2011 (2) TMI 1254 - HC - VAT and Sales Tax

Writ petitions - rejection of appeals by Appellate Deputy Commissioner on the ground that that they had failed to comply with the statutory requirement of paying 12.5 per cent of the disputed tax while filing the appeal within the prescribed time - reading of sections 19(1), 21(1) and (2) of the APGST Act, 1957 in juxta-position with sections 31(1), 33(1) and (2) of the A. P. VAT Act, 2005. - held that - payment of the admitted tax @12.5 per cent of the disputed beyond the period of 60 days, from the date of receipt of a copy of the order of the assessing authority, would disable the appellate authority from admitting the appeal, writ petitions dismissed

Summary

Issues Involved:

1. Compliance with the statutory requirement of paying 12.5% of the disputed tax while filing an appeal.
2. Interpretation of the second proviso to Section 19(1) of the APGST Act and Section 31(1) of the VAT Act.
3. Whether the second proviso permits payment of tax and production of its proof within a reasonable time beyond sixty days.
4. Whether the defect in payment of the tax stipulated in the second proviso is curable.
5. Whether the second proviso is a stand-alone provision independent of Section 19(1) of the Act and the first proviso thereto.
6. Whether the time limit for payment of admitted tax/12.5% of the disputed tax under the second proviso is mandatory or directory.
7. Whether proof of payment of tax should accompany the appeal.
8. Whether rules made under the Act must be in accordance with the provisions of the statute and not contrary thereto.
9. Whether the practice prevalent in the Department is of any guidance in construing statutory provisions.
10. How procedural/machinery provisions in a tax statute should be construed.
11. Whether the prescription of a time limit for payment of admitted tax/12.5% of the disputed tax renders the second proviso unreasonable and arbitrary.
12. Whether enunciation of a principle on which a question before a court is decided is binding as a precedent.
13. Whether a harmonious construction of the second proviso to avoid hardship is necessary.

Detailed Analysis:

1. Compliance with the statutory requirement of paying 12.5% of the disputed tax while filing an appeal:
The petitioners sought to set aside the orders passed by the Appellate Deputy Commissioner, which rejected their appeals due to non-compliance with the statutory requirement of paying 12.5% of the disputed tax while filing the appeal within the prescribed time.

2. Interpretation of the second proviso to Section 19(1) of the APGST Act and Section 31(1) of the VAT Act:
The court examined Sections 19(1), 21(1), and (2) of the APGST Act in conjunction with Sections 31(1), 33(1), and (2) of the VAT Act. It was noted that the provisions are in pari materia, and the second proviso to Section 19(1) prohibits the appellate authority from admitting an appeal unless the dealer produces proof of payment of the admitted tax and 12.5% of the disputed tax.

3. Whether the second proviso permits payment of tax and production of its proof within a reasonable time beyond sixty days:
The court held that the second proviso does not permit payment of tax or production of its proof beyond sixty days. The appellate authority does not have the discretion to admit an appeal filed after the expiry of sixty days from the date of receipt of the order passed by the authority.

4. Whether the defect in payment of the tax stipulated in the second proviso is curable:
The court ruled that the defect in belated payment of the admitted tax/12.5% of the disputed tax beyond sixty days of receipt of a copy of the assessment order cannot be cured or treated as having been paid at the time when the appeal was originally filed.

5. Whether the second proviso is a stand-alone provision independent of Section 19(1) of the Act and the first proviso thereto:
The court concluded that the second proviso is not a stand-alone provision but is integrally connected with Section 19(1) and its first proviso. The words "appeal so preferred shall not be admitted" in the second proviso refer to the admission of the appeal under the first proviso.

6. Whether the time limit for payment of admitted tax/12.5% of the disputed tax under the second proviso is mandatory or directory:
The court determined that the time limit for payment of admitted tax/12.5% of the disputed tax under the second proviso is mandatory. The use of the word "shall" in the second proviso indicates that it is obligatory and not merely directory.

7. Whether proof of payment of tax should accompany the appeal:
The court noted that while the first proviso to Section 21(2) requires satisfactory proof of payment of tax to "accompany" the appeal, the second proviso to Section 19(1) does not use the word "accompany." Therefore, proof of payment need not accompany the appeal but must be produced within sixty days from the date of receipt of the assessment order.

8. Whether rules made under the Act must be in accordance with the provisions of the statute and not contrary thereto:
The court emphasized that rules made under the Act must be consistent with the provisions of the statute. Rule 38(2)(d) of the VAT Rules and forms APP 400 and APP 400A must be read in conformity with the second proviso to Section 31(1) of the VAT Act.

9. Whether the practice prevalent in the Department is of any guidance in construing statutory provisions:
The court held that the practice prevalent in the Department is not relevant in construing statutory provisions. The appellate authority must function within the four corners of the statute and cannot act contrary to its provisions based on departmental practices.

10. How procedural/machinery provisions in a tax statute should be construed:
The court stated that procedural/machinery provisions must be given a literal construction and the most natural meaning appropriate in the circumstances. The statutory remedy of an appeal is conditioned by the stipulations in the first and second provisos to Section 19(1) of the Act.

11. Whether the prescription of a time limit for payment of admitted tax/12.5% of the disputed tax renders the second proviso unreasonable and arbitrary:
The court rejected the contention that the time limit for payment of admitted tax/12.5% of the disputed tax renders the second proviso unreasonable and arbitrary. The court is not concerned with the reasonableness of a statutory provision if the language is plain and unambiguous.

12. Whether enunciation of a principle on which a question before a court is decided is binding as a precedent:
The court clarified that only the ratio laid down in a judgment is binding as a precedent, not every stray observation or direction issued therein. A decision is binding for its ratio and the principles laid down, not for its conclusions or findings of fact.

13. Whether a harmonious construction of the second proviso to avoid hardship is necessary:
The court acknowledged that a harmonious construction is permissible if it does not cause violence to the language of the provision. However, the court must follow the literal interpretation even if it results in hardship or inconvenience. The requirement to pay admitted tax/12.5% of the disputed tax within sixty days is mandatory.

Conclusion:
The writ petitions were dismissed, and the court held that payment of the admitted tax/12.5% of the disputed tax beyond the period of sixty days from the date of receipt of the assessment order would disable the appellate authority from admitting the appeal.