2022 (1) TMI 194 - HC - VAT and Sales Tax

Validity of assessment order - Assessing Officer has erroneously applied the provisions of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) and passed the assessment orders which resulted exercise of jurisdiction erroneously - 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 - The procedures to be followed in the department for assessment are well settled. Thus, the authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. 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. 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 - 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 petitioner is bound to exhaust the statutory appellate remedy as contemplated under the provisions of the TNVAT Act. Thus, the petitioner is at liberty to approach the appellate authority by filing appeal/revision and by following the procedures contemplated. The delay, if any occurred, for filing the appeal, shall be condoned by the appellate authority and the appeal shall be taken on file to be adjudicated on merits and in accordance with law and by affording opportunity to all the parties concerned. Petition disposed off.

Issues Involved:
1. Erroneous application of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) by the Assessing Officer.
2. Jurisdictional error in passing assessment orders.
3. Necessity of exhausting statutory appellate remedies before filing a writ petition.
4. Application of pre-amendment provisions of Section 19 of the TNVAT Act.
5. Judicial review under Article 226 of the Constitution of India.

Detailed Analysis:

1. Erroneous Application of TNVAT Act:
The petitioner challenged the assessment orders dated 14.01.2015 for the assessment years 2011-12, 2012-13, and 2013-14, arguing that the Assessing Officer erroneously applied the amended provisions of the TNVAT Act, which came into effect on 29.01.2016. The petitioner contended that the pre-amended Section 19, which was applicable for the relevant assessment years, was not considered, leading to a jurisdictional error.

2. Jurisdictional Error:
The petitioner argued that the assessment orders were passed without proper application of mind and jurisdiction, as the amended provisions of Section 19 were applied retrospectively. This was claimed to be a jurisdictional error, justifying the filing of writ petitions without exhausting the statutory appellate remedy.

3. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized the importance of exhausting statutory appellate remedies provided under the TNVAT Act before approaching the High Court. 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 appeal remedy is the rule, and dispensing with it is an exception, to be exercised only in cases of imminent urgency or threat.

4. Application of Pre-Amendment Provisions of Section 19:
The petitioner contended that the pre-amendment provisions of Section 19, which allowed input tax credit for purchases made within the state from a registered dealer, should have been applied for the relevant assessment years. The court noted that the appellate authority is empowered to consider all legal grounds, including jurisdictional issues, and correct any erroneous application of the provisions of the TNVAT Act.

5. Judicial Review under Article 226:
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 of fact and law based on affidavits filed in writ petitions. The court emphasized the importance of adjudication before the appellate authority, which is the final fact-finding authority. The court also stressed that institutional respect must be maintained, and the High Court should not usurp the powers of the appellate authorities by entertaining writ petitions without exhausting statutory remedies.

Conclusion:
The court concluded that the petitioner must exhaust the statutory appellate remedy provided under the TNVAT Act. The appellate authority is competent to address all legal and jurisdictional issues raised by the parties. The court directed the petitioner to approach the appellate authority, which should condone any delay in filing the appeal and adjudicate the matter on merits. The writ petitions were disposed of with these observations, and the connected miscellaneous petitions were closed.

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