1986 (7) TMI 390 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether writ petitions challenging assessment orders should be entertained when statutory remedies are available?
2. Whether the definition of "raw material" in the Rajasthan Sales Tax Act is constitutionally valid?

Analysis:

Issue 1:
The judgment by A.K. Mathur, J., emphasized that under taxing statutes, extraordinary jurisdiction should only be invoked in exceptional circumstances when statutory remedies are ill-suited. The petitioners, involved in dyeing and printing businesses, had challenged assessment orders by the Commercial Taxes Officer. The learned counsel for the Revenue argued that the petitioners should have first appealed the assessment orders and then approached the Sales Tax Tribunal. Citing cases like Titaghur Paper Mills Co. Ltd. v. State of Orissa and Dunlop India Ltd., it was highlighted that article 226 should not be used to bypass statutory procedures, especially in revenue matters. The judgment stressed that statutory remedies should be exhausted before approaching the High Court directly. The petitioners' arguments challenging the assessment orders were dismissed, and it was held that statutory alternative remedies should have been pursued before resorting to writ petitions.

Issue 2:
Regarding the validity of the definition of "raw material" in section 2(mm) of the Rajasthan Sales Tax Act, the petitioners contended that it was unconstitutional. However, the judgment explained that the definition encompassed articles used as ingredients in manufactured goods, including fuel and lubricants. The Court found the definition to be in line with the Act and not violative of article 14 or any other provisions. The petitioners relied on the case of Air India v. Nergesh Meerza to argue about discrimination and unreasonableness, but the Court rejected this argument, stating that no arbitrariness or unreasonableness was found in the definition. The Court upheld the constitutionality of section 2(mm) and dismissed the petitioners' challenge against it.

Special Appeals:
The special appeals were filed against the decision of A.K. Mathur, J., which dismissed the writ petitions challenging assessment orders. The appeals argued that the available statutory remedies were futile due to a previous decision by the Board of Revenue. However, the Division Bench found no merit in the appeals, stating that the appellants could rely on previous judgments before the appellate authority. The Board of Revenue's decision was deemed inapplicable to the appellants' case, leading to the dismissal of the special appeals.

In conclusion, the High Court upheld the importance of exhausting statutory remedies before seeking extraordinary jurisdiction under article 226, and affirmed the constitutionality of the definition of "raw material" in the Rajasthan Sales Tax Act. The appeals challenging the dismissal of writ petitions were also dismissed by the Division Bench.