2021 (6) TMI 872 - HC - VAT and Sales Tax

Petitioner must exhaust statutory appellate remedy under TNVAT Act. Appeal within 4 weeks. Delay to be condoned.

M/s. Sudha Siva Traders Pvt., Ltd., Versus The Assistant Commissioner (CT), Chennai

The court concluded that the petitioner must exhaust the statutory appellate remedy provided under the TNVAT Act. The petitioner was given the liberty to ... Entitlement to statutory appeal/revision - issue in this petition is that the Assessing Officer has erroneously applied the provisions of the Tamil Nadu Value Added Tax Act, 2006 and passed the assessment order which resulted exercise of jurisdiction erroneously - Section 51 of the TNVAT Act - HELD THAT:- Institutional respect is of paramount importance. Even the point of jurisdiction, limitation, error apparent on the face of the record, are on merits and all are to be adjudicated before the appellate authority and the appellate authority, more specifically, the Appellate Tribunal or the Commissioner (Appeals), as the case may be, is empowered to adjudicate all such legal grounds raised by the respective parties and make a finding on merits. Thus, usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be over-burdened, but usurping the powers of the appellate authority, which is certainly not desirable - Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated. The growing practice in the High Court is to file writ petitions under Article 226 of the Constitution of India without exhausting the statutory remedies provided under the Act. The points raised in this regard are statutory violations. However, even such statutory violations can be dealt with by the Appellate authorities or the Appellate Tribunals. This apart, in a writ petition, if such orders are passed with jurisdictional errors and quashed without any remand, then an injustice would be caused to the very spirit of the statute enacted for the benefit of the public at large. Thus, Courts are expected to be cautious, while granting exoneration of liability merely on the ground of jurisdictional errors, if any committed by the authorities competent - The procedures to be followed in the department for assessment are well settled. Thus, the authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. Liability and jurisdictional errors are distinct factors, and therefore, Courts are expected to provide an opportunity to the Department to decide the liability on merits and in accordance with law with reference to the provisions of the Act and Rules and guidelines issued by the Department. Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise - In the absence of exhausting such remedies, High Court is losing the benefit of deciding the matter on merits, as the High Court cannot conduct a trial or examine the original records in the writ proceedings under Article 226 of the Constitution of India. Thus, the Courts shall not provide unnecessary opportunities to the assessee to escape from the liability merely on the ground of jurisdictional error, which is rectifiable. This Court has no hesitation in arriving a conclusion that the petitioner is bound to exhaust the statutory appellate remedy as contemplated under the provisions of the TNVAT Act - Petition disposed off. Issues Involved:1. Erroneous application of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) by the Assessing Officer.2. Jurisdictional error and non-application of mind by the Assessing Officer.3. Necessity of exhausting statutory appellate remedies before filing a writ petition.4. Judicial review under Article 226 of the Constitution of India.Issue-wise Detailed Analysis:1. Erroneous Application of TNVAT Act:The petitioner argued that the Assessing Officer incorrectly applied the provisions of the TNVAT Act, specifically Section 19, as amended by the Tamil Nadu Act, 13 of 2015, effective from 29.01.2016. The petitioner contended that the assessment year in question fell before this amendment, and therefore, the pre-amended provisions should have been applied. The pre-amended Section 19 allowed input tax credit for tax paid or payable under the TNVAT Act by the registered dealer on purchases of taxable goods. The Assessing Officer's application of the amended Section 19 to a period before the amendment constituted a jurisdictional error.2. Jurisdictional Error and Non-application of Mind:The petitioner claimed that the assessment order was passed without proper application of mind, leading to a jurisdictional error. The petitioner argued that such an error justified the filing of a writ petition without exhausting the statutory appellate remedies. The court noted that even if there was an erroneous application of the TNVAT Act, the appellate authority was empowered to correct such errors and consider all legal grounds raised by the parties.3. Necessity of Exhausting Statutory Appellate Remedies:The court emphasized the importance of exhausting statutory appellate remedies before approaching the High Court. Section 51 of the TNVAT Act provides for an appeal to the Appellate Deputy Commissioner, and Section 58 allows for an appeal to the Appellate Tribunal. The court highlighted that exhausting the appeal remedy is the rule, and dispensing with it is an exception. The court stated that the appellate authority is the final fact-finding authority, and its findings, along with those of the original authority, are crucial for the High Court's judicial review under Article 226 of the Constitution of India.4. Judicial Review under Article 226:The court reiterated that the power of judicial review under Article 226 is to scrutinize the processes and procedures adopted by the competent authorities, not the decision itself. The High Court cannot resolve disputed issues based on affidavits alone and must rely on the findings of the original and appellate authorities. The court cited several judgments to support the principle that writ petitions should not be entertained if an effective alternative remedy is available, except in exceptional circumstances where there is a gross injustice or violation of fundamental rights.Conclusion:The court concluded that the petitioner must exhaust the statutory appellate remedy provided under the TNVAT Act. The petitioner was given the liberty to prefer an appeal within four weeks from the date of receipt of the court's order. The respondents were directed to entertain the appeal by condoning any delay and decide the matter on merits in accordance with the law. The writ petition was disposed of with this liberty, and the connected miscellaneous petitions were closed without costs.