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TMI Blog2017 (11) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... re the date of filing of the return, the respondent has not remitted the tax to the government, has not been refuted by filing any counter in this appeal. As per the statute, tax has to be paid in time, failing which interest is levied. There is no provision in the statute to pay tax in installments. The respondent has suppressed collection of tax from the buyer, and failed to remit the same to the government in time - It is thus clear that though the appellant- Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter. The respondents having collected tax from TAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept in abeyance the impugned Form U notice / garnishee order. If the petitioner fails to pay any one of the instalments within the time stipulated by this Court, the impugned Form U notice / garnishee order will stand automatically revived without any further reference to this Court. On the petitioner clearing the entire arrears along with interest as per the time frame fixed by this Court, the third respondent shall lift the order of attachment / garnishee order.." 2. Short facts leading to the appeal are as hereunder: Respondent, is a company incorporated under the Indian Companies Act, 1956, engaged in the business of manufacture of sale of Indian Make Foreign Liquor, duly licenced by Government of Tamilnadu and supplier to Tamilnadu State Marketing Corporation (TASMAC), Chennai, 2nd respondent herein. According to the respondent company, which has been licenced to manufacture 4,19,400 cases of liquour per month has engaged about 750 workers, besides 3000 on contract basis. It is the case of the respondent that though there is increase in the cost of the manufacture of liquour, transport charges, electricity consumption charges, the purchase price of Indian Made Liquour, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above averments, writ petition No.24657 of 2017 has been filed for a writ of certiorarified mandamus, calling for the records of the Deputy Commissioner (CT)-I, Large Tax Payers Unit, Chennai, the 3rd appellant vide Notice in Form U dated 31.08.2017 in TIN No.33980640189 for the return month of July 2017 and to quash the same. Consequently, the respondent has prayed for a direction to the appellants 1 to 3, to grant 10 months time to the petitioner to pay the present VAT arrears and interest for the total sum of ₹ 34,68,83,092/- (Rupees Thirty Four Crores Sixty Eight Lakhs Eighty Three Thousand Ninety Two Only). 7. Before the writ Court, reliance has also been made to an order made in W.P.No.10573 of 2017 dated 28.04.2017, permitting the respondent to pay arrears in four installments. Order dated 28.04.2017, has been clarified on 08.05.2017 permitting the respondent to pay the arrears of tax in four installments commencing from 25.05.2017 and directing the appellants to keep the garnishee order, in abeyance till the respondent completed the payment of entire arrears, subject matter in W.P.No.10573 of 2017. 8. Though submissions have been made by learned Additional Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has filed monthly return for the month of July 2017, without accompanying the proof of payment of tax. Value Added Tax is one of the important sources of revenue to the State, through which the State Government generates 65% of the revenue and used for the welfare of the State. (d) Writ Court ought to have considered that the respondent is duty bound to pay tax collected from TASMAC to the Government on or before 12th day of the succeeding month. (e) Even if the dealer has not received the sale price from the buyer, the respondent is mandated to make payment of tax, in time, as per the statute. Even after having received the tax amount, along with the sale price, well before the date of filing the return on or before 14th day of succeeding month, the dealer / respondent, has received the sale price, with tax, not remitted to the Government and misused the tax amount, for their own purpose. (f) If the tax amount is not realized in time as scheduled, it will prolong or delay the implementation of the projects of schemes initiated for the welfare of the Public. (g) Writ Court ought to have seen that the respondent has never paid the entire tax due, along with the monthly returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sought for in the writ petition, while ordering notice, we dismissed, the writ miscellaneous petition. However, directed the appellants to bring it to the notice of the writ court that, challenge made to the order in W.P.No.24657 of 2017, has been entertained. 12. On this day, when the writ petition came up for further hearing, learned counsel for the appellants, further submitted that in the absence of any statutory provision, enabling payment of tax, in installments, writ Court, ought not to have permitted the petitioner to pay tax of ₹ 34,68,83,092/- for the month of July in five instalments. She further submitted that writ petition has been ordered, at the admission stage itself and therefore, the appellants, could not file a detailed counter affidavit. 