9911796707
TMI Blog2008 (4) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 8 of the West Bengal Taxation Tribunal Act, 1987, the petitioner has challenged two orders of seizure and penalty in respect of two imported consignments under exactly similar circumstances. As similar questions of fact and law are involved both these applications were heard together and are being disposed of by this common judgment. The petitioner is an importer and reseller of goods including "refined soya bean oil". It is a registered dealer under the West Bengal Value Added Tax Act, 2003 (in short, "the VAT Act"). Normally the petitioner imports goods through Paradip port in Orissa and it maintains an office at Paradip. On December 4, 2006 the petitioner's Paradip office sent two consignments of refined soya bean oil by two vehicles. The vehicles reached Sonakonia check-post on December 5, 2006, a day on which Bangla Bandh was called in West Bengal. According to the petitioner, because of the long queue of goods vehicles on a bandh day the drivers reached the check-post late and produced all the relevant documents including way-bills before the Check-post officers. The petitioner has claimed in these applications that the check-post officials du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re filed by the drivers. It is not possible to accept that the drivers were new and ignorant of procedural requirement. In fact no attempt was made to prove that the drivers were carrying goods from one State to another for the first time. The petitioner has claimed that the disputed consignments were being sent to West Bengal on stock transfer basis and no tax was payable for import of those goods. The purpose of production of the way-bill and other documents at the check-post and the requirement of endorsement on the way-bill by the check-post authorities was/is to ensure that such imports are duly recorded at the check-post and that the importers will not be in a position to suppress or conceal sale of the imported goods in West Bengal. Even if the goods were brought on stock transfer basis, sale of those goods in West Bengal were exigible to tax. Non-production of the documents including way-bill at the check-post definitely created an opportunity for the petitioner to conceal such import and sell those goods without any disclosure and payment of due tax. For imposition of penalty under section 77 actual evasion is not necessary. Possibility of evasion of tax is sufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods exceeds fifteen per centum including special additional tax. Mr. Sengupta, the learned advocate for the petitioner has, submitted that this Tribunal should take into account the entire facts and circumstances of the present case and reduce the amount of penalty. When his attention was drawn to the language of the proviso to section 77(1), which does not leave scope for any kind of discretion Mr. Sengupta has submitted that this Tribunal can exercise its discretion and pass any kind of "direction or order" as it may deem fit and proper in view of the language of section 8(6) of the West Bengal Taxation Tribunal Act. Mr. Sengupta has raised an interesting question regarding interpretation of the aforesaid proviso to section 77(1) of the VAT Act. According to him the proviso cannot undermine the main section and restrict the discretion allowed by the main section. He has contended that if the proviso is accepted as mandatory, the main section providing for maximum penalty and permitting discretion becomes totally redundant and the proviso occupies the position of the main section. He has cited several decisions on the role and meaning of proviso to a section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso, sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso. A proviso ordinarily is but a proviso, although the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other and result in a harmonious construction." The same view was reiterated by the Supreme Court in A.N. Sehgal v. Raje Ram Sheoram AIR 1991 SC 1406. "15. The scope of the proviso, therefore, is to carve out an exception to the main enactment and it excludes something which otherwise would have been within the rule. It has to operate in the same field nd if the language of the main enactment is clear, the proviso cannot be torn apart from the main enactment nor can it be used to nullify by implication what the enactment clearly says nor set at naught the real object of the main enactment, unless the words of the proviso are such that it is its necessary effect." Our attention has been drawn to another principle of interpreting a proviso according to which, the proviso, if introduced subsequently after enactment of the main provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the value of the offending goods attracting tax at rates not exceeding four per cent and 50 per cent in case of goods attracting tax exceeding four per cent. According to Mr. Sengupta the aforementioned construction does not destroy the main section and does not make it unnecessary and brings in harmony between the main provision and the proviso. In answer it has been submitted on behalf of the respondents that the Legislature intended to do away with any kind of discretion and to provide a fixed penalty to prevent improper use of discretion and resultant discrimination. It has been pointed out that