1998 (11) TMI 532 - SC - VAT and Sales Tax

Petition dismissed by High Court in view of an alternative remedy being available to the appellant Held that - Appeal allowed in part. In view of the observations made by the High Court, the appellate authority has rejected the appellant s appeal at the threshold and the appellant has been left without any remedy under the law. In such circumstances, observations made by the High Court in its judgment on merits of the case was totally uncalled for and deserves to be set aside. Consequently, we set aside the observations made by the High Court in the judgment under appeal to the extent they relate to the merit of the case which was the subject-matter of appeal before the Sales Tax Appellate Authority. Since the appellate authority under the Act observed that delay could have been condoned and also the fact that the appellant has deposited 20 per cent of the tax, we set aside the order of the appellate authority dated June 22, 1996 and restore the appeal to the file of Joint Commissioner of Commercial Taxes (Appeals), who shall decide the appeal expeditiously on its own merit without being influenced H by any of the observations made by the High Court in the writ petition.

Issues:
1. Disallowance of stock transfer claim under Central Sales Tax Act for the assessment year 1985-86.
2. Challenge of assessment order and notice of demand through a writ petition under article 226 of the Constitution before the High Court of Judicature at Patna.
3. Rejection of appeal by the Joint Commissioner of Commercial Taxes (Appeals) due to observations made by the High Court.
4. Review application rejection by the High Court.
5. Appellant's argument regarding the High Court's observations prejudicing the case.
6. Appellant's appeal to the Supreme Court via a special leave petition.

Analysis:
1. The appellant, a company registered under the Indian Companies Act, filed its return for the assessment year 1985-86. The Commercial Tax Officer disallowed the appellant's claim of stock transfer to outside States, treating it as inter-State sales under the Central Sales Tax Act and levied tax at 10%. A notice of demand was issued for a significant sum, leading the appellant to challenge the assessment order and notice of demand through a writ petition under article 226 of the Constitution before the High Court of Judicature at Patna.

2. The High Court dismissed the writ petition on the ground of an alternative remedy being available to the appellant. Although the High Court made observations on the merits of the case while dismissing the petition, the appellant filed an appeal before the Joint Commissioner of Commercial Taxes (Appeals) along with a condonation application for the delay in filing the appeal due to the pending writ petition.

3. The appeal filed by the appellant was rejected at the admission stage by the Joint Commissioner of Commercial Taxes (Appeals) based on the High Court's observations. Despite the possibility of condoning the delay, the appeal was not entertained as the High Court did not direct admission on merits. Subsequently, a review application in the High Court was also rejected, leading the appellant to file a special leave petition before the Supreme Court.

4. The appellant argued that the High Court's observations on the case's merits while dismissing the writ petition prejudiced their appeal before the appellate authority. The Supreme Court acknowledged the availability of an alternative remedy to the appellant but criticized the High Court for expressing opinions on the case's merits that were to be decided by an alternative forum.

5. The Supreme Court found the High Court's observations unnecessary and set them aside. The order of the appellate authority was also set aside, and the appeal was restored for expedited decision without influence from the High Court's observations. The appeal was allowed in part, with no order as to costs.

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