2016 (12) TMI 631 - HC - VAT and Sales Tax

Maintainability of petition - Writ jurisdiction - opportunity to represent the case - Held that - Considering the substantial questions of law which arise in the present petition, we are of the opinion that the present petition is not required to be dismissed on the ground that the present petition is at the show cause notice stage. Identical question came to be considered by the Hon ble Supreme Court in the case of the Aircel Limited and Anr 2016 (6) TMI 1063 - SUPREME COURT OF INDIA . Considering the fact that pure questions of law had arisen, the Hon ble Supreme Court set aside the order passed by the High Court, by which, the petition was not entertained on the ground of availability of alternative remedy and has observed that questions that have been raised by the original petitioner being absolutely pure question of law, the High Court should have decided the matter. Considering the aforesaid decision of the Hon ble Supreme Court and in the facts and circumstances of the case narrated herein above and as pure question of law arise which as per the opinion, are required to be decided by the High Court, preliminary objection raised by Shri Kamal Trivedi, learned Advocate General is hereby overruled - matter to be remitted to High Court - petition disposed off.

Issues:
1. Challenge to show cause notices at the stage of show cause notice.
2. Entertaining the petition at the show cause notice stage.
3. Determination order under Section 80 of the Gujarat Sales Tax Act.
4. Relevance of alternative remedy.
5. Substantial questions of law regarding service activity, value-added tax, deemed sale, and right to use.

Issue 1: Challenge to Show Cause Notices
The respondent State raised a preliminary objection, arguing that as the show cause notices were being challenged and the petition was at the show cause notice stage, the court should not entertain the petition and should direct the petitioner to appear before the Assessing Officer. The respondent emphasized that ample opportunity would be given to the petitioner to present their case before the Assessing Officer.

Issue 2: Entertaining the Petition
The petitioner contended that the issue involved a pure question of law and should not be dismissed based on the availability of an alternative remedy. The petitioner highlighted that a determination order under Section 80 of the Gujarat Sales Tax Act had been issued in their favor, yet the Assessing Officer had still issued the show cause notice. The petitioner argued that several questions of law needed to be addressed by the High Court, requesting a consideration of the issues on their merits.

Issue 3: Determination Order
The court heard arguments from both parties and concluded that numerous pure questions of law were at play, necessitating a consideration of the issues on their merits. The court noted the existence of a determination order under Section 80 of the Gujarat Sales Tax Act in favor of the petitioner, despite the Assessing Officer issuing the show cause notice without any significant change in circumstances.

Issue 4: Alternative Remedy
In light of the substantial questions of law raised in the petition, the court decided that the petition should not be dismissed solely due to being at the show cause notice stage. Citing a previous decision of the Hon'ble Supreme Court, the court emphasized that when pure questions of law were involved, the High Court should decide the matter rather than relying on the availability of alternative remedies.

Issue 5: Substantial Questions of Law
The court identified several substantial questions of law arising from the petition, including whether providing passive infrastructure services to telecommunication operators constituted a service activity liable for value-added tax, whether such services amounted to a deemed sale under the Constitution, the impact of earlier determination orders under the Gujarat Sales Tax Act, and the necessity of fresh adjudication based on material changes in agreements.

In conclusion, the court overruled the preliminary objection raised by the respondent State, emphasizing the need to address the substantial questions of law raised in the petition. The matter was scheduled for further hearing to delve into the intricate legal issues involved.

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