Telangana High Court
M/S. Owens Corning Industries India ... vs The Commercial Tax Officer on 26 April, 2024
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
Writ Petition Nos. 24121, 24123, and 24227 of 2018;
Writ Petition Nos.19069, 19044, 16294, 12665, 8616 and
8455 of 2020;
Writ Petition Nos.5550, 5546 and 7562 of 2021; 8404 and 8526 of 2022
and
Writ Petition Nos.26297 and 26152 of 2023
COMMON ORDER:
(per the Hon'ble Sri Justice P.SAM KOSHY)
Heard the learned Senior Counsel, Mr. S. Dwarakanath,
and Mr. Karan Talwar, learned counsel for the petitioners and
Mr. Swaroop Oorilla, learned Special Government Pleader for
State Tax, for the respondents.
2. The instant batch of writ petitions are filed under the
Telangana Tax on Entry of Goods into Local Areas Act, 2001.
All these batch of writ petitions are being taken up for
consideration on one preliminary objection raised by the
petitioners and for which some of the writ petitions were
entertained at the show cause notice level, some at the level of
assessment orders, and some against the appellate orders.
3. The point for consideration by way of the preliminary
objection raised by the petitioners are whether the show cause
notice or the assessment orders passed in all these bunch of writ
petitions are sustainable at all in view of the specific period of
limitation prescribed under Section 21(3) and Section 21(4) of
the Telangana Value Added Tax Act, 2005 (for short, 'TSVAT
Act').
4. Before we delve into the issue of limitation, it would be
relevant at the outset itself to reproduce the two sub-sections
under which the petitioners are backing upon their case. The
said two sub-sections of TSVAT Act read as under:
"(3) Where the authority prescribed is not satisfied with a
return filed by the VAT dealer or TOT dealer or the return
appears to be incorrect or incomplete, he shall assess to
the best of his judgment within four years of due date of
the return or within four years of the date of filing of the
return whichever is later.
(4) The authority prescribed may, based on any
information available or on any other basis, conduct a
detailed scrutiny of the accounts any VAT dealer or TOT
dealer and where any assessment as a result of such
scrutiny becomes necessary, such assessment shall be
made within a period of four years from the end of the
period for which the assessment is to be made."
5. Though there are various other grounds also which have
been raised by few of the petitioners like the impugned orders
being violative of the principles of natural justice, but we
proceed to decide the batch of writ petitions only on the aspect
of limitation. The need for considering the other aspects would
only come, in case if the objections of the petitioners so far as
limitation is concerned, is overruled or rejected.
6. To set right the facts, it would also be appropriate at this
juncture, to reproduce the details of each of the writ petitions so
as to ensure that in terms of the given facts in each of these
cases, the show cause notice, assessment orders as also the
appellate orders as the case may be in each of the cases, have
been issued beyond a period of four (04) years as is stipulated
under the aforesaid two sub-sections of Section 21 of the TSVAT
Act.
7. The details of each of the writ petitions are reproduced
herein under:
Sl. Writ Petition Assessment Date of Date of Date of
No. No. Year Show Cause Assessment Appellate
Notice Order Order
1. 24123 of 2018 2013-14 - 31.05.2018 -
2. 24121 of 2018 2012-13 - 31.05.2018 -
3. 24227 of 2018 2012-13 26.07.2017 31.03.2018 -
4. 19069 of 2020 2012-13 - 29.03.2018 30.05.2020
5. 19044 of 2020 2011-12 - 29.03.2018 30.05.2020
6. 16294 of 2020 2013-14 28.10.2017 21.05.2018 27.06.2020
7. 12665 of 2020 2012-13 22.07.2017 23.03.2018 28.05.2020
8. 8616 of 2020 2011-12 22.08.2017 28.02.1018 30.04.2020
9. 8455 of 2020 2012-13 27.10.2017 28.02.2018 30.04.2020
10. 5550 of 2021 2011-12 02.02.2021 - -
11. 5546 of 2021 2012-13 02.02.2021 - -
12. 7562 of 2021 2014-15 - 09.02.2019 -
13. 8404 of 2022 2012-13 05.02.2021 05.01.2022 -
14. 8526 of 2022 2013-14 05.02.2021 05.01.2022 -
15. 26152 of 2023 2016-17 - 13.09.2021 -
16. 26297 of 2023 2017-18 - 19.09.2021 -
(April 2017
to June
2017)
8. From the details of the writ petitions provided in the chart
above, prima facie, there is no dispute so far as the show cause
notices which are under challenge in few writ petitions and the
assessment orders in other writ petitions have all been passed
beyond a period of four (04) years as is stipulated under Section
21(3) and 21(4) of the Act. Section 6 of the Telangana State
Entry Tax Act, 2001, clearly envisages that for the purpose of
assessment, inspection, seizure, enforcement of payment of any
tax, so also payment of interest or penalty by the dealers, the
provisions of law to be applied by the authority concerned is that
which is provided in the Telangana State General Sales Tax Act,
2005. The Telangana State General Sales Tax Act subsequently
has been abolished and the TSVAT Act has been introduced and
therefore it is the provisions of the TSVAT Act which stands
imported for Entry Tax assessment also and it is in this context
that Section 21 of the TSVAT Act is being invoked.
