2018 (6) TMI 976 - HC - VAT and Sales Tax

Dismissal of Writ Petitions with Appellate Authority Appeal Option

The Writ Petitions were dismissed as not maintainable, with directions to the petitioner to file an appeal before the Appellate Authority within 30 days. ... Bypassing statutory remedy and maintainability of writ petitions - Availability and efficacy of alternative statutory appellate remedy in tax matters - Exceptions to exhaustion of statutory remedies (total lack of jurisdiction, violation of natural justice, order devoid of reasons, perversity, incompetence) - Burden of proof for registration and place of business under the TNVAT regime - Registration of place of business and compliance with Rule 5(5)(a) of the TNVAT Rules - Reversal of input tax credit and penalty for storage at unregistered place of businessBypassing statutory remedy and maintainability of writ petitions - Availability and efficacy of alternative statutory appellate remedy in tax matters - Exceptions to exhaustion of statutory remedies (total lack of jurisdiction, violation of natural justice, order devoid of reasons, perversity, incompetence) - Writ petitions challenging assessment orders are not maintainable where an effective statutory appeal remedy exists and the petitioner has not established any exceptional circumstance to justify bypassing that remedy. - HELD THAT: - The Court applied the settled principle that, in taxation matters, parties should ordinarily exhaust the statutory appellate remedy. The exceptions permitting direct writ jurisdiction (such as total lack of jurisdiction, breach of natural justice, orders without reasons, perversity or incompetence) are narrowly applied and were not shown on the facts. The petitioner failed to file objections to the revision notices and did not substantiate the asserted inability (illness of partner) to respond. The claim that the impugned orders contravene earlier decisions of this Court could not be examined without establishing the factual foundation (dates of commencement and use of alternate godowns), and those are disputed questions of fact inappropriate for adjudication in writ proceedings. The burden to prove that business was carried from stated premises and that statutory formalities for change of address/godown registration were complied with lay on the petitioner, who did not place requisite documentary proof before the Court. In these circumstances the available statutory appeal is an effective and efficacious remedy and the Writ Petitions could not be entertained. The Court accordingly left the merits open for the Appellate Authority to decide on merits. [Paras 8, 9, 10, 11, 12]Writ petitions dismissed as not maintainable; petitioner granted 30 days to file appeal and directed that the Appellate Authority shall entertain the appeal without rejecting it on the ground of limitation.Final Conclusion: The High Court dismissed the writ petitions for assessment years 2012-13, 2013-14 and 2015-16 as not maintainable for bypassing the statutory appellate remedy, granted the petitioner 30 days to prefer an appeal and directed the Appellate Authority to admit the appeal notwithstanding limitation; merits were left open for determination by the Appellate Authority. Issues Involved:1. Maintainability of the Writ Petitions.2. Alleged discrepancies in input tax credit claims and stock maintenance.3. Non-response to revision notices and reversal of input tax credits.4. Alleged operation from an unregistered place of business.5. Availability and efficacy of alternate statutory remedies.Issue-wise Detailed Analysis:1. Maintainability of the Writ Petitions:The primary issue considered was whether the Writ Petitions should be entertained, allowing the petitioner to bypass the statutory remedy available under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The court reiterated the settled legal position that a party should not normally bypass the statutory remedy, especially in taxation matters. Exceptions to this rule include total lack of jurisdiction, violation of principles of natural justice, orders devoid of reasons, orders suffering from perversity and unreasonableness, or orders passed by an incompetent authority. The court found that the petitioner had an effective alternate remedy under the Act, and the reasons provided to bypass this remedy were unconvincing.2. Alleged discrepancies in input tax credit claims and stock maintenance:The petitioner faced allegations of discrepancies noticed during an inspection by the Enforcement Wing, including issues with input tax credit claims not maintained in the carry forward register, unregistered place of business, lack of stock at the registered place, and goods stored at an unregistered location. The respondent provisionally concluded that the goods were unaccounted and not tax suffered, leading to an estimation and a show cause notice for penalty under Section 27(3)(c) of the TNVAT Act. The petitioner contended that proper explanations were provided and that the goods were not stored in an unauthorized place of business.3. Non-response to revision notices and reversal of input tax credits:The petitioner did not file any objections to the revision notices. Consequently, the respondent confirmed the proposals in the notices, reversed the input tax credits availed by the petitioner, and levied a penalty under Section 27(4)(ii) of the Act. The court noted that the petitioner failed to respond despite sufficient opportunity and could not claim violation of natural justice principles. The petitioner’s failure to substantiate the claim of the partner’s illness further weakened their position.4. Alleged operation from an unregistered place of business:The petitioner’s claim of informing the respondent about the change of godown was scrutinized. The court found inconsistencies in the petitioner’s letters regarding the dates of opening and shifting godowns. The inspection occurred on 23.07.2015, and the letter for change of branch address was given on 31.07.2015, after the inspection. The court noted that there was no clear record of the dates when the new godowns commenced operations, and the petitioner’s documents appeared self-serving and afterthoughts.5. Availability and efficacy of alternate statutory remedies:The court emphasized that the petitioner had an effective alternate remedy under the Act and should have responded to the revision notices with supporting documents. The petitioner’s argument that the appellate remedy was not efficacious was not convincing. The court stated that it could not act as an Assessing Officer or Appellate Authority to examine the petitioner’s accounts and sales turnover. The petitioner was directed to file an appeal before the Appellate Authority within 30 days, and the authority was instructed to entertain the appeal without rejecting it on the ground of limitation.Conclusion:The Writ Petitions were dismissed as not maintainable, with directions to the petitioner to file an appeal before the Appellate Authority within 30 days. The court left the merits of the case open for the Appellate Authority to decide. No costs were imposed, and the connected Miscellaneous Petitions were closed.