BY TIOL News Service

ERNAKULAM, AUG 15, 2018: THE issue before the Bench was - Whether the Heydon's Rule of interpretation can be applied in cases where the words of a statute are clear & unambiguous, owing to which their plain meaning is easily understood. NO is the verdict.

Moreover, the Bench also held that in such circumstances, a redundant statute laying down the limitation for issuing SCN could not be resuscitated by extending such limitation period, where such extension runs contrary to legislative intent.

Facts of the case

The assessee company was issued certain notices u/s 25(1) of the Act for the relevant AYs. The assessee contested such notices before the Single Judge on grounds that the notices had been issued after the five year limitation period prescribed u/s 25 of the Act. However, the Single Judge refused to interfere in the matter and remanded the matter.

In writ, the High Court held that,

++ here only a notice was issued and that too after the five year period. If the period provided was for completion of assessment, then necessarily an initiation of proceedings, which obviously the notices are; is definitely barred and out of time. But the question arose by reason of the subsequent amendment to the statute extending the period for completion of assessment; The amendment with effect from 01.04.2010, introduced a proviso extending the period of limitation for completion of assessment of the year 2005-06 to 31.03.2011. In 2011, this proviso was substituted with another extending the limitation for completion of assessment upto 31.03.2012. Yet another substitution occurred extending, likewise, till 31.03.2013, the period for completion of assessment of years upto 2007- 2008. that as it may, we are bound by the order of the Full Bench which answered the reference affirming the view of the earlier Division bench in Tirur Medical Stores. As of now, the limitation as provided under Section 25(1) of the KVAT Act can only be for initiation of proceedings.

++ the sine qua non for invoking the mischief rule is that the material words are capable of bearing two or more constructions and only if it is so capable, then the four tests can be applied. It is not as if the rule has to be applied in all cases where the legislature attempts to cure a defect in statute or provide for something which was earlier not available. Then the Courts will have to first speculate on the intention and apply the rule to remedy the perceived ills without reference to the words employed. This would be missing the woods for the trees. When the words of the statute are clear and unambiguous and the plain and natural meaning is easily discernible then "Heydons Rule" has no application because no "mischief" emanates from the words employed;

++ when there is no limitation prescribed for completion, there could only be the principles of reasonableness applied, on facts of individual cases, if a challenge is made with regard to that. As held by the Full Bench, it is not for us to provide a time frame and it is left to the legislature to decide on that. However, the legislature in extending the period of completion of assessment, has extended a period which was never there as per the limitation prescribed under Section 25 of the KVAT Act Act. We cannot presume the legislature having done it purposefully, especially when the limitation prescribed for was not for the final determination, but to 'proceed to determine', which definitely indicates initiation of proceedings for determination. The legislature also was aware of Section 19 of the KGST Act, which was in pari materia with Section 25 of the KVAT Act and the Division Bench judgment of this Court in Tirur Medical Stores rendered four decades back. We are surprised that such a redundant provision was brought into the Act. Suffice it to observe, neither are we permitted to speak against the Full Bench decision nor are we in disagreement with the view expressed by their Lordships; which we respectfully follow. We hence set aside the judgment of the Single Judge as also allow the Writ Petition setting aside the notices issued beyond the limitation period as provided under Section 25(1) of the KVAT Act.

(See 2018-TIOL-1624-HC-KERALA-VAT)