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Different periods prescribed u/s 74(7) Case 1 Case 2 Case 3 Case 4 0 1 2 3 4 5 6 7 8 9 Initial Period Extension by Commissioner Extension by Dealer Whether the applicable period is three months or five months or six months or eight months, the commissioner is required to either accept or reject the objections within that time. But what happens if the commissioner does not dispose of the objections during the applicable period? Does it mean that the objections are deemed to be allowed or accepted with the mere passage of the applicable period? We are of the view that such a deeming fiction is not discernible from a plain reading of the provisions of section 74(7) of the said Act. This is explained below.

8. In sub-sections (8) and (9) of section 74, the legislature has provided for the situation where the commissioner does not dispose of the objections during the applicable period. This, in itself, is indicative of the fact that the legislature was mindful of such a situation and that the mere passage of the applicable period without the commissioner disposing the objections one way or the other did not mean that the objections could be deemed to have been accepted or allowed. For this to happen, something more is required and that is exactly what is stipulated in sub-sections (8) and (9). In sub-section (8) it is provided that where the Commissioner has not notified the objector of his decision within the time specified under sub-section (7) (ie., the applicable period), the objector may serve a written notice requiring him to make a decision within fifteen days. And, by virtue of sub- section (9), if the decision is not made by the end of the period of fifteen days after being given the notice referred to in sub-section (8), then, at the end of that period, the Commissioner shall be deemed to have allowed the objection. So, the deeming fiction of sub-section (9) gets triggered only if a notice as stipulated in sub-section (8) is given and the period of fifteen days specified therein expires without any decision from the commissioner. Not otherwise. This is the clear legislative intendment which we can gather upon a plain reading of the provisions of sub-sections (7), (8) and (9) of section 74 of the said Act.

9. Mr Parag Tripathi, the learned Additional Solicitor General of India, appearing for the appellant/revenue submitted that sub-sections (7), (8) and (9) of section 74 of the said Act must be read together and not disjunctively. He submitted that the legal fiction created by the deeming provision in sub-section (9) can only be raised if the conditions precedent for its application are satisfied. He contended that the condition precedent for the applicability of the deeming fiction under sub-section (9) is provided in sub-section (8). A notice calling upon the Commissioner to decide within fifteen days is a must. If no such notice is issued by the objector, then the deeming provision of sub-section (9) does not get activated. He placed reliance on Dilip N. Shroff v. CIT: (2007) 6 SCC 329, wherein the Supreme Court observed [at page 354]:

11. On behalf of the respondents, reliance was also placed on a division bench decision of the High Court of Andhra Pradesh in the case of Santosh Wines v Asst Commercial Tax Officer, Khairatabad Circle, Hyderabad : 99 STC 160. That decision, also, would be of no help to the respondents. The deeming fiction for the grant of a registration certificate was specifically engrafted in the provisions itself. Rule 28 of the A.P. General Sales Tax Rules, 1957 dealt with the question of registration. Clause (a) of sub-rule (10) of rule 28 provided that if the registering authority is satisfied that all the requirements have been complied with he shall register and issue the certificate within 30 days of receipt of the application. Clause (b) of sub-rule (10) stipulates that the registering authority shall give the applicant a notice of further enquiry or a notice to show cause against rejection of the application within a period of 30 days from the date of receipt of the application for registration, if for any reason the certificate of registration could not be issued within the period of 30 days. Clause (c) of sub-rule (10) specifically provides that if the registering authority fails to comply with clause (a) and clause (b), that is, he neither issues the certificate within 30 days nor issues the notice or show cause notice (as the case may be) within the period of 30 days, then, the application shall be deemed to have been duly registered. It is obvious that the deeming fiction is specifically provided for as a consequence of default. There is no such specific consequence under section 74(7) of the said Act. In fact, the deeming provision of section 74(9) of the said Act is triggered only if the condition of notice stipulated in section 74(8) is satisfied. It is clear that the decision in Santosh Wines (supra) turns on its own facts and is of no assistance to the respondents.