2012 (1) TMI 152 - HC - VAT and Sales Tax

Purchase and consumption of tobacco in the manufacturing of tobacco products are unreasonable and disproportionate to the extent of its maximum consumption limit - maintainability of the writ petition in view of alternative remedy Held that - The allegations contained in the impugned orders require adjudication on investigation of the disputed facts. The materials on record cannot lead to an interference that the allegations in the show-cause notices are wholly non-existent and that there is no foundation or basis of the allegations. In the writ petitions there is no challenge as to the vires of the statutory provisions governing the matter nor there is any question regarding violation of fundamental rights involved in the said proceedings. On examination of the materials on record, it cannot be said that the impugned orders are ex facie nullity and without jurisdiction. The basic facts on the basis of which the authority has assumed jurisdiction an the subject-matter, in my considered view, cannot be said to be on non-existent. The impugned orders, under the circumstances, cannot be said to be unauthorised and without jurisdiction. Writ petitions are dismissed without being admitted upholding the plea of non-maintainability of the writ petitions as has been raised by the respondents.

Issues Involved:
1. Maintainability of writ petitions under Article 226 of the Constitution of India.
2. Jurisdiction and legality of the impugned show-cause notice, reassessment order, and notice of demand under the Assam Value Added Tax Act, 2003.
3. Availability and adequacy of alternative remedies under Section 79 of the Assam Value Added Tax Act, 2003.

Issue-wise Detailed Analysis:

1. Maintainability of Writ Petitions:
The primary issue argued was whether the writ petitions are maintainable under Article 226 of the Constitution of India, given the availability of an alternative remedy under Section 79 of the Assam Value Added Tax Act, 2003. The petitioners contended that the writ petitions are maintainable due to the lack of bona fide exercise of power and jurisdictional errors in the impugned orders. They relied on several Supreme Court decisions, including Madhya Pradesh Industries Ltd. v. Income-tax Officer, State of Tripura v. Manoranjan Chakraborty, and Ram and Shyam Company v. State of Haryana, which emphasized that the High Court's jurisdiction under Article 226 is discretionary and not ousted by the existence of an alternative remedy, especially in cases of jurisdictional errors or violation of principles of natural justice.

On the other hand, the respondents argued that the petitioners should first avail the alternative remedy provided under the Act, as the impugned assessment orders did not suffer from jurisdictional errors or violate the principles of natural justice. They cited the decision in Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax, Calcutta, to emphasize that the belief formed by the assessing officer was reasonable and based on material grounds.

2. Jurisdiction and Legality of the Impugned Orders:
The petitioners challenged the jurisdiction of the Assistant Commissioner of Taxes in issuing the show-cause notice and completing the reassessment order, arguing that there were no materials to form a belief of any escaped turnover. They contended that the impugned orders were illegal, without jurisdiction, and not tenable in law. The respondents, however, maintained that the assessing authority had formed a bona fide belief based on the examination of accounts, audit reports, and the audited balance sheet, which indicated that the petitioner-company did not separately show the consumption of tobacco, leading to the conclusion that part of the turnover had escaped assessment.

The court, after examining the materials on record, found that the impugned assessment order was based on reasonable grounds and was not arbitrary or capricious. The court held that the belief and opinion formed by the assessing authority were in good faith and had a rational connection to the formation of the belief, thereby sustaining the impugned orders.

3. Availability and Adequacy of Alternative Remedies:
The court emphasized that proceedings under Article 226 are not a substitute for proceedings initiated under the Act. It noted that Section 79 of the Assam Value Added Tax Act, 2003, provides an alternative and efficacious remedy by way of an appeal to the appellate authority. The court observed that the allegations in the impugned orders required adjudication on investigation of disputed facts, which could be adequately addressed through the statutory appeal process.

The court referred to several Supreme Court decisions, including Union of India v. Hindalco Industries, Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, and Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., which reiterated that the existence of an alternative remedy does not oust the jurisdiction of the High Court under Article 226 but should be considered as a matter of judicial discretion.

Conclusion:
The court dismissed the writ petitions without admission, upholding the plea of non-maintainability raised by the respondents. It directed the petitioners to pursue their remedy under the Act, emphasizing that the appellate authority should consider the appeals on their own merits without being influenced by the observations made in the judgment. The court reiterated that the High Court's jurisdiction under Article 226 should not be used to bypass statutory procedures unless there are extraordinary circumstances.

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