2019 (7) TMI 553 - HC - VAT and Sales Tax

Validity of revised assessment orders - best judgment method - it is the stated position of writ petitioner that writ petitioner has effected only Intra-State sales in the two relevant Assessment Years, whereas, the impugned assessment orders, on appreciation of material, has come to a different conclusion i.e., that there has been inter state sale - econd ground that has been urged is that lone respondent in making the impugned assessment orders, has taken into account the income tax records for making the best judgment method assessment and according to learned counsel for writ petitioner, this is impermissible - third ground of attack is that the impugned orders are such that the respondent has not applied his mind independent of the proposal given by the Enforcement Wing Officials - principles of natural justice. HELD THAT - On the teeth of the obtaining position that Enforcement Wing proposals are approved by Joint Comm i ssioner, this Court has held that the Assessing Officer should independently apply his/her mind. This leads us to the inevitable sequitur that principle is to the effect that even though the Enforcement Wing Official's proposal is approved by Joint Commissioner, an authority much below the rank of Deputy Commissioner for that matter below the rank of even the Assistant Commissioner viz., a Commercial Tax Officer (CTO) would apply his mind independently and come to a conclusion by going through the proposal of Enforcement Wing Officials on one side and objections of the dealer on the other. Alternate remedy - HELD THAT - It is not a rule of compulsion, but it is a rule of discretion. Though it is a rule of discretion, Hon'ble Supreme Court in Satyawati Tandon Case United Bank of India Vs. Satyawati Tondon and others 2010 (7) TMI 829 - SUPREME COURT has held that when it comes to matter pertain to Taxes, CESS, Revenue etc., the rule of alternate remedy has to be applied with utmost rigour - it is a fit case to relegate the writ petitioner to the alternate remedy of an appeal to the jurisdictional Deputy Commissioner or in other words, Appellate Deputy Commissioner having jurisdiction. If writ petitioner, chooses to avail the alternate remedy all the conditions for pursuing an appeal will operate and apply. If there is any delay in preferring the appeal, it is open to the writ petitioner to seek condonation, besides seeking exclusion of time spent in the instant writ petition by applying Section 14 of Limitation Act. If the writ petitioner makes such a plea/prayer for condonation and/or exclusion of time under Section 14 of Limitation Act, the Appellate Authority shall deal with the same and decide such prayers/pleas on their own merits. Petition dismissed.

Summary

Issues Involved:
1. Nature of sales (Intra-State vs. Inter-State).
2. Use of income tax records in TNVAT assessments.
3. Independent application of mind by the Assessing Officer.
4. Alternate remedy through statutory appeal.

Issue-wise Detailed Analysis:

1. Nature of Sales (Intra-State vs. Inter-State):
The petitioner contended that only Intra-State sales were effected in the relevant assessment years (2011-12 and 2015-16), whereas the impugned assessment orders concluded that there were inter-state sales. The State Counsel argued that the assessments were based on available material and any factual disputes could not be adjudicated in a writ petition.

2. Use of Income Tax Records in TNVAT Assessments:
The petitioner argued that the use of income tax records for best judgment assessment under the TNVAT Act was impermissible. The petitioner relied on the judgment in "Sharoff Syndicate vs. The Assistant Commissioner (CT)" where it was noted that the courses of taxation under the Income Tax Act and the Sales Tax Act are different. However, the court observed that income tax records are not completely forbidden, citing the "Sharoff Syndicate" judgment which allows for their use under certain circumstances.

3. Independent Application of Mind by the Assessing Officer:
The petitioner claimed that the Assessing Officer did not apply his mind independently of the proposal by the Enforcement Wing Officials, violating the principle laid down in "Narasus Roller Flour Mills Vs. Commercial Tax Officer (Enforcement Wing)". The court, after reviewing the impugned orders, concluded that the Assessing Officer had indeed considered the proposals, the objections raised by the petitioner, conducted a personal hearing, and provided independent findings. The court also referenced judgments from the Supreme Court, emphasizing that best judgment assessments involve some approximation and guesswork but should not be arbitrary or capricious.

4. Alternate Remedy through Statutory Appeal:
The petitioner argued that since the Enforcement Wing's proposals were approved by a Joint Commissioner, a Deputy Commissioner could not act as an Appellate Authority. The court rejected this argument, stating that even if the Enforcement Wing's proposals were approved by a higher authority, the Assessing Officer must independently apply his mind. The court held that the argument that a Deputy Commissioner cannot act as an Appellate Authority was untenable. The court emphasized the principle of alternate remedy, especially in matters involving taxes, as reiterated by the Supreme Court in "Satyawati Tondon" and "K.C. Mathew" cases. The court decided to relegate the petitioner to the alternate remedy of an appeal to the jurisdictional Deputy Commissioner.

Conclusion:
The court dismissed the writ petitions, directing the petitioner to pursue the statutory appeal. The petitioner was allowed to seek condonation of any delay in filing the appeal and to apply for exclusion of time spent in the writ petition under Section 14 of the Limitation Act. The court preserved the petitioner's rights to raise all questions available, including those raised in the writ petitions. No costs were imposed, and connected miscellaneous petitions were closed.