2021 (12) TMI 788 - HC - VAT and Sales Tax

Exercise of jurisdiction erroneously - Erroneous application of provisions of the Tamil Nadu Value Added Tax Act, 2006 - Validity of assessment orders - HELD THAT - Power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinise the processes and the procedures adopted by the competent authorities for arriving a particular decision in accordance with law, but not the decision itself. Thus, the High Court cannot entertain an adjudicative process regarding the mixed question of fact and law with reference to the documents and evidences in original. High Court cannot resolve the disputed issues between the parties only based on the affidavits filed in the writ petitions. There is a possibility of omissions and commissions. Thus, adjudication before the appellate authority with reference to such disputed findings of the original authority would be of greater importance. Institutional respect is of paramount importance. Even the point of jurisdiction, limitation, error apparent on the face of the record, are on merits and all are to be adjudicated before the appellate authority and the appellate authority, more specifically, the Appellate Tribunal or the Commissioner (Appeals), as the case may be, is empowered to adjudicate all such legal grounds raised by the respective parties and make a finding on merits. Thus, usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be overburdened, but usurping the powers of the appellate authority, which is certainly not desirable. 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. Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise - In the absence of exhausting such remedies, High Court is losing the benefit of deciding the matter on merits, as the High Court cannot conduct a trial or examine the original records in the writ proceedings under Article 226 of the Constitution of India. Thus, the Courts shall not provide unnecessary opportunities to the assessee to escape from the liability merely on the ground of jurisdictional error, which is rectifiable. 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 dismissed.

Summary

Issues Involved:
1. Erroneous application of the Tamil Nadu Value Added Tax Act, 2006.
2. Applicability of the amended Section 19 of the TNVAT Act.
3. Jurisdictional error by the Assessing Officer.
4. Necessity of exhausting statutory appellate remedies.
5. Judicial review under Article 226 of the Constitution of India.

Detailed Analysis:

1. Erroneous Application of the Tamil Nadu Value Added Tax Act, 2006:
The petitioners challenged the assessment orders passed by the Commercial Tax Officer for the years 2011-12 to 2014-15, arguing that the Assessing Officer erroneously applied the provisions of the TNVAT Act. The orders resulted from an erroneous exercise of jurisdiction.

2. Applicability of the Amended Section 19 of the TNVAT Act:
The petitioners contended that the amendment to Section 19 of the TNVAT Act, effective from 29.01.2016, should not apply to the assessment years in question. They argued that the pre-amendment provisions should be considered, which allowed input tax credit for tax paid or payable under the TNVAT Act. The Assessing Officer's application of the amended Section 19 to the pre-amendment period constituted a jurisdictional error.

3. Jurisdictional Error by the Assessing Officer:
The petitioners maintained that the Assessing Officer's application of the amended Section 19 to assessment years prior to the amendment was a clear jurisdictional error. They argued that the orders were passed without proper application of mind, necessitating judicial intervention without exhausting the statutory appellate remedy.

4. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized that Section 51 of the TNVAT Act provides for an appeal to the Appellate Deputy Commissioner, and Section 58 provides for an appeal to the Appellate Tribunal. The court highlighted that exhausting the appellate remedy is the rule, and dispensing with it is an exception. The appellate authority is the final fact-finding authority and can correct any errors, including jurisdictional ones. The court stressed that the appellate remedy should not be bypassed casually, as it ensures a thorough examination of the issues with reference to original records and provides a complete adjudication process.

5. Judicial Review under Article 226 of the Constitution of India:
The court reiterated that the power of judicial review under Article 226 is to scrutinize the processes and procedures adopted by the competent authorities, not the decision itself. The High Court cannot resolve disputed issues based solely on affidavits filed in writ petitions. The court emphasized that the appellate authority is empowered to adjudicate all legal grounds raised by the parties, including jurisdictional issues. The court cited several judgments to support the principle that writ petitions should not be entertained without exhausting alternative remedies unless there are exceptional circumstances.

Conclusion:
The court concluded that the petitioners must exhaust the statutory appellate remedy as provided under the TNVAT Act. The appellate authority should adjudicate the appeals on merits, considering all legal grounds and providing an opportunity to all parties. The court directed that any delay in filing the appeal should be condoned, and the appeal should be taken on file for adjudication. The writ petitions were disposed of with these observations and directions.