2022 (10) TMI 576 - SC - VAT and Sales Tax

Supreme Court emphasizes exhausting statutory remedies in tax matters

The State of Madhya Pradesh and Another Versus M/s Commercial Engineers and Body Building Company Limited

The Supreme Court held that the High Court erred in entertaining a writ petition challenging an Assessment Order denying Input rebate under the MP VAT ... Maintainability of writ petition - availability of alternative remedy of appeal - Validity of assessment order - denial of Input Rebate - Section 14 of the Madhya Pradesh Value Added Tax Act, 2002 - HELD THAT:- While entertaining the writ petition under Article 226 of the Constitution of India challenging the Assessment Order denying the Input rebate, the High Court has observed that there are no disputed question of facts arise and it is a question to be decided on admitted facts for which no dispute or enquiry into factual aspects of the matter is called for. The aforesaid can hardly be a good/valid ground to entertain the writ petition under Article 226 of the Constitution of India challenging the Assessment Order denying the Input rebate against which a statutory remedy of appeal was available. After taking into consideration the earlier decision of this Court in the case of UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [2010 (7) TMI 829 - SUPREME COURT], it is observed and held that in a tax matter when a statutory remedy of appeal is available, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India against the Assessment Order by-passing the statutory remedy of appeal. The impugned judgment and order passed by the High Court entertaining the writ petition under Article 226 of the Constitution of India against the Assessment Order denying the benefit of Input rebate is unsustainable and the same deserves to be quashed and set aside and the original writ petitioner is to be relegated to prefer an appeal against the Assessment Order dated 28.02.2015 passed by the Divisional Deputy Commissioner, Commercial Tax, Jabalpur, which may be available under Section 46(1) of the MP VAT Act, 2002. The writ petition preferred by the respondent herein – original writ petitioner – assessee is hereby dismissed on the ground of alternative efficacious statutory remedy of appeal available to the respondent. Issues:1. Entertainability of writ petition under Article 226 challenging Assessment Order denying Input rebate.2. Availability of statutory remedy of appeal under Section 46(1) of the MP VAT Act, 2002.3. Justifiability of High Court's decision to entertain writ petition despite statutory remedy.4. Application of legal principles regarding bypassing statutory remedies in tax matters.Issue 1: Entertainability of Writ Petition under Article 226:The Supreme Court addressed the challenge to the Assessment Order denying Input rebate under the MP VAT Act, 2002. The High Court entertained the writ petition under Article 226, setting aside the Assessment Order and allowing the Input rebate. The Supreme Court analyzed the High Court's decision to entertain the writ petition despite the availability of a statutory remedy of appeal under Section 46(1) of the Act. The Court emphasized that the High Court should not have entertained the writ petition under Article 226 challenging the Assessment Order, as a statutory appeal was available.Issue 2: Availability of Statutory Remedy of Appeal:The Assessment Order denying the Input rebate was subject to appeal under Section 46(1) of the MP VAT Act, 2002. The respondent did not appeal the Assessment Order but directly filed a writ petition. The Supreme Court highlighted the importance of exhausting statutory remedies before seeking judicial intervention under Article 226. The Court held that the respondent should have pursued the statutory appeal instead of approaching the High Court directly through a writ petition.Issue 3: Justifiability of High Court's Decision:The High Court justified entertaining the writ petition by stating that no disputed questions of facts were involved, and the matter could be decided based on admitted facts. However, the Supreme Court disagreed with this reasoning. The Court cited precedents emphasizing that statutory remedies should not be bypassed in tax matters, and the High Court erred in entertaining the writ petition under Article 226. The Supreme Court concluded that the High Court's decision to allow the Input rebate was unsustainable.Issue 4: Application of Legal Principles in Tax Matters:The Supreme Court referred to previous judgments highlighting the importance of not bypassing statutory remedies in tax matters. Citing cases involving alternative remedies and the need to follow statutory procedures, the Court reiterated that in tax matters where statutory remedies are available, courts should refrain from entertaining writ petitions under Article 226. The Court emphasized the need to discourage the practice of bypassing statutory remedies and reiterated the importance of following the hierarchy of appeals provided by law.In conclusion, the Supreme Court allowed the appeal, quashed the High Court's judgment, and directed the respondent to pursue the statutory appeal under Section 46(1) of the MP VAT Act, 2002. The Court emphasized the significance of exhausting statutory remedies before seeking judicial intervention and underscored the need to adhere to established legal principles in tax matters.