9911796707
TMI Blog2008 (4) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ecember 5, 2006, a day on which Bangla Bandh was called in West Bengal. According to the petitioner, because of the long queue of goods vehicles on a bandh day the drivers reached the check-post late and produced all the relevant documents including way-bills before the Check-post officers. The petitioner has claimed in these applications that the check-post officials duly inspected the vehicles and the goods carried therein and returned the documents without putting endorsements on those. The respondents have disputed such claim and stated that the vehicles did not at all report at the checkpost and might have entered West Bengal avoiding the check-posts with ulterior motive. On December 6, 2006 the vehicles were intercepted near Kharagpur by the sales tax authorities. The drivers produced relevant documents including the way-bills. The sales tax officials did not accept those documents in the absence of endorsement by the check-post authorities and seized the goods on the ground of non-production of the documents at the checkpost and contravention of section 73 of the VAT Act. Penalty proceedings were initiated. On the basis of an early hearing petition filed by the drivers the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in West Bengal were exigible to tax. Non-production of the documents including way-bill at the check-post definitely created an opportunity for the petitioner to conceal such import and sell those goods without any disclosure and payment of due tax. For imposition of penalty under section 77 actual evasion is not necessary. Possibility of evasion of tax is sufficient to attract said penalty. We are not inclined to interfere with the finding recorded by three fact finding authorities that if not intercepted, the petitioner might have suppressed such import and might not have accounted for sales of those imported goods. In several decisions we have indicated the difference between voluntary reporting at the check-post and detection of contravention after interception. Detection upon interception obviously raises doubt about the motive of the importer. It appears that the authorities concerned have imposed penalty under proviso (a) to section 77(1) of the VAT Act. Mr. Sengupta, the learned advocate appearing for the petitioners, has argued that the proviso providing for penalty at a fixed percentage of the sale value of the offending goods is inconsistent with the main section and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and restrict the discretion allowed by the main section. He has contended that if the proviso is accepted as mandatory, the main section providing for maximum penalty and permitting discretion becomes totally redundant and the proviso occupies the position of the main section. He has cited several decisions on the role and meaning of proviso to a section. Section 77(1) of the VAT Act has provided that the concerned authorities can impose penalty up to maximum limit being 50 per cent of the value of the goods seized for contravention of section 73 or 81 of the VAT Act. Under the main part of the section the concerned officer has a discretion in determining amount of penalty to be imposed but such amount of penalty cannot exceed 50 per cent of the determined value of the offending goods. Clauses (a) and (b) of the proviso to section 77(1) have the same coverage as that of the main section 77(1). Clause (a) of the proviso deals with goods exigible to tax up to four per cent and clause (b) thereof deals with the rest of the goods taxable under section 16(2) of the VAT Act. The discretion allowed under sub-section 77(1) is thus taken away by the proviso providing for two kinds of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on what the enactment clearly says nor set at naught the real object of the main enactment, unless the words of the proviso are such that it is its necessary effect." Our attention has been drawn to another principle of interpreting a proviso according to which, the proviso, if introduced subsequently after enactment of the main provision is to be regarded as the expression of the last intention of the Legislature and in case of irreconcilable repugnancy such proviso should be allowed to prevail. The aforementioned principle was applied in a few extraordinary cases as a last resort but the well-settled golden rule of construction is that a construction which brings in harmony between the main provision and the proviso should be preferred. The approach that in case of irreconcilable conflict the later provision should always be preferred to the former has been criticised as doubtful and illogical. The more logical approach appears to be that in case of incompatible conflict the court should determine which provision is the leading provision and which is the subordinate and subordinate provision should give way to the leading one. (vide Institute of Patent Agents v. Lock Wood [1894 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious proviso and consciously introduced a fixed penalty in place of a variable penalty. The difference in the language reflects the clear intention of the Legislature to do away with the discretion and to impose a fixed penalty depending on the rate of tax payable. If the Legislature intended to provide for different maximum amounts for different groups/ classes of goods it would not have used expressions different from the pre-amendment provisos. It is difficult to accept the construction sought to be put by Mr. Sengupta. The VAT Act was enacted in 2003. It received the assent of the