2016 (6) TMI 946 - HC - VAT and Sales Tax

Input Tax Credit - purchases from the unregistered dealers - UP VAT - production of genuine duty paying documents - alternative remedy - Held that - when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory remedy. - In the instant case the petitioner has a statutory and efficacious alternative remedy of filing an appeal under Section 55 of the VAT Act against the order of assessment in which all the reliefs can be granted to the petitioner as have been sought in this petition. - Decided against the petitioner.

Summary

Issues:
Quashing of assessment order under U.P. Value Added Tax Act for the assessment year 2012-13.

Analysis:
The petitioner sought to quash the assessment order dated 26 March 2016 under Section 28(2)(i) of the U.P. Value Added Tax Act for the assessment year 2012-13. The petitioner, a registered dealer, purchased goods from 17 registered dealers within the State of U.P. and claimed input tax credit. However, the Assessing Officer enhanced the purchases by a significant amount, leading to a substantial liability on the petitioner. The petitioner argued that the transactions were made through the bank and should not be disbelieved. The respondent highlighted the availability of a statutory appeal remedy under Section 55 of the VAT Act. The petitioner contended that when an assessment order is patently illegal, a writ petition under Article 226 of the Constitution can be entertained.

The High Court referred to the Supreme Court's decision in Commissioner of Income Tax & Ors. Vs. Chhabill Dass Agarwal, emphasizing that the non-entertainment of petitions under writ jurisdiction when an alternative remedy is available is a rule of self-imposed limitation. The Court recognized exceptions to this rule, such as when the statutory authority acts in defiance of fundamental principles or natural justice. The Court held that the Act provided a complete machinery for tax assessment and redressal, and the petitioner should have pursued the appeal remedy under the statute. The Court cited the importance of an effective remedy and the futility of appealing to the same authority. The Court concluded that the writ petition should not have been entertained as the petitioner failed to demonstrate the ineffectiveness of the statutory remedy.

The Supreme Court's decision in Union of India & Ors. Vs. Major General Shri Kant Sharma & Anr. reiterated the principle that when a statutory forum exists for grievance redressal, a writ petition should not be entertained, echoing the precedence set in earlier cases. The Court emphasized the importance of following the statutory remedy available to the petitioner. In the present case, the petitioner had a statutory and efficacious alternative remedy of filing an appeal under Section 55 of the VAT Act, where all reliefs sought in the petition could be granted. Consequently, the High Court dismissed the petition, citing the availability of a proper statutory remedy for the petitioner.