9. Another fact which is apparent from the details provided in
respect of different writ petitions mentioned in the preceding
paragraphs, except for Writ Petition No.26152 of 2023, Writ
Petition No.26297 of 2023 and Writ Petition No.7562 of 2021, is
that in the said three writ petitions there is a slight dispute of
four (04) years period of limitation prescribed. All the other
petitions in this batch of writ petitions being decided there is an
undisputed clear gap of more than (04) years from the date of
filing of the return or four (04) years from the end of the period
for which the assessment is to be made i.e. by 31st day of March
of the fourth year.
10. According to the learned counsel for the petitioners, an
assessment which has been initiated beyond a period of
limitation prescribed under the statute, amounts to be an
assessment without jurisdiction and void ab initio. According to
the learned counsel for the petitioners once when the period of
limitation itself had lapsed there was no occasion for the
respondents to have at the cost of the resources of the state,
subject the petitioners to undergo the rigors of an assessment
for a period which no longer could had been subjected to
assessment under Section 21 of the TSVAT Act on the ground of
limitation.
11. Learned counsel for the petitioner contended that the State
authorities cannot be permitted to generate revenue invoking the
provisions of law which otherwise debars them from invoking. It
was also the contention of the learned counsel for the petitioner
that even the statute does not provide for any powers upon
officers of the respondents to extend the period of limitation
beyond a period of four (04) years as per Section 21(4) of the
TSVAT Act.
12. Per contra, the learned Special Government Pleader
appearing for the respondents opposing the writ petitions drew
the attention of the Court to Section 21(7) of the TSVAT Act
giving his explanation and justification for having initiated the
proceedings under the Telangana State Entry Tax Act beyond a
period of four (04) years.
13. One of the preliminary objections raised by the learned
Special Government Pleader was that these writ petitions do not
deserve to be entertained by the High Court for the reason that
in most of the cases or rather in all the cases where an
assessment order has been passed, there is a remedy of appeal
available to the concerned dealer even in cases where the show
cause notices have been challenged. It is the further contention
of the learned Special Government Pleader that since they are at
the show cause stage, the assessee or the dealers would be at
liberty to raise all their submissions, contentions and defense
through their counter and thereafter it should be left for the
Adjudicating Authority or the Appellate Authority or the
Assessment Officer, as the case may be, to take an appropriate
decision.
14. According to the learned Special Government Pleader the
authority concerned had initiated the proceedings in all these
cases in the teeth of the judgment of the Hon'ble Supreme Court
in the case of M/s. Jindal Stainless Ltd & Anr vs. State of
Haryana 1 wherein in a batch of petitions, one among them also
being that of State of A.P. vs. M/s. Sree Rayalseema Alkalies
Company Limited. The Hon'ble Supreme Court held that levy
of tax by the State under the Act is upon entry of notified goods
and the same cannot be equated with levy of tax on sale of goods
levied by the State under Entry 54 List II of the VII Schedule of
the Constitution of India. It was also held by the Hon'ble
1 (2017) 12 SCC 1
Supreme Court that in addition the levy of Entry Tax by the
State does not impede the free flow of interstate trade as
guaranteed under Articles 301 and 304 of the Constitution of
India. Therefore, it was contended by the learned Special
Government Pleader that the aspect of limitation in the given
factual backdrop as envisaged under Section 21(3) and Section
21(4) of the TSVAT Act would not get attracted herein.
