TaxTMI 
TaxTMI 
2026 (2) TMI 510
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..../2025, WPA/375/2025, WPA/381/2025, WPA/383/2025, WPA/384/2025, WPA/385/2025, WPA/546/2025, WPA/547/2025, WPA/549/2025, WPA/550/2025, WPA/551/2025, WPA/552/2025, WPA/558/2025, WPA/562/2025, WPA/563/2025, WPA/564/2025, With WPA/565/2025. M/s. Seashell, Shri Praveen, M/s. Sinclairs Hotel Limited, Smti. C. Kalaiarasi, M/s. Aquays Hotels and Resorts Pvt. Ltd., Shri T. Kannan, Shri. V. Ravichandran, M/s. Hotel Sentinel, Welcomehotel Bay Island, Unit of ITC Hotel Ltd., M/s. Oriental Filling Station, M/s. Jadwet Trading Company, M/s. Royal Petroleum, M/s. Kamala Trading, M/s. Manoj Marketing, M/s. Hotel Arasi, M/s. Medival Islander Inn Bar, M/s. Hotel Sarvottam (A) Pvt. Ltd., M/s. Hotel Rajadeepam, M/s. Whistling Wood, M/s. Apt Bar and Restaurant, M/s. Dharma Cool Bar, M/s. Hotel Raj Prakash, M/s. TSG Hotels and Resorts, Shri V. Karuppaiah, M/s. TSG Aqua (TSG Bella Bay), Shri K. V. Rama Rao, M/s. Holiday Inn, Smti. Usha Moorthy, M/s. Aparupa Sands Marina, M/s. Hotel Aparupa (A) Pvt. Ltd., M/s. Southern Holdings and Investments (Chennai) Pvt., Shri K. V. Narsimha Rao, M/s. Silver Sand Neil, Smti. K. Shobha, M/s. C. S. Empire, M/s. Pearl Park Beach Resort, M/s. Annu Bar and Restaurant, M/....
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....r while carrying out the assessment exercise has exceeded his jurisdiction and violated the principles of natural justice. The assessment is barred by limitation. A plea of limitation concerns the jurisdiction of the Court. When an order of a Tribunal is challenged, inter alia, on the ground of being without jurisdiction, the writ court ought to entertain an application under Article 226 of the Constitution in spite of availability of an alternative remedy. 6. Amplifying on the point of limitation, Mr. Adarsh Ilango, learned counsel representing the petitioner, drew my attention to Section 34 of the VAT Regulation and submitted that the Commissioner is empowered to make assessment or reassessment within a period of four years from the end of the year comprising tax period(s). 7. In the present case, the last date for issuing notice of assessment stood expired. Hence, the notices under sections 32 and 33 of the VAT Regulation are barred by limitation. Consequently, the assessment period(s) FY 2017-18, FY 2018-19, FY 2019-2020 cannot be brought under the purview of assessment or reassessment as the assessment has been made between 2024 and early 2025. Therefore, the said notice....
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....ion 32(1) of the VAT Regulation stipulates that the Commissioner by a single order can make an assessment so long as all the tax period(s) in that are comprised in one year. In the present case, the Commissioner has exceeded his jurisdiction in incorporating more than one taxation year in a single order of assessment. Therefore, the notice of assessment of tax under section 32 of the VAT Regulation is contrary to law and hence bad. 12. Learned counsel then drew my attention to section 58(4)(b) of the VAT Regulation and submitted that the said provision stipulates that the Commissioner shall only after considering the returns, evidence furnished in the returns and the evidence acquired in the course of audit, issue notices under sections 32 and 33 of the Regulation. Subsections (1) to (3) of Regulation 58 of the VAT Regulation provide for a notice being served on the assessee intimating for audit of the business, hearing, inspection, along with production of documents and books of accounts. None of these provisions were complied with by the respondent authorities. 13. Learned counsel submitted that although one notice was sent to the petitioner calling upon it to submit books ....
