2021 (10) TMI 986 - HC - VAT and Sales Tax

Reversal of input tax credit (ITC) - alternate remedy to file an appeal - lone pivotal contention of the learned counsel for writ petitioner is that reversal of ITC should be in excess of 5% of tax or in other words, upto 5%, there cannot be reversal - HELD THAT - In the instant case, as would be evident from the trajectory which lead to the impugned order has been captured, it is clear that more than reasonable i.e., adequate and ample opportunity has been given to the writ petitioner for showing cause against the impugned order. So there can be no grievance in this regard. Though there can be no disputation or disagreement on the aforesaid rule, what is of relevance is Honourable Supreme Court in a catena and series of judgments i.e., a long line of case laws commencing from ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER 1984 (11) TMI 63 - SUPREME COURT , UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS 2010 (7) TMI 829 - SUPREME COURT and AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. 2018 (2) TMI 25 - SUPREME COURT , has held that when it comes to Revenue matters, the alternate remedy rule should be applied with utmost rigour. If the writ petitioner chooses to file appeal under Section 51 or revision under Section 54 as the case may be (subject to limitation) the same can be dealt with on its own merits and in accordance with law by the appellate authority or revisional authority as the case may be - If the appellate authority or the revisional authority as the case may be entertains the appeal or revision (subject of course to limitation), the observation made in this order will neither be an impediment nor serve as an impetus qua appeal or revision, in other words, the appellate authority or revisional authority shall deal with it on its own merits and in accordance with law untrammeled by any observation made in this order. Petition dismissed.

Summary

Issues Involved:
1. Validity of the impugned order under TNVAT Act.
2. Mention of the specific provision of law in the impugned order.
3. Adequacy of the opportunity given to the petitioner to show cause.
4. Applicability of the alternate remedy rule.

Detailed Analysis:

1. Validity of the Impugned Order under TNVAT Act:
The main writ petition was filed challenging the order dated 03.08.2020, referenced as TIN/33270483294/2015-2016, under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The impugned order pertained to the reversal of input tax credit (ITC) under Section 19(4) of the TNVAT Act. However, the respondent contended that the order was made under Section 27 of the TNVAT Act, leading to confusion due to the absence of a specific mention of the provision under which the order was made.

2. Mention of the Specific Provision of Law in the Impugned Order:
The court noted that the impugned order did not specify the provision of law under which it was made, causing significant confusion. The petitioner argued that the reversal of ITC should only apply to amounts exceeding 5% of the tax, implying that the impugned order contravened this principle. The court acknowledged this argument but noted that it might be a ground for appeal or revision rather than a writ petition.

3. Adequacy of the Opportunity Given to the Petitioner to Show Cause:
The court observed that the petitioner was given ample opportunity to show cause against the impugned order. The petitioner received multiple notices and had responded accordingly, including a request for a personal hearing. The court distinguished between "reasonable opportunity to show cause" and "reasonable opportunity of being heard" as per different provisions of the TNVAT Act, concluding that the petitioner had been given more than adequate opportunity to present their case.

4. Applicability of the Alternate Remedy Rule:
The court emphasized the principle of alternate remedy, noting that the petitioner had the option to appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of the TNVAT Act or seek revision under Section 54, depending on the specific provision under which the impugned order was made. The court cited multiple precedents, including the Dunlop India case, Satyawati Tondon case, and K.C. Mathew case, to underline that in revenue matters, the alternate remedy rule should be applied with utmost rigor. The court concluded that none of the exceptions to the alternate remedy rule, such as breach of fundamental rights or violation of natural justice, were applicable in this case.

Conclusion:
The court dismissed the writ petition, reiterating that the petitioner had an adequate alternate remedy available through appeal or revision. The court preserved a small window for the petitioner to pursue these remedies, subject to the limitation period, and clarified that the observations made in the order would not affect the merits of any appeal or revision filed. The connected WMP was also closed.