2021 (11) TMI 8 - HC - VAT and Sales Tax

Assessment of escaped turnover - collusion, fraud, misrepresentation or suppression - Section 16 of Tamil Nadu General Sales Tax Act, 1959 - HELD THAT - There is no disputation or disagreement before this Court that statutory appeal qua impugned order is available to the writ petitioner under Section 31 of TNGST Act. Alternate remedy Rule, no doubt is not an absolute rule or in other words, it is a rule of discretion. It is a self imposed restraint qua writ jurisdiction. Very recently i.e., on 03.09.2021 a three member Hon'ble Bench of Hon'ble Supreme Court speaking through Hon'ble Dr.Dhananjaya Y Chandrachud in THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED 2021 (9) TMI 480 - SUPREME COURT set out the exceptions to alternate remedy rule and held that interference qua writ jurisdiction should be by way of huge exceptions and the exceptions have been adumbrated in Commercial Steel. In the instant case, of the exceptions adumbrated in paragraph 11 of Commercial Steel case, excess of jurisdiction i.e., 11(iii) is attracted but that is only with regard to penalty aspect of the impugned order i.e., paragraph 7 of the impugned order as Sri Ram Packages principle clearly forbids levy of penalty absent adoption of best judgment method - this is a fit case for relegating the writ petitioner to alternate remedy of statutory appeal under Section 31 (except penalty which is set aside) i.e., tax due portion of impugned order subject of course to pre deposit condition and limitation with regard to the tax due part of the impugned order, if the writ petitioner chooses to do so. Impugned order is partly set aside i.e., set aside with regard to penalty alone - writ petition is allowed with regard to the penalty levied in the impugned order and writ petition is dismissed with regard to the remaining portion of the impugned order - Petition allowed in part.

Summary

Issues Involved:
1. Application of Ashok Leyland principle.
2. Consistency in the Assessing Officer's decisions for different assessment years.
3. Imposition of penalty under Section 12(3)(b) of TNGST Act in proceedings under Section 16.

Issue-wise Detailed Analysis:

1. Application of Ashok Leyland Principle:
The petitioner argued that the impugned order disregarded the Ashok Leyland principle, which states that reopening assessments under Section 6A of the CST Act can only occur in cases of collusion, fraud, misrepresentation, or suppression. The respondent countered that the impugned order found incriminating materials such as proforma invoices and sales invoices that indicated suppression. The court concluded that the impugned order did not disregard the Ashok Leyland principle. However, whether the materials are incriminating requires a factual examination suitable for an appeal, not writ jurisdiction.

2. Consistency in Assessing Officer's Decisions:
The petitioner contended that the same Assessing Officer had accepted the Ashok Leyland principle for the assessment year 2001-2002 and dropped proceedings. The respondent clarified that the officers were different for the two assessment years and that no incriminating records were found for 2001-2002. The court agreed with the respondent, noting that the officers were different and the facts of the two cases were distinguishable. Therefore, the argument that the same officer took a different view was incorrect.

3. Imposition of Penalty under Section 12(3)(b) of TNGST Act:
The petitioner argued that the penalty under Section 12(3)(b) was incorrectly levied in proceedings under Section 16. The respondent acknowledged that penalties for escaped turnover assessments should be under Section 16(2) and only in cases where the best judgment method is adopted. The court found that the penalty was indeed contrary to the Sri Ram Packages principle, which forbids penalties in the absence of the best judgment method. Consequently, the court set aside the penalty portion of the impugned order.

Alternate Remedy:
The court emphasized the importance of exhausting statutory remedies before invoking writ jurisdiction, especially in fiscal law matters. The court cited several Supreme Court cases, including Dunlop India, Satyawati Tondon, and K.C. Mathew, to underline the rigour with which the alternate remedy rule should be applied. The court concluded that the petitioner should pursue the statutory appeal under Section 31 of the TNGST Act for the tax due portion of the impugned order.

Conclusion:
The court partially allowed the writ petition, setting aside the penalty portion of the impugned order but sustaining the rest of the order. The petitioner was advised to file a statutory appeal for the tax due portion, subject to pre-deposit conditions and limitations. The writ petition was thus allowed concerning the penalty and dismissed regarding the tax due portion.