The Assessing Authority issued a show cause notice, in Form VAT 305-A dated 12.09.2012 for the assessment year 2011-12, proposing to levy tax on the petitioner, among others, on (a) the amount charged towards outdoor catering; (b) the amount charged towards hiring of tent house equipment; and (c) the levy of VAT on sales made to dealers in other States. He also disallowed the petitioners claim for input tax credit on liquefied petroleum gas (LPG) used by them for cooking food items. The petitioner filed their objections thereto by letter dated 18.12.2012, and appeared before the assessing authority for a personal hearing. They filed an application before the Commissioner on 18.01.2013 requesting him to issue an order under Section 21(7) of the A.P. VAT Act (hereinafter called the VAT Act) deferring assessment proceedings initiated by the assessing authority against them.
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN AND THE HONBLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION NO.13832 OF 2013
31-12-2014
KMK Event Management Ltd.Petitioner
The Commissioner of Commercial Taxes . Respondent
Counsel for the petitioner: Sri Dr. T. Ramesh Babu
Counsel for respondent:GP for Commercial Taxes
<GIST:
>HEAD NOTE:
? Citations:
1) (2008) 12 VST 371
2) (2006) 145 STC 91
3) (2004) 135 STC 480
4) (2011) 37 VST 226
5) (2011) 46 VST 57
6) (2000) 1 SCC 521 = (2000) 117 STC 1
7) 2013 (6) ALT 723 (D.B)
8) Judgment in WP No.4516 of 2013 dated 18.02.2013
9) Order in WPMP No.23591 of 2012 in W.P.No.18430 of 2012 dated 25.06.2012
10) AIR 1973 SC 2524
11) (1997) 10 SCC 291
12) AIR 1986 SC 662
13) 1990(3) ALT 382
14) AIR 1968 SC 647= (1968) 2 SCR 154
15) (1901 AC 495 : (1900-03) All ER Rep. 1 (HL)
16) AIR 2001 SC 1980
17) (2001) 5 SCC 407
18) (2001)8 SCC 676
19) (2001) 8 SCC 540
20) AIR 1987 SC 1668
21) AIR 1987 SC 2166
22) (1950) 2 ALL ER 29
23) AIR 1957 Punjab 5
24) (1984) 2 ALLER 1
25) (1979) 2 All ER d 433, (1979) 1 WLR 620
26) Judgment in Civil Appeal No.1421 of 1966 dated 01.05.1967
27) AIR 1968 S 816 = (1968) 2 SCR 674
28) AIR 1966 SC 1412 =(1966) 2 SCR 279
29) AIR 1967 Allahabad 248
30) AIR 1951 Raj 94(a) = (1951) 20 ITR 214 (Raj)
31) (1938) 6 ITR 414 (AIR 1938 PC 175
32) AIR 1954 Patna 155
33) AIR 1961 SC 609
34) (1957) 31 ITR 678
35) AIR 1961 SC 1265
36) AIR 1964 Madhya Pradesh 214
37) AIR 1955 SC 604
38) (1879) 5 A.C. 63 (PC)
39) 1978 (2) SCC 213
40) 1990 (3) SCC 447
41) 1993 Supp.(3) SCC 716
42) 1999 (4) SCC 135
43) 1999 (6) SCC 275
44) (2001) 9 SCC 432
45) 236 F.2d 622
46) AIR 2004 SC 1426 = (2004) 1 SCC 755
47) 1996) 4 SCC 76
48) (1997) 116 PLR 252
49) (2004) 1 SCC 702
50) (1955) 2 SCR 603 = AIR 1955 SC 661
51) (1898) 2 Ch 28
52) 1898 AC 571
53) (2004) 2 SCC 1
54) (1975) 1 All ER 16
55) (1988) 2 SCC 293
56) AIR 1962 SC 159
57) 1987 Supp SCC 350
58) AIR 1969 SC 1048
59) (1991) 1 SCC 86
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN
AND
THE HONBLE SRI JUSTICE M. SATYANARAYANA MURTHY
WRIT PETITION No.13832 OF 2013
ORDER: (per Honble Sri Justice Ramesh Ranganathan)
The proceedings, under challenge in this Writ Petition, is the
order of the Commissioner, Commercial Taxes (hereinafter called
the Commissioner) dated 24.04.2013 rejecting the petitioners
representation seeking deferment of the proposed assessment, in
Form VAT 305-A dated 12.09.2012, by the Assistant
Commissioner, Commercial Taxes II, Enforcement Wing
(hereinafter called the assessing authority).
The Assessing Authority issued a show cause notice, in Form
VAT 305-A dated 12.09.2012 for the assessment year 2011-12,
proposing to levy tax on the petitioner, among others, on (a) the
amount charged towards outdoor catering; (b) the amount charged
towards hiring of tent house equipment; and (c) the levy of VAT on
sales made to dealers in other States. He also disallowed the
petitioners claim for input tax credit on liquefied petroleum gas
(LPG) used by them for cooking food items. The petitioner filed
their objections thereto by letter dated 18.12.2012, and appeared
before the assessing authority for a personal hearing. They filed
an application before the Commissioner on 18.01.2013 requesting
him to issue an order under Section 21(7) of the A.P. VAT Act
(hereinafter called the VAT Act) deferring assessment proceedings
initiated by the assessing authority against them. The petitioner
contended that levy of VAT on the turnover on which service tax
was levied as hire charges, and levy of VAT on supply of food and
drinks on which also service tax was levied, was the subject matter
of W.P. No.6692 of 2011 which was admitted, and was pending on
the file of the High Court.
In his order dated 02.02.2013, the Commissioner (1st
respondent herein) held that the show cause notice issued by the
assessing authority was for several issues, apart from the proposal
to levy tax on the service part of outdoor catering services; and all
the issues mentioned in the show cause notice were not the
subject matter of W.P. No.6692 of 2011, pending before the High
Court. Consequently, the petitioners request for deferment of
assessment proceedings was rejected. The petitioner submitted
another representation on 04.02.2013 contending that, in addition
to the aforesaid two issues which were the subject matter of W.P.
No.6692 of 2011, the issue relating to levy of VAT, on the turnover
on which service tax was levied, was decided by the Supreme Court
in Imagic Creatives v. CCT ; and the question whether VAT could
be levied on the amount received towards the service element, in
the supply of food and drinks, had been decided by the Supreme
Court in BSNL v. Union of India , Imagic Creatives1, and
Tamilnadu Kalyanamandapam v. Union of India ; by the Punjab
and Haryana High Court in Cap N Chaps Caterers v. State of
Haryana ; and by the Karnataka High Court in Commissioner v.
LSG SKY Chef . However, for the other issues, the petitioner
conceded that the assessing authority could pass an assessment
order.
After considering the petitioners objections, the
Commissioner passed an elaborate order dated 24.04.2013
rejecting their request for deferment of assessment proceedings.
The Commissioner negatived their claim that the issue regarding
levy of VAT, on supply of tent house material, was the subject
matter of W.P. No.35693 of 2012 and batch, and held that what
was under challenge therein was the levy of VAT on
advertising/hiring activity, and not on hiring of tent house
equipment. The Commissioner also held that the proposal to levy
VAT, on the sale of food and drinks in catering activity, could not
be deferred as the petitioner had not produced any evidence that
the facts in Tamilnadu Kalyanamandapam3 was similar to their
case attracting the said decision; and the law declared by the
Supreme Court, in K. Damodaraswamy Naidu & Sons v. State of
Tamil Nadu , was still good law. With regards disallowance of
input tax credit on LPG, the Commissioner held that, in the case of
M/s. RAK Ceramics (India) Pvt. Ltd. v. Asst. Commissioner
(CT)-VI, Enforcement Wing, Hyderabad , the High Court had
granted interim stay by order in WPMP No.32 of 2013 in WP No.31
of 2013 dated 13.01.2013; the interim stay was only regarding
recovery of the disputed tax; there was no stay on the substantive
issue i.e., on disallowance of ITC on LPG as per Rule 20(2)(q) of
the VAT Rules; there were many issues involving questions of fact;
and the question, whether a particular transaction would come
under transfer of the right to use, had to be examined based on
the facts of each case.
It is this order of the Commissioner which is under challenge
in this Writ Petition. Interim orders were passed by this Court in
W.P.MP No.16922 of 2013 dated 30.04.2013, which were extended
thereafter. Consequently, the assessing authority has been
disabled from passing an assessment order pursuant to the show
cause notice dated 12.09.2012. During the course of hearing of
this Writ Petition on 11.11.2012, this Court called upon the
Commissioner to file a counter-affidavit on whether the VAT Act
conferred on him the power to defer assessment proceedings. In
his counter-affidavit dated 22.11.2014, the Commissioner
submitted that the petitioner was liable to pay tax on the total
amount set out in the tax invoice; the Assistant Commissioner
had, by his notice dated 12.09.2012, rightly proposed to tax the
turnover which had escaped assessment; the petitioners
application for deferment of assessment proceedings was rejected
by him in accordance with law; on a conjoint reading of Section
21(7) and 32(5) of the VAT Act, the Commissioner has the power to
defer assessment proceedings; and, as has been held by this Court
in M/s. Global Fuels Lubricants Inc. v. The Commissioner of
Commercial Taxes , the power to defer assessment proceedings is
valid.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner,
would draw attention of this Court to an interlocutory order passed
in M/s. Schindler India Private Limited v. Commercial Tax
Officer (Int) Secunderabad , and to the judgment of the Supreme
Court in The Commissioner of Income-tax, West Bangal-II,
Calcutta v. Naga Hills Tea Co. Ltd. and Collector of Customs,
Madras v. Lotus Inks . He would also place reliance on M/s.
Global Fuels Lubricants Inc.8, to submit that, on a conjoint
reading of Section 21(7) read with Section 32(5) of the VAT Act, the
Commissioner has the power to defer assessment proceedings.
