2021 (8) TMI 1071 - HC - VAT and Sales Tax

Jurisdiction of impugned orders - wrongful interpretation of provisions of the Central Sales Tax Act - Section 6(2) of the CST Act - HELD THAT - The power of judicial review conferred under Article 226 of the Constitution of India is to scrutinize the processes, through which, an adjudication is made and a decision is taken by the competent authority in consonance with the provisions of the Statute, but not the decision itself. This being the scope of judicial review in a writ proceedings, the aggrieved person at the first instance must be allowed to exhaust the Appellate remedy, which will be of much assistance even for an aggrieved person to discuss about certain business transactions and accounting details before the authority, who is well versed with such matters. The Courts are admitting writ petitions on one point, which may be convincing. However, there are many other points on facts are to be adjudicated. Keeping a writ petition pending for a longer period and not allowing a litigant to get a final decision in such matters would undoubtedly cause prejudice and hardship both to the litigant as well as the Revenue. Therefore, in such matters, where Appellate remedy is contemplated, High Court is expected to be cautious in admitting the matters in a routine manner - admitting a writ petition at one point and keep it pending for a prolonged period, then the prolongevity of the litigation would cause prejudice to the interest of the assessee and also to the Revenue as well. All the circumstances should be waived even at the admission stage by the High Courts. It is not as if, certain factual disputes can be adjudicated in a writ proceedings. Such an attempt by the High Court even may end in futile at the final hearing. This Court is of an opinion that in the present case, the petitioner has to prefer an appeal both in the interest of justice as well as in the interest of the parties to the lis on hand. Accordingly, the petitioner is at liberty to prefer an appeal before the competent Appellate authority within a period of four weeks from the date of receipt of a copy of this order in a prescribed format and by complying with the provisions of the Act and the Rules - Petition disposed off.

Summary

Issues:
Challenging Order-in-Original passed by the Assessing authority based on erroneous interpretation of the Central Sales Tax Act, 1956.

Analysis:
The learned Senior counsel for the petitioner argued that the impugned orders lacked jurisdiction due to erroneous interpretation of the CST Act by the respondent. He highlighted Section 6(2) of the CST Act, emphasizing that exemptions were misinterpreted in the petitioner's case. The writ petitions were filed on jurisdictional grounds, contending that the provisions were not properly applied.

The Court observed that an internal audit in 2019-20 revealed defects, leading to notices and revision of assessment orders. It stressed that adjudication of identified defects must be done by the final fact-finding authority, urging aggrieved parties to exercise their right to appeal. The Court emphasized the importance of appellate remedies for resolving grievances and respecting institutional structures created under the Statute.

Regarding the role of Appellate authorities, the Court highlighted their expertise in adjudicating factual and legal aspects of taxation matters. It emphasized that High Courts are not tax experts and should allow the Appellate authority to delve into detailed accounting and operational aspects crucial for judicial review under Article 226 of the Constitution.

The Court clarified the scope of judicial review under Article 226, focusing on scrutinizing adjudication processes rather than the decisions themselves. It stressed the need for aggrieved parties to exhaust Appellate remedies for a comprehensive discussion on business transactions and accounting details before competent authorities.

In conclusion, the Court directed the petitioner to prefer an appeal within four weeks, emphasizing the importance of pursuing appellate remedies for a just resolution of the matter. It cautioned against prolonged litigation through routine admission of writ petitions, highlighting the necessity of resolving factual disputes through the appropriate Appellate channels for expeditious resolution.