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TMI Blog2011 (2) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... etitions the petitioners seek to have the orders passed by the Appellate Deputy Commissioner rejecting their appeals, 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, set aside and to direct him to admit their appeals, and decide the matter in accordance with law. Before examining the contentions urged, it is necessary to briefly note the facts, to the extent relevant, in each of the writ petitions. 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, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the show-cause notice for admission of the appeal subsequent to the rejection order, the same could not be considered. Aggrieved thereby the present writ petition. W.P. No. 16179 of 2010:- The relief sought for in this writ petition is to declare the action of the first respondent in rejecting the appeal for non-payment of 12.5 per cent of the disputed tax for maintenance of the appeal even though payment was made before the order of rejection was passed on March 30, 2010, as arbitrary and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch 30, 2010. They would contend that failure to pay 12.5 per cent of the disputed tax was only because of financial constraints ; and there were no other laches on their part. W.P. No. 13470 of 2009:- The relief sought for in this writ petition is to declare the proceedings of the first respondent dated January 9, 2009, rejecting the appeal filed by the petitioner on June 24, 2008, as arbitrary and illegal ; and to direct the first respondent to consider their representation 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax admitted by the appellant, for the relevant assessment year, in respect of which the appeal is preferred. 31. Appeal to Appellate authority:- (1) Any VAT dealer or TOT dealer or any other dealer objecting to any order passed or proceeding recorded by arty authority under the provisions of the Act other than an order passed or proceeding recorded by an Additional Commissioner or Joint Commissioner or Deputy Commissioner, may, within thirty days from the date on which the order or proceeding was served 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 presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 21 or 32 or 38; or (c) by any authority following the ruling or order passed under section 67; may appeal to the Appellate Tribunal within sixty days from the date on which the order or proceeding was served on him. (2) The Appellate Tribunal may within a further period of sixty days admit the appeal preferred after the period of sixty days specified in sub-section (1), if it is satisfied that the dealer had sufficient cause for not preferring the appeal within that period:- Provided that no appeal against the order passed under section 31 shall be 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from the date on which the order or proceeding was served on him. Under rule 33(1) of the APGST Rules, and rule 59 of the APVAT Rules, an appeal lies to the Appellate Deputy Commissioner against an order passed or proceeding recorded by an officer not above the rank of the Assistant Commissioner. If an appeal is preferred within 30 days, from the date of receipt of an order passed or proceeding recorded by the authority, the appellate authority is required to hear and adjudicate the appeal on its merits, subject to fulfilment of the other conditions 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in the statute, by excluding the time spent in prosecuting in good faith and due diligence any prior proceeding on the analogy of section 14(2) of the Limitation Act. It is true that, in Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker AIR 1995 SC 2272, the Supreme Court distinguished its earlier judgment in Parson Tools and Plants [1975] 35 STC 413 (SC) ; [1975] 4 SCC 22 on the ground that the scope of section 29(2) of the Limitation Act was not considered in the said decision and, as such, could not be held to be an 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 autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear judicial interpretation the subsequent statute, which incorporates the same word or the same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has been previously assigned to it. (Banarsi Debi v. Income-tax Officer [1964] 53 ITR 100 (SC) ; [1964] 7 SCR 539 and Diwan Bros. v. Central Bank of India [1976] 3 SCC 300). If the Legislature, which is deemed to be aware of the declarations of law by the court, did not alter the law it must be deemed 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to section 19(1) requires the dealer to produce either proof of payment of the tax admitted to be due, or of such instalments as have been granted. It would suffice as proof, in cases where the Deputy Commissioner has granted instalments under section 16(2)(a), if the assessee produces the order of the Deputy Commissioner granting instalments, provided that he pays 12.5 per cent of the disputed tax and produces proof thereof within 60 days from the date of receipt of a copy of the assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take or inadvertence, received, filed or used in any court or office without being properly stamped, the presiding judge or the head of the office, as the case may be, or in the case of a High Court, any judge of such court, if he thinks fit, order that such document be stamped as he may direct and, on such document being stamped accordingly, the same and every proceedings relating thereto shall be as valid as it had been properly stamped in the first instance. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the said provision. It carves out an exception to the provision to which it has been enacted as a proviso, and to no other. (Commissioner of Income-tax v. Indo-Mercantile Bank Ltd. [1959] 36 ITR 1 (SC) ; [1959] Supp (2) SCR 256, Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax [1955] 6 STC 627 (SC) ; [1955] 2 SCR 483). A proviso cannot be torn apart from the main section nor can it be used to nullify or set at naught the real 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit within the time prescribed ; the second proviso does not lay down consequences for non-compliance thereof ; as no time-limit is prescribed therein for payment of 12.5 per cent of the disputed tax, pre-deposit is directory in so far as the period, within which the amount is to be paid, is concerned ; the assessee can, therefore, comply with the second proviso at any time before rejection of the appeal by the Appellate 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second proviso, in using the word shall not , prohibits the appellate authority from admitting the appeal unless proof of payment of admitted tax, or 12.5 percent of the disputed tax, is produced by the dealer. Prohibitive or negative words can rarely be directory, and are indicative of the intent that the provision is to be mandatory (Haridwar Singh v. Bagun Sumbrui [1973] 3 SCC 889). The circumstance that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 21(2), of the Act does not use the words accompanied by , proof of payment of the admitted tax, or 12.5 per cent of the disputed tax, need not accompany the appeal filed either under section 19(1) of the Act or under the first proviso thereto, and it would suffice if such proof is produced before the last date on which an appeal may be admitted, i.e., within 60 days of receipt 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners that the practice obtaining in the Commercial Tax Department is that, only after securing confirmation from the Department official, (assessing authority), as regards payment of tax, the first appellate authority admits the appeal ; and the use of the word admit in the second proviso can only mean that the appellate authority can exercise its judicial discretion 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved assessee ; and any construction which scuttles pursuit of the statutory remedy of appeal should be eschewed. Reliance is placed on Shaikh Salim Haji Abdul Khayumsab [2006] 1 SCC 46, and Salem Advocate Bar Association [2005] 6 SCC 344. In Shaikh Salim Haji Abdul Khayumsab [2006] 1 SCC 46, the Supreme Court held that all rules of procedure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakti Co-op. Housing Society v. Swaraj Developers AIR 2003 SC 2434). Statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances, (Chertsey Urban District Council v. Mixnam's Properties Ltd. [1964] 2 All ER 627), and must be construed according to the rules of grammar. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(4) on the other. While the former relates to admission of the appeal, the latter prescribes a time-limit for its final disposal. On a conjoint reading of section 31(1) and (4) of the VAT Act and its provisos, it is evident that the time-limit prescribed for admission of an appeal cannot be extended till the hearing of the 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 reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal, i.e., within sixty days from the date of receipt of a copy of the order, and not thereafter. Reliance placed by the petitioners on Shyam Kishore AIR 1992 SC 2279 is misplaced. In Shyam Kishore AIR 1992 SC 2279 an appeal, against the levy of assessment of tax, was provided for under section 169 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is put in issue, would constitute a precedent. It is the rule deductible from the application of law to the facts and circumstances of the ease which constitutes its ratio decidendi. (Union of India v. Dhanwanti Devi [1996] 6 SCC 44, State of Orissa v. Mod. llliyas [2006] 1 SCC 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 natu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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