2025 (12) TMI 643 - HC - VAT / Sales Tax

Appeal Maintainable Against Tribunal's Section 24 MVAT Rectification Rejection; Writ Barred When Effective Appellate Remedy Exists

HC held that an appeal is prima facie maintainable against the Tribunal's order rejecting the Revenue's rectification application under Section 24 of the ... Jurisdiction - powers of Tribunal to ignore mandatory provisions of limitation and direct scrutiny of returns filed beyond the prescribed period of limitation under the Maharashtra Value Added Tax Act, 2002 - jurisdiction of Sales Tax Tribunal to direct scrutiny despite its finding that the assessment is barred under Section 23(3) of the Maharashtra Value Added Tax Act, 2002, in the absence of any such enabling provision in the said Act, to sustain such directions - correctness in ignoring and overlooking on an incorrect presumption that it would not împact the outcome of the Judgment, particularly in light of Article 141 of the Constitution of India - applicability of provisions of limitation under section 51(7) of the MVAT, Act, 2002 to all applications seeking refund of excess payment under Section 50 of the Maharashtra Value Added Tax, 2002 - requirement of filing Form 501 is mandatory and that the period of limitation provided under Section 51(7) is merely procedural in nature, or not - jurisdiction exceeded by directing the Assessing Authority to process with scrutiny/ Assessment of the Original Appellant's returns whilst holding that, the Assessment is barred under Section 23(3) of the Maharashtra Value Added Tax, 2002 - error in diluting the mandatory nature of Sections 23(3) and 51(7) of the Maharashtra Value Added Tax, 2002, by directing the Appellant herein to scrutinize the returns submitted by the Original Appellant, which were beyond the prescribed period of limitation - error in interpretation of Section 50 - rejection of Revenue’s Application for rectification, even though, the same was moved on the ground that there was an error apparent on the face of record. HELD THAT:- At least prima facie, upon perusal of the order of 15 January 2025, it is found that the Revenue’s Appeal was not admitted because the Tribunal had relied upon its earlier decision in the case of M/s. Om Shree Developers v. State of Maharashtra decided on 12 October 2021. However, at that time, no Appeal had been filed against the said decision. Reference made to the decision of the Coordinate Bench of this Court in the case of Sony Sales Corporation Vs. State of Maharashtra and another [2021 (9) TMI 1152 - BOMBAY HIGH COURT], which prima facie suggest that an Appeal would lie against the rejection of an Application for rectification under Section 24 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act), and therefore, a Writ Petition to challenge such an order would not be ordinarily entertained. Therefore, if the Revenue can make out a case that the Rectification Application was improperly rejected, then the relief which the Revenue seeks would stand out. This is an additional ground which persuades us to admit this Appeal, no doubt, by keeping open the above-referred issues to be urged at the stage of final hearing. It is submitted that this is a case of merger. In any event, he submits that an Appeal would also lie under Section 27 against the order of the Tribunal rejecting the rectification application. It is submitted that if the rectification application is ultimately allowed by this Court, then, the impugned order would stand modified as prayed for by the Revenue. No final opinion expressed - all the issues are open for consideration at the final hearing. 1. ISSUES PRESENTED AND CONSIDERED a) Whether the Appeal under Section 27 of the Maharashtra Value Added Tax Act, 2002, against the Tribunal's order in the matter arising from the decision in 'Om Shree Developers' and the consequential rectification order, is maintainable and liable to be admitted notwithstanding a previous order of a Coordinate Bench declining to admit a similar Revenue appeal. b) Whether, in light of the statutory scheme and prior precedent, an Appeal lies against the Tribunal's rejection of an application for rectification under Section 24 of the Maharashtra Value Added Tax Act, 2002, thereby rendering a writ petition ordinarily not maintainable for such challenge. c) Whether the Court should, at the stage of admission, finally adjudicate on the objections of limitation and absence of power to condone delay in filing an Appeal under Section 27 of the Maharashtra Value Added Tax Act, 2002. --- 2. ISSUE-WISE DETAILED ANALYSIS a) Maintainability and admission of the present Appeal in the context of prior Coordinate Bench order Interpretation and reasoning The Court noted that a Coordinate Bench had, in a separate matter ('Ortek Computers'), declined to admit the Revenue's Appeal on the premise that the Tribunal's decision in 'Om Shree Developers' had not been challenged. The Court found, upon prima facie examination, that the present Appeal directly challenges both the Tribunal's original order in 'Om Shree Developers' and the order dismissing the Revenue's rectification application. It was further recorded that, at the time the Coordinate Bench decided 'Ortek Computers', there was a communication gap: the pendency and disposal of the rectification proceedings against 'Om Shree Developers' had not been brought to its notice. The Court also observed that the present Appeal raises substantial questions of law, which were formally framed and set out in paragraph 2 of the order, and that these issues deserved examination at final hearing. Conclusions The Court admitted the Appeal on the substantial questions of law formulated, holding that the earlier Coordinate Bench order did not preclude consideration of the present Appeal, especially as it now squarely assails the 'Om Shree Developers' decision and the rectification rejection order. --- b) Availability of an Appeal against rejection of rectification under Section 24 MVAT Act, and impact on writ jurisdiction Legal framework as discussed The Court referred to the decision of a Coordinate Bench in 'Sony Sales Corporation v. State of Maharashtra and another' which, on a prima facie reading, indicates that an Appeal would lie against an order rejecting a rectification application under Section 24 of the Maharashtra Value Added Tax Act, 2002, and that, consequently, a writ petition would not ordinarily be entertained against such an order. Interpretation and reasoning Relying on the reasoning in 'Sony Sales Corporation', the Court observed that if the Revenue is able to demonstrate that its rectification application was wrongly rejected, then the substantive relief it seeks in relation to the Tribunal's order could be obtained via an Appeal under Section 27. The Court treated this availability of a statutory appellate remedy as an additional factor justifying admission of the present Appeal, rather than resort to writ jurisdiction. Conclusions The Court held, prima facie, that an Appeal lies against the rejection of an application for rectification under Section 24 of the MVAT Act, and that this serves as an additional ground for admitting the present Appeal and examining the correctness of the rectification rejection at final hearing. --- c) Consideration of limitation and power to condone delay at the admission stage Legal framework as discussed The respondent relied on the decision of the Supreme Court in 'Viraj Profiles Ltd. v. Addl. Commissioner of Sales Tax, Mumbai', wherein it was held that there is no power to condone delay in filing an Appeal under Section 27 of the MVAT Act. The respondent contended that the challenge to the Tribunal's original order was, therefore, barred by limitation. The Revenue argued, inter alia, that principles of merger and the availability of an Appeal against the rectification order under Section 27 affect the limitation analysis. Interpretation and reasoning The Court acknowledged the rival contentions on limitation, the effect of the Supreme Court's decision on the power to condone delay under Section 27, and the Revenue's contention regarding merger and maintainability of an Appeal against the rectification rejection. However, the Court expressly declined to render any final view on these questions at the admission stage, indicating that these issues required fuller consideration at the final hearing. Conclusions The Court left all questions relating to limitation, condonation of delay, merger, and the effect of 'Viraj Profiles Ltd.' open for decision at the time of final hearing, and confined itself at this stage to admitting the Appeal and framing substantial questions of law.