1997 (7) TMI 623 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to demand of additional security without opportunity granted.

Analysis:
The petitioner, a registered dealer under the Orissa Sales Tax Act, challenged the demand for additional security made by the Sales Tax Officer without granting an opportunity. The impugned order passed on July 3, 1997, and the consequential notice of demand were questioned by the petitioner on the grounds of lack of opportunity. The Revenue contended that the order is revisable under section 23(4)(a) of the Act, making the writ application misconceived.

Legal Provisions:
Section 9 of the Orissa Sales Tax Act deals with the registration of dealers, while sub-section (3-a) of section 9 pertains to the security to be paid. Rule 7 of the Orissa Sales Tax Rules covers the grant of registration, with sub-rule (6) allowing the Sales Tax Officer to require a dealer to pay reasonable security equivalent to the estimated tax payable for one year. The maximum security demand is indicated in the proviso to sub-rule (6) of rule 7.

Exhaustion of Remedies:
The court discussed the rule relating to the exhaustion of alternative remedies, emphasizing that it is a matter of policy and discretion rather than a strict rule of law. Generally, the High Court refrains from entertaining petitions under article 226 if the statute provides an appeal or alternative remedy. However, exceptions exist, such as in cases of violation of natural justice. In this instance, since the petitioner was not given an opportunity before the additional demand was raised, the court entertained the writ application for adjudication.

Principles of Natural Justice:
The court highlighted the importance of natural justice in administrative actions, stating that it must be read into the statute unless there is a clear mandate to the contrary. The principles of natural justice, including the right to be heard, are essential for fair adjudication. The court cited the case of Cooper v. Wandsworth Board of Works to underscore the significance of granting an opportunity before taking adverse action.

Decision:
The court set aside the impugned order and the notice of demand, directing the petitioner to appear before the Sales Tax Officer to be informed of the materials proposed to be used against them for fixing the enhanced security amount. The court clarified that no opinion on the merits was expressed. The writ application was allowed without costs, with both judges concurring on the decision.