In M/s. Schindler India Private Limited9 this Court, by
way of an interlocutory order, observed that, prima facie, Section
21(7) read with Section 32(5) of the VAT Act enables the
Commissioner to defer assessment proceedings and, as the
Commissioners power under Section 32(5) of the VAT Act is
exercised qua an assessment order already passed, impliedly the
Commissioner can always even defer the assessment. It is well
settled that interlocutory orders have no finality and are, therefore,
not binding as a precedent. As there is no finality to an
interlocutory order, and interim orders passed by Courts on
certain conditions are not precedents for other cases which may be
on similar facts, (Empire Industries Limited v. Union of India ;
M. Vijaya Kumar v. Milk Products Factory ), the interim order
passed in M/s.Schindler India Private Limited9 would not
constitute a precedent binding on a co-ordinate Division Bench.
It is no doubt true that, if two views are possible on the
interpretation of the provisions of a fiscal statute, the construction
in favour of the assessee should bind the decision of the Court.
(Naga Hills Tea Co. Ltd.10 and Lotus Inks11). As the power to
defer assessment proceedings can only be statutorily conferred by
the legislature, and not by the Court, the question which
necessitates examination is whether Section 21(7) of the VAT Act,
either explicitly or by necessarily implication, confers power on the
Commissioner to defer assessment proceedings.
It is only if the Commissioner has the power to defer
assessment proceedings, would he be entitled to entertain and
examine any request for its deferment. As conferment of the
power, to defer assessment proceedings, is a pre-requisite for its
exercise, this Court must, at the outset, examine whether the VAT
Act confers on the Commissioner the power to defer assessment
proceedings, before considering whether exercise of the power to
pass the impugned order dated 24.04.2013, rejecting the
petitioners request for deferment of assessment proceedings, is
valid or not. Before doing so, it is necessary to consider the
submission of the Commissioner that, in view of the law declared
by the Division bench of this Court in Global Fuels Lubricants
Inc8, the Commissioner has the power to defer assessment
proceedings.
In M/s. Global Fuels Lubricants Inc.8, the order of the
Commissioner, super-adding the condition of furnishing a bank
guarantee for deferment of assessment proceedings, was under
challenge. The Division Bench held that the order passed by the
Commissioner, directing the petitioner to furnish a bank
guarantee, was destructive of the purpose for which the power and
discretion was conferred under Section 32(5) of the Act; this
provision enabled the Commissioner to defer any proceedings on
the ground that an appeal or other proceedings are pending before
the Appellate Tribunal or the High Court or the Supreme Court
involving a question of law having a direct bearing on the order or
proceeding in question; Section 32(6) extended the period of
limitation for passing an order of assessment pro-tanto the period
for which a deferment was ordered under Section 32(5) of the Act;
in the circumstances, there was no prejudice caused to the
Revenue by deferment of proceedings; the provision was, in fact,
incorporated to facilitate a uniform and coherent tax
administration policy i.e., to proceed with the assessment in
conformity with the guidance received from the orders of the
Appellate Tribunal, the High Court or the Supreme Court, as the
case may be, on matters involving identical or substantially similar
questions of law; and, where an order of assessment has not been
passed as yet, the order of the Commissioner super-adding a
condition calling upon the petitioner to furnish a bank guarantee,
for a liability yet to be assessed, constituted an irrational exercise
of discretion.
The question, which arose for consideration before the
Division bench in M/s. Global Fuels Lubricants Inc8, was
whether the Commissioner could direct a VAT dealer to furnish a
bank guarantee as a pre-condition for deferment of proceedings.
The question whether the Commissioner had the power to defer
assessment proceedings did not arise for consideration therein.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner, would
however contend that it is only if the Commissioner has the power
to defer assessment proceedings could he have imposed the pre-
condition of furnishing a bank guarantee to defer assessment
proceedings. A decision is only an authority for what it actually
decides. What is of the essence in a decision is its ratio and not
every observation found therein nor what logically follows from the
various observations made in it. Every judgment must be read as
applicable to the particular facts proved, or assumed to be proved,
since the generality of the expressions which may be found there
are not intended to be exposition of the whole law, but governed
and qualified by the particular facts of the case in which such
expressions are to be found. A case is only an authority for what it
actually decides. It cannot be quoted for a proposition that may
seem to follow logically from it. Such a mode of reasoning assumes
that the law is necessarily a logical code, whereas it must be
acknowledged that the law is not always logical at all. (State of
Orissa v. Sudhansu Sekhar Misra ; Quinn v. Leathem ). While
the premise, on which the judgment in M/s. Global Fuels
Lubricants Inc8 is founded, is that the Commissioner has the
power to defer assessment proceedings, the question whether the
Commissioner had the power to defer assessment proceedings was
not in issue before, nor was it examined by, the Division bench.
Reliance placed on M/s. Global Fuels Lubricants Inc8 is,
therefore, misplaced.
Section 32(1) of the VAT Act enables the Commissioner to,
suo moto, call for and examine the record of any order passed or
proceeding recorded by any authority, officer or person
subordinate to it under the provisions of the VAT Act, including
sub-section (2), and, if such order or proceeding recorded is
prejudicial to the interests of revenue, he may make such enquiry
or cause such enquiry to be made and, subject to the provisions of
the Act, initiate proceedings to revise, modify or set aside such
order or proceeding and to pass such order in reference thereto as
he thinks fit. Under Section 32(2) the powers, of the nature
referred to in sub-section (1), can also be exercised by the
Additional Commissioner, the Joint Commissioner, the Deputy
Commissioner and the Assistant Commissioner, in the case of
orders passed or proceedings recorded by the authorities, officers
or persons subordinate to them.
As the proviso to Section 32 of the VAT Act is similar to
Section 20(2-A) of the A.P. General Sales Tax Act (APGST Act for
short), it is useful to read Section 20(2-A) of the APGST Act in
juxta-position with the proviso to Section 32 of the VAT Act as it
originally stood, and the proviso to Section 32 of the VAT Act after
it was amended by Act 21 of 2011 with effect from 15.09.2011.
Section 20 (2-A) of the
APGST Act
Proviso to Section 32
of the AP VAT Act prior
to its amendment
Proviso to Section 32
of the AP VAT Act after
its amendment by Act
21 of 2011 with effect
from 15.09.2011
The power under sub-
section (1) or sub-section
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question which
is the subject matter of
an appeal before, or
which was decided on
appeal by, the Appellate
Tribunal under Section
21.
Provided that the power
under sub-section (1) or
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question, which
is the subject matter of
an appeal before or
which was decided on
appeal by the Appellate
Tribunal under Section
33:
Provided that the power
under sub-section (1) or
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question which
was decided on appeal by
the Appellate Tribunal
under Section 33.
Section 20(2-A) of the APGST Act and the proviso to Section
32 of the VAT Act, prior to its amendment by Act 21 of 2011 with
effect from 15.09.2011, disabled the revisional authority from
exercising the power of revision in respect of any issue or question
which (i) was the subject matter of an appeal before the Sales Tax
Appellate Tribunal (STAT for short); and (ii) was decided in appeal
by the STAT. The effect of the amendment, by Act 21 of 2011, is
that there is no longer any bar on the exercise of the revisional
jurisdiction when the issue or question is the subject matter of an
appeal before the STAT. The bar is now limited only in respect of
an issue or question decided in appeal by the STAT.
As the proviso to Section 32, prior to its amendment, barred
exercise of the revisional jurisdiction in respect of any issue or
question which was the subject matter of appeal before the STAT,
the power to defer revision proceedings was confined, under
Section 32(5) of the Act prior to its amendment by Act 21 of 2011
dated 29.12.2011 with effect from 15.09.2011, only to cases where
an appeal or other proceedings were pending before the High
Court, or the Supreme Court, involving a question of law having a
direct bearing on the order or proceedings in question. By Act 21 of
2011, the proviso to Section 32 was amended and, thereafter, the
bar on the exercise of the revisional jurisdiction is now limited only
in respect of an issue or question decided in appeal by the STAT,
and not when an issue or question is the subject matter of an appeal
pending before the STAT. It is only because the bar, under the
proviso to Section 32, is no longer applicable when an appeal is
pending before the STAT, has power now been conferred on the
Commissioner, under Section 32(5) of the VAT Act after its
amendment by Act 21 of 2011 w.e.f. 15.09.2011, to defer revision
proceedings when an appeal, involving any issue or question
having a direct bearing on the revision proceedings, is pending
before the STAT.
Section 32(5) of the VAT Act makes it lawful for the
Commissioner to defer any proceedings under this section meaning
thereby Section 32 of the VAT Act alone, and not assessment
proceedings under Section 21 or appellate proceedings under
Section 31 of the VAT Act. Extending the power of the
Commissioner, under Section 32(5) of the VAT Act, to also defer
assessment proceedings under Section 21, or the appellate
proceedings under Section 31, of the VAT Act would require this
Court to ignore the words under this section in Section 32(5) of the
VAT Act. It would be wholly inappropriate for this Court, while
interpreting a statutory provision, to delete or ignore some of the
words used therein. No construction, which requires the words
under this section in Section 32(5) of Act to be ignored, or construed
as inapposite surplusage, is permissible. Courts have adhered to
the principle that effort should be made to give meaning to each
and every word used by the legislature and it is not a sound
principle of construction to brush aside words in a statute, as
being inapposite surplusage, if they can have a proper application
in circumstances conceivable within the contemplation of the
statute. (Gurudevdatta VKSSS Maryadit v. State of
Maharashtra , Manohar Lal v. Vinesh Anand ). The legislative
intent, found specific mention and expression in the provisions of
the Act itself, cannot be whittled down or curtailed and rendered
nugatory. (Bharathidasan University v. All India Council for
Technical Education ). Effect should be given to the provision,
and a construction that reduces a part thereof to a dead letter
must be avoided. (Anwar Hasan Khan v. Mohd. Shafi ).
