2018 (6) TMI 976 - HC - VAT and Sales Tax

Validity of Assessment Orders - maintainability of petition - statutory remedy of appeal - the input tax credits availed by the petitioner were reversed, apart from levying penalty under Section 27(4)(ii) of the Act - whether the Writ Petitions have to be entertained, permitting the petitioner to bye-pass the statutory remedy available under the Act? - Held that - The settled legal position is that under normal circumstances, a party should not be permitted to bye-pass the statutory remedy available under the Act. This is more so when a case arises out of a taxation statute. No doubt, there are exceptions to this Rule and the Hon ble Supreme Court has carved out these exceptions and under what circumstances a party can be permitted to bye-pass the statutory remedy available under an enactment and these exceptions cannot be stated to be fully exhaustive, but are broad parameters laying down circumstances under which the Court can exercise its extraordinary jurisdiction under Article 226 of the Constitution of India. Some of such exceptions being total lack of jurisdiction, violation of principles of natural justice, an order devoid of reasons, an order which suffers from perversity and unreasonableness, an order passed by an incompetent authority etc. The reason assigned by the learned counsel for the petitioner to bye-pass the appellate remedy available under the Act is not convincing. Unless and until the petitioner is able to factually establish that they had, infact carried on business in a particular premises from a particular date and shifted from the premises to an another premises, the question of applying the legal principles in various decisions relied on by the petitioner, does not arise. The burden of proof lies on the petitioner to establish that they had been functioning at a particular location, which is the registered place and shifted to a different venue from 05.11.2014 and thereafter, shifted to another venue on 20.07.2015. This Court cannot dorn the role of an Assessing Officer or the Appellate Authority and peruse the statement of accounts, details of sales turnover and to examine the conduct of the assessee. This Court is not inclined to entertain the Writ Petitions on the ground that the petitioner has an effective alternate remedy under the Act - petition dismissed being not maintainable.

Summary

Issues Involved:
1. Maintainability of the Writ Petitions.
2. Alleged discrepancies in input tax credit claims and stock maintenance.
3. Non-response to revision notices and reversal of input tax credits.
4. Alleged operation from an unregistered place of business.
5. Availability and efficacy of alternate statutory remedies.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petitions:
The primary issue considered was whether the Writ Petitions should be entertained, allowing the petitioner to bypass the statutory remedy available under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The court reiterated the settled legal position that a party should not normally bypass the statutory remedy, especially in taxation matters. Exceptions to this rule include total lack of jurisdiction, violation of principles of natural justice, orders devoid of reasons, orders suffering from perversity and unreasonableness, or orders passed by an incompetent authority. The court found that the petitioner had an effective alternate remedy under the Act, and the reasons provided to bypass this remedy were unconvincing.

2. Alleged discrepancies in input tax credit claims and stock maintenance:
The petitioner faced allegations of discrepancies noticed during an inspection by the Enforcement Wing, including issues with input tax credit claims not maintained in the carry forward register, unregistered place of business, lack of stock at the registered place, and goods stored at an unregistered location. The respondent provisionally concluded that the goods were unaccounted and not tax suffered, leading to an estimation and a show cause notice for penalty under Section 27(3)(c) of the TNVAT Act. The petitioner contended that proper explanations were provided and that the goods were not stored in an unauthorized place of business.

3. Non-response to revision notices and reversal of input tax credits:
The petitioner did not file any objections to the revision notices. Consequently, the respondent confirmed the proposals in the notices, reversed the input tax credits availed by the petitioner, and levied a penalty under Section 27(4)(ii) of the Act. The court noted that the petitioner failed to respond despite sufficient opportunity and could not claim violation of natural justice principles. The petitioner’s failure to substantiate the claim of the partner’s illness further weakened their position.

4. Alleged operation from an unregistered place of business:
The petitioner’s claim of informing the respondent about the change of godown was scrutinized. The court found inconsistencies in the petitioner’s letters regarding the dates of opening and shifting godowns. The inspection occurred on 23.07.2015, and the letter for change of branch address was given on 31.07.2015, after the inspection. The court noted that there was no clear record of the dates when the new godowns commenced operations, and the petitioner’s documents appeared self-serving and afterthoughts.

5. Availability and efficacy of alternate statutory remedies:
The court emphasized that the petitioner had an effective alternate remedy under the Act and should have responded to the revision notices with supporting documents. The petitioner’s argument that the appellate remedy was not efficacious was not convincing. The court stated that it could not act as an Assessing Officer or Appellate Authority to examine the petitioner’s accounts and sales turnover. The petitioner was directed to file an appeal before the Appellate Authority within 30 days, and the authority was instructed to entertain the appeal without rejecting it on the ground of limitation.

Conclusion:
The Writ Petitions were dismissed as not maintainable, with directions to the petitioner to file an appeal before the Appellate Authority within 30 days. The court left the merits of the case open for the Appellate Authority to decide. No costs were imposed, and the connected Miscellaneous Petitions were closed.