2006 (2) TMI 615 - HC - VAT and Sales Tax

Requirement to Exhaust Appeal Before Challenging Assessment Order

Ashoka Creations (P) Ltd. Versus Assistant Commissioner of Commercial Taxes, Additional 8th District Circle, Bangalore

The High Court determined that the petitioner must exhaust the remedy of appeal before challenging the assessment order through a writ petition, as there ... - Issues:1. Jurisdiction of the High Court to entertain a writ petition challenging an assessment order without exhausting the remedy of appeal.2. Liability of the petitioner regarding tax assessment after purchasing goods from the official liquidator.Detailed Analysis:Issue 1:The petitioner filed a writ petition under articles 226 and 227 of the Constitution of India, challenging the assessment order passed by the respondent. The petitioner contended that he was aggrieved by the assessment order issued under the Karnataka Sales Tax Act, 1957. The High Court noted that the assessment order was appellable under section 20 of the Act, providing an effective and efficacious alternative remedy through appeal. The court considered whether it was appropriate to exercise jurisdiction under articles 226 and 227 without exhausting the appeal remedy. It was established that direct court intervention is warranted only in cases of lack of jurisdiction or violation of natural justice. In this instance, the competent authority had issued a show cause notice, received a detailed reply from the petitioner, and the petitioner was represented by counsel during the assessment process. As there was no jurisdictional issue or breach of natural justice, the court deemed it necessary for the petitioner to pursue the appeal route before approaching the High Court directly.Issue 2:The petitioner argued that the tax liability should not be imposed on him as he had purchased goods from the official liquidator. However, the court rejected this contention, stating that the liability issue had been raised before the assessing authority and was duly considered and dismissed. The court emphasized that since the petitioner was required to follow the appeal process, it was unnecessary to delve into the merits of the liability argument at the writ petition stage. The court concluded that due to the availability of an alternative remedy through appeal, the writ petition was to be dismissed, and the petitioner was directed to file an appeal before the appellate authority within 30 days. The court clarified that the appellate authority should consider the appeal without being influenced by any observations made in the writ petition judgment.In summary, the High Court held that in the absence of jurisdictional issues or violations of natural justice, the petitioner must exhaust the remedy of appeal before challenging the assessment order through a writ petition. Additionally, the court rejected the petitioner's argument regarding tax liability, emphasizing the need for the petitioner to pursue the appeal process for a comprehensive review of the case.