WP/13832/2013 of M/s.KMK Event Management Ltd Vs The Commissioner of Commercial Taxes 1St Floor, on 31 December 2014

1) (2008) 12 VST 3712)(2006) 145 STC 913)(2004) 135 STC 4804)(2011) 37 VST 2265)(2011) 46 VST 576)(2000) 1 SCC 521 = (2000) 117 STC 17)2013 (6) ALT 723 (D.B)8)Judgment in WP No.4516 of 2013 dated 18.02.20139)Order in WPMP No.23591 of 2012 in W.P.No.18430 of 2012 dated 25.06.2012

10) AIR 1973 SC 2524

11) (1997) 10 SCC 291

12) AIR 1986 SC 662

13)1990(3) ALT 382

14) AIR 1968 SC 647= (1968) 2 SCR 154

15) (1901 AC 495 : (1900-03) All ER Rep. 1 (HL)

16) AIR 2001 SC 198017)(2001) 5 SCC 407

18) (2001)8 SCC 676

19) (2001) 8 SCC 540

20) AIR 1987 SC 1668

21) AIR 1987 SC 2166

22) (1950) 2 ALL ER 29

23) AIR 1957 Punjab 5

24) (1984) 2 ALLER 1

25) (1979) 2 All ER d 433, (1979) 1 WLR 620

26) Judgment in Civil Appeal No.1421 of 1966 dated 01.05.1967

27) AIR 1968 S 816 = (1968) 2 SCR 674

28) AIR 1966 SC 1412 =(1966) 2 SCR 279

29) AIR 1967 Allahabad 248

30) AIR 1951 Raj 94(a) = (1951) 20 ITR 214 (Raj)

31) (1938) 6 ITR 414 (AIR 1938 PC 175

32) AIR 1954 Patna 155

33) AIR 1961 SC 609

34) (1957) 31 ITR 678

35) AIR 1961 SC 1265

36) AIR 1964 Madhya Pradesh 214

37) AIR 1955 SC 604

38) (1879) 5 A.C. 63 (PC)

39)1978 (2) SCC 213

40)1990 (3) SCC 447

41)1993 Supp.(3) SCC 716

42)1999 (4) SCC 135

43)1999 (6) SCC 275

44) (2001) 9 SCC 432

45)236 F.2d 622

46) AIR 2004 SC 1426 = (2004) 1 SCC 755

47)1996) 4 SCC 76

48) (1997) 116 PLR 252

49) (2004) 1 SCC 702

50) (1955) 2 SCR 603 = AIR 1955 SC 661

51) (1898) 2 Ch 28

52)1898 AC 571

53) (2004) 2 SCC 1

54) (1975) 1 All ER 16

55) (1988) 2 SCC 293

56) AIR 1962 SC 159

57)1987 Supp SCC 350

58) AIR 1969 SC 1048

59) (1991) 1 SCC 86

THE HON’BLE SRI JUSTICE RAMESH RANGANATHANANDTHE HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY

WRIT PETITION No.13832 OF 2013

ORDER: (per Hon’ble Sri Justice Ramesh Ranganathan)

The proceedings, under challenge in this Writ Petition, is the order ofthe Commissioner, Commercial Taxes (hereinafter called the“Commissioner”) dated 24.04.2013 rejecting the petitioner’s representationseeking deferment of the proposed assessment, in Form VAT 305-A dated12.09.2012, by the Assistant Commissioner, Commercial Taxes II,Enforcement Wing (hereinafter called the “assessing authority”).

The Assessing Authority issued a show cause notice, in Form VAT305-A dated 12.09.2012 for the assessment year 2011-12, proposing tolevy tax on the petitioner, among others, on (a) the amount charged towardsoutdoor catering; (b) the amount charged towards hiring of tent houseequipment; and (c) the levy of VAT on sales made to dealers in otherStates. He also disallowed the petitioner’s claim for input tax credit onliquefied petroleum gas (LPG) used by them for cooking food items. Thepetitioner filed their objections thereto by letter dated 18.12.2012, andappeared before the assessing authority for a personal hearing. They filedan application before the Commissioner on 18.01.2013 requesting him toissue an order under Section 21(7) of the A.P. VAT Act (hereinafter calledthe “VAT Act”) deferring assessment proceedings initiated by the assessingauthority against them. The petitioner contended that levy of VAT on theturnover on which service tax was levied as hire charges, and levy of VATon supply of food and drinks on which also service tax was levied, was thesubject matter of W.P. No.6692 of 2011 which was admitted, and waspending on the file of the High Court.

