2008 (2) TMI 607 - SC - VAT and Sales Tax

The High Court seems to have completely lost sight of the parameters highlighted by this court in a large number of cases relating to exhaustion of alternative remedy. Additionally the High Court did not even refer to the judgment of another Division Bench for the assessment year 1997-98 and assessment year 1998-99 in respect of ICI India Ltd. In any event the High Court ought to have referred to the ratio of the decision in the said case. That judicial discipline has not been adhered to. Looked at from any angle the High Court s judgment is indefensible and is set aside.

Summary

Issues:
Challenge to the judgment of a Division Bench of the Orissa High Court allowing the writ petition filed by the respondent. Interpretation of entry 48 of the notification issued under section 5(1) of the Orissa Sales Tax Act. Jurisdiction of the High Court to entertain a writ petition when an alternative remedy is available.

Analysis:
The appeal before the Supreme Court challenged the judgment of the Orissa High Court in favor of the respondent, who was registered as a dealer under the Orissa Sales Tax Act. The respondent had filed a consolidated return for the assessment year 2000-01, claiming exemption on purchased goods, including ammonium nitrate, intended for manufacturing goods for sale. The Assistant Commissioner initially accepted the claim but later initiated reassessment proceedings. Subsequently, a show cause notice was issued by the Commissioner of Sales Tax, which the respondent challenged through a writ petition, arguing that the notice was without jurisdiction based on the interpretation of relevant provisions.

The High Court entertained the writ petition despite the availability of an alternative remedy, holding in favor of the respondent and quashing the show cause notice. The appellant contended that the High Court erred in not considering previous decisions rejecting similar pleas by the assessee in earlier assessment years. The appellant also highlighted the judgment in ICI India Ltd. v. State of Orissa, which upheld the rejection of similar pleas in previous cases. The Supreme Court criticized the High Court for not adhering to the principle of exhaustion of alternative remedies and failing to consider relevant precedents and judicial discipline.

Ultimately, the Supreme Court set aside the High Court's judgment, directing the respondent to file a response to the show cause notice within eight weeks. The Commissioner was instructed to consider the response and dispose of the proceedings accordingly. The appeal was allowed without any order as to costs, emphasizing the importance of following legal principles and precedents in such matters.