2009 (3) TMI 1097 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the revisional authority to exercise suo motu power of revision.
2. Validity of the revisional authority's action based on previously rejected audit objections.
3. Maintainability of the writ petition without exhausting alternative statutory remedies.

Detailed Analysis:

1. Jurisdiction of the Revisional Authority to Exercise Suo Motu Power of Revision:
The petitioner challenged the suo motu revisional orders dated 31st December 2007, arguing that the revisional authority lacked jurisdiction to exercise its suo motu power of revision. The revisional authority had revised the re-assessment orders on the grounds that the allowance of the claim of penultimate sales under Section 5(3) of the CST Act by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. However, the court noted that the pre-requisite for exercising jurisdiction under Rule 80 of the OST Rules read with Rule 22 of the CST (O) Rules is that the order must be both erroneous and prejudicial to the interest of the Revenue. The court found that the revisional authority did not independently apply its mind and mechanically accepted the objections raised by the A.G. Audit Party without assigning any reasons for rejecting the explanations furnished by the petitioner and accepted by the Assessing Officer. The revisional authority's order was thus found to be vitiated due to lack of independent reasoning and failure to point out errors in the Assessing Officer's orders.

2. Validity of the Revisional Authority's Action Based on Previously Rejected Audit Objections:
The court examined whether the revisional authority could exercise jurisdiction based on the same audit objections that had been rejected by the Assessing Officer. The revisional authority relied on the audit objections which stated that the goods sold by the petitioner were not exported in the same form and that the sales were for home consumption, not for export purposes. The Assessing Officer had previously rejected these objections, providing detailed reasons and verifying that the goods were indeed exported. The court held that the revisional authority could not exercise its jurisdiction merely because it did not agree with the view of the Assessing Officer, especially when the view taken by the Assessing Officer was sustainable in law. The court emphasized that the revisional authority must provide cogent reasons and cannot revise an order simply based on a difference of opinion.

3. Maintainability of the Writ Petition Without Exhausting Alternative Statutory Remedies:
The court addressed whether the writ petition was maintainable without exhausting alternative remedies, such as an appeal before the Commissioner of Sales Tax. The court noted that if a court or authority wrongly assumes the existence of a jurisdictional fact, the order can be questioned by a writ of certiorari. The court cited the Hon'ble Supreme Court's judgment in Arun Kumar and Ors. v. Union of India and Ors., which held that a jurisdictional fact must exist before a court or authority assumes jurisdiction. The court also referred to the judgment in State of H.P. and Ors. v. Gujarat Ambuja Cement Ltd. and Anr., which stated that the rule of alternative remedy is a rule of policy and discretion. The court concluded that the writ petition was maintainable as the petitioner challenged the jurisdiction of the revisional authority and the exercise of suo motu power based on previously rejected audit objections.

Conclusion:
The court quashed the suo motu revisional orders dated 31st December 2007 and the notice dated 19th February 2008, finding that the revisional authority acted without jurisdiction and failed to provide independent reasoning for revising the Assessing Officer's orders. The writ petition was allowed, and the orders of the revisional authority were declared illegal and without jurisdiction.