2021 (6) TMI 1138 - HC - VAT and Sales Tax

Maintainability of petition - availability of appellate remedy - Validity of assessment order - erroneous application (exercise of Jurisdiction) of provisions of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT - As far as the judgment of the Hon'ble Supreme Court of India in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT is concerned, as rightly pointed out by the learned Government Advocate appearing on behalf of the respondents, the matter went to the Hon'ble Apex Court by way of regular appeal and the Hon'ble Supreme Court of India, while adjudicating the final orders passed by the Appellate Tribunal, formed an opinion that the issuance of show cause notice itself was by an improper authority. Thus, by citing the said finding, the appellate remedy otherwise provided under the Statute cannot be dispensed with, and in the event of accepting the said contention, in all such cases, every litigant will approach the High Court by way of writ petition bypassing the appellate remedy, which is not desirable and cannot be accepted. 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. However, the Courts are expected to ensure that all such legal grounds available to the parties are adjudicated before the proper forum and only after exhausting the statutory remedies, writ petitions are to be entertained. 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. The delay, if any occurred, for filing the appeal, shall be condoned by the appellate authority and the appeal shall be taken on file to be adjudicated on merits and in accordance with law and by affording opportunity to all the parties concerned. The writ petition disposed off.

Summary

Issues Involved:
1. Erroneous application of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) by Assessing Officers.
2. Jurisdictional error in the assessment orders.
3. Necessity of exhausting statutory appellate remedies before filing a writ petition.
4. Judicial review under Article 226 of the Constitution of India.

Detailed Analysis:

1. Erroneous Application of the TNVAT Act:
The petitioners challenged the assessment orders passed by the Commercial Tax Officer, arguing that the Assessing Officers erroneously applied the provisions of the TNVAT Act. Specifically, they applied the amended Section 19, which came into effect on 29.01.2016, to assessment years that fell prior to this amendment. The pre-amendment provision under Section 19 allowed input tax credit for the amount of tax paid or payable under the TNVAT Act by the registered dealer to the seller on purchases of taxable goods specified in the First Schedule. The petitioners contended that the amended provisions should not apply to their cases, and the Assessing Officers' actions constituted a jurisdictional error.

2. Jurisdictional Error in the Assessment Orders:
The petitioners argued that the assessment orders were passed without proper application of mind and involved a jurisdictional error. They claimed that the erroneous application of the amended Section 19 to periods before its enactment rendered the orders invalid. The court noted that even if there was an erroneous application of the provisions, the appellate authority is empowered to correct such errors and consider all legal grounds raised by the parties.

3. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized that exhausting the statutory appellate remedy is the rule, while dispensing with it is an exception. The TNVAT Act provides an appeal mechanism, including appeals to the Appellate Deputy Commissioner (Section 51), Appellate Tribunal (Section 58), and the High Court (Sections 59 and 60). The court highlighted that the appellate authority is the final fact-finding authority, and its findings are crucial for the High Court to exercise judicial review effectively. The court reiterated that the power of judicial review under Article 226 is to scrutinize the processes and procedures adopted by competent authorities, not to adjudicate on mixed questions of fact and law.

4. Judicial Review under Article 226 of the Constitution of India:
The court discussed the principles of judicial review under Article 226, noting that it is meant to scrutinize the processes and procedures adopted by competent authorities. The court cannot entertain an adjudicative process regarding mixed questions of fact and law based solely on affidavits filed in writ petitions. The court also emphasized the importance of institutional respect and the need to trust the appellate authorities created under the statute. The court cited several judgments to support 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 are bound to exhaust the statutory appellate remedy provided under the TNVAT Act. The court directed the petitioners to approach the appellate authority by filing an appeal or revision, and any delay in filing the appeal should be condoned by the appellate authority. The writ petitions were disposed of with these observations and directions, and no costs were awarded.