2025 (8) TMI 641 - HC - VAT / Sales Tax

Petition dismissed for not exhausting remedies under Maharashtra VAT Act, 2002; appeal allowed within four weeks

The HC dismissed the petition for non-exhaustion of alternative remedies, emphasizing that statutory procedures under the Maharashtra VAT Act, 2002, must ... Maintainability of petition - non-exhaustion of alternative remedies - precedents were not considered properly - impugned order failed to appreciate that the decision of the Tribunal in M/s JNK India Private Limited was clearly distinguishable - HELD THAT:- This Court has considered several precedents of the Hon’ble Supreme Court in the context of entertaining Petitions without exhausting statutory and alternative remedies. By relying on the reasoning in Oberoi Constructions Ltd Vs. Union of India and Others [2024 (11) TMI 588 - BOMBAY HIGH COURT] and the precedents referred to therein, we see no good grounds to entertain this Petition. To a similar effect are the decisions of the Hon’ble Supreme Court in the cases of State of Maharashtra and Others Vs. Greatship (India) Limited [2022 (9) TMI 896 - SUPREME COURT] and Bank of Baroda Vs. Farooq Ali Khan and Others [2025 (2) TMI 1021 - SUPREME COURT] dealing with the issue of exhaustion of alternate remedies. These decisions hold that where a special procedure is provided, normally, without any exceptional circumstances being made out, the party should not be allowed to deviate from this special procedure or the statutorily provided remedies. No exceptional circumstances have been demonstrated for deviating from the normal practice of exhaustion of alternate remedies. Section 26 of the Maharashtra Value Added Tax Act, 2002, which deals with appeals, among others, before the Tribunal, vests the Tribunal with substantial powers. The issue of pre-deposit is left to the discretion of the Tribunal, and there does not appear to be any statutorily prescribed minimum. It is declined to entertain this Petition but it is left open to the Petitioner to appeal the impugned order in accordance with law. If the Appeal is instituted within four weeks from today, the Appellate Authority shall decide the Appeal on its own merits and in accordance with law without adverting to the issue of limitation. This is because this Petition was instituted on 11 June 2025 to challenge the impugned orders made on 25 March 2025. The Petitioner was bona fide pursuing this Petition. Petition dismissed. 1. ISSUES PRESENTED and CONSIDERED Whether a writ petition challenging orders of the Joint Commissioner of State Tax (Appeals) can be entertained without exhaustion of statutory alternative remedies. Whether the impugned orders of the Joint Commissioner of State Tax (Appeals) are unreasoned or lack proper consideration of binding precedents. Whether the Joint Commissioner of State Tax (Appeals) was bound to follow the Tribunal's decision in Ajay Trading Company or could distinguish and follow the decision in M/s JNK India Private Limited. The scope and applicability of the principle of exhaustion of alternate remedies in fiscal matters, especially in the context of appeals under the Maharashtra Value Added Tax Act, 2002. The discretion of the Tribunal regarding pre-deposit requirements and the efficacy of the appellate remedy provided under the statute. The applicability of Supreme Court precedents concerning the entertainability of writ petitions bypassing statutory remedies. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entertainability of Writ Petition without Exhaustion of Alternate Remedies Relevant legal framework and precedents: The principle that writ petitions in fiscal matters should not be entertained unless statutory alternative remedies are exhausted is well-established. The Hon'ble Supreme Court's decision in Godrej Sara Lee Ltd. clarifies that bypassing statutory remedies requires exceptional circumstances. Other precedents reinforce that where special statutory procedures exist, parties must adhere to them unless exceptional grounds justify deviation. Court's interpretation and reasoning: The Court held that the petitioners' averments do not establish exceptional circumstances to justify bypassing the statutory appellate remedy. The grounds raised are routine and typically examinable by the appellate authorities. The Court emphasized the distinction between maintainability and entertainability of writ petitions, underscoring that without exceptional circumstances, writ petitions should not be entertained in fiscal matters without exhausting alternative remedies. Key evidence and findings: The petitioners' assertion in paragraph 37 that no alternative remedy exists was found misleading. The petitioners had appealed the adjudicating authority's order and only after the appeal was dismissed did they approach the Court directly. The statutory appeal before the Tribunal remains available and efficacious. Application of law to facts: The Court applied the principle that statutory remedies must be exhausted and found no exceptional circumstances in the facts presented. The petitioners' reliance on routine grounds and absence of clear exceptional circumstances weighed against entertaining the writ petition. Treatment of competing arguments: The petitioners argued that the appellate order was unreasoned and that the Tribunal's decisions were not properly considered, justifying direct writ jurisdiction. The Court rejected these contentions, noting that such issues are appropriate for appellate consideration and do not constitute exceptional grounds to bypass the appeal process. Conclusions: The writ petition is not entertainable without exhaustion of statutory remedies. The petitioners must pursue the appeal before the Tribunal, which is a viable and efficacious remedy. Issue 2: Whether the Impugned Orders are Unreasoned and Failure to Follow Binding Precedents Relevant legal framework and precedents: Administrative orders must contain reasons; however, the sufficiency and correctness of reasoning are matters for appellate scrutiny. Binding precedents from the Tribunal and higher courts must be considered and followed unless distinguishable. Court's interpretation and reasoning: