2020 (4) TMI 768 - HC - VAT and Sales Tax

Maintainability of petition - efficacious remedy of filing an appeal - Validity of reassessment order - validity of rectification order passed by the prescribed authority - KVAT Act - HELD THAT - When an alternative and efficacious remedy is provided under the Act, such a remedy requires to be exercised by the party first. However, that does not mean that the jurisdiction of the Writ Court is unavailable but while exercising the jurisdiction, the Writ Court would necessarily have to indicate as to why it is entertaining a writ petition, not withstanding, the availability of an alternative or efficacious remedy to a party. Unfortunately, even after having noticed the preliminary objection regarding maintainability of the writ petition, the court has proceeded to frame the question on merits. This aspect of the matter in the impugned order passed by the learned Single Judge, we find as being erroneous. In order to enable the writ Court to exercise its jurisdiction, it would first have to answer the availability of an alternative and efficacious remedy and as to why it intends to exercise the writ jurisdiction - In the absence of the same, consideration of the matter on any other ground, would not be sustainable, since the preliminary objection of the State has not been answered. There are no hesitation to hold that the writ Court could not have entertained the matter in view of an alternative remedy available under Section 62 of the Karnataka Value Added Tax Act, 2003. There are no good ground to interfere - appeal dismissed.

Summary

Issues:
Challenge to reassessment and rectification orders under Karnataka Value Added Tax Act, 2003; Maintainability of writ petitions without exhausting statutory appeal remedy; Entitlement to claim input tax credit based on audit statement without making claim in monthly returns.

Analysis:
The judgment by the Karnataka High Court involved a challenge to reassessment and rectification orders issued under the Karnataka Value Added Tax Act, 2003. The appellant filed an appeal against the common order passed by the Single Judge dismissing the writ petitions. The State contended that the writ petitions were not maintainable as the statutory appeal remedy under Section 62 of the Act was not exhausted. The Single Judge framed the question of whether a registered dealer could claim input tax credit based on an audit statement without making such claim in the monthly returns.

The appellant sought to withdraw the writ petition and approach the appellate authority, acknowledging the mistake in filing the writ petition under Article 226 of the Constitution. The Court accepted the withdrawal and permitted the appellant to prosecute the appeal on merits. The appellant's counsel argued the matter extensively, but the Court noted that the preliminary question of maintainability raised by the State had not been addressed. The Court emphasized that the writ jurisdiction should only be exercised after considering the availability of an alternative remedy and reasons for choosing the writ jurisdiction.

The High Court held that the writ Court should not have entertained the matter due to the availability of an alternative remedy under Section 62 of the Act. Even on merits, the Single Judge did not find grounds to interfere, leading to the dismissal of the writ appeal. The Court rejected the pending application, concluding that there were no sufficient grounds to interfere with the decision.