Section 21 of the VAT Act relates to assessment. Sections
21(1), (3), (4) and (5) enable the prescribed authority, in the
circumstances mentioned therein, to assess a VAT dealer. Section
21(7) of the VAT Act stipulates that, where an assessment has
been deferred by the Commissioner under Section 32(5) or, as the
case may be, by the STAT under the proviso to Section 33(4), on
account of any stay granted by the Appellate Tribunal or, as the
case may be, the Andhra Pradesh High Court or the Supreme
Court respectively, or where an appeal or other proceedings is
pending before the Appellate Tribunal or the High Court or the
Supreme Court involving a question of law having a direct bearing
on the assessment in question, the period during which the stay
order was in force, or such appeal or proceedings was pending,
shall be excluded in computing the period of four years or six years
as the case may be for the purpose of making the assessment.
The words as the case may be mean whichever the case may be,
(Shri Balaganesan Metals v. M.N. Shanmugham Chetty ), and
what the expression says, i.e., as the situation may be.
(Subramaniam Shanmugham v. M.L.Rajendran ; Bluston &
Bramley Ltd. v. Leigh ; Words and Phrases, Permanent Edn. 4
page 596). The words as the case may be in Section 21(7) of the VAT
Act mean whichever the case may be i.e., either the Commissioner
under Section 32(5) or the STAT under the proviso to Section 33(4)
of the VAT Act. As noted hereinabove, Section 32(5) confers on the
Commissioner the power to defer revision proceedings initiated
under Sections 32(1) & (2) of the VAT Act. The proviso to Section
33 (4) of the VAT Act confers power on the STAT to defer hearing of
the appeal before it, if the appeal involves a question of law, a
decision on which is pending in any proceedings before the High
Court or the Supreme Court, till such proceedings are disposed of.
The deferment of assessment proceedings, as referred to in Section
21(7) of the VAT Act, is by the Commissioner under Section 32(5)
and the STAT under the proviso to Section 33(4), which confer
power on the Commissioner to defer revision proceedings, and the
STAT to defer hearing of the appeal before it, respectively. The
word assessment, in the context of Section 21(7), neither means
self-assessment under Section 20 nor an assessment order
passed under Section 21 of the VAT Act.
The word assessment, in Section 21(7) of the VAT Act, has a
wide connotation. It does not always mean the determination of
the taxable turnover of a dealer under a taxing statute like the VAT
Act. To "levy" a tax means "to impose or assess" or "to impose,
assess or collect under the authority of law". It is a unilateral act of
a superior legislative power to declare the subjects and rates of
taxation and to authorise the collector to proceed to collect the tax.
"Assessment" is the official determination of liability of a person to
pay a particular tax, and "collection" is the power to gather in
money as taxes by enforced payment, if necessary. The levy of
taxes is generally a legislative function; assessment is a quasi-
judicial function and collection an executive function. These
three expressions "levy", "assessment" and "collection" are of the
widest significance and embrace in their broad sweep all the
proceedings which can possibly be imagined for raising money by
the exercise of the power of taxation from the inception to the
conclusion of the proceedings. (Firm L. Hazari Mal Kuthiala v.
Income-tax Officer, Special Circle, Ambala Cantt ). The
expression assessment to tax may cover all the various stages
leading upto the calculation and statement of the amount of tax
due. (Vickerman v. Masons Personal Representatives ;
Hallamshire Industrial Finance Trust Ltd. v. IRC ). The word
assessment' can bear a very comprehensive meaning; it can
comprehend the whole procedure for ascertaining and imposing
liability upon the taxpayer; and it may provide for all contingencies
which may arise. (Kalawati Devi Harlalka v. CIT ; S. Sankappa
v. ITO ; State of Bombay v. Jagmohandas ).
One of the peculiarities of most tax enactments is that the
expression "assessment" is used in its various sections to convey
different connotations. The word "assessment" is used as meaning
sometimes the computation of turnover, sometimes the
determination of the amount of tax payable, and sometimes the
whole procedure laid down in the Act for imposing liability upon
the tax payer (M/s. J.K. Iron and Steel Co. Ltd. v. The Income
Tax Officer, Kanpur ; Madangopal Kabra v. The Union of
India ; Commr. of Income-tax v. Khemchand Ramdas ). The
word 'assessment' may mean determination of the amount of tax
payable. (Gulabrai Manohar Lal v. Commr. of Income-tax,
Bihar ). The said expression may also be so used as to include
proceedings for imposing liability to additional tax called penalty
on the assessee's guilt of fraud, gross negligence, dishonest or
contumacious conduct. (M/s. J.K. Iron and Steel Co. Ltd.29;
C.A. Abraham v. Income-tax Officer ; Mareddi Krishna Reddy
v. Income Tax Officer, Tenali ). It can also be understood to
include the entire machinery and procedure for imposing and
enforcing the tax liability. (M/s. J.K. Iron and Steel Co. Ltd.29;
Commr. of Income-tax, Andhra Pradesh v. Bhikaji Dadabhai
and Co., ).
The word assessment is often used in a comprehensive
sense to include all proceedings, starting with the filing of the
return or issue of notice and ending with the determination of the
tax payable by the assessee. Though, in some sections, the word
assessment is used only with reference to computation of tax, in
other sections it has the more comprehensive meaning. (S.
Sankappa27; C.A. Abraham33; Kalawati Devi Harlalka26). The
term "assessment" is flexible, capable of many meanings, and
takes its colour from the context in which it occurs. The
nomenclature is not decisive, and does not prevent it from being an
"assessment" in a proper context. (M/s. J.K. Iron and Steel Co.
Ltd.29). The meaning of "assessment" has to be derived from
the language of the provision itself. (Firm Harpaldas
Jairamdas v. The Sales Tax Officer ). The word assessment
has been used in different Sections in different contexts, and is not
always used only to mean assessment of a VAT dealer under
Section 21 of the VAT Act. In the context in which it is used, it
obviously refers only to revision proceeding under Section 32 and
an appeal before the STAT under Section 33 of the VAT Act.
It is a legitimate rule of construction to construe words, in a
statutory enactment, with reference to words found in immediate
connection with them (M.K. Ranganathan v. Government of
Madras ; Angus Robertson v. George Day ). The doctrine of
Noscitur a sociis (meaning of a word should be known from its
accompanying or associating words) has relevance in
understanding the import of words in a statutory provision.
(Bangalore Water Supply & Sewerage Board v. A Rajappa ;
Rohit Pulp and Paper Mills Ltd. vs. CCE ; Oswal Agro Mills
Ltd. vs. CCE ; K. Bhagirathi G. Shenoy v. K.P. Ballakuraya ;
Lokmat Newspapers (P) Ltd. v. Shankarprasad ; CBI v. Braj
Bhushan Prasad ). Blacks Law Dictionary (Sixth Edition)
defines Noscitur a sociisto mean that a word is known from its
associates. The meaning of a word is or may be known from the
accompanying words. Under the doctrine of noscitur, the meaning
of questionable or doubtful words or phrases in a statute may be
ascertained by reference to the meaning of other words or phrases
associated with it (Wong Kam Wo v. Dulles ). P. Ramanatha
Aiyer THE LAW LEXICON 2nd Edition Reprint 2002 defines
Noscitur a sociis to mean that the meaning of a doubtful word may
be ascertained by reference to the meaning of the words associated
with it (Broom Legal Maxims). One is known by his companions;
the meaning of a word or expression is to be gathered from the
surrounding words, that is, from the context. The coupling of
words together shows that, where the meaning of a particular word
is doubtful or obscure or where a particular expression when taken
singly is inoperative, the intention of a party who used it may
frequently be ascertained by looking at adjoining words, or at
expressions occurring in other parts of the same instrument. One
provision of an instrument must be construed by the bearing it will
have upon another.
In construing the words assessment and has been deferred by
the Commissioner under Section 32(5) or by the STAT under the
proviso to Section 33(4), which are used in association with each
other in Section 21(7) of the VAT Act, the rule of construction
noscitur a sociis may be applied. The aforesaid words, read in
juxtaposition, indicate that the meaning of one takes colour from
the other. The Rule is explained as the meaning of doubtful words
may be ascertained by reference to the meaning of words
associated with it. (Ahmedabad (P) Primary Teachers Assn. v.
Administrative Officer ). The setting and context in which the
words assessment and has been deferred by the Commissioner under
Section 32(5) or by the STAT under the proviso to Section 33(4) are
used in Section 21(7) of the VAT Act would require the word
assessment not to be understood dissociated from the words has
been deferred by the Commissioner under Section 32(5) or by the STAT
under the proviso to Section 33(4), or the word assessment to mean the
passing of an assessment order under Section 21 of the VAT Act.
Despite its having been made under Section 21 of the VAT Act
which relates to assessment, the word assessment in Section 21(7),
when read with the words assessment and has been deferred by the
Commissioner under Section 32(5) or by the STAT under the proviso to
Section 33(4), can only mean either a revision under Section 32 or
an appeal before the STAT under Section 33(1), for it is only in
relation to such proceedings has the power of deferment been
conferred on the Commissioner under Section 32(5), and on the
STAT under the proviso to Section 33(4) of the VAT Act.
Construing Section 21(7) of the VAT Act as conferring on the
Commissioner the power to defer assessment proceedings would
requires this Court to read such a power as having been conferred
also on the STAT, for Section 21(7) refers to deferment of
assessment proceedings both under Section 32(5) and the proviso
to Section 33(4) of the VAT Act. Such a construction is
impermissible on a plain and literal reading of Section 21(7) of the
VAT Act. It does not bear repetition that Section 32(5) makes it
lawful for the Commissioner to defer proceedings under this section
meaning thereby Section 32 of the VAT Act. Likewise, the proviso
to Section 33(4) only enables the STAT to defer hearing of the
appeal before it, ie an appeal preferred by a dealer under Section
33(1) of the VAT Act, and not assessment proceedings under
Section 21 of the VAT Act. Section 21(7) of the VAT Act neither
explicitly nor by necessary implication confers power either on the
Commissioner or on the STAT to defer assessment proceedings
initiated under Section 21 of the VAT Act.
Even otherwise, Section 21(7) of the VAT Act only provides
for the consequences of deferment of assessment proceedings
either by the Commissioner under Section 32(5) or by the STAT
under the proviso to Section 33(4) of the VAT Act. Just like
Section 21(7), both Section 31(4A) and Section 32(7) of the VAT Act
also provide for the consequences of deferment of proceedings. It
is convenient to read Section 21(7), Section 31(4-A) and Section
32(7) of the VAT Act in juxta-position with each other.
