1998 (10) TMI 526 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the writ application due to the availability of an alternative remedy.
2. Validity of sub-section (3) of section 45 of the Bihar Finance Act, 1981.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Application:

The petitioner challenged the assessment orders for the financial year 1995-96 under the Bihar Finance Act, 1981, and the Central Sales Tax Act, 1956, and sought to quash the demand notices issued pursuant to these orders. The learned State Counsel raised a preliminary objection regarding the maintainability of the writ application due to the availability of an alternative remedy of appeal under section 45 of the Act.

The court emphasized that the appeal is an efficacious and adequate remedy, and the writ application cannot be entertained merely because the petitioner is required to deposit 20% of the assessed tax before the appeal is admitted. The court referred to the Supreme Court's ruling in Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., which stated that Article 226 is not meant to circumvent statutory procedures unless extraordinary situations demand it.

The court also cited the Supreme Court's decision in State of Goa v. Leukoplast (India) Ltd., reiterating that it is not open to an assessee to bypass the statutory remedy provided under the Sales Tax Act by approaching the High Court with a writ application against the assessment order.

2. Validity of Sub-section (3) of Section 45 of the Bihar Finance Act, 1981:

The petitioner challenged the validity of sub-section (3) of section 45 on two grounds:
(i) The requirement of depositing 20% of the assessed tax before the admission of the appeal is an onerous condition that virtually nullifies the right of appeal, violating Article 14 of the Constitution.
(ii) Unlike other states where the appellate authority has the power to dispense with or modify the deposit requirement, Bihar does not provide such discretion, making the provision discriminatory and violative of Article 14.

The court analyzed section 45, which mandates that no appeal shall be admitted unless the dealer has paid 20% of the assessed tax or the full amount of admitted tax, whichever is greater. The court referred to a recent division bench decision in Tinplate Company of India Ltd. v. State of Bihar, which upheld the provision, stating that the right of appeal is a statutory right and can be regulated by imposing conditions.

The court also cited the Supreme Court's ruling in Shyam Kishore v. Municipal Corporation of Delhi, affirming that the legislature can impose conditions on the right of appeal, and such conditions are not unconstitutional.

The court disagreed with the Gauhati High Court's decision in Monoranjan Chakraborty v. State of Tripura, which declared a similar provision ultra vires, and instead agreed with the Madhya Pradesh High Court's decision in Lachhmandas v. State of M.P., which upheld the requirement of depositing part of the assessed tax as a condition precedent for filing an appeal.

The Supreme Court's decision in Anant Mills Co. Ltd. v. State of Gujarat was also cited, which upheld the imposition of conditions on the right of appeal, stating that such conditions are valid pieces of legislation and do not contravene Article 14.

The court concluded that section 45(3) does not require the deposit of the total assessed tax but only 20%, which is not exorbitant or unreasonable. The provision ensures that the right of appeal is not abused and is a valid regulatory measure.

The court also rejected the argument that the absence of discretionary power to waive the deposit requirement makes the provision discriminatory. It emphasized that each state has its own methods and problems, and differences in laws do not make them discriminatory.

Conclusion:

The court held that the provisions of sub-section (3) of section 45 of the Act are valid and not ultra vires. Consequently, the writ application was dismissed on the ground of alternative remedy, with no costs awarded.