2012 (1) TMI 152 - HC - VAT and Sales Tax

Court dismisses writ petitions, directs pursuit under Act; appellate authority to consider appeals on merits.

The court dismissed the writ petitions without admission, upholding the plea of non-maintainability raised by the respondents. It directed the petitioners ... Maintainability of writ petition in presence of alternative statutory remedy - exercise of writ jurisdiction under Article 226 - principle of not short-circuiting statutory remedies in revenue matters - reason to believe / formation of belief - jurisdictional error versus meritsMaintainability of writ petition in presence of alternative statutory remedy - exercise of writ jurisdiction under Article 226 - principle of not short-circuiting statutory remedies in revenue matters - Writ petitions challenging show-cause notice, reassessment order and demand are not maintainable because an alternative and efficacious remedy of appeal under the Act is available. - HELD THAT: - The Court held that proceedings under Article 226 are not a substitute for statutory remedy and, at the admission stage, the inquiry is whether there is prima facie material to sustain the impugned orders. Where statutory appeal under section 79 is available and the impugned orders are not shown to be wholly without jurisdiction, the High Court ordinarily should refuse to entertain writ petitions in revenue matters so as not to short-circuit inbuilt statutory procedures. The Court applied settled principles that exhaustion of alternative remedy is a discretionary rule of convenience and reiterated exceptions (e.g., violation of fundamental rights, want of jurisdiction, or breach of natural justice) but found none established on the material before it. Consequently the petitioners were directed to pursue the appellate remedy under the Act and the writ petitions were dismissed without admission.Writ petitions dismissed at admission stage for non-maintainability; petitioners directed to pursue appeal under the Act.Reason to believe / formation of belief - jurisdictional error versus merits - Impugned show-cause notice and reassessment order are not ex facie nullities or without jurisdiction; the assessing authority had prima facie materials to form a belief. - HELD THAT: - On scrutiny of the assessment order and records, the Court found articulated reasons-examination of accounts, audit reports, consolidated manufacturing accounts, quantitative and qualitative analysis of tobacco consumption (including reference to 2005-06 figures) and physical verification-which furnished a rational connection to the assessing authority's belief that turnover had escaped assessment. The Court concluded that the opinion recorded was not arbitrary, capricious or made mala fide, and that the allegations required factual investigation and adjudication by the statutory forum rather than interlocutory relief by the writ court. As such, there was no jurisdictional defect warranting exercise of writ jurisdiction at the admission stage.Impugned orders held to be prima facie supported by material and not vitiated by jurisdictional error; not amenable to interference by writ at this stage.Final Conclusion: Writ petitions dismissed without admission on the ground of non-maintainability because an alternative efficacious statutory remedy exists; the petitioners are left to agitate their grounds before the appellate authority, which will decide the appeals on merits uninfluenced by the observations in this order. Issues Involved:1. Maintainability of writ petitions under Article 226 of the Constitution of India.2. Jurisdiction and legality of the impugned show-cause notice, reassessment order, and notice of demand under the Assam Value Added Tax Act, 2003.3. Availability and adequacy of alternative remedies under Section 79 of the Assam Value Added Tax Act, 2003.Issue-wise Detailed Analysis:1. Maintainability of Writ Petitions:The primary issue argued was whether the writ petitions are maintainable under Article 226 of the Constitution of India, given the availability of an alternative remedy under Section 79 of the Assam Value Added Tax Act, 2003. The petitioners contended that the writ petitions are maintainable due to the lack of bona fide exercise of power and jurisdictional errors in the impugned orders. They relied on several Supreme Court decisions, including Madhya Pradesh Industries Ltd. v. Income-tax Officer, State of Tripura v. Manoranjan Chakraborty, and Ram and Shyam Company v. State of Haryana, which emphasized that the High Court's jurisdiction under Article 226 is discretionary and not ousted by the existence of an alternative remedy, especially in cases of jurisdictional errors or violation of principles of natural justice.On the other hand, the respondents argued that the petitioners should first avail the alternative remedy provided under the Act, as the impugned assessment orders did not suffer from jurisdictional errors or violate the principles of natural justice. They cited the decision in Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax, Calcutta, to emphasize that the belief formed by the assessing officer was reasonable and based on material grounds.2. Jurisdiction and Legality of the Impugned Orders:The petitioners challenged the jurisdiction of the Assistant Commissioner of Taxes in issuing the show-cause notice and completing the reassessment order, arguing that there were no materials to form a belief of any escaped turnover. They contended that the impugned orders were illegal, without jurisdiction, and not tenable in law. The respondents, however, maintained that the assessing authority had formed a bona fide belief based on the examination of accounts, audit reports, and the audited balance sheet, which indicated that the petitioner-company did not separately show the consumption of tobacco, leading to the conclusion that part of the turnover had escaped assessment.The court, after examining the materials on record, found that the impugned assessment order was based on reasonable grounds and was not arbitrary or capricious. The court held that the belief and opinion formed by the assessing authority were in good faith and had a rational connection to the formation of the belief, thereby sustaining the impugned orders.3. Availability and Adequacy of Alternative Remedies:The court emphasized that proceedings under Article 226 are not a substitute for proceedings initiated under the Act. It noted that Section 79 of the Assam Value Added Tax Act, 2003, provides an alternative and efficacious remedy by way of an appeal to the appellate authority. The court observed that the allegations in the impugned orders required adjudication on investigation of disputed facts, which could be adequately addressed through the statutory appeal process.The court referred to several Supreme Court decisions, including Union of India v. Hindalco Industries, Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, and Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., which reiterated that the existence of an alternative remedy does not oust the jurisdiction of the High Court under Article 226 but should be considered as a matter of judicial discretion.Conclusion:The court dismissed the writ petitions without admission, upholding the plea of non-maintainability raised by the respondents. It directed the petitioners to pursue their remedy under the Act, emphasizing that the appellate authority should consider the appeals on their own merits without being influenced by the observations made in the judgment. The court reiterated that the High Court's jurisdiction under Article 226 should not be used to bypass statutory procedures unless there are extraordinary circumstances.