) TMI 787
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....tute? In STA No. 12/2008 (Behl Construction), the Appellate Tribunal, Value Added Tax (hereinafter referred to as, "the Tribunal"), by virtue of its decision dated April 24, 2008 in Appeal No. 402/ATVAT/06-07, though it decided against the dealer/assessee on facts, inter alia held on law that: (a) the provisions of section 74(7) of the said Act are directory and not mandatory; (b) if no notice of 15 days is given as provided under subsection (8) of section 74, the objection cannot be kept pending indefinitely by the objection-hearing authority; (c) The legislative intent is abundantly clear from a harmonious reading of sub-sections (7), (8) and (9) of section 74 of the said Act that the objection must be decided within a maximum period of eight months. The Revenue is aggrieved by these conclusions of law. In STA No. 13/2008 (Aravali Aluminium), the Tribunal, by virtue of its order dated May 22, 2008, followed its order dated April 24, 2008 in the case of Behl Construction and reiterated that if the objections are not decided within a period of eight months, even if the notice of 15 days has not been given by the objector to the objection hearing authority, the objectio....
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....me bar. At this juncture, we may also set down the facts in Aravali Aluminium. Here, the objections under section 74 of the said Act were filed on January 19, 2003 and the Joint Commissioner passed the order rejecting them on October 31, 2007. Since the time gap between the two dates was more than eight months, the Tribunal held that the objections were deemed to have been allowed. Consequently, the order of the Joint Commissioner passed on October 31, 2007 was held to be beyond time. The relevant provisions of section 74 of the said Act read as under: "74 Objections.-(1) Any person who is dissatisfied with,- (a) an assessment made under this Act (including an assessment under section 33 of this Act); or (b) any other order or decision made under this Act; may make an objection against such assessment, or order or decision, as the case may be, to the Commissioner: ... (7) Within three months after the receipt of the objection, the Commissioner shall either,- (a) accept the objection in whole or in part and take appropriate action to give effect to the acceptance (including the remission of any penalty assessed either in whole or in part); or (b) refus....
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....ains two provisos. Under the first proviso the Commissioner has been empowered to continue to consider the objection for a further period of two months beyond the three-month period prescribed in the main part of sub-section (7). However, such an extension would be operative only if the Commissioner sends a written notice to the objector, within three months of the making of the objection, of his intention to extend the period of his consideration by a further period of two months. The second proviso deals with extension of time at the instance of the objector who can request the Commissioner, in writing, to delay considering the objection for a period of up to three months to enable the objector to prepare its case properly. Though this period of three months operates as an extension of time, technically speaking it is an adjournment and is not to be counted towards the period by which the Commissioner is to reach his decision. There are four possible cases under section 74(7): Case 1: Where neither the Commissioner nor the objector seek an extension of time. The applicable period for deciding the objections would be three months from the receipt of the objections; Case 2: W....
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....n the notice referred to in sub-section (8), then, at the end of that period, the Commissioner shall be deemed to have allowed the objection. So, the deeming fiction of sub-section (9) gets triggered only if a notice as stipulated in sub-section (8) is given and the period of fifteen days specified therein expires without any decision from the Commissioner. Not otherwise. This is the clear legislative intendment which we can gather upon a plain reading of the provisions of sub-sections (7), (8) and (9) of section 74 of the said Act. Mr. Parag Tripathi, the learned Additional Solicitor General of India, appearing for the appellant/Revenue submitted that sub-sections (7), (8) and (9) of section 74 of the said Act must be read together and not disjunctively. He submitted that the legal fiction created by the deeming provision in sub-section (9) can only be raised if the conditions precedent for its application are satisfied. He contended that the condition precedent for the applicability of the deeming fiction under sub-section (9) is provided in sub-section (8). A notice calling upon the Commissioner to decide within fifteen days is a must. If no such notice is issued by the objec....
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.... so, because there were no consequences of failure provided for in the said sub-section. He relied upon State of Jharkhand v. Ambay Cements [2005] 139 STC 74 (SC); [2005] 1 SCC 368. The Supreme Court held that: (at page 85 of STC; page 378 of SCC) "Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed..." Reliance was also placed on the Constitution Bench decision in Bhikraj Jaipuria v. Union of India [1962] 2 SCR 880, wherein the Supreme Court observed as under: (at pages 902, 903) "...Where a statute requires that a thing shall be done in the prescribed manner or form but does not set out the consequences of non-compliance, the question whether the provision was mandatory or directory has to....
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....ine whether a provision is mandatory or directory. The broad purpose of the statute is important. The object of the particular provision must be considered. The link between the two is most important. The weighing of the consequence of holding a provision to be mandatory or directory is vital and, more often than not, determinative of the very question whether the provision is mandatory or directory. Where the design of the statute is the avoidance or prevention of public mischief, but the enforcement of a particular provision literally to its letter will tend to defeat that design, the provision must be held to be directory, so that proof of prejudice in addition to non-compliance of the provision is necessary to invalidate the act complained of. It is well to remember that quite often many rules, though couched in language which appears to be imperative, are no more than mere instructions to those entrusted with the task of discharging statutory duties for public benefit. The negligence of those to whom public duties are entrusted cannot by statutory interpretation be allowed to promote public mischief and cause public inconvenience and defeat the main object of the statute. It i....
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....use (b), that is, he neither issues the certificate within 30 days nor issues the notice or show-cause notice (as the case may be) within the period of 30 days, then, the application shall be deemed to have been duly registered. It is obvious that the deeming fiction is specifically provided for as a consequence of default. There is no such specific consequence under section 74(7) of the said Act. In fact, the deeming provision of section 74(9) of the said Act is triggered only if the condition of notice stipulated in section 74(8) is satisfied. It is clear that the decision in Santhosh Wines [1995] 99 STC 160 (AP) turns on its own facts and is of no assistance to the respondents. The learned counsel for the respondents also contended that the requirement of passing an order either accepting or rejecting the objections cannot be left open-ended in the sense that the Commissioner may pass an order after several months or even years. It is for this reason, according to them, that the Tribunal sought to fix a reasonable time period of eight months within which the order ought to be passed. They submitted that the Tribunal's view in this regard does not call for any interference....
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.... 74(8) of the said Act is issued then the period of 15 days would be mandatory. The consequence of not passing an order is clearly spelt out and that is that the objections would be deemed to have been accepted. It is apparent that the scheme is not left open-ended as submitted by the learned counsel for the respondents and wrongly assumed by the Tribunal. If it is contended that it is left at the whim and fancy of the Commissioner to pass an order when he likes, the answer is, what prevents the objector from issuing a notice under section 74(8) of the said Act and thereby fixing a terminal date for passing the order? If the contention is that, why should the objector issue such a notice as by virtue of section 35(2) of the said Act he enjoys a virtual stay during the pendency of his objections, the answer is that such an objector would have to choose between the protection of section 35(2) and invoking the deeming provisions of section 74(9). He cannot "eat his cake and have it too", as it were. He cannot let the applicable time-limit (and more) slip by, all this while enjoying the virtual stay, and also say, at the end of it, without issuing the peremptory 15 day notice under ....