2022 (1) TMI 441 - HC - VAT and Sales Tax

Erroneous exercise of Jurisdiction - issue raised in these writ petitions is that the Assessing Officer has erroneously applied the provisions of the TNVAT Act and passed the assessment orders which resulted exercise of jurisdiction erroneously - violation of principles of natural justice - 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 higher authorities of the Department are expected to be watchful and review the orders passed by the subordinate authorities and in the event of any negligence, dereliction of duty, collusion or corrupt activities, such officials are liable to be prosecuted apart from initiation of departmental disciplinary proceedings. 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. The 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. Such writ petitions are filed may be on the ground of jurisdiction or otherwise. 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 - Petition disposed off.

Issues Involved:
1. Erroneous application of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act).
2. Violation of principles of natural justice.
3. Jurisdictional error in assessment.
4. Applicability of amended provisions of Section 19 of the TNVAT Act.
5. Necessity of exhausting statutory appellate remedies.

Issue-wise Detailed Analysis:

1. Erroneous Application of TNVAT Act:
The petitioner contended that the Assessing Officer erroneously applied the provisions of the TNVAT Act, resulting in incorrect assessment orders. The orders were challenged on the basis that the officer exercised jurisdiction erroneously, leading to the filing of the writ petitions.

2. Violation of Principles of Natural Justice:
The petitioner argued that there was a clear violation of the principles of natural justice. Notices were issued on one ground, but the impugned orders were passed on a different ground. The petitioner was not given an opportunity to dispute the factual aspects of the transactions considered by the respondent, which were unknown to the petitioner. This lack of opportunity to contest the facts was cited as a violation of natural justice.

3. Jurisdictional Error in Assessment:
The petitioner raised a jurisdictional issue, asserting that the assessment orders were passed without proper application of mind, resulting in a jurisdictional error. The petitioner argued that due to this error, the writ petitions should be entertained without exhausting the statutory appellate remedy.

4. Applicability of Amended Provisions of Section 19 of the TNVAT Act:
The petitioner contended that the amended provisions of Section 19 of the TNVAT Act (effective from 29.01.2016) were erroneously applied to assessment years falling prior to the amendment. The petitioner argued that the pre-amended provisions should have been considered for passing the assessment orders. The court noted that the pre-amended Section 19 allowed input tax credit for tax paid or payable under the TNVAT Act by a registered dealer on purchases of taxable goods specified in the First Schedule. The court found that the respondent erroneously implemented the amended Section 19 for assessment years prior to the amendment, indicating a lack of application of mind and a jurisdictional error.

5. Necessity of Exhausting Statutory Appellate Remedies:
The court emphasized the importance of exhausting the statutory appellate remedy provided under the TNVAT Act. Section 51 of the 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. The court stated that the power of judicial review under Article 226 of the Constitution of India is to scrutinize the processes and procedures adopted by the competent authorities, not the decision itself. The court noted that the appellate authority is the final fact-finding authority, and its findings, along with those of the original authority, are crucial for the High Court's effective disposal of writ petitions.

The court also discussed the principle of separation of powers and the necessity of maintaining institutional respect. It emphasized that the appellate remedy should not be bypassed routinely, and writ petitions should be entertained only in exceptional circumstances. The court referred to several judgments to support the principle that when an effective alternative remedy is available, a writ petition should not be maintained.

Conclusion:
The court concluded that the petitioner must exhaust the statutory appellate remedy as provided under the TNVAT Act. The petitioner was directed to approach the appellate authority by filing an appeal/revision, and any delay in filing the appeal should be condoned. The appeals were to be adjudicated on merits and in accordance with the law, with an opportunity provided to all parties concerned. The writ petitions were disposed of with these observations and directions, and no costs were imposed.

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