2007 (11) TMI 561 - HC - VAT and Sales Tax

Revision of assessment - denial of the copies of the records and an opportunity of cross-examining the persons, on whose statements the enforcement authorities had arrived at their conclusions to fasten the liability on the dealers such as the petitioners? Held that - Considering the submissions made by the learned counsels appearing on behalf of the parties concerned and on analysing the cases cited and in view of the facts and circumstances in which the present writ petitions have arisen, this court is of the considered view that the petitioners have an alternate appellate remedy in accordance with law to seek for the reliefs sought for by them. Once it is accepted that the petitioners have the appellate remedy, it is not open to them to come before this court by way of filing the writ petitions under article 226 of the Constitution of India, unless it is clearly shown that the impugned orders have been passed by the respondent by following the law, which is ultra vires or in violation of the principles of natural justice. Thus the petitioners have not shown sufficient reason or cause for this court to interfere by setting aside the impugned orders of the respondent, while a statutory appeal remedy is available to the aggrieved parties

Summary

Issues Involved:
1. Revision of assessment orders.
2. Principles of natural justice and fair play.
3. Burden of proof in tax assessment.
4. Validity of penalty imposition.
5. Jurisdiction and procedural compliance.
6. Availability of alternative remedy.

Issue-wise Detailed Analysis:

1. Revision of Assessment Orders:
The respondent proposed to revise the assessment orders for the years 1999-2000 and 2000-01, seeking to levy tax under section 7A of the Tamil Nadu General Sales Tax Act, 1959, on purchases from M/s. Aashana Enterprises and M/s. Kamalesh Enterprises. Penalty was also levied under sections 16(2) and 10(3) of the Act. The petitioners contested the revision, arguing that the records showed the delivery of goods directly to their factory, making the revision contrary to available records.

2. Principles of Natural Justice and Fair Play:
The petitioners argued that the proposed revision was against the principles of natural justice as they were not given an opportunity to cross-examine the dealers or access the records and statements relied upon by the enforcement authorities. They emphasized that denial of cross-examination and copies of records violated well-established legal principles and statutory provisions.

3. Burden of Proof in Tax Assessment:
The petitioners contended that they had discharged their burden of proof during the original assessment proceedings. They asserted that the burden of proof in the case of revision lay with the respondent, as per the provisions of the Tamil Nadu General Sales Tax Act, 1959. The petitioners argued that the department had erred in disallowing the purchases in the hands of the purchasers after having accepted the sales and purchases made by the sellers.

4. Validity of Penalty Imposition:
The petitioners claimed that mere disallowance of purchases was not sufficient to attract penalty under the Act. They argued that there was no omission, suppression, or seizure of incriminating records. They also contended that the impugned order lacked jurisdiction for estimated addition towards probable omission under section 16 of the Act.

5. Jurisdiction and Procedural Compliance:
The petitioners pointed out that the impugned order was illegal as it was made without the concurrence of the Deputy Commissioner, as required under rule 15(6) of the Tamil Nadu General Sales Tax Rules, 1959. They also highlighted that the Commissioner of Commercial Taxes had instructed deferring proposals based on inspection until further reports from the enforcement wing were received.

6. Availability of Alternative Remedy:
The court noted that the petitioners had an alternative appellate remedy available. The court referenced previous decisions, including those of the Supreme Court, stating that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not compulsion. The court emphasized that the petitioners should have availed the statutory appeal process unless it was shown that the impugned orders were ultra vires or violated the principles of natural justice.

Conclusion:
The court concluded that the petitioners had not shown sufficient reason to set aside the impugned orders while a statutory appeal remedy was available. The court dismissed the writ petitions, permitting the petitioners to file statutory appeals within two weeks, provided they deposit 25% of the tax component demanded. The respondent was directed to entertain and decide the appeals on merits without raising the issue of limitation and to pass appropriate orders within eight weeks thereafter. No costs were awarded.