In his order dated 02.02.2013, the Commissioner (1[st] respondentherein) held that the show cause notice issued by the assessing authoritywas for several issues, apart from the proposal to levy tax on the “servicepart” of outdoor catering services; and all the issues mentioned in the showcause notice were not the subject matter of W.P. No.6692 of 2011, pendingbefore the High Court. Consequently, the petitioner’s request for defermentof assessment proceedings was rejected. The petitioner submitted anotherrepresentation on 04.02.2013 contending that, in addition to the aforesaidtwo issues which were the subject matter of W.P. No.6692 of 2011, theissue relating to levy of VAT, on the turnover on which service tax was levied, was decided by the Supreme Court in Imagic Creatives v. CCT[[1]];and the question whether VAT could be levied on the amount receivedtowards the service element, in the supply of food and drinks, had beendecided by the Supreme Court in BSNL v. Union of India[[2]],ImagicCreatives[1], and Tamilnadu Kalyanamandapam v. Union of India[[3]]; bythe Punjab and Haryana High Court in Cap ‘N’ Chaps Caterers v. State ofHaryana[[4]];and by the Karnataka High Court in Commissioner v. LSGSKY Chef[[5]]. However, for the other issues, the petitioner conceded thatthe assessing authority could pass an assessment order.

After considering the petitioner’s objections, the Commissionerpassed an elaborate order dated 24.04.2013 rejecting their request fordeferment of assessment proceedings. The Commissioner negatived theirclaim that the issue regarding levy of VAT, on supply of tent house material,was the subject matter of W.P. No.35693 of 2012 and batch, and held thatwhat was under challenge therein was the levy of VAT on advertising/hiringactivity, and not on hiring of tent house equipment. The Commissioneralso held that the proposal to levy VAT, on the sale of food and drinks incatering activity, could not be deferred as the petitioner had not producedany evidence that the facts in Tamilnadu Kalyanamandapam[3] was similarto their case attracting the said decision; and the law declared by theSupreme Court, in K. Damodaraswamy Naidu & Sons v. State of TamilNadu[[6]], was still good law. With regards disallowance of input tax credit on LPG, the Commissioner held that, in the case of M/s. RAK Ceramics(India) Pvt. Ltd. v. Asst. Commissioner (CT)-VI, Enforcement Wing,Hyderabad[[7]], the High Court had granted interim stay by order in WPMPNo.32 of 2013 in WP No.31 of 2013 dated 13.01.2013; the interim stay wasonly regarding recovery of the disputed tax; there was no stay on thesubstantive issue i.e., on disallowance of ITC on LPG as per Rule 20(2)(q)of the VAT Rules; there were many issues involving questions of fact; andthe question, whether a particular transaction would come under “transfer ofthe right to use”, had to be examined based on the facts of each case.

It is this order of the Commissioner which is under challenge in thisWrit Petition. Interim orders were passed by this Court in W.P.MPNo.16922 of 2013 dated 30.04.2013, which were extended thereafter.Consequently, the assessing authority has been disabled from passing anassessment order pursuant to the show cause notice dated 12.09.2012. During the course of hearing of this Writ Petition on 11.11.2012, this Courtcalled upon the Commissioner to file a counter-affidavit on whether the VATAct conferred on him the power to defer assessment proceedings. In hiscounter-affidavit dated 22.11.2014, the Commissioner submitted that thepetitioner was liable to pay tax on the total amount set out in the tax invoice;the Assistant Commissioner had, by his notice dated 12.09.2012, rightlyproposed to tax the turnover which had escaped assessment; thepetitioner’s application for deferment of assessment proceedings wasrejected by him in accordance with law; on a conjoint reading of Section21(7) and 32(5) of the VAT Act, the Commissioner has the power to deferassessment proceedings; and, as has been held by this Court in M/s.Global Fuels Lubricants Inc. v. The Commissioner of CommercialTaxes[[8]], the power to defer assessment proceedings is valid.

Dr. T. Ramesh Babu, Learned Counsel for the petitioner, would drawattention of this Court to an interlocutory order passed in M/s. SchindlerIndia Private Limited v. Commercial Tax Officer (Int) Secunderabad[[9]],and to the judgment of the Supreme Court in The Commissioner ofIncome-tax, West Bangal-II, Calcutta v. Naga Hills Tea Co. Ltd.[[10]]and Collector of Customs, Madras v. Lotus Inks[[11]]. He would also placereliance on M/s. Global Fuels Lubricants Inc.[8], to submit that, on aconjoint reading of Section 21(7) read with Section 32(5) of the VAT Act, theCommissioner has the power to defer assessment proceedings.

In M/s. Schindler India Private Limited[9] this Court, by way of aninterlocutory order, observed that, prima facie, Section 21(7) read withSection 32(5) of the VAT Act enables the Commissioner to deferassessment proceedings and, as the Commissioner’s power under Section32(5) of the VAT Act is exercised qua an assessment order already passed,impliedly the Commissioner can always even defer the assessment. It iswell settled that interlocutory orders have no finality and are, therefore, notbinding as a precedent. As there is no finality to an interlocutory order, andinterim orders passed by Courts on certain conditions are not precedents forother cases which may be on similar facts, (Empire Industries Limited v.