15. According to the learned Special Government Pleader in
the light of the judgment of the Hon'ble Supreme Court in the
case of M/s. Jindal Stainless Ltd & Anr (supra) or in the case
of Sree Rayalseema Alkalies Company Limited (supra), the
authority concerned have initiated the step with an intention to
boost and increase the revenue of the State which otherwise was
in a very bad shape. Learned Special Government Pleader
further harped upon the provisions of Section 21(7) of the TSVAT
Act to justify the action of the respondents in initiating the
proceedings beyond a period of four (04) years.
16. It was also contended that since in the appeal to the
Hon'ble Supreme Court, the issue of validity of levy of Entry Tax
of notified goods was pending consideration before the Hon'ble
Supreme Court from the year 2008 onwards, the period during
which such appeals were pending before the Hon'ble Supreme
Court would stand excluded by the application of Section 21(7)
of the TSVAT Act. Thus, this authority is empowered to make an
assessment under the provisions of Section 6 of the Telangana
State Entry Tax Act on the petitioner for the period 2011-12.
17. According to the learned Special Government Pleader,
having regard to scheme of the Act and in particular the mention
of the words such as "using them" as "input" for manufacture of
other goods" in sub-section (2), the Legislature sought to qualify
and provide such exemption only in relation to 'inputs' which are
used for manufacture of other goods. The word "input" has not
been defined and the general meaning as understood in common
parlance is "what is put in". The term "input" cannot be given a
wider meaning that those goods which are actually put in to
derive the output. Applying the general meaning of the above
said word, read along with the context in which it is used, the
said word "input" is prefixed with the term "using them" and is
further qualified and suffixed with the words "for manufacture of
other goods". Thus, if all the words providing for exemption are
construed in its letter and spirit, it would indicate that such
exemption is available only in respect of goods which are put in,
the process of manufacture to bring about a change resulting in
the new goods coming into existence.
18. According to the learned Special Government Pleader the
term 'input' used in sub-section (2) of Section 3 would indicate
indirect nexus of the modified goods to the resultant new
product emerging out of manufacturing process and in order to
be eligible for such an exemption under Section 3(2) of the Entry
Tax Act, there has to be a direct nexus between the input so
used and the resultant output. All the other goods which may
aid the process of manufacture cannot be considered as inputs
since the legislature sought to provide for exemption only in
respect of a class of goods which go into manufacture of other
goods as 'inputs'.
19. Having heard the contentions put forth on either side and
on perusal of records, it would be relevant at this juncture to
take note of Section 21(7) of the TSVAT Act also, which has been
strongly relied upon by the learned Special Government Pleader
in defending the action of the respondents in respect of issuance
of show cause notice or the order of assessment and also in
matters where the appellate jurisdiction has also been exercised.
The relevant portion of Section 21(7) of the TSVAT Act, for ready
reference, is reproduced herein under:
"Where an assessment has been deferred by the
Commissioner under sub-section (5) of Section 32 or
as the case may be, 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 Telangana High Court or Supreme
Court respectively, or whereas appeal or other
proceedings is pending before the Appellate Tribunal
or 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 proceeding
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."
In the context of the aforesaid provisions of Section 21(7) of
the TSVAT Act, the learned Special Government Pleader banked
hard on the said provision.
