2014 (9) TMI 373 - HC - VAT and Sales Tax

Vacation/modification of the interim order - Valuation - deduction from works contract value - Tripura Value Added Tax Act, 2004 - Held that - Rule is based on public policy but the motivating factor is the existence of a parallel jurisdiction in another court. But the apex court has also held in C.B. Gosain Bhan v. State of Orissa 1963 (4) TMI 2 - SUPREME Court , that even when an alternative remedy has been availed of by a party but not pursued that the party could prosecute the proceeding under article 226 for the same relief. This court has also held that when a party has already moved the High Court under article 226 and failed to obtain relief and then moved an application under article 32 before this court for the same relief, normally the court will not entertain the application under article 32. In absence of any prescription or any other charges in the statute the Revenue cannot by way of exercise of the powers as provided under section 87 of the Tripura Value Added Tax Act cannot make any law in the form of the rule which stands contrary to what has been provided in the Act. Section 5(2)(c) of the Tripura Value Added Tax Act, 2004 is one of such rule which is entirely unworkable and vague. He has further submitted that in the present writ petition the horizon is much wider for consideration and it is different in nature. For non-disclosure of pendency of the previous writ petition or the interim order passed in connection therewith, it cannot be said there have been suppression of material facts. It cannot be denied that the writ petitioner has suppressed some facts, which were apparently material to the dispute as raised in the present writ petition. Therefore, the interim order dated March 12, 2013, stands modified and the direction that until further order the impugned memorandum dated June 25/30, 2005, the notification dated September 21, 2011, the notification dated November 26, 2011 and the notification dated February 1, 2011, shall remain suspended is hereby vacated. However, that part of the impugned assessment order for the years 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12 whereunder in absence of any books of accounts the value towards the labour service charges and the other like charges have been assessed and deducted from the gross bill as per the amended rule 7A to determine the taxable turnover shall remain suspended till disposal of the writ petition. However, the Revenue shall be at liberty to redraw the demand notice in view of this order and also to proceed with the attachment proceeding in terms of the redrawn assessment order as indicated. - Decided in favour of Revenue.

Issues Involved:
1. Alleged suppression of material facts and fraud by the writ petitioner.
2. Conflict between interim orders dated March 22, 2013, and September 18, 2012.
3. Legality of tax deductions under the Tripura Value Added Tax Act, 2004.
4. Maintainability of the writ petition in light of available statutory remedies.

Detailed Analysis:

1. Alleged Suppression of Material Facts and Fraud by the Writ Petitioner:
Dr. Saraf, learned senior counsel for the Revenue, argued that the interim order dated March 22, 2013, was obtained through fraud and suppression of material facts. The petitioner allegedly failed to disclose the pendency of a previous writ petition (W.P. (C) No. 440 of 2012) and the interim order dated September 18, 2012. Dr. Saraf contended that this suppression misled the court and amounted to criminal contempt, citing various precedents including K.D. Sharma v. Steel Authority of India Limited and All India State Bank Officers Federation v. Union of India, which emphasize the necessity for petitioners to disclose all material facts fully and fairly.

2. Conflict Between Interim Orders Dated March 22, 2013, and September 18, 2012:
The court acknowledged that the interim order dated March 22, 2013, conflicted with the order dated September 18, 2012, which permitted tax deductions at eight percent on taxable turnover. The court noted that the writ petitioner had indeed suppressed some material facts, leading to this conflict. Consequently, the court vacated the suspension of the impugned memorandum and notifications but maintained the suspension of the assessment order for specific years where deductions were calculated under the amended rule 7A.

3. Legality of Tax Deductions Under the Tripura Value Added Tax Act, 2004:
The writ petitioner challenged the legality of tax deductions under the Tripura Value Added Tax Act, 2004, particularly the retroactive application of rule 7A. The petitioner argued that deductions for labor and services were calculated based on the amended rule 7A, which was not in force before its publication on August 1, 2012. The court found merit in this argument and suspended the assessment orders for the years 2007-08 to 2011-12, where deductions were made under the amended rule 7A.

4. Maintainability of the Writ Petition in Light of Available Statutory Remedies:
Dr. Saraf argued that the writ petition was not maintainable due to the availability of an effective statutory remedy under section 69 of the Tripura Value Added Tax Act, 2004. He contended that the petitioner should have pursued an appeal instead of approaching the court. However, Mr. Deb, counsel for the petitioner, argued that the writ petition was maintainable under the principles laid out in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, which allows for writ petitions in cases of violation of fundamental rights, breach of natural justice, or where the order is wholly without jurisdiction. The court left this issue open, noting that the impact of suppression needed to be appreciated in terms of the reliefs sought in the writ petition.

Conclusion:
The court modified the interim order dated March 22, 2013, by vacating the suspension of the impugned memorandum and notifications but maintained the suspension of the assessment order for specific years. The court expressed displeasure at the writ petitioner's suppression of material facts but allowed the writ petition to proceed for substantial justice. The petition for modification or vacation of the interim order was disposed of accordingly.

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