2023 (2) TMI 64 - SC - VAT / Sales Tax

Revisional Authority under Section 34 cannot overturn final Tribunal; mosquito-repellent mat treated as mosquito repellent, revisional orders quashed.

M/s GODREJ SARA LEE LTD. Versus THE EXCISE AND TAXATION OFFICERCUM- ASSESSING AUTHORITY & ORS.

The SC allowed the appeal, holding that where only questions of law arise the HC should decide rather than dismissing a writ for an alternative remedy. ... Jurisdiction of Revisional Authority to revise an order - Maintainability of petition - availability of an alternative remedy of appeal to the appellant under section 33 of the VAT Act - whether to remit the writ petition to the High Court for hearing it on merits or to examine the correctness or otherwise of the orders impugned before the High Court? HELD THAT:- where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available. Jurisdiction of Revisional Authority to revise an order - Clarification of goods - Not Accepting the decision of Tribunal - HELD THAT:- The sine qua non for exercise of power under section 34 is the satisfaction of the Revisional Authority that an order has been made by a taxing authority in any proceeding prejudicial to the interests of the State, the legality or propriety of which appears to him to be prima facie vulnerable. Nevertheless, such power cannot be exercised if the issue involved is pending before or has been settled by an appellate authority. It cannot be disputed that the Tribunal is comprehended within the meaning of ‘appellate authority’ as defined in section 2(b) of the VAT Act - These being the contours of section 34, as it then stood, it needs to be seen how far the Revisional Authority was justified in drawing power from such provision and exercising it. Having regard to the specific entry, i.e. Entry 129, dealing with mosquito repellents, this Court overruled the contention of the appellant therein that ‘Jet Mat’ would not come within the ambit of Entry 129 since one of its constituents happens to be an insecticide. It was also held that the product manufactured by the appellant therein, viz. ‘Jet Mat’, which was commercially known as “Mosquito Repellent Mat” is a mosquito repellant notwithstanding the fact that it not only repels mosquitoes but is also capable of killing mosquitoes. For the reasons assigned in the decision, it was held that ‘Jet Mat’ is not an insecticide which would be entitled for partial exemption under Entry 98 of the Sales Tax Act - It is, therefore, clear that because of the specific entry dealing with mosquito repellents, this Court held ‘Jet Mat’ to be covered under Entry 129. What stares at the face of the respondents is that the aforesaid decision of the Tribunal, quoted in the order of the Assessing Authority, has attained finality. Once the issue stands finally concluded, the decision binds the State, a fortiori, the Revisional Authority. The decision of the Tribunal may not be acceptable to the Revisional Authority, but that cannot furnish any ground to such authority to perceive that it is either not bound by the same or that it need not be followed. The first proviso, in such a case, gets activated and would operate as a bar to the exercise of powers by the Revisional Authority. The Revisional Authority might have been justified in exercising suo motu power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by a competent Court. So long it is not disputed that the Tribunal’s decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such framework too continues to remain operative when the impugned revisional orders were made, the Revisional Authority was left with no other choice but to follow the decision of the Tribunal without any reservation - Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses. There is nothing on record to justify either illegality or (procedural/moral) impropriety in the proceedings before the Assessing Authority or the orders passed by him, as such. The Assessing Authority was bound by the order of the Tribunal and elected to follow it having no other option - it is not the Assessing Authority’s orders but those passed by the Revisional Authority, which suffer from a patent illegality. There are no other option but to invalidate the impugned final revisional orders dated 2nd March, 2009 for the Assessment Years 2003-04 and 2004-05 - appeal allowed. Issues Involved:1. Justification of High Court in declining interference due to availability of an alternative remedy.2. Remit the writ petition to the High Court for merits hearing or examine the correctness of orders impugned before the High Court.3. Jurisdiction of the Revisional Authority to reopen proceedings under section 34 of the VAT Act.Detailed Analysis:1. Justification of High Court in Declining Interference:The High Court dismissed the writ petition on the ground that the appellant had not pursued the alternative remedy of appeal under section 33 of the VAT Act. The Supreme Court emphasized that the power to issue writs under Article 226 of the Constitution is plenary and not restricted by the availability of an alternative remedy. The Court highlighted that while it is a rule of policy, convenience, and discretion that High Courts should normally not entertain writ petitions when an effective alternative remedy is available, this does not oust the jurisdiction of the High Court. The Court cited previous judgments to assert that the availability of an alternative remedy does not render a writ petition 'not maintainable.' The High Court's reliance on the decision in Titagarh Paper Mills was misplaced, as the jurisdictional issue raised by the appellant was a pure question of law deserving consideration on merits.2. Remit the Writ Petition to the High Court or Examine Correctness of Orders:Given the lapse of time (fourteen years) since the orders impugned in the writ petition were made, the Supreme Court decided not to remit the matter to the High Court. Instead, the Court chose to rule on the jurisdiction of the Revisional Authority, having already heard the parties on this issue.3. Jurisdiction of the Revisional Authority:The appellant challenged the jurisdiction of the Revisional Authority to reopen proceedings under section 34 of the VAT Act. The Revisional Authority had revised the assessment orders, classifying the appellant's products as mosquito repellents taxable at 10% instead of 4%. The Supreme Court noted that the Assessing Authority had followed a binding decision of the Haryana Tax Tribunal, which had classified mosquito repellents as insecticides taxable at 4%. The Tribunal's decision had attained finality and was binding on the Revisional Authority. The Court emphasized the importance of judicial discipline and adherence to decisions of higher authorities. The Revisional Authority's orders were found to be without jurisdiction as they violated the principle of judicial discipline and were based on an incorrect understanding of the law.Conclusion:The Supreme Court invalidated the impugned final revisional orders dated 2nd March 2009 for the Assessment Years 2003-04 and 2004-05, making the interim order dated 18th January 2010 absolute. The appeal was allowed, and the parties were left to bear their own costs.