2014 (1) TMI 414 - HC - VAT and Sales Tax

Tax assessment - Whether a composite sale of running business of the concern would attract the provisions of the Tamil Nadu Value Added Tax Act, 2006, particularly when the Assessing Officer took a stand that the appellants/writ petitioners used to sell some of the assets every year as in the case of sale during the year 2010 treating it as transfer of business as a whole, and the Assessing Officer treated the same as bulk sale of assets liable to tax - Alternate remedy taken - Normal course not adhered to - Held that - When the facts are in dispute, the writ petition filed under Article 226 of the Constitution of India is not maintainable - if the facts are seriously disputed, no factual finding can be recorded without considering the evidence adduced by the parties. It was not appropriate for the writ Court to exercise its jurisdiction - assessee ought not to have filed a writ petition before the High Court questioning the correctness or otherwise of the orders passed by the Tribunal. The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution. Therefore, Since the assessee has a remedy in the form of a right of appeal under the statute, that remedy must be exhausted first - appellants have to approach the appellate authority under Section 51 of the Tamil Nadu Value Added Tax Act, 2006. Want of jurisdiction can also be raised before the appellate authority - Decided against assessee.

Issues Involved:
1. Availability of alternate remedy
2. Jurisdiction of the Assessing Officer
3. Hardship due to pre-deposit requirement
4. Disputed questions of fact

Issue-wise Detailed Analysis:

1. Availability of Alternate Remedy:
The primary issue addressed in the judgment was whether the writ petitions were maintainable given the availability of an alternate remedy under Section 51 of the Tamil Nadu Value Added Tax Act, 2006. The court emphasized that the appellants had not disputed the availability of this statutory appeal. It was noted that the appellants had to deposit 25% of the assessed tax to file an appeal, which they argued would cause severe hardship. However, the court reiterated that when a statute provides a specific remedy, it must be exhausted before invoking the writ jurisdiction under Article 226 of the Constitution of India.

2. Jurisdiction of the Assessing Officer:
The appellants contended that the first respondent lacked jurisdiction to initiate proceedings as the transactions took place outside Tamil Nadu. They argued that the Business Transfer Agreement involved the transfer of a running business and not a sale of goods. The court held that issues of jurisdiction and the nature of the transaction could be raised before the Appellate Authority, which is competent to appreciate and decide on these facts.

3. Hardship Due to Pre-deposit Requirement:
The appellants argued that the requirement to deposit 25% of the assessed tax for filing an appeal would cause significant financial hardship. The court, however, held that hardship is not a valid ground to bypass the statutory appeal process, especially in tax matters where the statutory remedies are designed to address such grievances.

4. Disputed Questions of Fact:
The court highlighted that the writ petitions involved disputed questions of fact, such as whether the transaction was a sale of goods or a transfer of a running business. It was emphasized that such factual disputes should be resolved by the Appellate Authority, which can consider evidence and provide a factual finding. The court cited several Supreme Court decisions to support the principle that writ jurisdiction should not be invoked when factual disputes are present and an alternative statutory remedy exists.

Conclusion:
The court dismissed the writ appeals, confirming the learned single Judge's order that directed the appellants to approach the Appellate Authority under Section 51 of the Tamil Nadu Value Added Tax Act, 2006. The appellants were granted liberty to file appeals and were given an extension until 13.12.2013 to do so. The court reiterated that the statutory appeal process must be exhausted before seeking relief under writ jurisdiction, particularly in tax matters.

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