Union of India[[12]];M. Vijaya Kumar v. Milk Products Factory[[13]]), theinterim order passed i n M/s.Schindler India Private Limited[9]would notconstitute a precedent binding on a co-ordinate Division Bench.

It is no doubt true that, if two views are possible on the interpretationof the provisions of a fiscal statute, the construction in favour of theassessee should bind the decision of the Court. (Naga Hills Tea Co. Ltd.[10]and Lotus Inks[11]). As the power to defer assessment proceedings can onlybe statutorily conferred by the legislature, and not by the Court, the questionwhich necessitates examination is whether Section 21(7) of the VAT Act,either explicitly or by necessarily implication, confers power on theCommissioner to defer “assessment” proceedings.

It is only if the Commissioner has the power to defer “assessment”proceedings, would he be entitled to entertain and examine any request forits deferment. As conferment of the power, to defer assessmentproceedings, is a pre-requisite for its exercise, this Court must, at the outset,examine whether the VAT Act confers on the Commissioner the power todefer assessment proceedings, before considering whether exercise of thepower to pass the impugned order dated 24.04.2013, rejecting thepetitioner’s request for deferment of assessment proceedings, is valid or not. Before doing so, it is necessary to consider the submission of theCommissioner that, in view of the law declared by the Division bench of thisCourt in Global Fuels Lubricants Inc[8], the Commissioner has the power todefer assessment proceedings.

I n M/s. Global Fuels Lubricants Inc.[8], the order of theCommissioner, super-adding the condition of furnishing a bank guaranteefor deferment of assessment proceedings, was under challenge. TheDivision Bench held that the order passed by the Commissioner, directingthe petitioner to furnish a bank guarantee, was destructive of the purpose forwhich the power and discretion was conferred under Section 32(5) of theAct; this provision enabled the Commissioner to defer any proceedings onthe ground that an appeal or other proceedings are pending before theAppellate Tribunal or the High Court or the Supreme Court involving aquestion of law having a direct bearing on the order or proceeding inquestion; Section 32(6) extended the period of limitation for passing anorder of assessment pro-tanto the period for which a deferment was orderedunder Section 32(5) of the Act; in the circumstances, there was no prejudicecaused to the Revenue by deferment of proceedings; the provision was, infact, incorporated to facilitate a uniform and coherent tax administrationpolicy i.e., to proceed with the assessment in conformity with the guidancereceived from the orders of the Appellate Tribunal, the High Court or theSupreme Court, as the case may be, on matters involving identical orsubstantially similar questions of law; and, where an order of assessmenthas not been passed as yet, the order of the Commissioner super-adding acondition calling upon the petitioner to furnish a bank guarantee, for aliability yet to be assessed, constituted an irrational exercise of discretion.

The question, which arose for consideration before the Divisionbench in M/s. Global Fuels Lubricants Inc[8], was whether theCommissioner could direct a VAT dealer to furnish a bank guarantee as apre-condition for deferment of proceedings. The question whether theCommissioner had the power to defer assessment proceedings did notarise for consideration therein. Dr. T. Ramesh Babu, Learned Counsel forthe petitioner, would however contend that it is only if the Commissionerhas the power to defer assessment proceedings could he have imposed the

pre-condition of furnishing a bank guarantee to defer assessmentproceedings. A decision is only an authority for what it actually decides.What is of the essence in a decision is its ratio and not every observationfound therein nor what logically follows from the various observations madein it. Every judgment must be read as applicable to the particular factsproved, or assumed to be proved, since the generality of the expressionswhich may be found there are not intended to be exposition of the wholelaw, but governed and qualified by the particular facts of the case in whichsuch expressions are to be found. A case is only an authority for what itactually decides. It cannot be quoted for a proposition that may seem tofollow logically from it. Such a mode of reasoning assumes that the law isnecessarily a logical code, whereas it must be acknowledged that the law isnot always logical at all. (State of Orissa v. Sudhansu Sekhar Misra[[14]]; Quinn v. Leathem[[15]]). While the premise, on which the judgment in M/s.Global Fuels Lubricants Inc[8] is founded, is that the Commissioner hasthe power to defer assessment proceedings, the question whether theCommissioner had the power to defer assessment proceedings was not inissue before, nor was it examined by, the Division bench. Reliance placedon M/s. Global Fuels Lubricants Inc[8] is, therefore, misplaced.

Section 32(1) of the VAT Act enables theCommissioner to, suomoto, call for and examine the record of any order passed or proceedingrecorded by any authority, officer or person subordinate to it under theprovisions of the VAT Act, including sub-section (2), and, if such order orproceeding recorded is prejudicial to the interests of revenue, he may makesuch enquiry or cause such enquiry to be made and, subject to theprovisions of the Act, initiate proceedings to revise, modify or set aside suchorder or proceeding and to pass such order in reference thereto as he thinksfit. Under Section 32(2) the powers, of the nature referred to in sub-section(1), can also be exercised by the Additional Commissioner, the JointCommissioner, the Deputy Commissioner and the Assistant Commissioner,in the case of orders passed or proceedings recorded by the authorities,officers or persons subordinate to them.

