2019 (7) TMI 729 - HC - VAT and Sales Tax

Disallowance of ITC - petitioner claimed refund - Jurisdiction of Court under Article 226 - rank perversity - alternative appeal remedy - HELD THAT - The petitioner ought to be directed to work out the remedies against Exts.P6 and P6(a) before the appellate authority. This Court after taking note of bare details exhibited in Exts.P1, P4, P5 and P6 was also of the view that without further examination the ground of perversity raised in the writ petition could be considered merits decided. But as rightly pointed out by the learned Government Pleader the exercise were for the limited purpose of finding out the ground of perversity, this Court may encroach into the function of an appellate authority where the facts threadbare are considered, thereafter principle of law decided. The petitioner is given liberty to file appeal within the period of limitation prescribed by the statute and also file an application seeking stay of the order in Ext.P6 - directed to maintain status quo as on date vis-a-vis Ext.P6 for a period of two months - Petition disposed off.

Summary

Issues:
Challenge to legality and jurisdiction of orders Exts.P6 and P6(a), Disallowance of input tax credit on interstate stock transfer, Grounds of perversity in the orders, Jurisdiction of High Court under Article 226, Availability of remedy through appeal, Permissibility of judicial review in the present case.

Analysis:
The petitioner contested the legality and jurisdiction of orders Exts.P6 and P6(a) as completely illegal, beyond jurisdiction, and suffering from perversity. The dispute arose from the disallowance of input tax credit on interstate stock transfer as per the third proviso to Section 11(3) of the KVAT Act, 2005. The issue centered around the petitioner's claim of input tax credit amounting to ?2,69,27,728, which was contested by the respondent based on the annual return and audit statements. The respondent's order Exts.P6 and P6(a) upheld the disallowance of the claimed credit, leading to the filing of the writ petition challenging these decisions.

The petitioner, through counsel, argued that the orders suffered from rank perversity, emphasizing discrepancies in the input tax credit amount claimed. While acknowledging the availability of appeal as a remedy, the petitioner invoked the High Court's jurisdiction under Article 226 due to the perceived perversity in the respondent's orders. On the other hand, the Government Pleader opposed the writ prayers, contending that the issues raised fell within the scope of appeal and should be addressed by the appellate authority. The Court acknowledged the need for further examination to determine the alleged perversity but recognized the potential for appeal to address the matter comprehensively.

In its judgment, the Court allowed the petitioner to file an appeal within the statutory limitation period and seek a stay of the order in Ext.P6. The parties were directed to maintain the status quo for two months to facilitate the appeal process. The Court highlighted the importance of appellate review in addressing the complex issues raised in the case, emphasizing the need for a thorough examination of facts and legal principles by the appellate authority. The judgment aimed to protect the petitioner's interests while ensuring a comprehensive review of the dispute through the appellate process, thereby balancing the need for judicial intervention with the statutory remedy of appeal.