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'May' may mean 'shall'

November 15, 2023

By Vijay Kumar

Section 1 of the CGST Act states:

(1) This Act may be called the Central Goods and Services Tax Act, 2017.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

What is the difference between may and shall in the above provisions?

This Act may be called the Central Goods and Services Tax Act, 2017. Means what? Is there a discretion? Is it my choice to call this Act as the Central Goods and Services Tax Act? Can I also call it as something else? Is it directory/obligatory/mandatory? Why should it not be "This Act shall be called the Central Goods and Services Tax Act"?

Section 1 of the IPC states:

This Act shall be called the Indian Penal Code

But the proposed replacement Bharatiya Nyaya Sanhita states:

This Act may be called the Bharatiya Nyaya Sanhita, 2023.

Thus, an Act may be called or shall be called. Then does may mean shall?

Every word within a statute is there for a purpose and should be given its due significance.

As per Section 107 (4) of the CGST Act,

The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

What does this may mean. Can the Appellate Authority refuse to allow a further period of one month?

In an order last year - VIDARBHA INDUSTRIES POWER LIMITED versus AXIS BANK LIMITED - CIVIL APPEAL NO. 4633 OF 2021- 2022-TIOLCORP-17-SC-IBC, the Supreme Court observed,

Legislature has, in its wisdom, chosen to use the expression "may" in Section 7(5)(a) of the IBC. When an Adjudicating Authority (NCLT) is satisfied that a default has occurred and the application of a Financial Creditor is complete and there are no disciplinary proceedings against proposed resolution professional, it may by order admit the application. Legislative intent is construed in accordance with the language used in the statute.

Ordinarily the word "may" is directory. The expression 'may admit' confers discretion to admit. In contrast, the use of the word "shall" postulates a mandatory requirement. The use of the word "shall" raises a presumption that a provision is imperative. However, it is well settled that the prima facie presumption about the provision being imperative may be rebutted by other considerations such as the scope of the enactment and the consequences flowing from the construction.

Had it been the legislative intent that Section 7(5)(a) of the IBC should be a mandatory provision, Legislature would have used the word 'shall' and not the word 'may'. There is no ambiguity in Section 7(5)(a) of the IBC. Purposive interpretation can only be resorted to when the plain words of a statute are ambiguous or if construed literally, the provision would nullify the object of the statute or otherwise lead to an absurd result.

The fact that Legislature used 'may' in Section 7(5)(a) of the IBC but a different word, that is, 'shall' in the otherwise almost identical provision of Section 9(5)(a) shows that 'may' and 'shall' in the two provisions are intended to convey a different meaning. It is apparent that Legislature intended Section 9(5)(a) of the IBC to be mandatory and Section 7(5)(a) of the IBC to be discretionary.

In Gvindlal Chhaggan Lal Patel vs The Agricultural Produce Market ... on 27 August, 1975, the Supreme Court observed,

But the little complexity that there is in this matter arises out of a known phenomenon, judicially noticed but otherwise disputed, that sometimes the legislature does not say what it means. That has given rise to a series of technical rules of interpretation devised or designed to unravel the mind of the law-makers.

Maxwell, Crawford and Craies abound in illustrations where the words "shall" and "may" are treated as interchangeable, "Shall be liable to pay interest" does not mean "must be made liable to pay interest", and "may not drive on the wrong side of the road" must mean "shall not drive on the wrong side of the road".

Plainly, "shall" must normally be construed to mean "shall" and not "may", for the distinction between the two is fundamental. Granting the application of mind, there is little or no chance that one who intends to leave a lee-way will use the language of command in the performance of an act. But since, even lesser directions are occasionally clothed in words of authority, it becomes necessary to delve deeper and ascertain the true meaning lying behind mere words.

The Delhi High Court in Bharat Aluminium Company Ltd. vs. Union of India - 2022-TIOL-193-HC-DEL-IT, observed


It is settled law that having regard to the context, the expression "may" used in a statute has varying significance. In some contexts, it is purely permissive, whereas in others, it may make it obligatory upon the person invested with the power to exercise it. The word "may" is capable of meaning "must" or "shall" in the light of the context. In fact, where a discretion is conferred upon a quasi-judicial authority whose decision has civil consequences, the word "may" which denotes discretion should be construed to mean a command.

Consequently, this Court is of the view that the word "may" in Section 144B(viii) should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory.

As per Rule 86A of the GST Rules, the Commissioner may, for reasons to be recorded in writing, disallow use of credit. The Gujarat High Court in NEW NALBANDH TRADERS vs STATE OF GUJARAT -2022-TIOL-360-HC-AHM-GST held:

The second pre-requisite of rule 86-A is of recording of reasons in writing. It comes with the use of the word "may", which, in our opinion, needs to be construed as conveying an imperative command of the rule maker, and that means, reasons must be recorded in writing in each and every case. This is because of the fact that any order which brings to bear adverse consequences upon the person against whom the order is passed, must disclose the reasons for it so that the person affected thereby would know why he is being made to suffer or otherwise he would not be able to seek appropriate redressal of his grievance arising from such an order. Right to know the reasons behind an administrative order having civil consequences is a well embedded principle forming part of doctrine of fair play which runs like a thread through the warp and weft of the fabric of our Constitutional order made up by Articles 14 and 21 of the Constitution of India.

It then follows that the word, "may" used before the words, "for the reasons recorded in writing" signifies nothing but a mandatory duty of the competent authority to record reasons in writing.

Clause 69 of The Income Tax Bill 1961 read as:

Unexplained investments

Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the value of the investments shall be deemed to be the income of the assessee of such financial year.

The Bill was referred to a Select Committee of Parliament which felt that the fact that the explanation offered by the assessee is not satisfactory should not invariably force the Income-tax Officer to treat it as the income of the assessee and therefore recommended that the word "shall" should be substituted by the word "may" which was accepted and now the Section reads as:

Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.

Strangely, in a case in the Supreme Court, the Revenue Counsel argued that the word "may" in section 69 should be read as "shall". The Supreme Court did not agree and observed, (COMMISSIONER OF INCOME TAX Vs SMT P K NOORJAHAN - 2002-TIOL-785-SC-IT)

in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory.

"may" indicates a chance;

While "shall" commands.

In different roles, they prompt action with distinction.

Until Next week

Sub: shall may will ever say must

i may appreciate the article
but i shall admire it.

Posted by Navin Khandelwal
Sub: Mandatory or Directory

In State of U.P v. Manbodhanlal Srivastav, a 1957 judgment, the Supreme Court has discussed in detail circumstances in which these words are construed as either mandatory or directory. The key to the interpretation as per the SC is the intent of the legislature, not the language in which it is clothed.

Posted by Gururaj B N