As the proviso to Section 32 of the VAT Act is similar to Section 20(2-A) of the A.P. General Sales Tax Act (“APGST Act” for short), it isuseful to read Section 20(2-A) of the APGST Act in juxta-position with theproviso to Section 32 of the VAT Act as it originally stood, and the proviso toSection 32 of the VAT Act after it was amended by Act 21 of 2011 witheffect from 15.09.2011.

Section 20(2-A) of the APGST Act and the proviso to Section 32 ofthe VAT Act, prior to its amendment by Act 21 of 2011 with effect from15.09.2011, disabled the revisional authority from exercising the power ofrevision in respect of any issue or question which (i) was the subject matterof an appeal before the Sales Tax Appellate Tribunal (“STAT” for short);and (ii) was decided in appeal by the STAT. The effect of the amendment,by Act 21 of 2011, is that there is no longer any bar on the exercise of therevisional jurisdiction when the issue or question is the subject matter of anappeal before the STAT. The bar is now limited only in respect of an issueor question decided in appeal by the STAT.

As the proviso to Section 32, prior to its amendment, barred exerciseof the revisional jurisdiction in respect of any issue or question which wasthe subject matter of appeal before the STAT, the power to defer revisionproceedings was confined, under Section 32(5) of the Act prior to itsamendment by Act 21 of 2011 dated 29.12.2011 with effect from15.09.2011, only to cases where an appeal or other proceedings werepending before the High Court, or the Supreme Court, involving a questionof law having a direct bearing on the order or proceedings in question. ByAct 21 of 2011, the proviso to Section 32 was amended and, thereafter, the bar on the exercise of the revisional jurisdiction is now limited only inrespect of an issue or question “decided in appeal” by the STAT, and notwhen an issue or question “is the subject matter of an appeal pending”before the STAT. It is only because the bar, under the proviso to Section32, is no longer applicable when an appeal is pending before the STAT,has power now been conferred on the Commissioner, under Section 32(5)of the VAT Act after its amendment by Act 21 of 2011 w.e.f. 15.09.2011, todefer revision proceedings when an appeal, involving any issue or questionhaving a direct bearing on the revision proceedings, is pending before theSTAT.

Section 32(5) of the VAT Act makes it lawful for the Commissioner todefer any proceedings “underthis section” meaning thereby Section 32 ofthe VAT Act alone, and not assessment proceedings under Section 21 orappellate proceedings under Section 31 of the VAT Act. Extending thepower of the Commissioner, under Section 32(5) of the VAT Act, to alsodefer assessment proceedings under Section 21, or the appellateproceedings under Section 31, of the VAT Act would require this Court toignore the words “under this section” in Section 32(5) of the VAT Act. Itwould be wholly inappropriate for this Court, while interpreting a statutoryprovision, to delete or ignore some of the words used therein. Noconstruction, which requires the words “under this section” in Section32(5) of Act to be ignored, or construed as inapposite surplusage, ispermissible. Courts have adhered to the principle that effort should be madeto give meaning to each and every word used by the legislature and it is nota sound principle of construction to brush aside words in a statute, as beinginapposite surplusage, if they can have a proper application incircumstances conceivable within the contemplation of the statute.

(Gurudevdatta VKSSS Maryadit v. State of Maharashtra[[16]],Manohar Lal v. Vinesh Anand[[17]]). The legislative intent, found specific mentionand expression in the provisions of the Act itself, cannot be whittled down orcurtailed and rendered nugatory. (Bharathidasan University v. All India Council for Technical Education[[18]]). Effect should be given to theprovision, and a construction that reduces a part thereof to a “dead letter”

must be avoided. (Anwar Hasan Khan v. Mohd. Shafi[[19]]).

Section 21 of the VAT Act relates to “assessment”. Sections 21(1),(3), (4) and (5) enable the prescribed authority, in the circumstancesmentioned therein, to assess a VAT dealer. Section 21(7) of the VAT Actstipulates that, where an assessment has been deferred by theCommissioner under Section 32(5) or, as the case may be, by the STATunder the proviso to Section 33(4), on account of any stay granted by theAppellate Tribunal or, as the case may be, the Andhra Pradesh High Courtor the Supreme Court respectively, or where an appeal or otherproceedings is pending before the Appellate Tribunal or the High Court orthe Supreme Court involving a question of law having a direct bearing onthe assessment in question, the period during which the stay order was inforce, or such appeal or proceedings was pending, shall be excluded incomputing the period of four years or six years as the case may be for thepurpose of making the assessment.

The words “as the case may be” mean “whichever the case maybe”, (Shri Balaganesan Metals v. M.N. Shanmugham Chetty[[20]]), andwhat the expression says, i.e., as the situation may be. (Subramaniam Shanmugham v. M.L.Rajendran[[21]]; Bluston & Bramley Ltd. v.

