High Court allows writ petition challenging VAT assessment under TN VAT Act despite alternate remedy

The High Court allowed the writ petition challenging the assessment order under the Tamil Nadu Value Added Tax Act, 2006, despite the availability of an alternate remedy. The Court found exceptional circumstances existed due to the prolonged pendency of the writ petition and the respondent contesting the matter on merits. Specific directions were provided for the treatment of inter-State sales, reversal of input tax credit, and stock difference issues in the assessment order, allowing the appellant opportunities to rectify discrepancies and effectively challenge the assessment.

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Issues involved:
1. Whether the writ petition challenging the assessment order under the Tamil Nadu Value Added Tax Act, 2006 can be entertained despite the availability of an alternate remedy.
2. Whether the assessment order dated 26.2.2016 for the year 2014-15 was correct, specifically regarding the treatment of inter-State sales as local sales, reversal of input tax credit, and stock difference issues.

Analysis:
Issue 1:
The High Court considered whether the writ petition challenging the assessment order could be entertained despite the availability of an alternate remedy under the Act. The Court noted exceptions to the general rule that the assessee should exhaust statutory remedies, including cases of jurisdictional errors, violations of natural justice, and perverse findings. The Court emphasized that when a writ petition has been pending for a considerable time, it may be unfair to relegate the assessee to the appellate forum, especially when challenges to assessments have been pending for years. In this case, the Court found that the writ petition had been pending for over 4½ years with an interim stay order and the respondent had contested the matter on merits. Therefore, the Court concluded that exceptional circumstances existed to entertain the writ petition.

Issue 2:
Regarding the assessment order dated 26.2.2016, the Court addressed three main issues raised by the assessee. Firstly, the treatment of inter-State sales as local sales due to missing seal on C Form Declarations. Secondly, the reversal of input tax credit based on the absence of Form C Declarations despite the availability of check post seals. Thirdly, discrepancies in stock reconciliation leading to a tax levy. The Court found the third issue to be factual and granted the appellant time to appeal before the Appellate Deputy Commissioner. For the other two issues, the Court directed the appellant to pay 10% of the disputed tax and approach the Assessing Officer with necessary documents to support their claims. The Court provided specific directions for each issue, allowing the appellant to avail opportunities to rectify the discrepancies and challenge the assessment order effectively.

In conclusion, the High Court partially allowed the writ appeal, granting specific directions for each issue raised in the assessment order, ensuring the appellant's right to appeal and present evidence to support their claims.

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