20. According to learned Special Government Pleader,
appearing for the respondents-Authorities, as per Section 21(7)
in a case where proceedings were sub judice the appellate
Tribunal or the High Court for the State of Telangana or the
Hon'ble Supreme Court, as the case may be, such period during
which the proceedings were pending before the aforesaid judicial
forums would get excluded from being calculated for the purpose
of computing the period of four (04) years under Section 21(3)
and 21(4) and as per Section 21(5) for the purpose of
assessment. In this regard, the learned Special Government
Pleader submitted that since in the matters of M/s. Jindal
Stainless Ltd (supra) as also that of Sree Rayalseema Alkalies
Company Limited (supra) were pending before the Hon'ble Apex
Court, the period of limitation would automatically stand
extended. It was also his contention that though there was no
litigation qua the petitioners herein before any appellate tribunal
or any judicial forums, the question of law being the same was
under consideration before the Hon'ble Supreme Court in the
aforesaid two decisions and the connected batch of petitions
which were decided together. This argument of the learned
Special Government Pleader may not have sufficient force of law
for the simple reason that the judgment of the Hon'ble Supreme
Court in the aforesaid batch of matters was delivered on
11.11.2016, and the impugned notices issued in most of these
cases itself or the assessment orders passed was much beyond
the period of four years from the date of the judgment and the
Hon'ble Supreme Court in the aforesaid batch of matters dealing
with the validity of the provisions of the Entry Tax. This
argument also would not be sustainable for the reason that
there are petitioners in whose cases the respondent-Authorities
have not waited till the judgment of the Hon'ble Supreme Court
to commence the proceedings so as to take a uniform stand so
far as the limitation is concerned; and in a few cases, the notices
were issued much before the decision of the Hon'ble Supreme
Court though the adjudication part has been done subsequently,
but notices were definitely been issued earlier which is sufficient
to show that pendency of the matter before the Hon'ble Supreme
Court was not a criteria at all.
21. The Hon'ble Supreme Court in the case of State of Punjab
and others vs. Shreyans Indus Ltd. 2 held at paragraph Nos.21,
22 and 24 as under, viz.,
"21. Clause (b) of sub-section (6) indicates that Joint
Commissioner, in appropriate cases, may pass an order for
deferment of assessment order to be passed by the
assessing authority and once such an order is passed, that
period has not to be counted while computing the period of
limitation. Significantly, this provision also mandates the
Joint Commissioner to record reasons for deferring the orders
of assessment. In essence, therefore, the purport and
objective behind the provisions in the Punjab Act as well as
in the Karnataka Act remains the same. By making any
(2016) 4 S.C.C. 769
order of deferment under sub-section (6) of Section 12 of the
Karnataka Sales Tax Act, the Joint Commissioner is, in fact,
achieving the same purpose of granting more time to the
assessing officer to pass the assessment order. Same is the
purpose behind sub-section (11) of Section 10 of the Punjab
Act. In view thereof, it may not be appropriate to go into the
nuanced distinction between "deferment" and "extension" as
per the definitions contained in Black's Law Dictionary in the
given situation, which is dealt with in the instant appeals.
22. Even otherwise, it is important to understand the
ratio laid down in the judgment of the Karnataka High Court
in BHEL [BHEL v. CCT, (2006) 143 STC 10 (Kar)] . The issue
in the said case before the Karnataka High Court was as to
whether the power to pass a deferment order is to be
exercised even after the expiry of the period of limitation
which was answered in the negative. The reasons given in
support of this conclusion are as follows: (STC pp. 15-16,
para 8)
"8. ... Deferment of assessment has the effect of
enlarging the period of limitation which did not
expire by the time the deferment order is
contemplated to be passed. When once the
period of limitation expires, the immunity against
being subject to assessment sets in and the right
to make assessment gets extinguished. Resort to
deferment provisions does not retrieve the
situation. There is no question of deferring
assessment which had already become time-
barred. The provision for exclusion of time in
computing the period of limitation of deferment of
assessment is meant to prevent further running
of time against the Revenue if the limitation had
not expired."(emphasis supplied)
It was also observed that upon the lapse of the period
of limitation prescribed, the right of the Department to assess
an assessee gets extinguished and this extension confers a
very valuable right on the assessee.
23. .........
24. The argument of the learned Senior Counsel for
the appellants based on Section 148 CPC would be of no
consequence. This section categorically states that power to
enlarge the period can be exercised even when period
originally fixed has expired. Likewise, reliance upon Section
139(2) of the Income Tax Act is misconceived. That provision
is made for the benefit of the assessee which empowers the
assessing officer to grant an extension of time for filing of the
return of income and, therefore, obviously will have no
bearing on the issue at hand. Moreover, this Court in Ajanta
Electricals case [CIT v. Ajanta Electricals, (1995) 4 SCC 182] ,
which is relied upon by the learned counsel for the appellant,
held that the time can be extended even after the time
allowed originally has expired on the interpretation of the
words "it has not been possible" occurring in Section 133(2)
of the Act. The Court, thus, opined that the aforesaid
expression would mean that the time can be extended even
after original time prescribed in the said provision has
expired. Same is our answer to the argument of Mr Ganguli
predicated on Section 28 of the Arbitration Act, 1940 as that
provision was in altogether different context."
