2018 (12) TMI 1824 - HC - VAT and Sales Tax

Maintainability of petition - availability of alternative remedy of appeal - Composition Scheme - Whether Tamil Nadu Act 27 of 2011 has to be retrospectively applied? - HELD THAT - The fact that 01.04.2012 has been notified as the date on which the Act is to come into force cannot be put against the petitioner - The general principles concerning retrospectivity have been authoritatively laid down by the Five Judges Bench by the Honble Supreme Court in the decision of COMMISSIONER OF INCOME TAX (CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED 2014 (9) TMI 576 - SUPREME COURT where it was held that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. Applying the aforesaid standard, there cannot be any difficulty in coming to the conclusion that Tamil Nadu Act 27 of 2011 must be given retrospective application. As rightly pointed out by the learned counsel appearing for the petitioner, this is evident from the statement of objections and reasons annexed to the amendment Act. The legislature was aware that a literal construction of the unamended Section 3(4)(b) of the Act resulted in levy of tax under Section 3(2) of the Act on the entire turn over of the dealer. The dealer was faced with such a levy even though he had not collected any tax on the turnover upto ₹ 50.00 lakhs. In order to rectify the situation the amendment Act was introduced. The intent and object of the legislature is clearly evident by the use of the expression ?substituted?. Therefore, it will have to be necessarily construed as retrospective. In fact, that is the object which the legislature intend to subserve. Therefore, the Tamil Nadu Act 27 of 2011 being a substitutive amendment will cover the case of the writ petitioner also. The matter is remitted to the file of the respondent to pass orders afresh in accordance with law after affording an opportunity of personal hearing to the petitioner - petition allowed by way of remand.

Summary

Issues Involved:

1. Retrospective application of Tamil Nadu Act 27 of 2011.
2. Validity of the writ petition despite the availability of an alternative remedy.
3. Interpretation of statutory requirements as mandatory or directory.

Issue-wise Detailed Analysis:

1. Retrospective Application of Tamil Nadu Act 27 of 2011:

The primary issue was whether Tamil Nadu Act 27 of 2011 should be applied retrospectively. The petitioner argued for retrospective application, highlighting that the amendment was substitutive. The court examined the scheme of the statute before and after the amendment to determine its nature. The court referenced the decision in Commissioner of Income Tax-1, Ahmedabad Vs. Gold Coin Health Foods Pvt Ltd, which emphasized that the date from which an amendment is operative does not conclusively decide its retrospective nature. The court also considered the principles laid down by the Supreme Court in Commissioner of Income Tax (Central) – I, New Delhi vs. Vatika Township Private Limited, which stated that legislation is presumed not to have retrospective operation unless clearly indicated. However, if a legislation confers a benefit without inflicting a detriment, it may be presumed to be retrospective. The court concluded that Tamil Nadu Act 27 of 2011, being a substitutive amendment, should be applied retrospectively to benefit the petitioner.

2. Validity of the Writ Petition Despite the Availability of an Alternative Remedy:

The respondent contended that the writ petition was not maintainable as the petitioner had not exhausted the available remedy of appeal under the Act. The court dismissed this objection, stating that a serious question of law was raised, justifying the writ petition. The court emphasized that the availability of an alternative remedy does not bar the writ petition when significant legal questions are involved.

3. Interpretation of Statutory Requirements as Mandatory or Directory:

The court addressed whether the requirement for a dealer under the composition scheme to inform the assessing authority within seven days of crossing the turnover limit was mandatory or directory. The court referred to the principles laid down by the Supreme Court in Sharif-Ud-Din vs. Abdul Gani Lone, which stated that the use of the word "shall" is not conclusive in determining whether a provision is mandatory or directory. The court must consider the provision's object and context. The court noted that the statutory scheme did not stipulate consequences for non-compliance and that the requirement was procedural. Therefore, the court held that the requirement was directory, not mandatory.

Conclusion:

The court allowed the writ petition, set aside the impugned order, and remitted the matter to the respondent for fresh consideration in accordance with the law. The petitioner was granted an opportunity to file objections within four weeks. The writ petition was allowed without costs, and the connected miscellaneous petition was closed.