AP VAT ACT
AP VAT ACT
AP VAT ACT
Section 21(7)
Where an
assessment has been
deferred by the
Commissioner under
sub-section (5) of Section
32 or as the case may be,
by the Appellate Tribunal
under the proviso to sub-
section (4) of Section 33
on account of any stay
granted by the Appellate
Tribunal, or as the case
may be the Andhra
Pradesh High Court or
Supreme Court
respectively, or whereas
appeal or other
proceedings is pending
before the Appellate
Tribunal or the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
Section 31(4A)
Where any
proceeding under this
section has been
deferred on account of
any stay orders granted
by the High Court or
Supreme Court in any
case or by reason of the
fact that an appeal or
other proceedings is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
order or proceeding in
question, the period
during which the stay
order is in force or the
period during which
such appeal or
proceeding is pending,
shall be excluded, while
computing the period of
two years specified in
sub-section (4) for the
purpose of passing
appeal orders under this
section.
Section 32(7)
Where any
proceeding under this
section has been
deferred on account of
any stay order granted
by the Appellate Tribunal
or the High Court or
Supreme Court in any
case, or by reason of the
fact that an appeal or
other proceeding is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
order or proceeding in
question, the period
during which the stay
order was in force or
such appeal or
proceeding was pending
shall be excluded in
computing the period of
four years specified in
sub-section (3), for the
purposes of exercising
the power under this
section.
The first limb of both Section 21(7) and Section 31(4A),
which provide for the consequences of deferment of assessment
and appellate proceedings, would operate only when the power of
deferment is specifically conferred on a specified
authority/authorities and is exercised by them pursuant to such
conferment. A plain and literal reading of the aforesaid provisions
make it clear that Section 21(7), Section 32(4A) and Section 32(7)
only provide for the consequences of deferment of (i) assessment,
(ii) appeal before the Appellate authority, and (iii) revision under
Section 32 of the VAT Act respectively. They do not, by
themselves, confer on the said authorities the power to defer the
proceedings. It is only because Section 32(5) specifically confers
such a power, can the Commissioner defer revision proceedings
initiated under Section 32(1) & (2) of the VAT Act. The very fact
that, while the consequences of deferment of assessment
proceedings, appellate proceedings before the Appellate authority
and revision proceedings are specifically provided for, but the
power of deferment of proceedings is restricted only to revision
proceedings under Section 32 of the VAT Act, shows that the
legislature has for the present, neither explicitly nor by necessary
implication, chosen to confer the power to defer either the
assessment proceedings under Section 21 of the VAT Act or the
appellate proceedings under Section 31 of the VAT Act.
This question can be examined from another angle also.
Ambiguity, if any, in a statutory provision can be removed applying
the Heydons Rule. The Heydons Rule is that, for the sure and
true interpretation of all statutes in general (be they penal or
beneficial, restrictive or enlarging of the common law), four things
are to be discerned and considered: (1) what was the common law
before the making of the Act/Rules; (2) what was the mischief and
defect for which the common law did not provide; (3) what remedy
the legislature has resolved to cure; and (4) the true reason of the
remedy. The Court is always to make such construction as shall:
(a) suppress the mischief and advance the remedy; and (b)
suppress subtle inventions and evasions for the continuance of the
mischief pro privato commodo (for private benefit); and (c) add
force and life to the cure and remedy according to the true intent of
the makers of the Act/Rules pro publico (for the public good). The
Heydons rule is applied in order to suppress the mischief which
was intended to be remedied as against the literal rule which could
have otherwise covered the field. (Parayankandiyal Eravath
Kanapravan Kalliani Amma v. K. Devi ; Goodyear India Ltd. v.
State of Haryana ; Ameer Trading Corpn. Ltd. v. Shapoorji
Data Processing Ltd., ; Halsburys Laws of England, Vol. 44(1),
4th Reissue, para 1474, pp. 906-07; Bengal Immunity Co. Ltd.
v. State of Bihar ; In re Mayfair Property Company ; Eastman
Photographic Material Company v. Comptroller General of
Patents, Designs and Trade Marks ; National Insurance Co.
Ltd. v. Baljit Kaur ).
The Heydon's rule itself is sometimes stated as a primary
cannon of construction, sometimes as secondary (i.e available in
the case of an ambiguity). (Maxwell on Interpretation of
Statutes; 12th Edn (1969); Craies on Statute Law; 7th Edn
(1971), pp 94, 96). The rule is available at two stages. The first
task of a court of construction is to put itself in the shoes of the
draftsman-to consider what knowledge he had and, importantly,
what statutory objective he had-if only as a guide to the linguistic
register. Here is the first consideration of the 'mischief'. Being
thus placed in the shoes of the draftsman, the court proceeds to
ascertain the meaning of the statutory language. In this task the
first and most elementary rule of construction is to consider the
plain and primary meaning, in their appropriate register, of the
words used. If there is no such plain meaning (ie if there is an
ambiguity), a number of secondary canons are available to resolve
it. Of these one of the most important is the rule in Heydon's Rule.
Here, then, may be a second consideration of the 'mischief'.
(Maunsell v. Olins ).
Section 14(6) of the APGST Act provided that it shall be
lawful for the Commissioner of Commercial Taxes to direct, by
general or special order, any assessing authority to defer
assessment in respect of any class of goods or any class of dealers
pending clarification by it of any question referred to it, if such
question has a direct bearing on such assessment. The proviso to
Section 21(4) of the APGST Act, which is in pari-materia with the
proviso to Section 33(4) of the VAT Act, also enabled the STAT, in
certain circumstances, to defer hearing of the appeal before it.
Section 14(5) of the APGST Act was identical to Section 21(7) of the
VAT Act before its amendment, and similar to Section 21(7) of the
VAT Act after its amendment. It is useful to read Section 14(5) of
the APGST Act in juxta-position with Section 21(7) of the VAT Act
both before, and after, its amendment by Act 21 of 2011.
THE APGST ACT
THE AP VAT ACT (prior
to its amendment by Act
21 of 2011 with effect
from 15.09.2011)
THE AP VAT ACT (after
its amendment by Act 21
of 2011 with effect from
15.09.2011)
Section 14(5)
Where an
assessment under this
section has been
deferred on account of
any stay order granted
by the High Court in any
case, or by reason of the
fact that an appeal or
other proceedings is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceeding was pending,
shall be excluded in
computing the period of
four years or six years as
the case may be specified
in this section for the
purpose of making the
assessments.
Section 21(7)
Where any
assessment has been
deferred on account of
any stay order granted
by the High Court or
where an appeal or other
proceedings is pending
before the High Court or
Supreme Court involving
a question of law having
a direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
Section 21(7)
Where an
assessment has been
deferred by the
Commissioner under
sub-section (5) of Section
32 or as the case may be,
by the Appellate Tribunal
under the proviso to sub-
section (4) of Section 33
on account of any stay
granted by the Appellate
Tribunal, or as the case
may be the Andhra
Pradesh High Court or
Supreme Court
respectively, or whereas
appeal or other
proceedings is pending
before the Appellate
Tribunal or the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
The Legislature, having retained a provision similar to
Section 14(5) of the APGST Act in Section 21(7) of the VAT Act, has
consciously chosen not to make a provision similar to Section 14(6)
of the APGST Act which conferred on the Commissioner the power,
in certain circumstances, to direct the assessing authority to defer
assessment proceedings. The Commissioner has not been
conferred the power to defer assessment proceedings under the
VAT Act, and his power is now limited only to defer revision
proceedings under Section 32 thereof, that too only in the
circumstances referred to, and subject to the limitations
prescribed, in sub-section (5) thereof. The Legislature has
consciously chosen not to confer on the Commissioner the power
to defer assessment proceedings under the VAT Act evidently
because, unlike the APGST Act, Sections 20(2) & (4) of the VAT Act
provide for self-assessment and, except in the circumstances
referred to in sub-sections (3) to (5) of Section 21, no assessment
order need be passed under the VAT Act. The Legislative intent is
to remedy the mischief which, under Section 14(6) of the APGST
Act, enabled the Commissioner to defer assessment proceedings,
and thereby ensure that assessment proceedings, under the VAT
Act, are not interdicted before its completion, and are completed
without hindrance. In the absence of a provision in the VAT Act,
similar to Section 14(6) of the APGST Act, none of the authorities
under the VAT Act can be said to have been empowered to defer
assessment proceedings.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner,
would submit that, since the Commissioner has also understood
Section 21(7) of the VAT Act as conferring on him the power to
defer assessment proceedings, this Court should not take a
different view. Contemporanea expositio is a well settled principle
or doctrine which applies only to the construction of ambiguous
language in old statutes, (Baktawar Singh Bal Kishan v. Union of
India ), but not in interpreting Acts which are comparatively
modern. (Senior Electric Inspector v. Laxmi Narayan Chopra ;
J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of India, ). Even if
persons who dealt with the statute understood its provisions in
another sense, such mistaken construction of the statute does not
bind the Court so as to prevent it from giving it its true
construction. (National & Grindlays Bank Ltd. v. Municipal
Corpn. of Greater Bombay ; Punjab Traders v. State of
Punjab ). The understanding of the Commissioner to the
contrary notwithstanding, we cannot, without doing violence to the
language of Section 21(7) of the VAT Act, read in it a power, having
been conferred either on the Commissioner or the STAT, to defer
assessment proceedings.
It matters little that the Commissioner had rejected the
petitioners request for deferment, as he lacks jurisdiction, in the
first place, to entertain such an application for deferment of
assessment proceedings under Section 21 of the VAT Act. The Writ
Petition is devoid of merits and is, accordingly, dismissed. It is
made clear that the assessing authority may proceed, pursuant to
the show-cause notice issued by him earlier, and pass an
assessment order in accordance with law. There shall be no order
as to costs. The Miscellaneous petitions, if any, pending in this
Writ Petition, shall stand dismissed.