the pre-amendment provisos divided goods into three groups on the basis of rate of payable tax, prescribed three maximum penalties for those three groups as exceptions to the main section. By the present amendment the Legislature has deleted the previous proviso and consciously introduced a fixed penalty in place of a variable penalty. The difference in the language reflects the clear intention of the Legislature to do away with the discretion and to impose a fixed penalty depending on the rate of tax payable. If the Legislature intended to provide for different maximum amounts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts, if possible, so that none is rendered useless and ineffective. Before insertion of the disputed proviso the State Legislature did not prescribe any fixed penalty for infringement of any statutory safeguard against possibility of evasion of tax. Almost in all such statutes the Legislature fixed the maximum amount of penalty and left it to the discretion of the concerned officers to impose penalty within prescribed range commensurate with the nature, gravity and impact of the infringement. In section 96 of the VAT Act itself the Legislature has prescribed the maximum amount of penalty and has left it to the discretion of the assessing authority to levy penalty up to the maximum limit (twice the amount of tax avoided) in case of concealment of sales, purchases, contractual transfer price or for furnishing incorrect particulars in the return for avoiding payment of due tax. Procedural requirements for transporting goods have been laid down in order to prevent concealment of imports into or exports from West Bengal and of sales or purchases within West Bengal and consequential evasion of tax. Concealment of sales, purchases or contractual transfer price is also intended to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus: The fact that the statute uses the word 'shall' while laying down a duty is not conclusive on the question whether it is a mandatory or directory provision. In order to find out the true character of the legislation, the court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. . ." While interpreting Order 41, rule 3A of the Civil Procedure Code in which the mandatory expression "shall be" has been used, the Supreme Court in State of M.P. v. Pradeep Kumar [2000] 7 SCC 372, has approved the view expressed by several High Courts that despite use of the words "shall be" the provision is directory and not mandatory. In Salem Advocate Bar Association, Tamil Nadu v. Union of India AIR 2005 SC 3353, the Supreme Court was interpreting Order 8, rule 1 of the Civil Procedure Code prescribing maximum time which can be allowed by courts to file written statement and the effect of the proviso added to Order 6, rule 17 of the Civil Procedure Code dealing with amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the court will always endeavour to place on such words reasonable limitation, on the ground that the Legislature could not have intended such consequence to ensue, unless the express language in the Act or binding authority prevents such limitation being interpolated into the Act. In construing an Act, a construction ought not be put that would work injustice, or even hardship or inconvenience, unless it is clear that such was the intention of the Legislature. It is also settled that where the language of the Legislature admits of two constructions and if construction in one way would lead to obvious injustice, the courts act upon the view that such a result could not have been intended, unless the intention had been manifested in express words. Out of the two interpretations, that language of the statute should be preferred to that interpretation which would frustrate it. It is a cardinal rule governing the interpretation of the statutes that when the language of the Legislature admits of two constructions, the court should not adopt the construction which would lead to an absurdity or obvious injustice. It is equally well-settled that within two constructions that alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main part to impose a lesser amount of penalty. Similarly in case of goods falling under clause (a) of the proviso (goods attracting tax up to four per cent on their sale) the concerned authority may take into account the nature and gravity of the violation and mitigating or aggravating circumstances, if any, and impose penalty lesser or higher than 30 per cent but not exceeding 50 per cent, the maximum set by the main part of section 77(1) for recorded acceptable reasons. This interpretation keeps both the main part and the proviso operative and effective without destroying or obliterating anyone. We, thus hold that the provisions contained in the proviso to section 77(l) of the VAT Act as amended on and from August 1, 2006, are directory and the authorities competent to impose penalty have also the liberty and discretion to deviate from the proviso in exceptional cases after recording appropriate reasons for such deviation or departure. However they cannot exceed the maximum limit set by the main part of section 77(1). The harmonising interpretation of the proviso to section 77(1) as explained hereinabove does not help the petitioner in the present case. As already stated, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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