2011 (7) TMI 1063 - HC - VAT and Sales Tax

Validity of the order passed by the Commissioner of Commercial Taxes, the fourth respondent herein, conferring jurisdiction on the first respondent to reassess the petitioner under section 39(1) of the Karnataka Value Added Tax Act, 2003 ( the Act , for short) and to impose penalty and demand payment of interest questioned Held that - It is clear from the order at annexure A dated February 24, 2010 that the Commissioner of Commercial taxes has authorised the first respondent to reassess the petitioner under sub-section 39(1) of the Act as also to levy penalty and demand payment of interest. Therefore, there is no merit in the contention of the petitioner that the order at annexure A is invalid or that the orders of reassessment and orders of penalty passed by the first respondent are without jurisdiction. There is no reason why this court should entertain these writ petitions when the Act contains a detailed mechanism for the redressal of the grievances of the petitioner especially when the matter involves public money. It is, also well-settled that the mere fact that an assessee has to deposit the amount of tax while filing an appeal cannot be said to be a good ground to bypass the remedy provided under the Act. There must be something more in a. case to warrant the entertainment of a petition under article 226, something going to the root of the jurisdiction of the taxing authority. Appeal dismissed.

Summary

Issues:
1. Validity of the order authorizing reassessment and penalty
2. Jurisdiction of the High Court in tax matters and availability of alternative remedies

Issue 1: Validity of the order authorizing reassessment and penalty
The petitioner challenged the order conferring jurisdiction on the first respondent to reassess under section 39(1) of the Karnataka Value Added Tax Act, 2003, and impose penalty and interest. The petitioner argued that the reassessment was unwarranted as correct returns were filed and accepted previously. The respondents contended that reassessment was based on the first respondent's recommendation of tax evasion, authorized by the fourth respondent. The High Court analyzed the order of reassessment and penalty, noting observations made during an inspection in 2008. The key question was the validity of the order at annexure A, authorizing reassessment. The Court referred to Section 39(1) of the Act, defining the "prescribed authority" as an officer authorized to perform assigned functions. The order at annexure A authorized the first respondent for reassessment, penalty, and interest. The Court held the order valid, rejecting the petitioner's argument against the jurisdiction of the first respondent.

Issue 2: Jurisdiction of the High Court in tax matters and availability of alternative remedies
The Court addressed the validity of the orders of reassessment and penalty dated April 13, 2011, emphasizing their appealability under section 62 of the Act. It highlighted the principle that the High Court should not entertain petitions against tax orders when statutory appeal remedies exist. Citing the need for circumspection, the Court referred to the Supreme Court's stance on exhausting statutory remedies before approaching the High Court. The Court underlined that the mere requirement to deposit tax for an appeal does not justify bypassing statutory remedies unless there are jurisdictional issues. Referring to precedents, the Court emphasized that Article 226 should not circumvent statutory procedures, especially in revenue matters with available statutory remedies. Consequently, the Court dismissed the writ petitions but allowed the petitioner to challenge the orders by filing appeals within a specified period. The order at annexure A was sustained, and the Court dismissed related petitions, emphasizing the importance of exhausting statutory remedies in tax matters.

In conclusion, the High Court upheld the validity of the order authorizing reassessment and penalty, emphasizing the availability of statutory appeal remedies in tax matters and the need to exhaust such remedies before seeking relief through writ petitions.