2021 (7) TMI 331 - HC - VAT and Sales Tax

Exercise of erroneous Jurisdiction - provisions of the Tamil Nadu Value Added Tax Act, 2006 erroneously applied by AO - Case of petitioners is that when the impugned orders are passed with jurisdictional error and based on erroneous application of law, then a writ petition is to be entertained without exhausting the statutory appellate remedy provided under the Act itself - HELD THAT - 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 - 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. 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 - Petition disposed off.

Summary

Issues Involved:
1. Erroneous application of the amended provisions of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act).
2. Jurisdictional error in passing assessment orders.
3. Necessity of exhausting statutory appellate remedies before filing writ petitions.

Issue-wise Detailed Analysis:

1. Erroneous Application of the Amended Provisions of the TNVAT Act:
The petitioners contended that the Assistant Commissioner applied the amended Section 19 of the TNVAT Act, introduced by Tamil Nadu Act 13 of 2015, to assessment years that predated the amendment (effective from 29.01.2016). The pre-amended Section 19 allowed input tax credit for tax paid or payable by a registered dealer on purchases of taxable goods. The proviso required the dealer to establish that the tax on such purchases had been paid in the prescribed manner. The petitioners argued that the assessment orders should have been based on the pre-amended provisions, and the erroneous application of the amended law constituted a jurisdictional error.

2. Jurisdictional Error in Passing Assessment Orders:
The petitioners claimed that the assessment orders were passed without proper application of mind and jurisdiction, as the amended provisions were wrongly applied to periods before the amendment. They argued that this fundamental error warranted the filing of writ petitions without exhausting the statutory appellate remedies, as the orders were passed with a jurisdictional error.

3. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized the importance of exhausting statutory appellate remedies before approaching the High Court. Section 51 of the TNVAT Act provides for an appeal to the Appellate Deputy Commissioner, detailing the procedures and powers of the appellate authority, including confirming, reducing, enhancing, or annulling assessments or penalties. Section 58 provides for further appeal to the Appellate Tribunal, and Sections 59 and 60 allow for appeals and revisions to the High Court. The court reiterated that exhausting appellate remedies is the rule, and dispensing with them is an exception, applicable only in cases of imminent urgency or irreparable damage.

The court cited several judgments to support the principle that writ petitions should not be entertained if an effective alternative remedy is available. The appellate authorities are competent to correct any legal errors, including jurisdictional issues, and provide a thorough adjudication based on original records and evidence. The court stressed the institutional respect for appellate authorities and the separation of powers, cautioning against routine interference by the High Court in matters that should be addressed through statutory appellate procedures.

Conclusion:
The court concluded that the petitioners must exhaust the statutory appellate remedies provided under the TNVAT Act. The appellate authorities are empowered to address all legal and jurisdictional issues raised by the parties. The court directed the petitioners to approach the appellate authority, which should condone any delay in filing the appeal and adjudicate the matter on merits, ensuring that all parties are given a fair opportunity to present their case. The writ petitions were disposed of with these observations, and the connected miscellaneous petitions were closed.