TMI Blog2009 (1) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... t exercised either of the options set out in section 74(7)(a) or 74(7)(b). The deeming provision of section 74(9) of the said Act would get triggered only if the conditions precedent provided under section 74(8) of the said Act are satisfied. We also hold that the Tribunal erred in law in fixing a mandatory period of eight months, within which the Commissioner has to dispose of the objection pending before him under section 74(7) of said Act, particularly, when no such stipulation is provided by the statute. Consequently, both the questions of law are decided in favour of the Revenue/appellant and against the respondents. While this will not alter the outcome in Behl Construction, as indicated above, it sets right the position in law which the Tribunal had erroneously taken and which was being followed in other cases before the Tribunal. The appeals are allowed and the impugned orders are set aside to the extent indicated above. - S.T.A. No. 12,13 of 2008 - - - Dated:- 23-1-2009 - BADAR DURREZ AHMED AND RAJIV SHAKDHER , JJ. The judgment of the court was delivered by BADAR DURREZ AHMED J. In these appeals under section 81 of the Delhi Value Added Tax Act, 2004 (herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In Behl Construction, the dealer/assessee, being aggrieved by an order of penalty passed by the Value Added Tax Officer (VATO), filed its objections to the same under section 74 of the said Act on September 21, 2005. The Joint Commissioner issued a notice dated December 19, 2005 extending the time to consider the objections by a period of two months. The objections were ultimately rejected by the Joint Commissioner by his order dated March 20, 2006. Being aggrieved, the dealer/assessee filed an appeal before the Tribunal and contended that the order passed by the Joint Commissioner was beyond time and the objections ought to be deemed to have been allowed. It was argued on behalf of the dealer/assessee that the period of limitation for considering objections was three months in the first instance and, after the two-month extension under the first proviso to section 74(7), even the period of five months had expired before the order dated March 20, 2006 was passed. It is pertinent to note that though the dealer/assessee could have issued a notice under section 74(8) requiring the Joint Commissioner to decide upon the objections, it did not do so. The Tribunal, as mentioned above, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the objection for a period of up to three months for the proper preparation of its position, in which case the period of the adjournment shall not be counted towards the period by which the Commissioner shall reach his decision. (8) Where the Commissioner has not notified the person of his decision within the time specified under sub-section (7) of this section, the person may serve a written notice requiring him to make a decision within fifteen days. (9) If the decision has not been made by the end of the period of fifteen days after being given the notice referred to in sub-section (8) of this section, then, at the end of that period, the Commissioner shall be deemed to have allowed the objection. (10) Where on the date of commencement of this Act a dispute under the Delhi Sales Tax Act, 1975 (43 of 1975) has been pending before a sales tax authority referred to in section 9 of the Delhi Sales Tax Act, 1975 (43 of 1975), the dispute shall be disposed of within a period of five years from the date of the commencement of this Act. (11) Where the dispute referred to in sub-section (10) of this section has not been decided within the time required, the dispute shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (3+2+3) from the receipt of the objections. These four cases are depicted in the chart below: Different periods prescribed u/s 74(7) Case 1 Case 2 Case 3 Case 4 1 2 3 4 5 6 7 8 9 Initial period period Extension by Commissioner Extension by dealer Whether the applicable period is three months or five months or six months or eight months, the Commissioner is required to either accept or reject the objections within that time. But what happens if the Commissioner does not dispose of the objections during the applicable period? Does it mean that the objections are deemed to be allowed or accepted with the mere passage of the applicable period? We are of the view that such a deeming fiction is not discernible from a plain reading of the provisions of section 74(7) of the said Act. This is explained below. In sub-sections (8) and (9) of section 74, the Legislature has provided for the situation where the Commissioner does not dispose of the objections during the applicable period. This, in itself, is indicative of the fact that the Legislature was mindful of such a situation and that the mere passage of the applicable period without the Commissioner disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Mancheri Puthusseri Ahmed v. Kuthiravattam Estate Receiver [1996] 6 SCC 185, wherein it was held as under: (at pages 195-196) ...Rule of construction of provisions creating legal fictions is well-settled. In interpreting a provision creating a legal fiction the court is to ascertain for what purpose the fiction is created, and after ascertaining this, the court is to assume all those facts and consequences which are incidental or inevitable corollaries to giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the section by which it is created. It cannot also be extended by importing another fiction. In this connection we may profitably refer to two decisions of this court. In the case of Commissioner of Incometax v. Shakuntala [1961] 43 ITR 352 (SC); [1966] AIR 1966 SC 719 a three-judge Bench of this court speaking through S.K. Das, J., made the following pertinent observation in paragraph 8 of the report: 'The question here is one of interpretation only and that interpretation must be based on the terms of the section. The fiction enacted by the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction involving no invalidating consequence in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope and object of the enactment. It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is in the main governed by considerations of convenience and justice, and when that result would involve general inconvenience or injustice to innocent persons, or advantage to those guilty of the neglect, without promoting the real aim and object of the enactment, such an intention is not to be attributed to the Legislature. The whole scope and purpose of the statute under consideration must be regarded.' Lord Campbell in Liverpool Borough Bank v. Turner [1860] 30 LJ Ch 379 observed: 'No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a stipulation of limitation, the non-compliance with which would lead to any penal consequences. In fact, the provisions of section 74(7) merely contain a prescription of a period or periods relative to different circumstances during which the Commissioner ought to decide the objections. They do not contain any stipulation by way of consequences for non-compliance. Thus, although section 74(7) uses the word shall which is usually found in mandatory provisions, the absence of a stipulated consequence for non-compliance reveals the true nature of the provision, that is, it is directory. On behalf of the respondents, reliance was also placed on a Division Bench decision of the High Court of Andhra Pradesh in the case of Santhosh Wines v. Asst. Commercial Tax Officer, Khairatabad Circle, Hyderabad [1995] 99 STC 160. That decision, also, would be of no help to the respondents. The deeming fiction for the grant of a registration certificate was specifically engrafted in the provisions itself. Rule 28 of the A.P. General Sales Tax Rules, 1957 dealt with the question of registration. Clause (a) of sub-rule (10) of rule 28 provided that if the registering authority is satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first being the period of three months from the date of receipt of objections. Thus, where neither the Commissioner extends time for considering the objections nor the objector seeks further time, the time-limit is only three months. The Tribunal has gone wrong in fixing the time-limit at a purported reasonable period of eight months. Where the time-limit of three months is applicable, the objector could, immediately on the passing away of that period, issue a notice under section 74(8) of the said Act requiring the Commissioner to pass the order within 15 days. If an order is not passed within 15 days then the objector, by virtue of the fiction created in section 74(9) of the said Act, would be within his rights to deem that his objections have been accepted. However, if an order is passed within 15 days, the order shall determine as to whether the objections have been accepted or rejected. Similar situations prevail when the applicable periods are five months (where the Commissioner alone extends time) or six months (where the objector alone seeks time) or eight months (where both the Commissioner and the objector seek extension of time). So, there is a specific time-limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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