________________________
RAMESH RANGANATHAN, J
__________________________
M. SATYANARAYANA MURTHY, J
Date: 31-12-2014
WRIT PETITION NO.13832 OF 2013
31-12-2014
KMK Event Management Ltd.Petitioner
The Commissioner of Commercial Taxes . Respondent
Counsel for the petitioner: Sri Dr. T. Ramesh Babu
Counsel for respondent:GP for Commercial Taxes
<GIST:
>HEAD NOTE:
? Citations:
1) (2008) 12 VST 371
2) (2006) 145 STC 91
3) (2004) 135 STC 480
4) (2011) 37 VST 226
5) (2011) 46 VST 57
6) (2000) 1 SCC 521 = (2000) 117 STC 1
7) 2013 (6) ALT 723 (D.B)
8) Judgment in WP No.4516 of 2013 dated 18.02.2013
9) Order in WPMP No.23591 of 2012 in W.P.No.18430 of 2012 dated 25.06.2012
10) AIR 1973 SC 2524
11) (1997) 10 SCC 291
12) AIR 1986 SC 662
13) 1990(3) ALT 382
14) AIR 1968 SC 647= (1968) 2 SCR 154
15) (1901 AC 495 : (1900-03) All ER Rep. 1 (HL)
16) AIR 2001 SC 1980
17) (2001) 5 SCC 407
18) (2001)8 SCC 676
19) (2001) 8 SCC 540
20) AIR 1987 SC 1668
21) AIR 1987 SC 2166
22) (1950) 2 ALL ER 29
23) AIR 1957 Punjab 5
24) (1984) 2 ALLER 1
25) (1979) 2 All ER d 433, (1979) 1 WLR 620
26) Judgment in Civil Appeal No.1421 of 1966 dated 01.05.1967
27) AIR 1968 S 816 = (1968) 2 SCR 674
28) AIR 1966 SC 1412 =(1966) 2 SCR 279
29) AIR 1967 Allahabad 248
30) AIR 1951 Raj 94(a) = (1951) 20 ITR 214 (Raj)
31) (1938) 6 ITR 414 (AIR 1938 PC 175
32) AIR 1954 Patna 155
33) AIR 1961 SC 609
34) (1957) 31 ITR 678
35) AIR 1961 SC 1265
36) AIR 1964 Madhya Pradesh 214
37) AIR 1955 SC 604
38) (1879) 5 A.C. 63 (PC)
39) 1978 (2) SCC 213
40) 1990 (3) SCC 447
41) 1993 Supp.(3) SCC 716
42) 1999 (4) SCC 135
43) 1999 (6) SCC 275
44) (2001) 9 SCC 432
45) 236 F.2d 622
46) AIR 2004 SC 1426 = (2004) 1 SCC 755
47) 1996) 4 SCC 76
48) (1997) 116 PLR 252
49) (2004) 1 SCC 702
50) (1955) 2 SCR 603 = AIR 1955 SC 661
51) (1898) 2 Ch 28
52) 1898 AC 571
53) (2004) 2 SCC 1
54) (1975) 1 All ER 16
55) (1988) 2 SCC 293
56) AIR 1962 SC 159
57) 1987 Supp SCC 350
58) AIR 1969 SC 1048
59) (1991) 1 SCC 86
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN
AND
THE HONBLE SRI JUSTICE M. SATYANARAYANA MURTHY
WRIT PETITION No.13832 OF 2013
ORDER: (per Honble Sri Justice Ramesh Ranganathan)
The proceedings, under challenge in this Writ Petition, is the
order of the Commissioner, Commercial Taxes (hereinafter called
the Commissioner) dated 24.04.2013 rejecting the petitioners
representation seeking deferment of the proposed assessment, in
Form VAT 305-A dated 12.09.2012, by the Assistant
Commissioner, Commercial Taxes II, Enforcement Wing
(hereinafter called the assessing authority).
The Assessing Authority issued a show cause notice, in Form
VAT 305-A dated 12.09.2012 for the assessment year 2011-12,
proposing to levy tax on the petitioner, among others, on (a) the
amount charged towards outdoor catering; (b) the amount charged
towards hiring of tent house equipment; and (c) the levy of VAT on
sales made to dealers in other States. He also disallowed the
petitioners claim for input tax credit on liquefied petroleum gas
(LPG) used by them for cooking food items. The petitioner filed
their objections thereto by letter dated 18.12.2012, and appeared
before the assessing authority for a personal hearing. They filed
an application before the Commissioner on 18.01.2013 requesting
him to issue an order under Section 21(7) of the A.P. VAT Act
(hereinafter called the VAT Act) deferring assessment proceedings
initiated by the assessing authority against them. The petitioner
contended that levy of VAT on the turnover on which service tax
was levied as hire charges, and levy of VAT on supply of food and
drinks on which also service tax was levied, was the subject matter
of W.P. No.6692 of 2011 which was admitted, and was pending on
the file of the High Court.
In his order dated 02.02.2013, the Commissioner (1st
respondent herein) held that the show cause notice issued by the
assessing authority was for several issues, apart from the proposal
to levy tax on the service part of outdoor catering services; and all
the issues mentioned in the show cause notice were not the
subject matter of W.P. No.6692 of 2011, pending before the High
Court. Consequently, the petitioners request for deferment of
assessment proceedings was rejected. The petitioner submitted
another representation on 04.02.2013 contending that, in addition
to the aforesaid two issues which were the subject matter of W.P.
No.6692 of 2011, the issue relating to levy of VAT, on the turnover
on which service tax was levied, was decided by the Supreme Court
in Imagic Creatives v. CCT ; and the question whether VAT could
be levied on the amount received towards the service element, in
the supply of food and drinks, had been decided by the Supreme
Court in BSNL v. Union of India , Imagic Creatives1, and
Tamilnadu Kalyanamandapam v. Union of India ; by the Punjab
and Haryana High Court in Cap N Chaps Caterers v. State of
Haryana ; and by the Karnataka High Court in Commissioner v.
LSG SKY Chef . However, for the other issues, the petitioner
conceded that the assessing authority could pass an assessment
order.
After considering the petitioners objections, the
Commissioner passed an elaborate order dated 24.04.2013
rejecting their request for deferment of assessment proceedings.
The Commissioner negatived their claim that the issue regarding
levy of VAT, on supply of tent house material, was the subject
matter of W.P. No.35693 of 2012 and batch, and held that what
was under challenge therein was the levy of VAT on
advertising/hiring activity, and not on hiring of tent house
equipment. The Commissioner also held that the proposal to levy
VAT, on the sale of food and drinks in catering activity, could not
be deferred as the petitioner had not produced any evidence that
the facts in Tamilnadu Kalyanamandapam3 was similar to their
case attracting the said decision; and the law declared by the
Supreme Court, in K. Damodaraswamy Naidu & Sons v. State of
Tamil Nadu , was still good law. With regards disallowance of
input tax credit on LPG, the Commissioner held that, in the case of
M/s. RAK Ceramics (India) Pvt. Ltd. v. Asst. Commissioner
(CT)-VI, Enforcement Wing, Hyderabad , the High Court had
granted interim stay by order in WPMP No.32 of 2013 in WP No.31
of 2013 dated 13.01.2013; the interim stay was only regarding
recovery of the disputed tax; there was no stay on the substantive
issue i.e., on disallowance of ITC on LPG as per Rule 20(2)(q) of
the VAT Rules; there were many issues involving questions of fact;
and the question, whether a particular transaction would come
under transfer of the right to use, had to be examined based on
the facts of each case.
It is this order of the Commissioner which is under challenge
in this Writ Petition. Interim orders were passed by this Court in
W.P.MP No.16922 of 2013 dated 30.04.2013, which were extended
thereafter. Consequently, the assessing authority has been
disabled from passing an assessment order pursuant to the show
cause notice dated 12.09.2012. During the course of hearing of
this Writ Petition on 11.11.2012, this Court called upon the
Commissioner to file a counter-affidavit on whether the VAT Act
conferred on him the power to defer assessment proceedings. In
his counter-affidavit dated 22.11.2014, the Commissioner
submitted that the petitioner was liable to pay tax on the total
amount set out in the tax invoice; the Assistant Commissioner
had, by his notice dated 12.09.2012, rightly proposed to tax the
turnover which had escaped assessment; the petitioners
application for deferment of assessment proceedings was rejected
by him in accordance with law; on a conjoint reading of Section
21(7) and 32(5) of the VAT Act, the Commissioner has the power to
defer assessment proceedings; and, as has been held by this Court
in M/s. Global Fuels Lubricants Inc. v. The Commissioner of
Commercial Taxes , the power to defer assessment proceedings is
valid.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner,
would draw attention of this Court to an interlocutory order passed
in M/s. Schindler India Private Limited v. Commercial Tax
Officer (Int) Secunderabad , and to the judgment of the Supreme
Court in The Commissioner of Income-tax, West Bangal-II,
Calcutta v. Naga Hills Tea Co. Ltd. and Collector of Customs,
Madras v. Lotus Inks . He would also place reliance on M/s.
Global Fuels Lubricants Inc.8, to submit that, on a conjoint
reading of Section 21(7) read with Section 32(5) of the VAT Act, the
Commissioner has the power to defer assessment proceedings.
In M/s. Schindler India Private Limited9 this Court, by
way of an interlocutory order, observed that, prima facie, Section
21(7) read with Section 32(5) of the VAT Act enables the
Commissioner to defer assessment proceedings and, as the
Commissioners power under Section 32(5) of the VAT Act is
exercised qua an assessment order already passed, impliedly the
Commissioner can always even defer the assessment. It is well
settled that interlocutory orders have no finality and are, therefore,
not binding as a precedent. As there is no finality to an
interlocutory order, and interim orders passed by Courts on
certain conditions are not precedents for other cases which may be
on similar facts, (Empire Industries Limited v. Union of India ;
M. Vijaya Kumar v. Milk Products Factory ), the interim order
passed in M/s.Schindler India Private Limited9 would not
constitute a precedent binding on a co-ordinate Division Bench.