13. Responding to the notice and based on the typed set of papers dated 01.11.2017, Mr.Packiaraj, learned counsel for the respondent submitted that amount due and payable by the respondent as on 31.08.2017 was ₹ 34,68,83,092/-. On 14.09.2017, Writ Court directed said amount to be paid in five equal instalments with interest. On 19.09.2017, 1st installment with interest ₹ 6,93,76,618.4p was paid. The 2nd ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Form I on or before 20th of the succeeding month, to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax. (b) Every registered dealer who is liable to pay tax under sub-section (5) of section 3 shall file a return in Form J on or before 20th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax: Provided that a registered dealer specified in clause (a) or (b), whose taxable turnover in the preceding year is two hundred crores of rupees and above, shall file the above returns on or before 12th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax: (c) The option exercised under sub-section (4) of section 3 of the Act shall be final for the financial year and such option shall be exercised within thirty days from the date of commencement of the Act or commencement of his business whichever i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dealers making electronic payment of the tax, the dealers whose taxable turnover in the previous year is two hundred crores of rupees and above, shall file the returns on or before 14th of the succeeding month along with proof of payment of tax and the others shall file the above returns on or before 22nd of the succeeding month along with proof of payment of tax. (9) If a dealer having filed a return, finds any omission or error therein, other than as a result of an inspection or audit or receipt of any other information or evidence by the assessing authority, he shall file a revised return rectifying the omission or error within a period of six months from the last day of the relevant period to which the return relates. Where, as a result of such revised return, the tax payable by the dealer increased, the dealer shall furnish along with such revised return, proof of payment of tax and interest due thereon under sub-section (4) of Section 42 of the Act. (c) In terms of Section 22, procedure to be followed by the Assessing authority, is set out in Rule 8 of TNVAT Rules, 2007 and the same is extracted hereunder. "8. Procedure for assessment.- (1) In pursuance of Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, exclusive of the tax element, is more than fifteen per cent (15%), the assessing authority shall examine the reasons for the variation, taking into account the relationship between the parties to the transactions,the charges for after sales services, packaging, transport and other expenses incurred by subsequent sellers which add to the cost of the goods at each stage of sale by successive dealers. The assessing authority shall also examine whether there is such difference in the price charged on the sales of the same goods to different customers and whether the goods are made available to all distributors or other customers in unlimited quantities and at the same prices. After making due allowance towards the variation in prices and normal profit margin, the assessing authority shall arrive at the market price that should have been charged by the dealer and levy tax on the taxable turnover so arrived at. (4) On receipt of the return in Form N, the assessing authority shall pass orders (a) demanding the tax payable on the amount received due to price variation and shall serve upon the dealer a notice in Form O; or (b) refunding the tax due on the amount returned and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the said amount was included and tax paid. (e) all amounts, including the tax collected from the customer, refunded to the customer or adjusted towards any amount payable by the customer, in respect of unexecuted portion of works contract based on the corrections on account of measurements or check measurements, subject to the conditions that (i) the turnover was included in the return and tax paid; and (ii) the amount including the tax collected from the customer is refunded or adjusted, within a period of six months from the due date for filing of the return in which the said amount was included and tax paid. (6) After assessment or revision of assessment under sections 22, 24, 27, 28 or 29 of the Act, the assessing authority shall serve on the dealer a demand notice in Form O, after adjusting the eligible input tax credit. If the tax due on assessment or revision of assessment, after adjustment of eligible input tax credit, is lower than the tax already paid, the assessing authority shall serve upon the dealer a notice in Form P, informing the dealer of the adjustment of excess tax towards the arrears or the refund of the amount, as the case may be. (7) The decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court is of the view that the petitioner cannot seek indulgence of this Court every time to make the payment in installments by stating one reason or other. Once the tax is fixed and also admitted by the petitioner, it is their bounden duty to pay without dragging the matter. As I have already pointed supra, this Court also granted one indulgence in the year 2015. Therefore, this writ petition is disposed of, with a direction to the petitioner, to pay the balance of arrears with interest in four monthly installments commencing from 15.05.2017. It is made clear that no further indulgence shall be shown by this Court, in respect of any future arrears, as it is the bounded duty of the petitioner to effect the payment of tax then and there." 