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....ty has arisen. In the notice under section 33 that was served on the petitioner, no reason is mentioned as to why penalty was being imposed on the petitioner. Further, without assigning any valid reason, the Commissioner chose to impose the maximum amount of penalty prescribed under the statute clearly indicating that the assessment of penalty has been made arbitrarily, with mala fide intention to harass the assessee. The notices are unreasoned. The basis on which the amounts of tax or penalty have been arrived at, has not been disclosed. When such a demand notice fails to provide the basis on which the amount claimed is arrived at, the notice becomes arbitrary and unsustainable in the eye of law. In this connection, reliance was placed on the case of Calcutta Municipal Corporation and others vs. The Cricket Association of Bengal and others [APO/248 of 2016 with WPO/2662 of 1996). 19. Learned counsel then referred to the decision of a Division Bench of this Court, dated May 06, 2025, rendered in WP.TT/8/2025 (Jharna Saha vs. Joint Commissioner of Sale Tax, Behala Charge and others) in support of his contention that if an assessment is made without serving prior notice on the ass....
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....turns for the period, 2nd quarter of 2017-2018 to 3rd quarter of 2020-2021, in prescribed Form of A & N VAT 16 and for clearing of dues if any for the said period. This could not be done by the Administration in the absence of the Rules. The grace period was granted vide Office Order No.18 dated 07.01.2021. The order operated prospectively and was in consonance with Rule 25(2). (iv) The compliance with the above mentioned office order forms the primary basis for assessment. Since the grace period was till March 28, 2021, no assessment process could be initiated prior to that date. Prior to initiation of assessment, notices requiring submission of books of accounts and other relevant records were served on the dealers, which were duly acknowledged. The tax liability was assessed on the basis of the records submitted by the dealers. (v) As multiple tax periods were involved i.e. period between 01.07.2017 and 31.12.2020, all the tax deficiencies were netted with excesses, if any, arising between the said dates. Interest on dues, if any, after such netting was concluded after March 28, 2021. Accordingly, multiple tax years were consolidated in a single order for the c....
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....ly on 14.12.2020 through the official notification of the A & N Islands VAT Rules, 2020 and further considering that registered dealers were granted a grace period until 28.03.2021 for filing of returns and clearance of past dues as per office order dated 07.01.2021, it is evident that no proceedings could lawfully have been initiated prior to the expiry of the grace period. (vi) The limitation prescribed under the statute is to be computed from 'the end of the year for which returns were filed". In the present case, although the returns relate to the years 2017-18 to 2020-21, no prescribed return format existed till 2020 and a statutory grace period for filing of such returns was granted upto 28.03.2021. (vii) As a result, returns for the second quarter of 2017-2018 to the third quarter of 2020-2021 could not be lawfully filed prior thereto, and the condition precedent for commencement of limitation itself did not arise earlier. (viii) The Hon'ble Supreme Court while interpreting Article 113 of the Limitation Act, 1963, in the case of Shakti Bhog Foods Ltd. Vs. Central Bank of India (2020) 17 SCC 260, has held that limitation begins to run only when the ....
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....re being an alternative remedy because the notice of assessment of tax is time barred and therefore without jurisdiction and also because both the notices dated December 31, 2024, are vitiated by reason of breach of the principles of natural justice. Hence, these three issues are taken up together for discussion and decision. 28. It is not in dispute that the writ petitioner has an alternative remedy in the form of section 76 of the Regulation, which reads as follows:- "76. (1) Any person aggrieved by a decision made by the Commissioner under sections 74, 84 and 85 may appeal to the Appellate Tribunal against such decision: Provided that no appeal may be made against a non-appealable order under section 79. (2) Subject to the provisions of section 77, no appeal shall be entertained unless it is made within two months from the date of service of the decision appealed against. (3) Every appeal made under this section shall be in form, verified in such manner and shall be accompanied by such fee as may be prescribed. (4) No appeal against an assessment shall be entertained by the Appellate Tribunal unless the appeal is accompanied by sat....
