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The Goods and Services Tax [Compensation to States] Act, 2017 can be construed only as directory and not mandatory.

Section 7 of CGST Act, 2017 — Compensation Cess – The petitioner submitted that in terms of Section 7, an obligation is cast upon the 1st respondent to provide for timely and speedy disbursal of compensation. The petitioner submitted that in terms of section 7, the compensation payable to the State shall be provisionally calculated and released at the end of every two months period and shall be finally calculated for every FY after the receipt of the final revenue figures. The said time line has not been adhered to and this Court can issue positive orders. The Court observed that the word “'shall” cannot be construed as mandatory in the light of the ratio laid down in the cited decisions and it depends upon the context and the purpose of the legislative intent also. Further, the Act does not deal and speak about the consequences of non-compliance of the time line stipulated under Subsection [2] of Section 7 and therefore, it can be construed only as directory and not mandatory. Held that:- The Hon’ble High Court dismissed the petition.
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