Leigh[[22]]; Words and Phrases, Permanent Edn. 4 page 596).Thewords “as the case may be” in Section 21(7) of the VAT Act meanwhichever the case may be i.e., either the Commissioner under Section32(5) or the STAT under the proviso to Section 33(4) of the VAT Act. Asnoted hereinabove, Section 32(5) confers on the Commissioner the powerto defer revision proceedings initiated under Sections 32(1) & (2) of the VATAct. The proviso to Section 33 (4) of the VAT Act confers power on theSTAT to defer hearing of the appeal before it, if the appeal involves aquestion of law, a decision on which is pending in any proceedings beforethe High Court or the Supreme Court, till such proceedings are disposed of. The deferment of assessment proceedings, as referred to in Section 21(7)of the VAT Act, is by the Commissioner under Section 32(5) and the STATunder the proviso to Section 33(4), which confer power on theCommissioner to defer revision proceedings, and the STAT to defer hearing of the appeal before it, respectively. The word “assessment”, in the contextof Section 21(7), neither means “self-assessment” under Section 20 nor anassessment order passed under Section 21 of the VAT Act.

The word ‘assessment’, in Section 21(7) of the VAT Act, has a wideconnotation. It does not always mean the determination of the taxableturnover of a dealer under a taxing statute like the VAT Act. To "levy" a taxmeans "to impose or assess" or "to impose, assess or collect under theauthority of law". It is a unilateral act of a superior legislative power todeclare the subjects and rates of taxation and to authorise the collector toproceed to collect the tax. "Assessment" is the official determination ofliability of a person to pay a particular tax, and "collection" is the power togather in money as taxes by enforced payment, if necessary. The “levy” oftaxes is generally a legislative function; “assessment” is a quasi-judicialfunction and “collection” an executive function. These three expressions"levy", "assessment" and "collection" are of the widest significance andembrace in their broad sweep all the proceedings which can possibly beimagined for raising money by the exercise of the power of taxation from theinception to the conclusion of the proceedings. (Firm L. Hazari Mal

Kuthiala v. Income-tax Officer, Special Circle, Ambala Cantt[[23]]).Theexpression ‘assessment to tax’ may cover all the various stages leadingupto the calculation and statement of the amount of tax due. (Vickerman v.

Mason’s Personal Representatives[[24]]; Hallamshire Industrial Finance Trust Ltd. v. IRC[[25]]).The word ‘assessment' can bear a verycomprehensive meaning; it can comprehend the whole procedure forascertaining and imposing liability upon the taxpayer; and it may provide for all contingencies which may arise. (Kalawati Devi Harlalka v. CIT[[26]];S.

Sankappa v. ITO[[27]]; State of Bombay v. Jagmohandas[[28]]).

One of the peculiarities of most tax enactments is that the expression"assessment" is used in its various sections to convey differentconnotations. The word "assessment" is used as meaning sometimes thecomputation of turnover, sometimes the determination of the amount of taxpayable, and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer (M/s. J.K. Iron and Steel Co. Ltd. v.The Income Tax Officer, Kanpur[[29]]; Madangopal Kabra v. The Unionof India[[30]]; Commr. of Income-tax v. Khemchand Ramdas[[31]]). Theword 'assessment' may mean determination of the amount of tax payable.(Gulabrai Manohar Lal v. Commr. of Income-tax, Bihar[[32]]).The saidexpression may also be so used as to include proceedings for imposingliability to additional tax called penalty on the assessee's guilt of fraud,gross negligence, dishonest or contumacious conduct. (M/s. J.K. Iron andSteel Co. Ltd.[29]; C.A. Abraham v. Income-tax Officer[[33]];MareddiKrishna Reddy v. Income Tax Officer, Tenali[[34]]).It can alsobeunderstood to include the entire machinery and procedure for imposing andenforcing the tax liability. (M/s. J.K. Iron and Steel Co. Ltd.[29]; Commr. ofIncome-tax, Andhra Pradesh v. Bhikaji Dadabhai and Co.,[[35]]).

The word “assessment” is often used in a comprehensive sense toinclude all proceedings, starting with the filing of the return or issue of noticeand ending with the determination of the tax payable by the assessee.Though, in some sections, the word “assessment” is used only withreference to computation of tax, in other sections it has the morecomprehensive meaning. (S. Sankappa[27]; C.A. Abraham[33]; KalawatiDevi Harlalka[26]).The term "assessment" is flexible, capable of manymeanings, and takes its colour from the context in which it occurs. Thenomenclature is not decisive, and does not prevent it from being an"assessment" in a proper context. (M/s. J.K. Iron and Steel Co. Ltd.[29]).The meaning of "assessment" has to be derived from the language ofthe provision itself. (Firm Harpaldas Jairamdas v. The Sales TaxOfficer[[36]]).The word “assessment” has been used in different Sections indifferent contexts, and is not always used only to mean “assessment” of aVAT dealer under Section 21 of the VAT Act.In the context in which it isused, it obviously refers only to revision proceeding under Section 32 andan appeal before the STAT under Section 33 of the VAT Act.