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....assessment, the Appellate Tribunal shall at the same time order the Commissioner to refund to the person some or all of the amount in dispute: Provided that where no order is made, it shall be presumed that the Appellate Tribunal has ordered the refund of the amount in dispute. (10) Where a person has failed to attend the hearing at the time and place stipulated, the Appellate Tribunal may adjourn the proceedings, strike out the appeal or proceed to make an order determining the objection in the absence of the person. (11) Save as provided in section 81 and sub-section (12), an order passed by the Appellate Tribunal on an appeal shall be final. (12) The Appellate Tribunal may rectify any mistake or error apparent from the record of its proceedings. (13) Any order passed by the Appellate Tribunal may be reviewed suo motu or upon an application made in that behalf: Provided that before any order which is likely to affect any person adversely is passed, such person shall be given a reasonable opportunity of being heard." 29. It is true that on the date when the writ petition was filed by M/s Seashell (WPA/345/2025], i.e., July 2....
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....owers of the High Court under Article 226 of the Constitution are of widest amplitude, still the Courts cannot be oblivious of the rules of self-imposed restraint evolved by this Court. The Court further held that though the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution when there exists an alternative remedy. 32. In the aforesaid case, the Hon'ble Apex Court clarified that the High Court will not entertain a petition under Article 226 of the Constitution, if an effective alternative remedy is available to the aggrieved person and particularly, if the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. 33. In Babu Ram Prakash Chanda Maheshwari Vs.Antarim Zilla Parisahd (1968 SCC Online SC 45), the Hon'ble Supreme Court observed that it is a well-established proposition of law that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not to invoke the special jurisdicti....
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....evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of 19 exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance." 35. In Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, (2014) 1 SCC 603, in paragraphs 11 to 15 of the reported judgment, the Hon'ble Supreme Court observed as follows: "11. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than....
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....atap Singh v. State of Haryana [(2002) 7 SCC 484 : 2002 SCC (L&S) 1075] and GKN Driveshafts (India) Ltd. v. ITO [(2003) 1 SCC 72].] 13. In Nivedita Sharma v. Cellular Operators Assn. of India [(2011) 14 SCC 337 : (2012) 4 SCC (Civ) 947], this Court has held that where hierarchy of appeals is provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction for relief and observed as follows: (SCC pp. 343-45, paras 12-14) "12. In Thansingh Nathmal v. Supt. of Taxes [AIR 1964 SC 1419] this Court adverted to the rule of self-imposed restraint that the writ petition will not be entertained if an effective remedy is available to the aggrieved person and observed: (AIR p. 1423, para 7) '7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by the statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statut....
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....bvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment.'" (See G. Veerappa Pillai v. Raman & Raman Ltd. [(1952) 1 SCC 334 : AIR 1952 SC 192], CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 : 1985 SCC (Tax) 75], Ramendra Kishore Biswas v. State of Tripura [(1999) 1 SCC 472 : 1999 SCC (L&S) 295], Shivgonda Anna Patil v. State of Maharashtra [(1999) 3 SCC 5], C.A. Abraham v. ITO [AIR 1961 SC 609 : (1961) 2 SCR 765], Titaghur Paper Mills Co. Ltd. v. State of Orissa [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131], Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath and Sons [1992 Supp (2) SCC 312], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], Tin Plate Co. of India Ltd. v. State of Bihar [(1998) 8 SCC 272], Sheela Devi v. Jaspal Singh [(1999) 1 SCC 209] and Punjab National Bank v. O.C. Krishnan [(2001) 6 SCC 569]. 14. In Union of India v. Guwahati Carbon Ltd. [(2012) 11 SCC 651] this Court has reiterate....
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....natural justice or where the order or proceedings challenged are wholly without jurisdiction or the vires of an Act is challenged. This view has been reiterated by the Hon'ble Supreme Court in a plethora of subsequent cases and indeed in earlier cases also. 38. The writ petitioner argued that the notice of assessment of tax and interest is without jurisdiction because it is time barred. His argument is based on section 34 of the 2017 Regulation, which reads as follows:- "34. (1) No assessment or re-assessment shall be made by the Commissioner after the expiry of four years from- (a) the end of the year comprising of one or more tax periods for which the person furnished a return under section 26 or section 28; or (b) the date on which the Commissioner made an assessment of tax for the tax period, whichever is the earlier: Provided that where the Commissioner has reason to believe that tax was not paid by reason of concealment, omission or failure to disclose fully material particulars on the part of the person, the said period shall stand extended to six years. (2) Notwithstanding anything contained in sub-section (1) the Commissioner....
