2008 (6) TMI 561 - HC - VAT and Sales Tax

Assessment orders challenged - alternative remedy - Held that - In view of the settled legal position, i. e., disputed facts cannot be gone into in a writ petition and in tax matters wherever alternate remedy is provided, writ petition shall not be entertained, thus these writ petitions challenging the orders of assessment made by the respondent, are not maintainable and the petitioner is bound to file appeals against the said orders of assessment as per section 31 of the Act. The petitioner is given two weeks time to file appeals against the orders of the assessment and if such appeals are filed within two weeks, the appellate authority is directed to consider the same on merits and in accordance with law, without referring to the period of limitation. Since deciding the writ petitions solely on the ground of availability of alternate remedy, merits of the cases canvassed by the learned Senior Counsel for the petitioner-company and by the learned Additional Government Pleader are not considered and decided in this order, in any manner. W.P. dismissed.

Issues Involved:
1. Challenge to the assessment orders.
2. Alleged violation of principles of natural justice.
3. Availability and exhaustion of alternative statutory remedies.
4. Burden of proof for tax exemption claims.
5. Maintainability of writ petitions in tax matters.

Issue-wise Detailed Analysis:

1. Challenge to the Assessment Orders:
In W.P. No. 2392 of 2008, the petitioner challenged the assessment order dated December 7, 2007, which demanded Rs. 14,09,13,503 including penalty. Similarly, in W.P. No. 2393 of 2008, the assessment order dated December 24, 2007, demanded Rs. 27,74,19,671, and in W.P. No. 13457 of 2008, the assessment order dated April 29, 2008, demanded Rs. 12,04,10,462. The petitioner, a public limited company engaged in trading iron and steel and Padmini brand fans, claimed exemptions on second sales which were not accepted by the respondent due to alleged irregularities.

2. Alleged Violation of Principles of Natural Justice:
The petitioner argued that the assessment orders were passed in violation of the principles of natural justice. It was claimed that the business premises were inspected, and the respondent found discrepancies, including purchases from allegedly bogus dealers. Despite filing objections to the notices, the petitioner contended that the newly appointed consultant failed to provide an effective reply, leading to the confirmation of the proposed demands.

3. Availability and Exhaustion of Alternative Statutory Remedies:
The respondent countered that the petitioner had a substantive remedy to appeal before the Appellate Assistant Commissioner of Commercial Taxes, as stated in the impugned orders. The court emphasized that disputed facts and voluminous records requiring detailed inquiry should be addressed through the statutory appeal process. It was noted that the Appellate Assistant Commissioner had the authority to confirm, reduce, enhance, annul, or set aside the assessment and direct fresh assessments.

4. Burden of Proof for Tax Exemption Claims:
The court highlighted Section 10(2) of the Tamil Nadu General Sales Tax Act, 1959, which places the burden on the petitioner to prove that the goods sold had already been subjected to tax. The petitioner claimed that the iron and steel were purchased from registered dealers and that the tax had been paid on the first sale. However, the respondent found that the petitioner failed to provide concrete evidence, such as lorry receipts and proof of payment, to support the exemption claims.

5. Maintainability of Writ Petitions in Tax Matters:
The court reiterated the principle that writ petitions should not be entertained in tax matters when an alternative statutory remedy is available. Citing various Supreme Court judgments, it was emphasized that the statutory appeal process must be exhausted before invoking writ jurisdiction. The court referred to previous decisions, including Titaghur Paper Mills Co. Ltd. v. State of Orissa and Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd., which established that statutory remedies should be pursued in tax disputes.

Conclusion:
The court dismissed the writ petitions, directing the petitioner to file appeals within two weeks. The appellate authority was instructed to consider the appeals on merits without referring to the period of limitation. The court did not address the merits of the case, focusing solely on the availability of alternative remedies. The connected miscellaneous petitions were also dismissed.

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