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2023 (6) TMI 896 - HC - VAT and Sales TaxCancellation of the permission to pay tax on compounded basis for the year 2015-16 - alleged shifting of business premises - principles of interpretation - HELD THAT:- The statutory provision that enables an assessee to pay tax on compounded basis [Section 8(f) of the KVAT Act] does not mandate that the assessee should not change its place of business during the year in which it has sought to pay tax on compounded basis. The provision of sub clause (iv) of Section 8(f) only empowers an Assessing Authority to cancel a permission already granted for valid and sufficient reasons such as shifting of place of business, furnishing of false information, suppression of relevant information, failure to furnish such information demanded etc. It can be seen therefore that sub clause (iv) of Section 8(f) uses the phrase 'shifting of place of business' along with other phrases such as 'furnishing of false information', 'suppression of relevant information' etc. to denote those reasons which are treated as valid and sufficient by the Statute for the purposes of cancellation of a permission already granted. It is a settled principle of interpretation of statutes that the true scope and ambit of a phrase used in a statute must be gathered from the other words/phrases which are used along with it in the statutory provision. The principle of noscitur a sociis is a rule of interpretation that stipulates that where the general words in a statutory text are flanked by restricted words, the meaning of the general words are taken to be restricted by implication with the meaning of the restricted words. The Latin term, noscitur a sociis contemplates that a statutory term is recognised by its associate words. On applying the principle of noscitur a sociis, to determine the scope and ambit of sub clause (iv) of Section 8(f), it can be safely stated that the shifting of a place of business can be cited as a valid and sufficient reason for cancelling a permission already granted only if such shifting is without the knowledge of the Assessing Officer and thereby had an element of suppression of relevant information or failure to furnish relevant information. Justification refers to the principle that the exercise of public power must be justified, intelligible and transparent, not in the abstract, but to the individuals subject to it. Demonstrated expertise refers to the requirement of the decision maker establishing the reasonableness of his decision by demonstrating therein his experience and expertise. On the facts in the instant case, it is not found that the Assessing Authority or the Tribunal to have indicated or provided a clear justification for the action of the Assessing Authority in cancelling the permission that was granted to the petitioner to pay tax on compounded basis for the assessment year 2015-16. The cancellation of the permission already granted was illegal and unreasonable, and hence, liable to be set aside. The O.T. Revision is allowed.
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