2007 (8) TMI 691 - HC - VAT and Sales Tax

Alternate remedy - whether the order under challenge can be treated as totally non-speaking order is highly debatable? - Held that - It is, thus, evident that the officer concerned had considered the objection raised by the petitioner and decided the same by assigning reasons. The three judgments of this court on which reliance has been placed by Shri E. Manohar do not have any bearing on the petitioner s case because in none of them the issue of alternative remedy was discussed and decided.Therefore, we do not consider it necessary to deal with the same. In the result, the writ petition is dismissed leaving the petitioner free to avail remedy by filing appeal. Since the petitioner has sought intervention of the court, we give it liberty to file appeal within a period of 15 days along with an application for condonation of delay and direct that the same shall be entertained, considered and decided on merits.

Issues Involved:
1. Tax liability assessment and rejection of exemption claim.
2. Availability and necessity of alternative remedy.
3. Compliance with principles of natural justice and requirement for a speaking order.

Detailed Analysis:

1. Tax Liability Assessment and Rejection of Exemption Claim:
The petitioner, engaged in the manufacture and sale of iron and steel products, contested an order dated March 31, 2007, by the Commercial Tax Officer, which created a tax liability of Rs. 8,57,27,945 under the Andhra Pradesh General Sales Tax Act, 1957, for the assessment year 2003-04. The petitioner had filed a return disclosing a net turnover of Rs. 29,15,82,857, which was not accepted by the respondent. A show-cause notice was issued on January 9, 2007, requiring the petitioner to file objections against the proposed rejection of its claim for exemption on various items, including second sales of iron and steel, due to lack of documentary evidence showing that the goods suffered tax as per section 7A of the Act. The petitioner responded with detailed objections and purchase documentation, but the respondent confirmed the rejection, citing the amended section 7A and the lack of evidence proving that the goods had suffered tax at the rate of four percent.

2. Availability and Necessity of Alternative Remedy:
The petitioner's counsel acknowledged the possibility of challenging the assessment order through an appeal under section 19 of the Act but argued against being compelled to do so, citing precedents and claiming the order violated natural justice principles. The respondent's counsel countered that the appeal process constituted an effective alternative remedy. The court reiterated the settled law that writ petitions under article 226 of the Constitution should not be entertained if an effective alternative remedy is available. This principle has been rigorously applied in tax-related cases, emphasizing that statutory remedies of appeal and revision should be treated as effective and normally preclude direct High Court intervention.

3. Compliance with Principles of Natural Justice and Requirement for a Speaking Order:
The petitioner argued that the impugned order lacked reasons and failed to address the documentary evidence provided, thus violating natural justice. However, the court found that the respondent had considered the petitioner's objections and provided reasons, albeit briefly, for rejecting the exemption claim. The court noted that while more detailed reasons could have been provided, the order was not entirely devoid of reasoning. The court cited various Supreme Court judgments to underline that the existence of an alternative remedy does not bar the High Court's jurisdiction but is a matter of discretion, typically exercised to avoid bypassing statutory mechanisms unless exceptional circumstances exist.

Conclusion:
The court dismissed the writ petition, emphasizing the availability of an effective alternative remedy through the appellate process. The petitioner was granted liberty to file an appeal within 15 days, along with an application for condonation of delay, which should be considered and decided on merits. Consequently, the petitioner's application for interim relief was also dismissed.

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