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2019 (8) TMI 583 - HC - VAT and Sales TaxVires of Rule 20(2) of the Karnataka Excise (Possession, Transport, Import and Export of Intoxicants) Rules, 1967 - delay caused in furnishing of EVCs collected from the Excise authorities of the destination States - export of liquor - time limit for furnishing of EVCs within the time prescribed i.e., sixty days/ninety days (defence supplies). HELD THAT:- There is no fetter on the Government to frame rules exercising the power to regulate the export of intoxicants which includes regulatory measure to insist for EVCs as a proof of export of liquor to the other destined States. The power delegated by the legislature to the executive vide Rule 20(2) cannot be held to be excessive, arbitrary or illegal. The next question would be whether such production of EVCs within a prescribed period is mandatory or directory. In the present set of facts, the respondents have not alleged any misuse of the export permits and the quantity of exported liquor did not reach the destinations. It is the specific case of the petitioners that the EVCs were submitted belatedly beyond the period of time prescribed and thus the same are rejected. For the Excise year 2018-19, out of about 1,405 export permits said to have been issued, approximately in 51 cases, EVCs were submitted belatedly for which explanation offered shows that destination States issued the EVCs belatedly due to various factors which was beyond the control of the petitioner and the same can not be rejected outrightly. As could be seen, furnishing of verification certificates is only for proof of the export and the quantity exported. This Court is of the considered opinion that production of EVCs is mandatory to avail the benefit of reduced duty pursuant to export of liquor to other States. Some proof is necessary to substantiate the liquor exported has reached the destination/other States. However, describing the time limit of sixty/ninety days for production of EVCs can be held to be directory, since the production of such EVCs within the prescribed period is dependant on the functioning of the authorities of different States, which is beyond the control of the person exporting the liquor. Any EVCs submitted beyond the prescribed period with sufficient cause shown requires to be considered, if it is otherwise established that the liquor was exported to other States by adequate material evidence - the credit has to be adjusted depending upon the facts and circumstances of the case. Furnishing of such EVCs belatedly would not disentitle the petitioner to avail the reduced rate of duty to which he is otherwise entitled to. Whether the expression ‘shall’ partakes the character of ‘may’ depends upon the intent of legislation, which requires to be achieved not only from the phraseology of the provision, but considering its nature, design and the consequences. Applying this principle, the word ‘shall’ used in rule 20(2) requires to be read as ‘may’. Furnishing of EVC Forms in terms of Rule 20(2) of the Export Rules is mandatory, but the time prescribed of sixty/ninety days (defence supplies) for furnishing of such EVC Forms is merely directory. Subject to the same, Rule 20(2) of the Export Rules is held to be intra vires the Constitution - the demand of excise duty as per Annexure – A dated 11.02.2019 stands quashed. Petition disposed off.
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