It is no doubt true that, if two views are possible on the
interpretation of the provisions of a fiscal statute, the construction
in favour of the assessee should bind the decision of the Court.
(Naga Hills Tea Co. Ltd.10 and Lotus Inks11). As the power to
defer assessment proceedings can only be statutorily conferred by
the legislature, and not by the Court, the question which
necessitates examination is whether Section 21(7) of the VAT Act,
either explicitly or by necessarily implication, confers power on the
Commissioner to defer assessment proceedings.
It is only if the Commissioner has the power to defer
assessment proceedings, would he be entitled to entertain and
examine any request for its deferment. As conferment of the
power, to defer assessment proceedings, is a pre-requisite for its
exercise, this Court must, at the outset, examine whether the VAT
Act confers on the Commissioner the power to defer assessment
proceedings, before considering whether exercise of the power to
pass the impugned order dated 24.04.2013, rejecting the
petitioners request for deferment of assessment proceedings, is
valid or not. Before doing so, it is necessary to consider the
submission of the Commissioner that, in view of the law declared
by the Division bench of this Court in Global Fuels Lubricants
Inc8, the Commissioner has the power to defer assessment
proceedings.
In M/s. Global Fuels Lubricants Inc.8, the order of the
Commissioner, super-adding the condition of furnishing a bank
guarantee for deferment of assessment proceedings, was under
challenge. The Division Bench held that the order passed by the
Commissioner, directing the petitioner to furnish a bank
guarantee, was destructive of the purpose for which the power and
discretion was conferred under Section 32(5) of the Act; this
provision enabled the Commissioner to defer any proceedings on
the ground that an appeal or other proceedings are pending before
the Appellate Tribunal or the High Court or the Supreme Court
involving a question of law having a direct bearing on the order or
proceeding in question; Section 32(6) extended the period of
limitation for passing an order of assessment pro-tanto the period
for which a deferment was ordered under Section 32(5) of the Act;
in the circumstances, there was no prejudice caused to the
Revenue by deferment of proceedings; the provision was, in fact,
incorporated to facilitate a uniform and coherent tax
administration policy i.e., to proceed with the assessment in
conformity with the guidance received from the orders of the
Appellate Tribunal, the High Court or the Supreme Court, as the
case may be, on matters involving identical or substantially similar
questions of law; and, where an order of assessment has not been
passed as yet, the order of the Commissioner super-adding a
condition calling upon the petitioner to furnish a bank guarantee,
for a liability yet to be assessed, constituted an irrational exercise
of discretion.
The question, which arose for consideration before the
Division bench in M/s. Global Fuels Lubricants Inc8, was
whether the Commissioner could direct a VAT dealer to furnish a
bank guarantee as a pre-condition for deferment of proceedings.
The question whether the Commissioner had the power to defer
assessment proceedings did not arise for consideration therein.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner, would
however contend that it is only if the Commissioner has the power
to defer assessment proceedings could he have imposed the pre-
condition of furnishing a bank guarantee to defer assessment
proceedings. A decision is only an authority for what it actually
decides. What is of the essence in a decision is its ratio and not
every observation found therein nor what logically follows from the
various observations made in it. Every judgment must be read as
applicable to the particular facts proved, or assumed to be proved,
since the generality of the expressions which may be found there
are not intended to be exposition of the whole law, but governed
and qualified by the particular facts of the case in which such
expressions are to be found. A case is only an authority for what it
actually decides. It cannot be quoted for a proposition that may
seem to follow logically from it. Such a mode of reasoning assumes
that the law is necessarily a logical code, whereas it must be
acknowledged that the law is not always logical at all. (State of
Orissa v. Sudhansu Sekhar Misra ; Quinn v. Leathem ). While
the premise, on which the judgment in M/s. Global Fuels
Lubricants Inc8 is founded, is that the Commissioner has the
power to defer assessment proceedings, the question whether the
Commissioner had the power to defer assessment proceedings was
not in issue before, nor was it examined by, the Division bench.
Reliance placed on M/s. Global Fuels Lubricants Inc8 is,
therefore, misplaced.
Section 32(1) of the VAT Act enables the Commissioner to,
suo moto, call for and examine the record of any order passed or
proceeding recorded by any authority, officer or person
subordinate to it under the provisions of the VAT Act, including
sub-section (2), and, if such order or proceeding recorded is
prejudicial to the interests of revenue, he may make such enquiry
or cause such enquiry to be made and, subject to the provisions of
the Act, initiate proceedings to revise, modify or set aside such
order or proceeding and to pass such order in reference thereto as
he thinks fit. Under Section 32(2) the powers, of the nature
referred to in sub-section (1), can also be exercised by the
Additional Commissioner, the Joint Commissioner, the Deputy
Commissioner and the Assistant Commissioner, in the case of
orders passed or proceedings recorded by the authorities, officers
or persons subordinate to them.
As the proviso to Section 32 of the VAT Act is similar to
Section 20(2-A) of the A.P. General Sales Tax Act (APGST Act for
short), it is useful to read Section 20(2-A) of the APGST Act in
juxta-position with the proviso to Section 32 of the VAT Act as it
originally stood, and the proviso to Section 32 of the VAT Act after
it was amended by Act 21 of 2011 with effect from 15.09.2011.
Section 20 (2-A) of the
APGST Act
Proviso to Section 32
of the AP VAT Act prior
to its amendment
Proviso to Section 32
of the AP VAT Act after
its amendment by Act
21 of 2011 with effect
from 15.09.2011
The power under sub-
section (1) or sub-section
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question which
is the subject matter of
an appeal before, or
which was decided on
appeal by, the Appellate
Tribunal under Section
21.
Provided that the power
under sub-section (1) or
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question, which
is the subject matter of
an appeal before or
which was decided on
appeal by the Appellate
Tribunal under Section
33:
Provided that the power
under sub-section (1) or
(2) shall not be exercised
by the authority specified
therein in respect of any
issue or question which
was decided on appeal by
the Appellate Tribunal
under Section 33.
Section 20(2-A) of the APGST Act and the proviso to Section
32 of the VAT Act, prior to its amendment by Act 21 of 2011 with
effect from 15.09.2011, disabled the revisional authority from
exercising the power of revision in respect of any issue or question
which (i) was the subject matter of an appeal before the Sales Tax
Appellate Tribunal (STAT for short); and (ii) was decided in appeal
by the STAT. The effect of the amendment, by Act 21 of 2011, is
that there is no longer any bar on the exercise of the revisional
jurisdiction when the issue or question is the subject matter of an
appeal before the STAT. The bar is now limited only in respect of
an issue or question decided in appeal by the STAT.
As the proviso to Section 32, prior to its amendment, barred
exercise of the revisional jurisdiction in respect of any issue or
question which was the subject matter of appeal before the STAT,
the power to defer revision proceedings was confined, under
Section 32(5) of the Act prior to its amendment by Act 21 of 2011
dated 29.12.2011 with effect from 15.09.2011, only to cases where
an appeal or other proceedings were pending before the High
Court, or the Supreme Court, involving a question of law having a
direct bearing on the order or proceedings in question. By Act 21 of
2011, the proviso to Section 32 was amended and, thereafter, the
bar on the exercise of the revisional jurisdiction is now limited only
in respect of an issue or question decided in appeal by the STAT,
and not when an issue or question is the subject matter of an appeal
pending before the STAT. It is only because the bar, under the
proviso to Section 32, is no longer applicable when an appeal is
pending before the STAT, has power now been conferred on the
Commissioner, under Section 32(5) of the VAT Act after its
amendment by Act 21 of 2011 w.e.f. 15.09.2011, to defer revision
proceedings when an appeal, involving any issue or question
having a direct bearing on the revision proceedings, is pending
before the STAT.
Section 32(5) of the VAT Act makes it lawful for the
Commissioner to defer any proceedings under this section meaning
thereby Section 32 of the VAT Act alone, and not assessment
proceedings under Section 21 or appellate proceedings under
Section 31 of the VAT Act. Extending the power of the
Commissioner, under Section 32(5) of the VAT Act, to also defer
assessment proceedings under Section 21, or the appellate
proceedings under Section 31, of the VAT Act would require this
Court to ignore the words under this section in Section 32(5) of the
VAT Act. It would be wholly inappropriate for this Court, while
interpreting a statutory provision, to delete or ignore some of the
words used therein. No construction, which requires the words
under this section in Section 32(5) of Act to be ignored, or construed
as inapposite surplusage, is permissible. Courts have adhered to
the principle that effort should be made to give meaning to each
and every word used by the legislature and it is not a sound
principle of construction to brush aside words in a statute, as
being inapposite surplusage, if they can have a proper application
in circumstances conceivable within the contemplation of the
statute. (Gurudevdatta VKSSS Maryadit v. State of
Maharashtra , Manohar Lal v. Vinesh Anand ). The legislative
intent, found specific mention and expression in the provisions of
the Act itself, cannot be whittled down or curtailed and rendered
nugatory. (Bharathidasan University v. All India Council for
Technical Education ). Effect should be given to the provision,
and a construction that reduces a part thereof to a dead letter
must be avoided. (Anwar Hasan Khan v. Mohd. Shafi ).
Section 21 of the VAT Act relates to assessment. Sections
21(1), (3), (4) and (5) enable the prescribed authority, in the
circumstances mentioned therein, to assess a VAT dealer. Section
21(7) of the VAT Act stipulates that, where an assessment has
been deferred by the Commissioner under Section 32(5) or, as the
case may be, by the STAT under the proviso to Section 33(4), on
account of any stay granted by the Appellate Tribunal or, as the
case may be, the Andhra Pradesh High Court or the Supreme
Court respectively, or where an appeal or other proceedings is
pending before the Appellate Tribunal or the High Court or the
Supreme Court involving a question of law having a direct bearing
on the assessment in question, the period during which the stay
order was in force, or such appeal or proceedings was pending,
shall be excluded in computing the period of four years or six years
as the case may be for the purpose of making the assessment.
