1990 (4) TMI 267 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to assessments under Andhra Pradesh General Sales Tax Act, 1957 for the years 1985-86, 1986-87, and 1987-88. Interpretation of Section 5-E regarding levy of tax on the transfer of right to use goods. Invocation of jurisdiction under Article 226 of the Constitution. Adjudication on the vires of Section 5-E. Alternative statutory remedies versus writ jurisdiction under Article 226.

Analysis:
The petitioner, a West German company engaged in drilling operations for ONGC, contested tax assessments under the Andhra Pradesh General Sales Tax Act for the years 1985-86, 1986-87, and 1987-88. The assessments were based on Section 5-E, which levies tax on the transfer of the right to use goods. The petitioner challenged the constitutionality of Section 5-E, arguing that the rigs were not transferred to ONGC, thus no right to use goods was transferred. The petitioner raised concerns about coercive recovery measures due to short appeal timelines and lack of stay orders. The writ petitions were admitted, and stay was granted pending bank guarantee. The petitioner also appealed to the Appellate Deputy Commissioner, who upheld the assessments. The petitioner sought to amend the prayer to include quashing the appellate authority's order.

The court considered the petitioner's argument that Section 5-E did not apply based on previous court decisions. The government pleader supported the authorities' conclusions, emphasizing the availability of statutory remedies over writ jurisdiction. Citing Supreme Court precedents, the court highlighted the importance of exhausting statutory remedies before seeking writ relief. The court noted that the question of Section 5-E's applicability involves mixed law and fact issues, urging reliance on the statutory appeal process. The court emphasized that the petitioner had the right to appeal to the Sales Tax Appellate Tribunal.

The court declined to adjudicate on the merits of the assessments, noting the availability of alternative remedies and recent appellate developments. The court referenced a recent Supreme Court case discouraging bypassing appellate remedies in tax matters. While acknowledging the petitioner's concerns, the court emphasized the need to follow the statutory appeal process. The court dismissed the writ petitions but directed the petitioner to appeal to the Sales Tax Appellate Tribunal, ensuring a timely disposal of the appeals. The stay granted by the court was to continue pending appeal, subject to conditions. The court highlighted the importance of adhering to the statutory appeal process and avoiding premature writ petitions.

In conclusion, the court dismissed the writ petitions, emphasizing the importance of exhausting statutory remedies before seeking writ relief in tax matters. The court directed the petitioner to appeal to the Sales Tax Appellate Tribunal and maintained the stay granted by the court pending appeal, subject to specified conditions. The judgment underscored the significance of following the statutory appeal process in tax disputes.