2021 (6) TMI 773 - HC - VAT and Sales Tax

Petitioners Must Exhaust Statutory Remedies Before High Court Review

M/s. Criticam Medical Systems Versus Additional Deputy Commercial Tax Officer – I, Pondicherry

The Court held that the petitioners must exhaust statutory appellate remedies under the PVAT Act before approaching the High Court. The writ petitions ... Validity of original assessment order or the First Appellate order - Section 47 of the Puducherry Value Added Tax Act, 2007 - benefit of Input Tax Credit - zero rated transactions - HELD THAT:- The Appellate remedies are vital for the purpose of fact findings regarding the disputed facts. The High Court based on the affidavits filed by the parties cannot make any finding in respect of the disputed facts as the documents and evidences cannot be examined in a writ proceedings and therefore, this Court is of the opinion that the appellate remedy is to be exhausted by the petitioner in all these Writ Petitions. Some Writ Petitions are filed challenging the original assessment order and the other Writ Petitions are filed challenging the orders passed by the First Appellate Authority. In all such cases, the petitioners are entitled to file an appeal under Section 47 and thereafter, under Section 49 and finally, before the High Court under Section 51 of the PVAT Act. This being the scheme of legislation, dispensing with the provisions contemplated under the statute is not preferable. The practice of filing Writ Petitions without exhausting the statutory appellate remedy is in ascending mode and most of such Writ Petitions are filed with an idea to evade payment of pre-deposit for filing an appeal which is contemplated under the procedures. However, the High Court need not encourage such practise. Respecting the institutions created under the legislations is of paramount importance. The High Court cannot undermine the importance of the appellate forum created under the statute, unless there are compelling reasons. The petitioner in all the Writ Petitions are at liberty to file respective appeals before the appellate forum concerned under Sections 47, 49 and 51, as the case may be, by following the procedures contemplated and in a prescribed format - Petition disposed off. Issues Involved:1. Entitlement to Input Tax Credit for zero-rated transactions under the PVAT Act.2. Exhaustion of statutory appellate remedies before filing writ petitions.3. Scope of High Court's jurisdiction under Article 226 of the Constitution of India in tax matters.4. Practice of bypassing statutory appellate remedies to avoid pre-deposit requirements.Detailed Analysis:1. Entitlement to Input Tax Credit for Zero-Rated Transactions:The petitioners contended that they are entitled to the benefit of Input Tax Credit for zero-rated transactions. They argued that the provisions under the PVAT Act, 2007, and the Central Sales Tax Act, 1956, are unambiguous in this regard. Specifically, they relied on Section 21 of the PVAT Act, which denotes zero-rated transactions, to assert their entitlement.2. Exhaustion of Statutory Appellate Remedies:The respondent objected to the petitions on the grounds that the petitioners had not exhausted the appeal remedies provided under the PVAT Act. Sections 47 and 49 of the PVAT Act provide for appeals to the Appellate Assistant Commissioner and the Appellate Tribunal, respectively, while Section 51 allows for an appeal to the High Court. The respondent argued that without exhausting these remedies, the writ petitions are not entertainable and should be rejected in limine.3. Scope of High Court's Jurisdiction under Article 226:The Court emphasized that when cases involve mixed questions of law and fact, the aggrieved persons are bound to exhaust the appellate remedy. The High Court's scope under Article 226 is limited to scrutinizing the processes through which a decision is taken, not the decision itself. The High Court cannot conduct a rowing enquiry or examine documents and evidence in writ proceedings. The appellate remedies are vital for fact-finding regarding disputed facts, and the High Court should not undermine the importance of the appellate forums created under the statute.4. Practice of Bypassing Statutory Appellate Remedies:The Court noted an increasing trend of filing writ petitions to evade the pre-deposit required for filing an appeal. The High Court should not encourage such practices. Respecting the institutions created under the legislation is paramount. The Court referred to previous judgments reinforcing the principle that the appellate remedy must be exhausted except under extraordinary circumstances. The Court reiterated that the legislative intention behind providing appellate remedies is to ensure that facts, grounds, and evidence are properly appreciated and grievances are redressed according to law.Conclusion:The Court concluded that the petitioners must exhaust the appellate remedies provided under the PVAT Act before approaching the High Court. The writ petitions were disposed of with directions for the petitioners to file respective appeals within four weeks from the date of receipt of the order, with the appellate forum to condone the delay in filing the appeal and entertain the appeal on merits. The Court emphasized the importance of following statutory procedures and not bypassing appellate remedies to avoid pre-deposit requirements.