EFFECT OF CLARIFICATIONS/ CIRCULARS ISSUED BY TAX
AUTHORITIES
In The Commercial Tax Officer
&Anr. v. Mohan Breweries and Distilleries Limited, one of the questions
that arose was the effect of circulars and clarifications issued from time to
time by tax authorities.
In this matter, the High Court had
relied on the Constitution Bench decision of the Supreme Court in CCE
Vadodra v. Dhiren Chemical Industries [2006(126)STC 122] in support of its
conclusions that the revenue could not refuse to the assessee the benefit of
certain clarificatory circulars issued by the revenue. In response thereto, the
argument of the revenue was that the circulars/ clarifications were merely
administrative in nature and had no binding force on a quasi judicial authority
or a Court of law. The revenue relied on CCE Bolpur v. Ratan Melting &
Wire Industries [2008(13)SCC 1] to contend that the law declared by the
Court would remain binding and not the Circulars and clarifications issued by
the revenue.
The Supreme Court noticed that the
decision in Dhiren Chemical (supra) had been clarified by the subsequent
Constitution Bench decision in Ratan Melting & Wire (supra), wherein
it was held that the Circulars and instructions issued by the Board are binding
in law on the authorities under the respective statutes, but when the Supreme
Court or the High Court declares the law on the question arising for
consideration, it would not be appropriate for the Court to direct that the
circular should be given effect to and not the view expressed in a decision of
the Court. The underlying principal for the ratio of the judgment was that the
circulars issued by the executive represent their understanding of the
statutory provisions, and are not thus binding on courts. It is for the courts
to declare what a particular provision of statute says, and not the executive.
IN MATTERS OF CONTRACT, GRANT OF
INTERIM ORDERS TO RESTRAIN SUCCESSFUL BIDDERS FROM EXECUTING THE CONTRACT IS
NOT IN PUBLIC INTEREST
In Rajasthan State Warehousing
Corporation v. Star Agriwarehousing and Collateral Management Ltd. &Ors.,
the Supreme Court was called upon to examine the correctness of an interim
order of the Division Bench of the Rajasthan High Court, whereby status quo was
directed to be maintained in respect of execution of a contract for management
of warehouses at 71 locations in Rajasthan, which contract had been awarded
after a public tender to the successful bidder. The order of the Division Bench
was passed in an appeal against decision of the Single Judge rejecting the
challenge to the award of contract.
Rejecting an argument against
entertaining an SLP against an interim order, the Court held that such a course
of action was desirable when the order under challenge was devoid of any
reasons, and public interest was likely to be affected by the interim order.
The Court relied upon its decision in Raunaq
International Ltd. v. I.V.R. Construction Ltd. &Ors. for the
proposition that interim orders ought not to be passed only after weighing
conflicting public interests. An interim order ought to be granted only when
there is an overwhelming public interest in favour of such a grant.
No such factors were found to exist in
the facts of the case, especially since the writ petition had been rejected by
the Ld. Single Judge.
DELEGATION OF THE FUNCTION OF
CARRYING OUT AN INQUIRY OR REPORT BY ITSELF WILL NOT AMOUNT TO A VIOLATION OF
THE PRINCIPLE OF DELEGATUS NON POTEST DELEGARE
In Inspector General of
Registration, Tamil Nadu and Ors. v. K. Baskaran, the Supreme Court was
called upon to interpret Section 47A of the Indian Stamp Act, 1899 (“Act”),
which was a Tamil Nadu amendment in the Act. This provision empowers the Registering
Officer under the Registration Act, 1908 to make a reference to the Collector
in the event that he/she has reason to believe that an instrument being
registered does not reflect the market value of the property being dealt with.
The Collector is thereafter empowered to hold an enquiry to determine the value
of the property.
One of the questions that arose was as
to whether the Collector, while arriving at a determination, was empowered to
direct his subordinates to carry out an enquiry on his behalf, and take a
decision based on the report. The High Court had held that such an act would
amount to impermissible sub-delegation on the part of the Collector.
After a detailed analysis of several
decisions on the subject, the Supreme Court culled out the principles of law
applicable to delegation of powers by statutory/ administrative authorities and
held that a statutory authority may empower a delegate to perform the
preparatory work and to take an initial decision in matters entrusted to it,
while retaining the power to approve or disapprove the decision in its hands.
Further, practical necessities in decision making may require delegation of
certain tasks such as collecting information and carrying out inspection.
WHERE PUBLIC INTEREST IS LIKELY TO
BE AFFECTED ADVERSELY, A PROVISION OF LAW IMPOSING TIMELINES MAY BE REQUIRED TO
BE READ AS DIRECTORY, EVEN IF MENTIONED EXPRESSLY AS BEING MANDATORY
In Inspector General of
Registration, Tamil Nadu and Ors. v. K. Baskaran, the Court was called
upon to consider whether the exercise of power by a statutory authority was
vitiated on account of having exceeded the time period within which such power
ought to have been exercised.
The power of the Collector under Section
47A of the Indian Stamp Act, 1899 was in question, which empowered the
Collector to conduct an enquiry to determine whether a property was undervalued
in an instrument which was being registered under the Registration Act, 1908;
upon such a reference being made by the Registering Officer. Section 47A by
itself did not provide a time limit for exercise of this power. Under the Rules
applicable to this exercise of power, however, a time limitation was provided.
The question arose as to whether the
time limitation in the said Rule was directory or mandatory, and as to whether
the breach of the said time limit would vitiate the exercise of power.
The Court examined the question in the
light of the fact that the purpose of the provision was to protect public
interest by preventing the undervaluation of property so as to avoid stamp
duty. The Court relied on State of Mysore and others v. V.K. Kangan and
others to hold that the imposition of time lines was directory, since in
the event that it was held to be mandatory, the very object of sub-serving
public interest and securing public revenue would get defeated.
AN AGRICULTURIST UNDER THE BOMBAY
TENANCY ACT CANNOT TRANSFER AGRICULTURAL LAND TO A NON-AGRICULTURIST BY WAY OF
A WILL- A PROHIBITION AGAINST “ASSIGNMENT” WOULD INCLUDE A TESTAMENTARY
DISPOSITION
In VinodchandraSarkarlal Kapadia v.
State of Gujarat &Ors. the Supreme Court was called upon to decide
whether the Bombay Tenancy and Agricultural Lands Act, 1948 (“Act”) imposed a
bar on an agriculturist from transferring of agricultural land to a
non-agriculturist by way of a Will. The question arose because Section 43 of
the Act imposed a prohibition on an agriculturist who had purchased
agricultural land in terms of the provisions of the Act from transferring the
land to a non-agriculturist. A similar prohibition in respect of transfer of
agricultural land to a non-agriculturist was also contained in Section 63 of
the Act. Neither of the provisions, however, referred to a ‘Will’.
The argument of the beneficiary of the
Will was, broadly, that the Act only prohibited transfers inter vivo and
not testamentary dispositions. The Court tested the argument on the anvil of
several decisions which had examined some enactments which imposed similar
restrictions on transfer of land. It was found that in the Supreme Court, in BhavarlalLabhchand
Shah v. KanaiyalalNathalalIntawala, had held that a tenancy governed by a
statute which prohibits assignment cannot be willed away to a total stranger.
The expression ‘assignment’ was also found to have been used in the
aforementioned prohibitions contained in the Act, and applying the ratio of Bhavarlal
(supra) was found to be sufficiently broad to include disposition by Will.
Such an interpretation was also found to
be consistent with the object of the enactment, which-upon a detailed scrutiny
of its provisions- was found to be a social benefit legislation intended to
give ownership rights to the tiller of agricultural land.