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....e, the facts of the case, on the hinges of which the issue of limitation has to be decided, are not admitted. Hence, the issue of limitation, in my opinion, does not partake the nature of a jurisdictional issue in the facts of this case. 43. In my considered view, it cannot be said at this stage that the impugned notices dated December 31, 2024, are without jurisdiction and therefore, this writ petition is maintainable notwithstanding availability of the appellate remedy. 44. Secondly, having received the notices dated December 31,2024, the petitioner had two options open to it. It could straightway approach the High Court in its writ jurisdiction as it has done now contending that the notices are without jurisdiction. Alternatively, it was open to it to file objection to the notices in terms of section 74 of the Regulation. The petitioner chose the second avenue. It filed a written objection asking for a hearing. The hearing was held before the Joint Commissioner. The Joint Commissioner by a reasoned order dated July 22, 2025, overruled the objection and upheld the two notices. Therefore, the petitioner waived its rights, if any, to invoke the writ jurisdiction of the High C....
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....austive catalogue of such rules." 48. Simply put, the principles of natural justice require that nobody be condemned unheard. If the order of an Authority is likely to have adverse civil consequences for a citizen, that person should be granted an opportunity of hearing before such order is passed. In most of the cases what is required is a pre-decisional hearing. However, there are cases galore where a post-decisional hearing may suffice. This is often so in cases of action taken under fiscal statutes. A taxing statute may provide for issuance of notice imposing a tax burden/penalty on an assessee without providing for a hearing prior to issuance of such notice. But the statute may provide for an objection being filed by the assessee to such notice and a full-fledged hearing being given by the authority issuing such notice. This would be post-decisional hearing but nonetheless would pass the test of fairness. The assessee would have full opportunity of assailing such notice and arguing why such notice should be withdrawn or modified. 49. In the present case, I do not find any provision in the Regulation requiring the office of the Commissioner to grant an opportunity of hear....
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.... notices and participate in a hearing before the Commissioner. This was the course of action adopted by the present petitioner. The said section reads as follows: "74. (1) Any person who is dissatisfied with- (a) an assessment made under this Regulation (including an assessment under section 33); or (b) any other order or decision made under this Regulation, may make an objection against such assessment, or order or decision, as the case may be, to the Commissioner: Provided that no objection may be made against a non-appealable order as defined in section 79: Provided further that no objection against an assessment shall be entertained unless the amount of tax, interest or penalty assessed that is not in dispute has been paid failing which the objection shall be deemed to have not been filed: Provided also that the Commissioner may, after giving to the dealer an opportunity of being heard, may direct the dealer to deposit an amount deemed reasonable, out of the amount under dispute, before such objection is entertained: Provided also that only one objection may be made by the person against any assessment, decision or ....
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....ection or the remainder of the objection, as the case may be; and in either case, serve on the person objecting, a notice in writing of the decision and the reasons for it, including a statement of the evidence on which it is based: Provided that where the Commissioner within three months of the making of the objection notifies the person in writing, he may continue to consider the objection for a further period of two months: Provided further that the person may, in writing, request the Commissioner to delay considering the objection for a period of three months for the proper preparation of its position, in which case the period of the adjournment shall not be counted towards the period by which the Commissioner shall reach his decision. (8) Where the Commissioner has not notified the person of his decision within the time specified under sub-section (7), the person may serve a written notice requiring him to make a decision within fifteen days. (9) If the decision has not been made by the end of the period of fifteen days after being given the notice referred to in sub-section (8), then, at the end of that period, the Commissioner shall be dee....