The words as the case may be mean whichever the case may be,
(Shri Balaganesan Metals v. M.N. Shanmugham Chetty ), and
what the expression says, i.e., as the situation may be.
(Subramaniam Shanmugham v. M.L.Rajendran ; Bluston &
Bramley Ltd. v. Leigh ; Words and Phrases, Permanent Edn. 4
page 596). The words as the case may be in Section 21(7) of the VAT
Act mean whichever the case may be i.e., either the Commissioner
under Section 32(5) or the STAT under the proviso to Section 33(4)
of the VAT Act. As noted hereinabove, Section 32(5) confers on the
Commissioner the power to defer revision proceedings initiated
under Sections 32(1) & (2) of the VAT Act. The proviso to Section
33 (4) of the VAT Act confers power on the STAT to defer hearing of
the appeal before it, if the appeal involves a question of law, a
decision on which is pending in any proceedings before the High
Court or the Supreme Court, till such proceedings are disposed of.
The deferment of assessment proceedings, as referred to in Section
21(7) of the VAT Act, is by the Commissioner under Section 32(5)
and the STAT under the proviso to Section 33(4), which confer
power on the Commissioner to defer revision proceedings, and the
STAT to defer hearing of the appeal before it, respectively. The
word assessment, in the context of Section 21(7), neither means
self-assessment under Section 20 nor an assessment order
passed under Section 21 of the VAT Act.
The word assessment, in Section 21(7) of the VAT Act, has a
wide connotation. It does not always mean the determination of
the taxable turnover of a dealer under a taxing statute like the VAT
Act. To "levy" a tax means "to impose or assess" or "to impose,
assess or collect under the authority of law". It is a unilateral act of
a superior legislative power to declare the subjects and rates of
taxation and to authorise the collector to proceed to collect the tax.
"Assessment" is the official determination of liability of a person to
pay a particular tax, and "collection" is the power to gather in
money as taxes by enforced payment, if necessary. The levy of
taxes is generally a legislative function; assessment is a quasi-
judicial function and collection an executive function. These
three expressions "levy", "assessment" and "collection" are of the
widest significance and embrace in their broad sweep all the
proceedings which can possibly be imagined for raising money by
the exercise of the power of taxation from the inception to the
conclusion of the proceedings. (Firm L. Hazari Mal Kuthiala v.
Income-tax Officer, Special Circle, Ambala Cantt ). The
expression assessment to tax may cover all the various stages
leading upto the calculation and statement of the amount of tax
due. (Vickerman v. Masons Personal Representatives ;
Hallamshire Industrial Finance Trust Ltd. v. IRC ). The word
assessment' can bear a very comprehensive meaning; it can
comprehend the whole procedure for ascertaining and imposing
liability upon the taxpayer; and it may provide for all contingencies
which may arise. (Kalawati Devi Harlalka v. CIT ; S. Sankappa
v. ITO ; State of Bombay v. Jagmohandas ).
One of the peculiarities of most tax enactments is that the
expression "assessment" is used in its various sections to convey
different connotations. The word "assessment" is used as meaning
sometimes the computation of turnover, sometimes the
determination of the amount of tax payable, and sometimes the
whole procedure laid down in the Act for imposing liability upon
the tax payer (M/s. J.K. Iron and Steel Co. Ltd. v. The Income
Tax Officer, Kanpur ; Madangopal Kabra v. The Union of
India ; Commr. of Income-tax v. Khemchand Ramdas ). The
word 'assessment' may mean determination of the amount of tax
payable. (Gulabrai Manohar Lal v. Commr. of Income-tax,
Bihar ). The said expression may also be so used as to include
proceedings for imposing liability to additional tax called penalty
on the assessee's guilt of fraud, gross negligence, dishonest or
contumacious conduct. (M/s. J.K. Iron and Steel Co. Ltd.29;
C.A. Abraham v. Income-tax Officer ; Mareddi Krishna Reddy
v. Income Tax Officer, Tenali ). It can also be understood to
include the entire machinery and procedure for imposing and
enforcing the tax liability. (M/s. J.K. Iron and Steel Co. Ltd.29;
Commr. of Income-tax, Andhra Pradesh v. Bhikaji Dadabhai
and Co., ).
The word assessment is often used in a comprehensive
sense to include all proceedings, starting with the filing of the
return or issue of notice and ending with the determination of the
tax payable by the assessee. Though, in some sections, the word
assessment is used only with reference to computation of tax, in
other sections it has the more comprehensive meaning. (S.
Sankappa27; C.A. Abraham33; Kalawati Devi Harlalka26). The
term "assessment" is flexible, capable of many meanings, and
takes its colour from the context in which it occurs. The
nomenclature is not decisive, and does not prevent it from being an
"assessment" in a proper context. (M/s. J.K. Iron and Steel Co.
Ltd.29). The meaning of "assessment" has to be derived from
the language of the provision itself. (Firm Harpaldas
Jairamdas v. The Sales Tax Officer ). The word assessment
has been used in different Sections in different contexts, and is not
always used only to mean assessment of a VAT dealer under
Section 21 of the VAT Act. In the context in which it is used, it
obviously refers only to revision proceeding under Section 32 and
an appeal before the STAT under Section 33 of the VAT Act.
It is a legitimate rule of construction to construe words, in a
statutory enactment, with reference to words found in immediate
connection with them (M.K. Ranganathan v. Government of
Madras ; Angus Robertson v. George Day ). The doctrine of
Noscitur a sociis (meaning of a word should be known from its
accompanying or associating words) has relevance in
understanding the import of words in a statutory provision.
(Bangalore Water Supply & Sewerage Board v. A Rajappa ;
Rohit Pulp and Paper Mills Ltd. vs. CCE ; Oswal Agro Mills
Ltd. vs. CCE ; K. Bhagirathi G. Shenoy v. K.P. Ballakuraya ;
Lokmat Newspapers (P) Ltd. v. Shankarprasad ; CBI v. Braj
Bhushan Prasad ). Blacks Law Dictionary (Sixth Edition)
defines Noscitur a sociisto mean that a word is known from its
associates. The meaning of a word is or may be known from the
accompanying words. Under the doctrine of noscitur, the meaning
of questionable or doubtful words or phrases in a statute may be
ascertained by reference to the meaning of other words or phrases
associated with it (Wong Kam Wo v. Dulles ). P. Ramanatha
Aiyer THE LAW LEXICON 2nd Edition Reprint 2002 defines
Noscitur a sociis to mean that the meaning of a doubtful word may
be ascertained by reference to the meaning of the words associated
with it (Broom Legal Maxims). One is known by his companions;
the meaning of a word or expression is to be gathered from the
surrounding words, that is, from the context. The coupling of
words together shows that, where the meaning of a particular word
is doubtful or obscure or where a particular expression when taken
singly is inoperative, the intention of a party who used it may
frequently be ascertained by looking at adjoining words, or at
expressions occurring in other parts of the same instrument. One
provision of an instrument must be construed by the bearing it will
have upon another.
In construing the words assessment and has been deferred by
the Commissioner under Section 32(5) or by the STAT under the
proviso to Section 33(4), which are used in association with each
other in Section 21(7) of the VAT Act, the rule of construction
noscitur a sociis may be applied. The aforesaid words, read in
juxtaposition, indicate that the meaning of one takes colour from
the other. The Rule is explained as the meaning of doubtful words
may be ascertained by reference to the meaning of words
associated with it. (Ahmedabad (P) Primary Teachers Assn. v.
Administrative Officer ). The setting and context in which the
words assessment and has been deferred by the Commissioner under
Section 32(5) or by the STAT under the proviso to Section 33(4) are
used in Section 21(7) of the VAT Act would require the word
assessment not to be understood dissociated from the words has
been deferred by the Commissioner under Section 32(5) or by the STAT
under the proviso to Section 33(4), or the word assessment to mean the
passing of an assessment order under Section 21 of the VAT Act.
Despite its having been made under Section 21 of the VAT Act
which relates to assessment, the word assessment in Section 21(7),
when read with the words assessment and has been deferred by the
Commissioner under Section 32(5) or by the STAT under the proviso to
Section 33(4), can only mean either a revision under Section 32 or
an appeal before the STAT under Section 33(1), for it is only in
relation to such proceedings has the power of deferment been
conferred on the Commissioner under Section 32(5), and on the
STAT under the proviso to Section 33(4) of the VAT Act.
Construing Section 21(7) of the VAT Act as conferring on the
Commissioner the power to defer assessment proceedings would
requires this Court to read such a power as having been conferred
also on the STAT, for Section 21(7) refers to deferment of
assessment proceedings both under Section 32(5) and the proviso
to Section 33(4) of the VAT Act. Such a construction is
impermissible on a plain and literal reading of Section 21(7) of the
VAT Act. It does not bear repetition that Section 32(5) makes it
lawful for the Commissioner to defer proceedings under this section
meaning thereby Section 32 of the VAT Act. Likewise, the proviso
to Section 33(4) only enables the STAT to defer hearing of the
appeal before it, ie an appeal preferred by a dealer under Section
33(1) of the VAT Act, and not assessment proceedings under
Section 21 of the VAT Act. Section 21(7) of the VAT Act neither
explicitly nor by necessary implication confers power either on the
Commissioner or on the STAT to defer assessment proceedings
initiated under Section 21 of the VAT Act.
Even otherwise, Section 21(7) of the VAT Act only provides
for the consequences of deferment of assessment proceedings
either by the Commissioner under Section 32(5) or by the STAT
under the proviso to Section 33(4) of the VAT Act. Just like
Section 21(7), both Section 31(4A) and Section 32(7) of the VAT Act
also provide for the consequences of deferment of proceedings. It
is convenient to read Section 21(7), Section 31(4-A) and Section
32(7) of the VAT Act in juxta-position with each other.