It is a legitimate rule of construction to construe words, in a statutory

It is a legitimate rule of construction to construe words, in a statutory enactment, with reference to words found in immediate connection withthem (M . K . Ranganathan v. Government of Madras[[37]];AngusRobertson v . George Day[[38]])[.]The doctrine of “Noscitur a sociis”(meaning of a word should be known from its accompanying or associatingwords) has relevance in understanding the import of words in a statutoryprovision. (Bangalore Water Supply & Sewerage Board v. ARajappa[[39]];Rohit Pulp and Paper Mills Ltd. vs. CCE[[40]];Oswal AgroMills Ltd. vs. CCE[[41]];K. Bhagirathi G. Shenoy v. K.P. Ballakuraya[[42]];Lokmat Newspapers (P) Ltd. v. Shankarprasad[[43]]; CBI v.BrajBhushan Prasad[[44]]). Black’s Law Dictionary (Sixth Edition) defines“Noscitur a sociis”to mean that a word is known from its associates. Themeaning of a word is or may be known from the accompanying words. Under the doctrine of “noscitur”, the meaning of questionable or doubtfulwords or phrases in a statute may be ascertained by reference to themeaning of other words or phrases associated with it (Wong Kam Wo v.Dulles[[45]]). P . Ramanatha Aiyer THE LAW LEXICON 2[nd] EditionReprint 2002 defines “Noscitur a sociis” to mean that the meaning of adoubtful word may be ascertained by reference to the meaning of the wordsassociated with it (Broom Legal Maxims). One is known by hiscompanions; the meaning of a word or expression is to be gathered fromthe surrounding words, that is, from the context. The coupling of wordstogether shows that, where the meaning of a particular word is doubtful orobscure or where a particular expression when taken singly is inoperative,the intention of a party who used it may frequently be ascertained bylooking at adjoining words, or at expressions occurring in other parts of thesame instrument. One provision of an instrument must be construed by thebearing it will have upon another.

In construing the words “assessment” and “has been deferred bythe Commissioner under Section 32(5) or ……… by the STAT underthe proviso to Section 33(4)”, which are used in association with eachother in Section 21(7) of the VAT Act, the rule of construction noscitur asociis may be applied. The aforesaid words, read in juxtaposition, indicate that the meaning of one takes colour from the other. The Rule is explainedas “the meaning of doubtful words may be ascertained by reference to themeaning of words associated with it”. (Ahmedabad (P) Primary Teachers’Assn. v. Administrative Officer[[46]]). The setting and context in which thewords “assessment” and “has been deferred by the Commissionerunder Section 32(5) or ……… by the STAT under the proviso toSection 33(4)” are used in Section 21(7) of the VAT Act would require theword “assessment” not to be understood dissociated from the words “hasbeen deferred by the Commissioner under Section 32(5) or ……… bythe STAT under the proviso to Section 33(4)”, or the word “assessment”to mean the passing of an assessment order under Section 21 of the VATAct. Despite its having been made under Section 21 of the VAT Act whichrelates to assessment, the word “assessment” in Section 21(7), when readwith the words “assessment” and “has been deferred by theCommissioner under Section 32(5) or ……… by the STAT under theproviso to Section 33(4)”, can only mean either a revision under Section32 or an appeal before the STAT under Section 33(1), for it is only inrelation to such proceedings has the power of deferment been conferred onthe Commissioner under Section 32(5), and on the STAT under the provisoto Section 33(4) of the VAT Act.

Construing Section 21(7) of the VAT Act as conferring on theCommissioner the power to defer assessment proceedings would requiresthis Court to read such a power as having been conferred also on theSTAT, for Section 21(7) refers to deferment of assessment proceedingsboth under Section 32(5) and the proviso to Section 33(4) of the VAT Act. Such a construction is impermissible on a plain and literal reading ofSection 21(7) of the VAT Act. It does not bear repetition that Section 32(5)makes it lawful for the Commissioner to defer proceedings under “thissection” meaning thereby Section 32 of the VAT Act. Likewise, the provisoto Section 33(4) only enables the STAT to defer hearing of the appealbefore it, ie an appeal preferred by a dealer under Section 33(1) of the VATAct, and not assessment proceedings under Section 21 of the VAT Act. Section 21(7) of the VAT Act neither explicitly nor by necessary implicationconfers power either on the Commissioner or on the STAT to defer assessment proceedings initiated under Section 21 of the VAT Act.

Even otherwise, Section 21(7) of the VAT Act only provides for theconsequences of deferment of assessment proceedings either by theCommissioner under Section 32(5) or by the STAT under the proviso toSection 33(4) of the VAT Act. Just like Section 21(7), both Section 31(4A)and Section 32(7) of the VAT Act also provide for the consequences ofdeferment of proceedings. It is convenient to read Section 21(7), Section31(4-A) and Section 32(7) of the VAT Act in juxta-position with each other.