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....e necessary. (c) If the Commissioner has initiated any proceeding before an appropriate forum against an issue which is decided against the revenue by an order of the Tribunal, then the Commissioner may, in respect of any order, other than the order which is the subject-matter of the order of the Tribunal, call for the record, conduct an examination as aforesaid, record his findings, call for the said books of account and other evidence and pass an order as provided for under this section as if the issue was not so decided against the revenue, but shall stay the recovery of the dues including the interest or penalty, insofar as they relate to such issue until the decision by the appropriate forum and after such decision, may modify the order of revision, if necessary. (d) No proceedings under this section shall be entertained on any application made by a dealer or a person. (e) Notwithstanding anything contained in any judgment, decree or order of any court, the provisions of this Regulation, other than sections 99 to 101, shall be deemed to have come into force with effect from the 1st day of July, 2017. (11) (a) Notwithstanding anything to the ....
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.... a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely, if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative progress or frustrate the need for utmost promptitude. In short, this rule of fair play "must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands". The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, to recall the words of Bhagwati, J., the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hea....
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...., should be decided by the High Court instead of dismissing the writ petition on the ground of an alternative remedy being available. In that case, a pure point of law was involved, i.e., whether or not the revisional authority could exercise suo motto power of revision of assessment order. In the present case, as noted above, disputed questions of fact are involved. Hence, the decision of M/s Godrej Sara Lee Ltd (Supra) does not help the petitioner. 57. The other points urged by the petitioner clearly do not pertain to the Commissioner's jurisdiction to issue the impugned notices or to the point of breach of natural justice and are therefore, not relevant for the purpose of deciding the issue of maintainability of this writ petition. The petitioner will be at liberty to urge all points before the Appellate Tribunal. It may be noted that the Andaman and Nicobar Islands Value Added Tax Rules, 2020, were notified on December 14, 2020. Rules 55A to 55C lay down the procedure for filing of an appeal before the Appellate Tribunal and for hearing of the appeal. It may also be noted that the Appellate Tribunal is fully functional now. 58. A question that would naturally arise is whe....
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....ile this petition in the absence of a functional Appellate Tribunal, the same would give the petitioner any vested right to have the disputes adjudicated by the writ court. 61. I therefore direct that the records of all those writ petitions out of the bunch of 47 petitions which have been heard, which were filed prior to August 19, 2025, be transferred/transmitted to the Appellate Tribunal constituted under section 73 of the VAT Regulation, 2017. All those writ petitioners as well as the respondents will be entitled to file additional pleadings before the Tribunal. The Tribunal will decide those cases in accordance with law. In respect of all those pre-August 19, 2025, cases, the Tribunal will not insist on pre-deposit being made in terms of section 76 of the VAT Regulation, 2017. The appeals will be decided within the statutory framework in accordance with the applicable laws, Rules and Regulations. The said writ petitions will be treated as disposed of insofar as the records of this Court are concerned. 62. The records of the following writ petitions will be transferred/ transmitted to the Appellate Tribunal. (i) WPA/345/2025 (M/s. Seashell vs. The Lt. Governor and....
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..... (xxviii) WPA/385/2025 (M/s. Pearl Park Beach Resort vs. The Lieutenant Governor and Others). 63. Insofar as the writ petitions filed on or after August 19, 2025, are concerned, the same shall stand dismissed solely on the ground of availability of an alternative statutory remedy. Those writ petitioners will be at liberty to approach the Appellate Tribunal. If any question of limitation/time-bar arises, the Tribunal shall decide the issue taking into consideration the applicable provisions of the Limitation Act, 1963, and in particular section 14 thereof as also the factum of pendency of the writ petitions in this Court. 64. The following writ petitions stand dismissed. (i) WPA/566/2025 (M/s. Hotel Arasi Vs. The Lt. Governor and Others). (ii) WPA/568/2025 (M/s. Medival Islander Inn Bar Vs The Lt. Governor and Others). (iii) WPA/569/2025 (M/s. Hotel Sarvottam (A) Pvt. Ltd. Vs. The Lt. Governor and Others). (iv) WPA/570/2025 (M/s. Hotel Rajadeepam Vs The Lieutenant Governor and Others). (v) WPA/573/2025 (M/s. Whistling Wood Vs. The Lieutenant Governor and Others). (vi) WPA/574/2025 (M/s. Apt Bar and Restaurant Vs. ....