The Court found that the impugned order was not unreasoned. The Joint Commissioner of Appeals had considered relevant Tribunal decisions, including Ajay Trading and M/s JNK India Private Limited, and had distinguished between them based on facts. Whether the reasoning is correct is a matter for the appellate authority to decide. Key evidence and findings: The impugned order contained reasoning applying the Tribunal's decision in M/s JNK India Private Limited rather than Ajay Trading. The order was not a mere cut-and-paste but involved an exercise of judicial discretion. Application of law to facts: The Court declined to interfere at this stage, holding that detailed factual and legal analysis is best conducted by the appellate authority. The absence of detailed reasoning does not justify bypassing the appeal process. Treatment of competing arguments: The petitioners argued that the order was a verbatim repetition of the show-cause notice order and thus unreasoned. The Court rejected this, emphasizing the appellate authority's competence to analyze and decide on the adequacy of reasoning. Conclusions: The impugned orders are not unreasoned, and the Joint Commissioner of Appeals did not disregard binding precedents but exercised discretion in applying the appropriate precedent. Issue 3: Binding Nature of Tribunal Decisions and Discretion to Distinguish Conflicting Precedents Relevant legal framework and precedents: Decisions of the Tribunal are binding on lower authorities. However, where conflicting Tribunal decisions exist, the adjudicating authority may distinguish and apply the decision appropriate to the facts. Court's interpretation and reasoning: The Court noted that the Joint Commissioner of Appeals considered both Tribunal decisions and chose to apply the one deemed applicable to the facts. This exercise is within the authority's jurisdiction and does not amount to ignoring binding precedents. Key evidence and findings: The Tribunal decisions in Ajay Trading and M/s JNK India Private Limited were both cited and considered. The Joint Commissioner distinguished the facts and applied the latter decision. Application of law to facts: The Court refrained from delving into factual disputes at this stage, leaving such analysis to the appellate authority empowered to consider all nuances. Treatment of competing arguments: Petitioners contended the JCA was bound to follow Ajay Trading; the Court held that distinguishing precedents based on facts is permissible and not a ground to bypass appellate remedies. Conclusions: The JCA's choice to follow one Tribunal decision over another is a matter for appellate review and does not justify writ jurisdiction. Issue 4: Scope of Section 26 of the Maharashtra Value Added Tax Act, 2002 and Tribunal's Powers Relevant legal framework and precedents: Section 26 vests the Tribunal with wide powers to hear appeals, including discretion over pre-deposit requirements, setting aside assessments, or remanding cases for fresh inquiry. Court's interpretation and reasoning: The Tribunal's powers are substantial and provide an efficacious remedy. The discretion regarding pre-deposit and other procedural matters ensures that appellants can seek relief effectively. Key evidence and findings: The petitioners had paid 70% of the duty, a fact which the Tribunal can consider in exercising discretion on pre-deposit and other reliefs. Application of law to facts: The Court observed that all grounds raised in the petition can be urged before the Tribunal, which is better positioned to assess factual and legal nuances. Treatment of competing arguments: Petitioners argued hardship and recurring issues over multiple assessment years; the Court acknowledged these but emphasized that the Tribunal is the appropriate forum to address such concerns. Conclusions: The appellate remedy before the Tribunal is adequate, efficacious, and should be pursued. Issue 5: Application of Supreme Court Precedents on Exhaustion of Remedies and Exceptional Circumstances Relevant legal framework and precedents: Supreme Court decisions consistently hold that statutory remedies must be exhausted before approaching the writ jurisdiction, except in cases of exceptional circumstances such as lack of jurisdiction or gross illegality. Court's interpretation and reasoning: The Court relied on recent Supreme Court rulings emphasizing that deviation from the statutory appellate process requires exceptional justification, which was not demonstrated here. Key evidence and findings: The facts did not reveal jurisdictional errors or denial of natural justice that would warrant writ intervention. The issues raised are routine appellate matters. Application of law to facts: The Court applied the principle that the statutory appeal process is the proper forum for dispute resolution in such fiscal matters. Treatment of competing arguments: Petitioners sought to rely on Supreme Court authority to justify writ jurisdiction; the Court distinguished those facts and held that no similar exceptional circumstances exist here. Conclusions: No exceptional circumstances exist to bypass the statutory appellate remedy; writ jurisdiction is not warranted. Issue 6: Procedural Directions and Preservation of Rights Relevant legal framework and precedents: Courts may grant liberty to file appeals out of time and direct early disposal where writ petitions are dismissed for non-exhaustion of remedies. Court's interpretation and reasoning: The Court granted liberty to file appeal within four weeks without limitation objections and directed the Tribunal to consider early disposal requests. It explicitly kept all merits open. Key evidence and findings: The petition was filed bona fide and within a reasonable time after the impugned orders. Application of law to facts: The directions ensure that petitioners' rights are preserved while enforcing the principle of exhaustion of remedies. Treatment of competing arguments: None specifically addressed; the Court balanced procedural propriety with substantive rights. Conclusions: Petitioners may pursue appeal promptly; Tribunal to consider expedited hearing; no adverse inference from delay or prior writ petition.