1987 (7) TMI 563 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the High Court under Article 226 of the Constitution to entertain a petition against an order of assessment.
2. Adequacy of the statutory remedy of appeal under the Madhya Pradesh General Sales Tax Act, 1958.
3. Compliance with the principles of natural justice during the assessment proceedings.

Detailed Analysis:

1. Jurisdiction of the High Court under Article 226 of the Constitution:

The preliminary objection raised by the respondents was that the petitioners had a statutory right to appeal under the Madhya Pradesh General Sales Tax Act, 1958, and thus, the order of assessment could only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. The Court referred to the Supreme Court's observations in *Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315; AIR 1983 SC 603*, which emphasized that where a statute provides a complete machinery to challenge an order of assessment, the impugned orders of assessment can only be challenged by the mode prescribed by the Act. The Court reiterated that Article 226 is not meant to short-circuit or circumvent statutory procedures and should only be invoked in extraordinary situations where statutory remedies are ill-suited to meet the demands of such situations.

2. Adequacy of the statutory remedy of appeal:

The petitioners argued that the statutory remedy of appeal was not adequate because they were required to pay the tax and penalty as a precondition for filing an appeal. They cited the decision in *Filterco v. Commissioner of Sales Tax, M.P. [1986] 61 STC 318; [1986] 19 VKN 150*, where the Supreme Court held that the remedy of appeal was illusory in that particular case. However, the Court distinguished the *Filterco* case on facts, stating that the decision did not imply that a petition under Article 226 could not be dismissed on the ground of an alternative remedy just because a substantial portion of the tax had to be deposited before an appeal or revision could be filed. The Court emphasized that the crux of the matter was whether the statutory remedy was ill-suited to meet the demands of extraordinary situations, not the magnitude of the tax or penalty amount.

3. Compliance with the principles of natural justice:

The petitioners contended that the assessment order offended the principles of natural justice as no reasonable opportunity was given to them to meet the case against them. They argued that the notice served was not in the prescribed form, and the entire investigation report of the Flying Squad was not furnished to them. The Court noted that the proceedings against the petitioners commenced on 5th April, 1986, and not on 22nd September, 1986, as averred by the petitioners. The Court found that the petitioners had suppressed material facts and were responsible for prolonging the assessment proceedings. The Court held that whether there was a reasonable opportunity of hearing was a question of fact to be examined by the appellate authorities under the Act. The Court also noted that the assessment order was not wholly based on the statement of an employee of the petitioners and that the appellate authority could remand the case if it found that no opportunity was given to cross-examine any person on whose statement the order was based.

Conclusion:

The Court concluded that the petitioners had not made out a case that the statutory remedy was ill-suited to meet the demands of extraordinary situations. The petitioners were found to be responsible for prolonging the assessment proceedings and suppressing material facts. Therefore, the Court dismissed the petition and declined to exercise its extraordinary powers under Article 226 of the Constitution.

Petition dismissed.

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