2015 (1) TMI 179 - HC - VAT and Sales Tax

Court Upholds Dismissal of Writ Appeal Emphasizing Alternative Remedy Rule

BHARATH SANCHAR NIGAM LTD. Versus ASSISTANT COMMISSIONER (ASSESSMENT) AND OTHERS

The court dismissed the writ appeal, upholding the learned Single Judge's decision that the appellant had an efficacious alternative remedy under Section ... Maintainability of Writ petition - efficacious alternative remedy available to petitioner or not – Assessee has made strenuous efforts to convince the Court by submitting that an expeditious decision on the issue of exigibility of interconnection charges is warranted, since it will have a huge impact on the services being provided by the appellant to the general public at large - Held that:- It is axiomatic that when an objection is raised regarding the very maintainability of the proceedings, the issue, as it goes to the root of the matter, shall be decided first - any positive finding on the issue renders the whole exercise of adjudication on the merits of the matter an exercise in futility - It only serves, conversely, the avoidable purpose of clipping the adjudicatory wings of the lower forum, which ought, ex debito jusitiae, to decide the lis untrammelled by any observations at higher judicial echelons - in a proceedings where trial is to take place, by recording the evidence, only pure questions of law can be decided as a preliminary issue, leaving the issues of mixed questions of fact and law to be decided in the end, but before considering the merits of the matter. In Tin Plate Co. of India Ltd. v. State of Bihar [1998 (11) TMI 532 - SUPREME COURT OF INDIA] the SC has observed that when an alternative and efficacious remedy is open to a person, he should be required to pursue that remedy and not to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution - where such a remedy is available, it would be a sound exercise of discretion to refuse entertainment of the writ petition under Article 226 of the Constitution - if the writ petition under Article 226 is to be dismissed on the ground of alternative remedy, the Court is not required to express any opinion on the merits of the case which is to be pursued before an alternative forum. Whether it is a proper or improper exercise of taxing power on the part of the respondents – Held that:- It bears reiteration, if not repetition, that it is the inherent lack of power, as is not the case presently, that could give rise to the necessary cause of action for the appellant to knock at the doors of this Court, notwithstanding the availability of an alternative remedy - refusal to entertain a petition under the writ jurisdiction by the High Court when an efficacious alternative remedy is available to the party is a self-imposed limitation - it is within the discretion of the High Court to grant relief under Article 226 of the Constitution despite the existence of an alternative remedy - neither the urgency of adjudication, nor the gravity of the issue, leave alone the status of the appellant being a public sector undertaking, can be judicially acknowledged as an exception to the rule of alternative remedy - without disturbing the direction of the single Judge to the appellant to avail itself of the alternative of remedy of appeal and the protective measure of deferment of collection of tax provided thereby, the petition is to be dismissed – Decided against petitioner assessee. Issues Involved:1. Availability of an alternative remedy.2. Jurisdiction of the assessing authority.3. Adequacy of opportunity provided to the appellant.4. Selective taxation and public sector undertaking status.5. Merits of the assessment on interconnection charges.Detailed Analysis:1. Availability of an Alternative Remedy:The court emphasized that the appellant had an efficacious alternative remedy under Section 34 of the Kerala General Sales Tax Act, 1963. The court cited the Supreme Court's precedent in Tin Plate Co. of India Ltd. v. State of Bihar, which stated that when an alternative remedy is available, it is a sound exercise of discretion to refuse a writ petition under Article 226 of the Constitution. The court reiterated that the rule of alternative remedy is a self-imposed restriction on judicial review under Article 226, and exceptions to this rule include enforcement of fundamental rights, violation of natural justice principles, and lack of jurisdiction.2. Jurisdiction of the Assessing Authority:The appellant contended that the assessing authority lacked jurisdiction to tax interconnection charges, arguing that these charges fall outside the purview of the Act. The court clarified that an erroneous exercise of power is different from lacking the necessary power. It stated that the appellant's registration under the Act and the competence of the respondents were undisputed, making it a matter of proper or improper exercise of taxing power rather than a jurisdictional error. The court concluded that the issue of jurisdiction did not warrant bypassing the alternative remedy.3. Adequacy of Opportunity Provided to the Appellant:The appellant argued that it was not provided with sufficient opportunity before the assessment orders were passed. The court noted the distinction between denial of opportunity and lack of sufficient opportunity. The learned Single Judge had observed that the appellant had been provided with sufficient opportunity, including personal hearings, before the assessment orders were passed. The court found no reason to interfere with this observation, stating that the issue of opportunity was adequately addressed.4. Selective Taxation and Public Sector Undertaking Status:The appellant claimed that the respondent authorities selectively imposed tax on it while leaving other private operators untaxed for similar interconnection charges. The court did not find this argument sufficient to override the rule of alternative remedy. It emphasized that the status of the appellant as a public sector undertaking did not warrant a different approach in assessing or adjudicating the issue. The court maintained that the appellant should pursue the statutory appellate remedy provided under the Act.5. Merits of the Assessment on Interconnection Charges:The appellant contended that interconnection charges did not constitute 'turnover' under the Act and should not be taxed. The court refrained from making any reference to the case law cited by the appellant, stating that the complexity of interconnection services and the technical nature of the issue could not be decided in a summary manner under Article 226. The court concluded that the merits of the assessment should be adjudicated by the appellate authority as provided under the Act.Conclusion:The court dismissed the writ appeal, upholding the learned Single Judge's decision that the appellant had an efficacious alternative remedy. The court directed the appellant to file an appeal within two weeks from the date of receipt of the judgment, with the deferment of tax collection contingent upon this condition. No order as to costs was made.