AP VAT ACT
AP VAT ACT
AP VAT ACT
Section 21(7)
Where an
assessment has been
deferred by the
Commissioner under
sub-section (5) of Section
32 or as the case may be,
by the Appellate Tribunal
under the proviso to sub-
section (4) of Section 33
on account of any stay
granted by the Appellate
Tribunal, or as the case
may be the Andhra
Pradesh High Court or
Supreme Court
respectively, or whereas
appeal or other
proceedings is pending
before the Appellate
Tribunal or the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
Section 31(4A)
Where any
proceeding under this
section has been
deferred on account of
any stay orders granted
by the High Court or
Supreme Court in any
case or by reason of the
fact that an appeal or
other proceedings is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
order or proceeding in
question, the period
during which the stay
order is in force or the
period during which
such appeal or
proceeding is pending,
shall be excluded, while
computing the period of
two years specified in
sub-section (4) for the
purpose of passing
appeal orders under this
section.
Section 32(7)
Where any
proceeding under this
section has been
deferred on account of
any stay order granted
by the Appellate Tribunal
or the High Court or
Supreme Court in any
case, or by reason of the
fact that an appeal or
other proceeding is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
order or proceeding in
question, the period
during which the stay
order was in force or
such appeal or
proceeding was pending
shall be excluded in
computing the period of
four years specified in
sub-section (3), for the
purposes of exercising
the power under this
section.
The first limb of both Section 21(7) and Section 31(4A),
which provide for the consequences of deferment of assessment
and appellate proceedings, would operate only when the power of
deferment is specifically conferred on a specified
authority/authorities and is exercised by them pursuant to such
conferment. A plain and literal reading of the aforesaid provisions
make it clear that Section 21(7), Section 32(4A) and Section 32(7)
only provide for the consequences of deferment of (i) assessment,
(ii) appeal before the Appellate authority, and (iii) revision under
Section 32 of the VAT Act respectively. They do not, by
themselves, confer on the said authorities the power to defer the
proceedings. It is only because Section 32(5) specifically confers
such a power, can the Commissioner defer revision proceedings
initiated under Section 32(1) & (2) of the VAT Act. The very fact
that, while the consequences of deferment of assessment
proceedings, appellate proceedings before the Appellate authority
and revision proceedings are specifically provided for, but the
power of deferment of proceedings is restricted only to revision
proceedings under Section 32 of the VAT Act, shows that the
legislature has for the present, neither explicitly nor by necessary
implication, chosen to confer the power to defer either the
assessment proceedings under Section 21 of the VAT Act or the
appellate proceedings under Section 31 of the VAT Act.
This question can be examined from another angle also.
Ambiguity, if any, in a statutory provision can be removed applying
the Heydons Rule. The Heydons Rule is that, for the sure and
true interpretation of all statutes in general (be they penal or
beneficial, restrictive or enlarging of the common law), four things
are to be discerned and considered: (1) what was the common law
before the making of the Act/Rules; (2) what was the mischief and
defect for which the common law did not provide; (3) what remedy
the legislature has resolved to cure; and (4) the true reason of the
remedy. The Court is always to make such construction as shall:
(a) suppress the mischief and advance the remedy; and (b)
suppress subtle inventions and evasions for the continuance of the
mischief pro privato commodo (for private benefit); and (c) add
force and life to the cure and remedy according to the true intent of
the makers of the Act/Rules pro publico (for the public good). The
Heydons rule is applied in order to suppress the mischief which
was intended to be remedied as against the literal rule which could
have otherwise covered the field. (Parayankandiyal Eravath
Kanapravan Kalliani Amma v. K. Devi ; Goodyear India Ltd. v.
State of Haryana ; Ameer Trading Corpn. Ltd. v. Shapoorji
Data Processing Ltd., ; Halsburys Laws of England, Vol. 44(1),
4th Reissue, para 1474, pp. 906-07; Bengal Immunity Co. Ltd.
v. State of Bihar ; In re Mayfair Property Company ; Eastman
Photographic Material Company v. Comptroller General of
Patents, Designs and Trade Marks ; National Insurance Co.
Ltd. v. Baljit Kaur ).
The Heydon's rule itself is sometimes stated as a primary
cannon of construction, sometimes as secondary (i.e available in
the case of an ambiguity). (Maxwell on Interpretation of
Statutes; 12th Edn (1969); Craies on Statute Law; 7th Edn
(1971), pp 94, 96). The rule is available at two stages. The first
task of a court of construction is to put itself in the shoes of the
draftsman-to consider what knowledge he had and, importantly,
what statutory objective he had-if only as a guide to the linguistic
register. Here is the first consideration of the 'mischief'. Being
thus placed in the shoes of the draftsman, the court proceeds to
ascertain the meaning of the statutory language. In this task the
first and most elementary rule of construction is to consider the
plain and primary meaning, in their appropriate register, of the
words used. If there is no such plain meaning (ie if there is an
ambiguity), a number of secondary canons are available to resolve
it. Of these one of the most important is the rule in Heydon's Rule.
Here, then, may be a second consideration of the 'mischief'.
(Maunsell v. Olins ).
Section 14(6) of the APGST Act provided that it shall be
lawful for the Commissioner of Commercial Taxes to direct, by
general or special order, any assessing authority to defer
assessment in respect of any class of goods or any class of dealers
pending clarification by it of any question referred to it, if such
question has a direct bearing on such assessment. The proviso to
Section 21(4) of the APGST Act, which is in pari-materia with the
proviso to Section 33(4) of the VAT Act, also enabled the STAT, in
certain circumstances, to defer hearing of the appeal before it.
Section 14(5) of the APGST Act was identical to Section 21(7) of the
VAT Act before its amendment, and similar to Section 21(7) of the
VAT Act after its amendment. It is useful to read Section 14(5) of
the APGST Act in juxta-position with Section 21(7) of the VAT Act
both before, and after, its amendment by Act 21 of 2011.
THE APGST ACT
THE AP VAT ACT (prior
to its amendment by Act
21 of 2011 with effect
from 15.09.2011)
THE AP VAT ACT (after
its amendment by Act 21
of 2011 with effect from
15.09.2011)
Section 14(5)
Where an
assessment under this
section has been
deferred on account of
any stay order granted
by the High Court in any
case, or by reason of the
fact that an appeal or
other proceedings is
pending before the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceeding was pending,
shall be excluded in
computing the period of
four years or six years as
the case may be specified
in this section for the
purpose of making the
assessments.
Section 21(7)
Where any
assessment has been
deferred on account of
any stay order granted
by the High Court or
where an appeal or other
proceedings is pending
before the High Court or
Supreme Court involving
a question of law having
a direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
Section 21(7)
Where an
assessment has been
deferred by the
Commissioner under
sub-section (5) of Section
32 or as the case may be,
by the Appellate Tribunal
under the proviso to sub-
section (4) of Section 33
on account of any stay
granted by the Appellate
Tribunal, or as the case
may be the Andhra
Pradesh High Court or
Supreme Court
respectively, or whereas
appeal or other
proceedings is pending
before the Appellate
Tribunal or the High
Court or the Supreme
Court involving a
question of law having a
direct bearing on the
assessment in question,
the period during which
the stay order was in
force or such appeal or
proceedings was pending
shall be excluded in
computing the period of
four years or six years as
the case may be for the
purpose of making the
assessment.
The Legislature, having retained a provision similar to
Section 14(5) of the APGST Act in Section 21(7) of the VAT Act, has
consciously chosen not to make a provision similar to Section 14(6)
of the APGST Act which conferred on the Commissioner the power,
in certain circumstances, to direct the assessing authority to defer
assessment proceedings. The Commissioner has not been
conferred the power to defer assessment proceedings under the
VAT Act, and his power is now limited only to defer revision
proceedings under Section 32 thereof, that too only in the
circumstances referred to, and subject to the limitations
prescribed, in sub-section (5) thereof. The Legislature has
consciously chosen not to confer on the Commissioner the power
to defer assessment proceedings under the VAT Act evidently
because, unlike the APGST Act, Sections 20(2) & (4) of the VAT Act
provide for self-assessment and, except in the circumstances
referred to in sub-sections (3) to (5) of Section 21, no assessment
order need be passed under the VAT Act. The Legislative intent is
to remedy the mischief which, under Section 14(6) of the APGST
Act, enabled the Commissioner to defer assessment proceedings,
and thereby ensure that assessment proceedings, under the VAT
Act, are not interdicted before its completion, and are completed
without hindrance. In the absence of a provision in the VAT Act,
similar to Section 14(6) of the APGST Act, none of the authorities
under the VAT Act can be said to have been empowered to defer
assessment proceedings.
Dr. T. Ramesh Babu, Learned Counsel for the petitioner,
would submit that, since the Commissioner has also understood
Section 21(7) of the VAT Act as conferring on him the power to
defer assessment proceedings, this Court should not take a
different view. Contemporanea expositio is a well settled principle
or doctrine which applies only to the construction of ambiguous
language in old statutes, (Baktawar Singh Bal Kishan v. Union of
India ), but not in interpreting Acts which are comparatively
modern. (Senior Electric Inspector v. Laxmi Narayan Chopra ;
J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of India, ). Even if
persons who dealt with the statute understood its provisions in
another sense, such mistaken construction of the statute does not
bind the Court so as to prevent it from giving it its true
construction. (National & Grindlays Bank Ltd. v. Municipal
Corpn. of Greater Bombay ; Punjab Traders v. State of
Punjab ). The understanding of the Commissioner to the
contrary notwithstanding, we cannot, without doing violence to the
language of Section 21(7) of the VAT Act, read in it a power, having
been conferred either on the Commissioner or the STAT, to defer
assessment proceedings.
It matters little that the Commissioner had rejected the
petitioners request for deferment, as he lacks jurisdiction, in the
first place, to entertain such an application for deferment of
assessment proceedings under Section 21 of the VAT Act. The Writ
Petition is devoid of merits and is, accordingly, dismissed. It is
made clear that the assessing authority may proceed, pursuant to
the show-cause notice issued by him earlier, and pass an
assessment order in accordance with law. There shall be no order
as to costs. The Miscellaneous petitions, if any, pending in this
Writ Petition, shall stand dismissed.
________________________
RAMESH RANGANATHAN, J
__________________________
M. SATYANARAYANA MURTHY, J
Date: 31-12-2014
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