22. Similarly, in the case of KMK Event Management Ltd. vs.
The Commissioner of Commercial Taxes 3, a Division Bench of
the High Court for the State of Andhra Pradesh held at
paragraph Nos.26, 27, 29 and 33 as under, viz.,
"26. 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) and (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
2014 SCC Online Hyd 1101
under section 21 of the VAT Act or the appellate proceedings
under section 31 of the VAT Act.
27. This question can be examined from another
angle also. Ambiguity, if any, in a statutory provision can be
removed applying the Heydon's Rule. The Heydon's 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 Heydon's 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 (1996) 4 SCC 76,
Goodyear India Ltd. v. State of Haryana [1997] 105 STC 465
(P&H) ; (1997) 116 PLR 252, Ameer Trading Corpn. Ltd. v.
Shapoorji Data Processing Ltd. (2004) 1 SCC 702, Halsbury's
Laws of England, Volume 44(1), 4th Reissue, para 1474,
pages 906-07, Bengal Immunity Company Limited v. State of
Bihar [1955] 6 STC 446 (SC) ; (1955) 2 SCR 603 ; AIR 1955
SC 661 ; In re Mayfair Property Company (1898) 2 Ch 28,
Eastman Photographic Materials Company Limited v.
Comptroller-General of Patents, Designs and Trade Marks
[1898] AC 571 (HL), National Insurance Co. Ltd. v. Baljit Kaur
(2004) 118 C-C 435 (SC) ; (2004) 2 SCC 1).
29. 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 juxtaposition with section 21(7) of the VAT
Act both before, and after, its amendment by Act 21 of 2011.
33. 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) and
(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.
23. Dealing with the words "or" as well as "and", recently the
Hon'ble Supreme Court in the case of Commissioner, Customs
Central Excise and Service Tax, Patna vs. Shapoorji and
Pallonji & Company Pvt. Ltd. 4 held at paragraph Nos.22 and
23 as under, viz.,
"22. Having noticed some of the precedents in the
field of interpretation of statutes, we now move on to a little
bit of English grammar. The word "or" as well as the word
"and" is a conjunction; and it is well known that a
conjunction is used to join words, phrases, or clauses. On
how the conjunctions "or" and "and" are to be read, guidance
could be drawn from authoritative texts and judicial
(2023) S.C.C. Online SC 1330
decisions. As per Justice G.P. Singh's Principles of Statutory
Interpretation, the word "or" is normally disjunctive while the
word "and" is normally conjunctive. In English law, the
position is clear as crystal, as explained by Lord Scrutton in
Green v. Premier Glynrhonwy Slate Co. Ltd. [Green v. Premier
Glynrhonwy Slate Co. Ltd., (1928) 1 KB 561 at p. 569 (CA)] ,
that one does not read "or" as "and" in a statute unless one
is obliged, because "or" does not generally mean "and" and
"and" does not generally mean "or".
23. When the meaning of the provision in question is
clear and unambiguous by the usage of "or" in Clause 2(s),
there remains no force in the submission of Ms Bagchi that
"or" should be interpreted as "and". In our opinion, the word
"or" employed in Clause 2(s) manifests the legislative intent
of prescribing an alternative. Going by the golden rule of
interpretation that words should be read in their ordinary,
natural, and grammatical meaning, the word "or" in Clause
2(s) clearly appears to us to have been used to reflect the
ordinary and normal sense, that is, to denote an alternative,
giving a choice; and, we cannot assign it a different meaning
unless it leads to vagueness or makes Clause 2(s) absolutely
unworkable. We are fortified in our view by the decision of
this Court in Sri Jeyaram Educational Trust v. A.G. Syed
Mohideen [Sri Jeyaram Educational Trust v. A.G. Syed
Mohideen, (2010) 2 SCC 513 : (2010) 1 SCC (Civ) 498] ,
wherein it was held thus : (SCC p. 516, para 11)
"11. It is now well settled that a provision
of a statute should have to be read as it is, in a
natural manner, plain and straight, without
adding, substituting or omitting any words. While
doing so, the words used in the provision should be
assigned and ascribed their natural, ordinary or
popular meaning. Only when such plain and
straight reading, or ascribing the natural and
normal meaning to the words on such reading,
leads to ambiguity, vagueness, uncertainty, or
absurdity which were not obviously intended by
the legislature or the lawmaker, a court should
open its interpretation toolkit containing the settled
rules of construction and interpretation, to arrive at
the true meaning of the provision. While using the
tools of interpretation, the court should remember
that it is not the author of the statute who is
empowered to amend, substitute or delete, so as to
change the structure and contents. A court as an
interpreter cannot alter or amend the law. It can
only interpret the provision, to make it meaningful
and workable so as to achieve the legislative
object, when there is vagueness, ambiguity or
absurdity. The purpose of interpretation is not to
make a provision what the Judge thinks it should
be, but to make it what the legislature intended it
to be."
