2018 (11) TMI 1506 - HC - VAT and Sales Tax

Levy of Interest on Entry tax - validity of orders of assessment of entry tax - principle of constructive res judicata - Uttar Pradesh Tax On Entry Of Goods Into Local Areas Act, 2007 - Held that - It is settled law that the challenge to the consequential order would be of no consequence and serve no purpose until and unless the main/basic order on which the demand is based is challenged. A challenge to the consequential order without challenging the basic order on which the consequential order has been based cannot be entertained. Thus, the party challenging the consequential order is obliged to challenge the basic order also and only if the same is found to be illegal the correctness of the consequential order can be examined. The assessment orders of entry tax in relation to the petitioner have already attained finality as the challenge to the same stand defeated in the earlier round of litigation - The petitioner cannot maintain successive writ petitions for the same cause of action in respect whereof earlier petitions filed were decided but without any relief in respect of levy of interest on entry tax. Any attempt to re-agitate the matter on a cause of action or issue on which the parties have previously litigated or which may have been raised and may not have been decided would amount to an abuse of the process of the court and would be contrary to the public policy as the object is to bring the lis to an end and not to allow any party to be vexed twice for the same cause of action. The petitioner had a better alternative remedy of disputing the correctness of the levy and demand of interest on entry tax on fact and law in appeal. Also, the matter regarding levy and payment of interest on entry tax in so far as the petitioner is concerned for the assessment years in question do not deserve to be interfered with by us in exercise of writ jurisdiction. Petition dismissed as not maintainable.

Summary

Issues Involved
1. Maintainability of the writ petitions.
2. Application of the principle of constructive res judicata.
3. Legality of the demand for interest on entry tax.
4. Alternative remedy through appeal.

Detailed Analysis

1. Maintainability of the Writ Petitions
The primary issue addressed was the maintainability of the writ petitions filed by the petitioner, M/s Indian Oil Corporation, challenging the demand of interest on entry tax. The respondents argued that the impugned demand notices were consequential to final and conclusive orders of assessment of entry tax, which had already been decided in previous litigation without granting any relief regarding interest on entry tax. The court upheld this preliminary objection, stating that the petitions challenging only the demand notices without challenging the underlying assessment orders were not maintainable.

2. Application of the Principle of Constructive Res Judicata
The respondents contended that the challenge to the demand of interest on entry tax was barred by the principle of constructive res judicata. They argued that the petitioner had previously filed writ petitions challenging the validity of the Uttar Pradesh Tax On Entry Of Goods Into Local Areas Act, 2007 (Entry Tax Act) and the assessment orders, which included the demand for interest on entry tax. These earlier petitions were dismissed without any relief regarding the interest. The court agreed, citing precedents that the principle of constructive res judicata applies to writ proceedings, and any attempt to re-litigate the same issue constitutes an abuse of the court's process.

3. Legality of the Demand for Interest on Entry Tax
The petitioner argued that the issue of levy of interest on entry tax was a pure question of law that had not been previously adjudicated. However, the court noted that the assessment orders, which included the demand for interest, had attained finality in earlier litigation. The court emphasized that challenging the consequential demand without challenging the basic assessment orders was not permissible. The court also referenced Section 13 of the Entry Tax Act and Section 33 of the U.P. Value Added Tax Act, 2008, which provide for the levy of interest on delayed payment of entry tax, supporting the legality of the interest demand.

4. Alternative Remedy Through Appeal
The court observed that the petitioner had an alternative remedy to dispute the correctness of the levy and demand of interest on entry tax through an appeal. This alternative remedy was considered more appropriate for addressing the petitioner's grievances.

Conclusion
The court concluded that the writ petitions were not maintainable as they challenged only the demand notices without challenging the underlying assessment orders. The principle of constructive res judicata barred the re-litigation of the issue of interest on entry tax, which had been implicitly addressed in earlier litigation. The court upheld the preliminary objection regarding maintainability and dismissed the writ petitions, stating that the petitioner had an alternative remedy through appeal and that the demand for interest on entry tax was legally justified under the applicable statutory provisions.