2021 (6) TMI 1064 - HC - VAT and Sales Tax

Validity of assessment order - exercise of jurisdiction erroneously - errorneous application of provisions of the Tamil Nadu Value Added Tax Act, 2006 by Assessing Officers - HELD THAT - Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated - The growing practice in the High Court is to file writ petitions under Article 226 of the Constitution of India without exhausting the statutory remedies provided under the Act. The points raised in this regard are statutory violations. However, even such statutory violations can be dealt with by the Appellate authorities or the Appellate Tribunals. This apart, in a writ petition, if such orders are passed with jurisdictional errors and quashed without any remand, then an injustice would be caused to the very spirit of the statute enacted for the benefit of the public at large. Thus, Courts are expected to be cautious, while granting exoneration of liability merely on the ground of jurisdictional errors, if any committed by the authorities competent. The authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. Liability and jurisdictional errors are distinct factors, and therefore, Courts are expected to provide an opportunity to the Department to decide the liability on merits and in accordance with law with reference to the provisions of the Act and Rules and guidelines issued by the Department. Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise - the Courts shall not provide unnecessary opportunities to the assessee to escape from the liability merely on the ground of jurisdictional error, which is rectifiable. This Court has no hesitation in arriving a conclusion that the petitioners are bound to exhaust the statutory appellate remedy as contemplated under the provisions of the TNVAT Act. Thus, the petitioners are at liberty to approach the appellate authority by filing appeal/revision and by following the procedures contemplated - Petition disposed off.

Summary

Issues Involved:
1. Erroneous application of the amended Section 19 of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) to assessment years prior to the amendment.
2. Jurisdictional error and non-application of mind by Assessing Officers.
3. Necessity of exhausting statutory appellate remedies before approaching the High Court.

Detailed Analysis:

1. Erroneous Application of the Amended Section 19 of the TNVAT Act:
The petitioners challenged the assessment orders, arguing that the Assessing Officers incorrectly applied the amended Section 19 of the TNVAT Act to assessment years prior to the amendment on 29.01.2016. The pre-amended provision under Section 19 allowed input tax credit for tax paid or payable by a registered dealer on purchases of taxable goods specified in the First Schedule. The petitioners contended that the amended provision should not apply to periods before its enactment, thus leading to a jurisdictional error in the assessment orders.

2. Jurisdictional Error and Non-application of Mind by Assessing Officers:
The petitioners argued that the impugned orders were passed without proper application of mind, resulting in a jurisdictional error. They claimed that the Assessing Officers erroneously implemented the amended Section 19 for periods before the amendment, thereby exercising their jurisdiction incorrectly. This lack of due diligence and incorrect application of law warranted the filing of writ petitions without exhausting the statutory appellate remedies.

3. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized the importance of exhausting statutory appellate remedies provided under the TNVAT Act before approaching the High Court. Section 51 of the TNVAT Act provides for an appeal to the Appellate Deputy Commissioner, with detailed procedures for filing and verifying appeals. Similarly, Section 58 allows for appeals to the Appellate Tribunal, and Sections 59 and 60 provide for further appeals and revisions to the High Court. The court noted that appellate authorities are the final fact-finding bodies and their findings are crucial for effective judicial review by the High Court under Article 226 of the Constitution of India.

The court highlighted that the power of judicial review is to scrutinize the processes and procedures adopted by competent authorities, not to adjudicate on mixed questions of fact and law based solely on affidavits. The appellate authorities are empowered to correct any erroneous application of provisions and consider all legal grounds raised by the parties. The court cited several judgments reinforcing the principle that writ petitions should not be entertained if an efficacious alternative remedy is available, except in exceptional circumstances involving gross injustice or violation of fundamental rights.

Conclusion:
The court concluded that the petitioners must exhaust the statutory appellate remedies before approaching the High Court. It directed the petitioners to file appeals/revisions with the appellate authority, which should condone any delay and adjudicate the appeals on merits. The writ petitions were disposed of with these observations and directions, emphasizing the importance of institutional respect and the proper use of appellate mechanisms provided under the statute.