24. Very recently, a Division Bench of the Gujarat High in the
case of Reliance Industries Ltd. and another vs. State of
Gujarat and others 5, held at paragraph Nos.168, 170 & 171 as
under, viz.,
(2020) 82 G.S.T.R. 32 (Guj)
"168. The illustration given by Mr. Soparkar for the purpose
of demonstrating that the impugned amendment is arbitrary
and unreasonable is quite apt.
.........
170. Then we are taking about unreasonableness in the
impugned provision, we should look into the English decision
in the case of Kruse v. Johnson [1895-90] All ER 105. It has
been observed as under :
"Unreasonableness in what sense ! If for
instance they were found to be partial and
unequal in their operation between different
classes, if they were manifestly unjust, if they
disclosed bad faith, if they involved such
oppressive or gratuitous interference with rights of
those subject to them as could find no justification
in the minds of the reasonable men, the court
might well say Parliament never intended to give
authority to make such rules and that they are
unreasonable and ultra vires.'
24. In Municipal Corporation of Delhi v. Birla
Cotton, Spinning and Weaving Mills, Delhi AIR
1968 SC 1232, a Constitution Bench of the apex
court had occasion to examine the issue. The court
approved the aforesaid principle enunciated in the
case of Kruse v. Johnson [1895-90] All ER 105.
25. Chief Justice Wanchoo approving the principle
said :
'26. In such case of the act of such a body in
exercise of the power conferred on it by law is
unreasonable, the court can held that such
exercise is void for unreasonableness. This
principle was laid down as far back as 1898 in
Kruse v. Johnson (1898) 2 QB 91, in connection
with a bye law made by a county Council.. .. The
court held that a bye law could be struck down on
the ground of unreasonableness.'
Hidayatullah, J. agreed and said :
'Now the rule regarding reasonableness of bye
laws was laid down in Kruse v. Johnson (1898) 2
QB 91. The rule has been universally accepted
and applied in India and elsewhere.'
Sikri, J. concurred :
'I agree with the learned chief justice and
Hidayatullah, J. that in suitable cases taxation in
pursuance of delegated powers by a Municipal
Corporation can be struck down as unreasonable
by courts. If Parliament chooses to delegate wide
powers it runs the risk of the bye laws or the rules
framed under the delegated powers being
challenged as unreasonable'."
171. In the case of Mafatlal Industries Ltd. v. Union of India
[1998] 111 STC467 (SC), the Supreme Court observed that
allowing refund claims beyond the stipulated period of
limitation based on the decisions rendered in other cases
would "do violence to several well-accepted principles of
law". It was further observed that "one of the important
principles of law, based upon public policy, is the sanctity
attaching to the finality of any proceeding, be it a suit or any
other proceeding". Denouncing the legality of the practice of
claiming refund after number of years based on subsequent
decisions it was observed that "But according to the present
practice, writs and suits are being filed after lapse of a long
number of years and the rule of limitation applicable in that
behalf is said to be three years from the date of discovery of
mistake of law. The incongruity of the situation needs no
emphasis."
25. Earlier also the Hon'ble Supreme Court in the case of
Spentex Industries Limited vs. Commissioner of Central
Excise and others 6, dealing with the interpretation of the word
"or" at paragraph Nos.28 to 32, held as under, viz.,
"28. The aforesaid discussion leads us to the only inevitable
consequence which is this: the word "OR" occurring in Rule 18
cannot be given literal interpretation as that leads to various
disastrous results pointed out in the preceding discussion
and, therefore, this word has to be read as "and" as that is
what was intended by the rule-maker in the scheme of things
and to carry out the objectives of Rule 18 and also to bring it
on a par with Rule 19.
