2011 (1) TMI 1273 - HC - VAT and Sales Tax

Whether these petitions are to be considered on merits notwithstanding the availability of the statutory remedy of filing the appeal? Do the impugned orders suffer from the vice of bias? Is the approach of the appellate authority likely to be biased in favour of the Revenue? Held that - the courts are not well-equipped to go into the scientific and technological aspects of the matter. It is therefore desirable that the petitioners file the statutory appeals. The appellate authority has to consider the case of the petitioners and the respondents by taking into account the materials placed on record. Given the nature of the subject, it may also be necessary for the appellate authority to embark on a fresh enquiry, perhaps by taking the assistance of the technical persons and technical bodies in the matter. Thus, It cannot be said with any rate of success that these petitions involve pure and simple questions of law. They involve complicated, scientific and technological questions, which certainly fall within the realm of factual controversies. As held by the apex court in the case of Vicco Laboratories 2007 (11) TMI 21 - SUPREME COURT OF INDIA , the writ court s interference is ruled out where factual adjudication is necessary. That the Deputy Commissioner has taken part in the proceedings of the committee on the subordinate legislation or is instrumental in filing the review petition are no grounds for alleging the bias. In the instant case, the Deputy Commissioner has passed the similar reassessment orders for different assessment periods on July 31, 2006 and January 12, 2007 long before the meeting of the committee on subordinate legislation. On the similar set of facts, the Deputy Commissioner has passed the similar orders. Therefore he cannot be held to be at fault for passing the impugned orders.

Summary

Issues Involved:
1. Maintainability of writ petitions despite the availability of statutory appeal remedies.
2. Jurisdiction and authority of the Deputy Commissioner of Commercial Taxes.
3. Taxability of Artificially Created Light Energy (ACLE) under the Karnataka Value Added Tax Act and Karnataka Sales Tax Act.
4. Allegations of bias and legal malice against the Deputy Commissioner.
5. Applicability of previous Supreme Court judgments, particularly Bharat Sanchar Nigam Ltd. v. Union of India, to the present case.

Detailed Analysis:

1. Maintainability of Writ Petitions:
The primary issue is whether the writ petitions are maintainable despite the availability of statutory appeal remedies under section 62 of the VAT Act and section 20 of the KST Act. The petitioners argue that the impugned reassessment orders are without jurisdiction and authority, thus making the writ petitions entertainable. They cite several Supreme Court judgments, including Bharat Sanchar Nigam Ltd. v. Union of India and Whirlpool Corporation v. Registrar of Trade Marks, to support their contention that alternative remedies do not bar writ petitions in cases involving fundamental rights, violation of natural justice, or lack of jurisdiction.

2. Jurisdiction and Authority of the Deputy Commissioner:
The petitioners challenge the jurisdiction of the Deputy Commissioner to levy sales tax on ACLE, arguing that it does not constitute "goods" under the VAT Act or the KST Act. They contend that ACLE lacks the attributes of goods, such as possession, delivery, and use, and therefore cannot be taxed. The respondents, however, maintain that ACLE is taxable at 12.5% and argue that the petitioners should be relegated to the statutory appeal process.

3. Taxability of Artificially Created Light Energy (ACLE):
The petitioners argue that ACLE is not goods and cannot be equated with electricity. They cite the Supreme Court's decision in Bharat Sanchar Nigam Ltd. v. Union of India, which held that electromagnetic waves are not goods and thus not subject to sales tax. The respondents counter that ACLE has all the attributes of goods and is taxable under section 4(1)(b) of the VAT Act. They rely on technical opinions and previous judgments to support their position.

4. Allegations of Bias and Legal Malice:
The petitioners allege bias and legal malice against the Deputy Commissioner, arguing that he has acted without jurisdiction and in disregard of the Supreme Court's judgment in Bharat Sanchar Nigam Ltd. They contend that the Deputy Commissioner has participated in proceedings and expressed opinions that compromise his impartiality. The respondents deny these allegations, asserting that the Deputy Commissioner has acted objectively and in accordance with the law.

5. Applicability of Previous Supreme Court Judgments:
The petitioners argue that the issue is squarely covered by the Supreme Court's judgment in Bharat Sanchar Nigam Ltd. v. Union of India, which held that similar transactions do not constitute the sale of goods. They contend that the reassessment orders are unsustainable in light of this precedent. The respondents, however, argue that the judgment in Bharat Sanchar Nigam Ltd. is open-ended and does not preclude the taxability of ACLE. They maintain that the matter involves complex scientific and technological questions that require further investigation and cannot be resolved solely based on legal principles.

Conclusion:
The court ultimately decides that the petitions involve complicated scientific and technological questions that fall within the realm of factual controversies. It emphasizes the need for the petitioners to exhaust the statutory appeal remedies before resorting to writ petitions. The court also finds no merit in the allegations of bias against the Deputy Commissioner, noting that he has passed similar reassessment orders for different assessment periods and that his participation in certain proceedings does not compromise his impartiality. The court dismisses the writ petitions, directing the petitioners to pursue their appeals through the appropriate statutory channels.