The first limb of both Section 21(7) and Section 31(4A), whichprovide for the consequences of deferment of assessment and appellateproceedings, would operate only when the power of deferment isspecifically conferred on a specified authority/authorities and is exercisedby them pursuant to such conferment. A plain and literal reading of theaforesaid provisions make it clear that Section 21(7), Section 32(4A) andSection 32(7) only provide for the consequences of deferment of (i)

assessment, (ii) appeal before the Appellate authority, and (iii) revisionunder 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 onlybecause Section 32(5) specifically confers such a power, can theCommissioner defer revision proceedings initiated under Section 32(1) &(2) of the VAT Act. The very fact that, while the consequences of defermentof assessment proceedings, appellate proceedings before the Appellateauthority and revision proceedings are specifically provided for, but thepower of deferment of proceedings is restricted only to revision proceedingsunder Section 32 of the VAT Act, shows that the legislature has for thepresent, neither explicitly nor by necessary implication, chosen to confer thepower to defer either the assessment proceedings under Section 21 of theVAT Act or the appellate proceedings under Section 31 of the VAT Act.

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 statutesin general (be they penal or beneficial, restrictive or enlarging of thecommon law), four things are to be discerned and considered: (1) what wasthe common law before the making of the Act/Rules; (2) what was themischief and defect for which the common law did not provide; (3) whatremedy the legislature has resolved to cure; and (4) the true reason of theremedy. The Court is always to make such construction as shall: (a)suppress the mischief and advance the remedy; and (b) suppress subtleinventions and evasions for the continuance of the mischief pro privatocommodo (for private benefit); and (c) add force and life to the cure andremedy according to the true intent of the makers of the Act/Rules propublico (for the public good). The Heydon’s rule is applied in order tosuppress the mischief which was intended to be remedied as against theliteral rule which could have otherwise covered the field. (Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi[[47]]; Goodyear India Ltd.v. State of Haryana[[48]]; Ameer Trading Corpn. Ltd. v. Shapoorji DataProcessing Ltd.,[[49]];Halsbury’s Laws of England, Vol. 44(1), 4thReissue, para 1474, pp. 906-07; Bengal Immunity Co. Ltd. v. State of Bihar[[50]];In re Mayfair Property Company[[51]];Eastman PhotographicMaterial Company v. Comptroller General of Patents, Designs andTrade Marks[[52]];National Insurance Co. Ltd. v. Baljit Kaur[[53]]).

The Heydon's rule itself is sometimes stated as a primary cannon ofconstruction, sometimes as secondary (i.e available in the case of anambiguity). (Maxwell on Interpretation of Statutes; 12[th] Edn (1969);Craies on Statute Law; 7th Edn (1971), pp 94, 96). The rule is availableat two stages. The first task of a court of construction is to put itself in theshoes of the draftsman-to consider what knowledge he had and,importantly, what statutory objective he had-if only as a guide to thelinguistic register. Here is the first consideration of the 'mischief'. Being thusplaced in the shoes of the draftsman, the court proceeds to ascertain themeaning of the statutory language. In this task the first and most elementaryrule of construction is to consider the plain and primary meaning, in theirappropriate register, of the words used. If there is no such plain meaning (ieif there is an ambiguity), a number of secondary canons are available toresolve it. Of these one of the most important is the rule in Heydon's Rule. Here, then, may be a second consideration of the 'mischief'. (Maunsell v.Olins[[54]]).

Section 14(6) of the APGST Act provided that it shall be lawful for theCommissioner of Commercial Taxes to direct, by general or special order,any assessing authority to defer assessment in respect of any class ofgoods or any class of dealers pending clarification by it of any questionreferred 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 withthe proviso to Section 33(4) of the VAT Act, also enabled the STAT, incertain 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 itsamendment, and similar to Section 21(7) of the VAT Act after itsamendment. It is useful to read Section 14(5) of the APGST Act in juxta-position with Section 21(7) of the VAT Act both before, and after, itsamendment by Act 21 of 2011.

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 chosennot to make a provision similar to Section 14(6) of the APGST Act whichconferred on the Commissioner the power, in certain circumstances, todirect the assessing authority to defer assessment proceedings. TheCommissioner has not been conferred the power to defer assessmentproceedings under the VAT Act, and his power is now limited only to deferrevision proceedings under Section 32 thereof, that too only in thecircumstances referred to, and subject to the limitations prescribed, in sub-section (5) thereof. The Legislature has consciously chosen not to conferon the Commissioner the power to defer assessment proceedings under theVAT Act evidently because, unlike the APGST Act, Sections 20(2) & (4) ofthe VAT Act provide for self-assessment and, except in the circumstancesreferred 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 themischief which, under Section 14(6) of the APGST Act, enabled theCommissioner to defer assessment proceedings, and thereby ensure thatassessment proceedings, under the VAT Act, are not interdicted before itscompletion, and are completed without hindrance. In the absence of aprovision in the VAT Act, similar to Section 14(6) of the APGST Act, none ofthe authorities under the VAT Act can be said to have been empowered todefer assessment proceedings.