29. We are conscious of the principle that the word "or" is
normally disjunctive and "and" is normally conjunctive (see
Union of India v. Kamalabai Harjivandas Parekh [AIR 1968
SC 377 : (1968) 1 SCR 463] ). However, there may be
(2016) 1 S.C.C. 780
circumstances where these words are to be read as vice
versa to give effect to manifest intention of the legislature as
disclosed from the context.
30. Of course, these two words normally "or" and "and" are
to be given their literal meaning in unless some other part of
the same statute or the clear intention of it requires that to be
done. However, wherever use of such a word viz. "and"/"or"
produces unintelligible or absurd results, the Court has the
power to read the word "or" as "and" and vice versa to give
effect to the intention of the legislature which is otherwise
quite clear. This was so done in State of Bombay v. R.M.D.
Chamarbaugwala [AIR 1957 SC 699 : 1957 SCR 874] and
while doing so, the Court observed as under: (AIR p. 709,
para 20)
"20. ... Considering the nature, scope
and effect of the impugned Act, we entertain no
doubt whatever that the first category of prize
competitions does not include any innocent prize
competitions. Such is what we conceive to be
the clear intention of the legislature as
expressed in the impugned Act read as a whole
and to give effect to this obvious intention as we
are bound to do, we have perforce to read the
word 'or' appearing in the qualifying clause
after the word 'promoter' and before the word
'or' as 'and'. Well-known canons of construction
of statutes permit us to do so. (See Maxwell on
the Interpretation of Statutes, 10th Edn., p.
238.)"
31. In J. Jayalalitha v. Union of India [(1999) 5 SCC 138 :
1999 SCC (Cri) 670] , the provisions of Section 3 of the
Prevention of Corruption Act, 1988 empower the Government
to appoint as many Special Judges as may be necessary for
such area or areas or for such case or group of cases, as may
be specified in the notification. Construing the italicised "or" it
was held that it would mean that the Government has the
power to do either or both the things i.e. the Government
may, even for an area for which a Special Judge has been
appointed, appoint a Special Judge for a case or group of
cases.
32. Likewise, in Mazagaon Dock Ltd. v. CIT and Excess
Profits Tax [AIR 1958 SC 861 : (1959) 1 SCR 848] , word "or"
occurring under Section 42(2) of the Income Tax Act, 1922
was construed as "and" when the Court found that the
legislature "could not have intended" use of the expression
"or" in that Section. We have already explained the statutory
scheme contained in the Act and the Rules which express
manifest intention of the legislature which provide for
granting of both kinds of rebates to the assessee. In
Mazagaon Dock Ltd. [AIR 1958 SC 861 : (1959) 1 SCR 848] ,
this aspect was explained in the following manner: (AIR p.
865-66, para 10)
"10. The word 'or' in the clause would
appear to be rather inappropriate, as it is
susceptible of the interpretation that when some
profits are made but they are less than the
normal profits, tax could only be imposed either
on the one or on the other, and that accordingly a
tax on the actual profits earned would bar the
imposition of tax on profits which might have
been received. Obviously, that could not have
been intended, and the word 'or' would have to
be read in the context as meaning 'and'. Vide
Maxwell's Interpretation of Statutes, 10th Edn.,
pp. 238-39. But that, however, does not affect the
present question which is whether the word
'derived' indubitably points to the business of the
non-resident as the one taxable under Section
42(2), and for the reasons already given, the
answer must be in the negative."
26. The two decisions referred to by the learned Special
Government Pleader for the respondents in the case of
Competition Commission of India vs. Steel Authority of
India Limited and another 7 and Union of India vs. Ind-Swift
Laboratories Limited 8, dealing with the interpretation of the
word "or", the Hon'ble Supreme Court has categorically held in
both these decisions that the provision of a taxing statute must
be interpreted in the light of what is clearly expressed. It
further held that it would not be permissible to import
provisions in a taxing statute so as to supply any assumed
deficiency. The Hon'ble Supreme Court found the view taken by
the High Court in reading down the provision of law by
(2010) 10 S.C.C. 744
(2011) 4 S.C.C. 635
substituting the word "or" by an "and" so as to give relief, was
found to be erroneous.
