2007 (4) TMI 627 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the petitioner acted as an agent or principal in the import and sale of dun peas.
2. Whether the transactions in question are import sales exempt under section 5(2) of the Central Sales Tax Act, 1956, or local sales subject to tax under the TNGST Act.
3. Whether the respondent was influenced by the Commissioner of Commercial Taxes in passing the impugned order.
4. Whether the petitioner was afforded an opportunity of personal hearing.
5. Whether the writ petition is maintainable despite the availability of an alternative remedy.

Detailed Analysis:

1. Agency vs. Principal Role:
The petitioner claimed to be a Government of India undertaking facilitating imports for customers and collecting a commission, asserting it acted as an agent for RTC in importing dun peas. However, the respondent argued that the petitioner imported and sold the dun peas within Tamil Nadu, making it liable for sales tax under the TNGST Act. The petitioner's documents, such as the Memorandum of Understanding (MOU) with RTC and agency agreements, were contested by the respondent as potentially fabricated after the investigation.

2. Import Sales vs. Local Sales:
The petitioner contended that the transactions were import sales exempt under section 5(2) of the Central Sales Tax Act, 1956. The respondent, however, treated the transactions as local sales subject to tax under the TNGST Act, based on the delivery orders and the manner of payment and delivery of goods. The court noted the absence of crucial documents like bills of lading and delivery orders, which are essential to substantiate the nature of the transactions.

3. Influence by Commissioner of Commercial Taxes:
The petitioner alleged that the respondent was influenced by the Commissioner of Commercial Taxes to complete the assessment as per the D3 proposal without considering the merits. The court found no concrete evidence to support this claim, noting that the letters from the Commercial Tax Officers did not conclusively prove undue influence.

4. Opportunity of Personal Hearing:
The petitioner argued that it was not given an opportunity of personal hearing, violating principles of natural justice. The respondent countered that the petitioner did not respond to summons and failed to produce documents during the assessment. The court could not determine the validity of these claims due to the lack of records.

5. Maintainability of Writ Petition:
The respondent argued that the petitioner bypassed the statutory appellate remedy by filing a writ petition. The court agreed, citing precedents that emphasize the exhaustion of alternative remedies, particularly when disputed questions of fact are involved. The court referenced several Supreme Court judgments, including *State of Goa v. Leukoplast (India) Ltd.*, *Titaghur Paper Mills Co. Ltd. v. State of Orissa*, and *Mrs. Sanjana M. Wig v. Hindustan Petro Corporation Ltd.*, which support the principle that writ petitions should not be entertained when an effective alternative remedy exists.

Conclusion:
The court dismissed the writ petition on the grounds that the petitioner did not exhaust the available alternative remedy of appealing to the Assistant Commissioner of Commercial Taxes. The petitioner was granted liberty to file an appeal within four weeks, and the period of pendency of the writ petition was excluded from the limitation period for filing the appeal. The court did not delve into the merits of the case due to the unresolved factual disputes and the lack of essential documents. No costs were awarded, and the connected W.P.M.P. was closed.

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