President of India on December 27, 2004. It came into operation from April 1, 2005. The original proviso to section 77(1) was first amended by the West Bengal Finance Act, 2005 with effect from April 1, 2005. The said amended proviso was: "Provided that the sum of penalty that may be imposed under this sub-section shall not exceed- (a) fifteen per centum of the value of goods if the rate of tax leviable under sub-section (2) of section 16 in respect of such goods does not exceed four per centum; (b) thirty per centum of the value of goods if the rate of tax leviable under sub-section (2) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Procedural requirements for transporting goods have been laid down in order to prevent concealment of imports into or exports from West Bengal and of sales or purchases within West Bengal and consequential evasion of tax. Concealment of sales, purchases or contractual transfer price is also intended to avoid payment of due tax. The motive behind and nature of the aforesaid two kinds of offence is the same. Prima facie it is difficult to comprehend why in a case of infringement of section 73 or 81 fixed penalty of 50 per cent or 30 per cent of the value of the goods as the case may be will be levied whereas for almost similar nature of offence penalty may be anything up to double the amount of tax sought to be avoided under section 86 of the VAT Act. A literal interpretation of the amended proviso may lead to anomalies and unconscionable results. It is the duty of the court, wherever possible, to interpret a statutory provision to prevent such unreasonable and oppressive results. To resolve disharmony between the main part of section 77(1) and the amended proviso and to avoid possible injustice and hardship it is necessary to examine if the proviso can be interpreted and tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, the Supreme Court was interpreting Order 8, rule 1 of the Civil Procedure Code prescribing maximum time which can be allowed by courts to file written statement and the effect of the proviso added to Order 6, rule 17 of the Civil Procedure Code dealing with amendment of pleadings. The Supreme Court has pointed out that use of the expression "shall" may not always be conclusive to hold that the provision is mandatory. The Supreme Court has observed therein: "21. The use of the word 'shall' in order VIII, rule 1 by itself is not conclusive to determine whether the provision is mandatory or directory. We have to ascertain the object which is required to be served by this provision and its design and context in which it is enacted. The use of the word 'shall' is ordinarily indicative of mandatory nature of the provision but having regard to the context in which it is used or having regard to the intention of the legislation, the same can be construed as directory. The rule in question has to advance the cause of justice and not to defeat it. The rules of procedure are made to advance the cause of justice and not to defeat it. Construction of the rule or procedure w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that when the language of the Legislature admits of two constructions, the court should not adopt the construction which would lead to an absurdity or obvious injustice. It is equally well-settled that within two constructions that alternative is to be chosen which would be consistent with the smooth working of the system which the statute purported to be regulating and that alternative is to be rejected which will introduce uncertainty, friction or confusion with the working of the system. (See Collector of Customs v. Digvijaysinhji Spinning & Weaving Mills Ltd. [1962] 1 SCR 896, at page 899 and His Holiness Kesvananda Bharati Sri Padagalvaru v. State of Kerala AIR 1973 SC 1461). 25.. The court must always lean to the interpretation which is a reasonable one, and discard the literal interpretation which does not fit in with the scheme of the Act under consideration." Consistently courts have preferred the rule of harmonious construction. In Venkataramana Devaru v. State of Mysore AIR 1958 SC 255, the Supreme Court laid down: "The rule of construction is well-settled that when there are, in an enactment, two provisions which cannot be reconciled with each other, they should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey cannot exceed the maximum limit set by the main part of section 77(1). The harmonising interpretation of the proviso to section 77(1) as explained hereinabove does not help the petitioner in the present case. As already stated, the explanation sought to be furnished by the petitioner for non-production of the documents at the entry check-post is unbelievable and improbable. It is the duty of the every driver to stop at the check-post and to produce the required documents for endorsement. There is no acceptable reason or explanation for not stopping at the check-post. Officers of the check-post are endorsing hundreds of documents daily and it cannot be believed that they did not endorse the documents produced before them. Moreover the statement of facts submitted with the grounds of revision before the two revisional authorities did not contain any such allegation. Before the first revisional authority it was pleaded that the driver was not conversant with the procedure and he did not get the way-bill endorsed. The case put forward before the second revisional authority was different. It was claimed that the driver could not find any check-post when he entered West Bengal from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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