27. As regards the other three writ petitions, viz., Writ Petition
No.26152 of 2023, Writ Petition No.26297 of 2023 and Writ
Petition No.7562 of 2021 are concerned where there was an
issue as regards the proceedings being barred by limitation or
not, in Writ Petition No.26152 of 2023 the Assessment Order is
for the year 2016-17 which is four (04) years from the last date
of the Financial Year, i.e., from 31.03.2017 till 31.03.2021,
whereas the Assessment Order in the instant case is one which
has been issued on 30.09.2021 which is much beyond the four
year period. Therefore, for the reasons stated in the preceding
paragraphs, we are of the considered opinion that the said Writ
Petition No.26152 of 2023 also for the same ground deserves to
be and is accordingly allowed. No costs.
28. Similarly, in Writ Petition No.26297 of 2023, the
Assessment Order is for the period April, 2017 to June, 2017,
i.e., for a period of two (02) months, as subsequently the new tax
regime under the G.S.T. had come into force. For these two
month period also, i.e., from April, 2017 to June, 2017, the four
year period would come to an end in June, 2021. However, the
Assessment Order in the said writ petition had been passed on
13.09.2021 which again is beyond a period of four (04) years,
and for the reasons mentioned in the earlier writ petition, viz.,
Writ Petition No.26152 of 2023, the present Writ Petition also
deserves to be and is accordingly allowed on the same ground on
which the other batch of writ petitions have been allowed. No
costs.
29. Coming to the third writ petition, i.e., Writ Petition
No.7562 of 2021, the Assessment Order is for the year 2014-15,
i.e., which is four (04) years from the last date of financial year,
i.e., from 31.03.2015 to 30.01.2019, and the impugned show-
cause notice was issued on 30.01.2019 and the Assessment
Order was passed on 09.02.2019, i.e., just around ten (10) days'
time from the date of issuance of the show-cause notice.
Therefore, though the period of limitation hits the assessment
up till January, 2015, but the period February and March, 2015,
the period comes within the four years of limitation prescribed.
Thus, the Assessment Order would be sustainable on the aspect
of limitation only for the period February and March, 2015.
However, the learned Senior Counsel appearing on behalf of the
petitioners drew the attention of the Court to the hasty manner
in which the proceedings were concluded, i.e., the show-cause
notice issued on 30.01.2019 and also the final Assessment
Order passed on 09.02.2019, i.e., just around ten (10) days. He
further made a categorical statement that even the show-cause
notice which was issued by the respondent-Authorities was not
effectively served and no opportunity of personal hearing was
provided to the petitioners. He, therefore, contended that for the
reason that the limitation had expired, the respondents, by-
passing the statutory proceedings prescribed for an effective
hearing, abruptly issued the impugned notice and concluded the
proceedings in ten (10) days' time. Thus, we do not find any
hesitation in reaching to the conclusion that the impugned
Assessment Order dated 09.02.2019 even though is within
limitation for a period of two (02) months, i.e., February and
March, 2015, but for the reason that there is a clear violation of
principles of natural justice and also violation of the statutory
provisions prescribed before passing of the impugned
Assessment Order, the order dated 09.02.2019 passed by the
Assessing Officer would not be sustainable and the same
deserves to be set aside. Therefore, the Writ Petition No.7562 of
2021 therefore also deserves to be and is accordingly allowed.
No costs.
30. It is by now a well settled proposition of law that when the
plain reading of the provision of law is unambiguous and is very
clear in its intent and object, the need for giving a different
interpretation which is otherwise not reflected on its plain
reading, cannot be permitted or that may not be sustainable.
The argument advanced by the learned Special Government
Pleader in the given factual backdrop and the judicial precedents
referred to in the preceding paragraphs would not be
sustainable. Therefore, all the Writ Petitions to the aforesaid
extent would be liable to be allowed, as either the show-cause
notices or the assessment orders in all the writ petitions have
been issued beyond the period envisaged under Section 21 of the
Act. Therefore, the impugned notices and orders are all set
aside. The Writ Petitions are allowed. No costs.
As a sequel, miscellaneous petitions pending if any, shall
stand closed.
____________________
P.SAM KOSHY, J
____________________
N.TUKARAMJI, J
Date: 26.04.2024
Gsd / Ndr