Dr. T. Ramesh Babu, Learned Counsel for the petitioner, wouldsubmit that, since the Commissioner has also understood Section 21(7) ofthe VAT Act as conferring on him the power to defer assessmentproceedings, this Court should not take a different view. Contemporaneaexpositio is a well settled principle or doctrine which applies only to theconstruction of ambiguous language in old statutes, (Baktawar Singh Bal Kishan v. Union of India[[55]]),but not in interpreting Acts which arecomparatively modern.(Senior Electric Inspector v. Laxmi NarayanChopra[[56]];J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of India,[[57]]).Even if persons who dealt with the statute understood its provisions inanother sense, such mistaken construction of the statute does not bind theCourt so as to prevent it from giving it its true construction. (National &

Grindlays Bank Ltd. v. Municipal Corpn. of Greater Bombay[[58]]; Punjab Traders v. State of Punjab[[59]]). The understanding of theCommissioner to the contrary notwithstanding, we cannot, without doingviolence to the language of Section 21(7) of the VAT Act, read in it a power,having been conferred either on the Commissioner or the STAT, to deferassessment proceedings.

It matters little that the Commissioner had rejected the petitioner’srequest for deferment, as he lacks jurisdiction, in the first place, to entertainsuch an application for deferment of assessment proceedings underSection 21 of the VAT Act. The Writ Petition is devoid of merits and is,accordingly, dismissed. It is made clear that the assessing authority mayproceed, pursuant to the show-cause notice issued by him earlier, and passan assessment order in accordance with law. There shall be no order as to costs. The Miscellaneous petitions, if any, pending in this Writ Petition, shall stand dismissed.

_____________________________

RAMESH RANGANATHAN, J

Date: 31-12-2014.

___________________________________

M. SATYANARAYANA MURTHY, J

Note: L.R. copy to be marked B/oMRKR/CS[1](2008) 12 VST 371[2](2006) 145 STC 91[3](2004) 135 STC 480[4](2011) 37 VST 226[5](2011) 46 VST 57[6](2000) 1 SCC 521 = (2000) 117 STC 1[7]2013 (6) ALT 723 (D.B)[8]Judgment in WP No.4516 of 2013 dated 18.02.2013[9]Order in WPMP No.23591 of 2012 in W.P.No.18430 of 2012 dated 25.06.2012[10]AIR 1973 SC 2524[11](1997) 10 SCC 291[12]AIR 1986 SC 662[13]1990(3) ALT 382[14]AIR 1968 SC 647= (1968) 2 SCR 154[15](1901 AC 495 : (1900-03) All ER Rep. 1 (HL)[16]AIR 2001 SC 1980[17](2001) 5 SCC 407[18](2001)8 SCC 676[19](2001) 8 SCC 540[20]AIR 1987 SC 1668[21]AIR 1987 SC 2166[22](1950) 2 ALL ER 29[23]AIR 1957 Punjab 5[24](1984) 2 ALLER 1[25](1979) 2 All ER d 433, (1979) 1 WLR 620[26]Judgment in Civil Appeal No.1421 of 1966 dated 01.05.1967[27]AIR 1968 S 816 = (1968) 2 SCR 674[28]AIR 1966 SC 1412 =(1966) 2 SCR 279

[29]AIR 1967 Allahabad 248[30]AIR 1951 Raj 94(a) = (1951) 20 ITR 214 (Raj)[31](1938) 6 ITR 414 (AIR 1938 PC 175[32]AIR 1954 Patna 155[33]AIR 1961 SC 609[34](1957) 31 ITR 678[35]AIR 1961 SC 1265[36]AIR 1964 Madhya Pradesh 214[37]AIR 1955 SC 604[38](1879) 5 A.C. 63 (PC)[39]1978 (2) SCC 213[40]1990 (3) SCC 447[41]1993 Supp.(3) SCC 716[42]1999 (4) SCC 135[43]1999 (6) SCC 275[44](2001) 9 SCC 432[45]236 F.2d 622[46]AIR 2004 SC 1426 = (2004) 1 SCC 755[47]1996) 4 SCC 76[48](1997) 116 PLR 252[49](2004) 1 SCC 702[50](1955) 2 SCR 603 = AIR 1955 SC 661[51](1898) 2 Ch 28[52]1898 AC 571[53](2004) 2 SCC 1[54](1975) 1 All ER 16[55](1988) 2 SCC 293[56]AIR 1962 SC 159[57]1987 Supp SCC 350[58]AIR 1969 SC 1048[59](1991) 1 SCC 86