2010 (7) TMI 1072 - HC - VAT and Sales Tax

Summary

Issues involved: Notification and demand for penalty to a Value Added Tax dealer u/s 53(3) of the Andhra Pradesh Value Added Tax Act, 2005.

The petitioner, a company dealing in edible oils, challenged a notification imposing a penalty of Rs. 20,76,106 under Section 53(3) of the VAT Act for claiming excess input tax credit during the audit period. The petitioner contended that the notice lacked reasons for the proposed penalty and argued that Section 53(3) can only be invoked in cases of fraud or willful neglect. The petitioner cited various legal precedents to support their objections. The first respondent, after considering the objections, upheld the penalty, stating that the petitioner did not maintain a separate stock register for purchases made using a DEPB license and had under-declared tax. The petitioner's counsel argued that the input credit was claimed in accordance with the VAT Act and that imposing a penalty equal to the tax without allegations of fraud or willful neglect is without jurisdiction. The Special Standing Counsel for Commercial Taxes argued that the appeal remedy provided by the statute bars the writ petition, as under-declaration of tax attracts Section 53(3) of the VAT Act.

The High Court emphasized the importance of exhausting alternative remedies before resorting to a writ petition, citing legal precedents. While acknowledging exceptions where a writ petition can be filed, such as for Fundamental Rights enforcement or jurisdictional issues, the Court highlighted the discretionary nature of writ jurisdiction. Referring to past judgments, the Court reiterated that when a statute provides a complete redressal mechanism, parties should utilize those remedies before approaching the High Court directly. The Court declined to entertain the writ petition, emphasizing the need to follow established legal principles and exhaust appellate avenues before seeking writ relief.

In line with the precedent set by the three Judge Bench in C.A. Abraham, the Court declined to delve into the merits of the case regarding tax under-declaration and excess input tax credit. The Court emphasized that such matters should be raised before the appropriate appellate or revisional forum, rather than through a writ petition. Consequently, the writ petition was dismissed at the admission stage, reinforcing the principle of exhausting alternative remedies before seeking writ relief.