20. By order dated 28.04.2017 in W.P.No.10573 of 2017, writ Court has made it clear that the respondent cannot seek indulgence everytime to make the payment in instalments by stating one reason or the other, and further observed that once the tax liability is fixed and also admitted by the respondents, it is the bounden duty to pay without dragging the matter. 21. As per the order made in W.P.No.10573 of 2017 dated 28.04.2017, no further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns alongwith, proof of payment of tax, is mandatory. 26. As per the statutory provisions, tax has to be paid, before the 12th day of the succeeding month. Contention of the appellant in the grounds of appeal that even after receiving the tax amount along with the sale price from TASMAC Limited, well before the date of filing of the return, the respondent has not remitted the tax to the government, has not been refuted by filing any counter in this appeal. 27. Contention of the appellants that the respondent has not paid the entire tax along with the monthly returns within the time, for the year 2013-14, 2014-15 and 2016-17, has not been disputed. As rightly contended by the appellants, tax liability is not fixed out of the dealers income, whereas, sales tax is paid by the respondent out of the tax collected from the other end, and as observed earlier, the specific case of the appellant that the respondent has already collected the tax from the buyer, TASMAC, has not been disputed. As rightly contended by the appellants, withholding the tax collected from the buyer and not remitting the same to the Court, within time, would amount to unjust enrichment. 28. As per the statute, ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e higher revenue to the Government. We once again request your kindly lift the Form U Notice at the earliest. Thanking you, Yours sincerely, for EMPEE DISTILLERIES LTD Sd/- AUTHORISED SIGNATORY 29. Nowhere in the said letter, the respondent has averred about the escalation cost of manufacture, electricity consumption charges and other reasons stated in the supporting affidavit to W.P.No.24657 of 2017, except to state that the company is facing continued financial constraint, due to reasons beyond their control. Lack of clarity on GST, has been assigned as one of the reasons, for remitting the tax in time. 30. Before the Deputy Commissioner of Tax (CT), Large Tax Payers Unit, Chennai, when the respondent, has assigned the above reasons, for not remitting the tax in time, before the writ Court, has given different reasons. Mere averments in the supporting affidavit to a writ petition, do not amount to proof. 31. Explaining the distinction between the pleadings and proof, required in a writ petition filed under Article 226 of the Constitution of India and the pleadings in the Civil Court, the Hon'ble Supreme Court at paragraph No.13, in Bharat Singh and Others Vs. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter. 34. The object underlying the above principle has been succinctly stated by Scrutton, L.J., in R v. Kensington Income Tax Commissioners, [(1917) 1 KB 486 : 86 LJ KB 257 : 116 LT 136], in the following words: "(I)t has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should made a full and fair disclosure of all the material facts, not law. He must not misstate the law if he can help the Court is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the passage in Dering v. Earl of Winchelsea [(1787) 1 Cox Eq Cas 318: 2 Bos & P 270], which has been referred to, shows that equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for." 14. In Halsbury s Laws of England, 4th Edn., Vol. 16, pp. 874-76, the law is stated in the following terms: 1303. He who seeks equity must do equity. In granting relief peculiar to its own jurisdiction a court of equity acts upon the rule that he who seeks equity must do equity. By this it is not meant that the court can impose arbitrary conditions upon a plaintiff simply because he stands in that position on the record. The rule means that a man who comes to seek the aid of a court of equity to enforce a claim must be prepared to submit in such proceedings to any directions which the known principles of a court of equity may make it proper to give; he must do justice as to the matters in respect of which the assistance of equity is asked. In a court of law it is otherwise: when the plaintiff is found to be entitled to judgment, the law must take its course; no terms can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayami Evan Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in 2008 (1) SCC 560, at Paragraph 16, the Hon'ble Supreme Court held as follows: "15. A writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should not suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. In Advocate General, State of Bihar v. M/s.Madhya Death Khair Industries and Anr. [1980 (3) SC 311, this Court was of the opinion that such a repeated filing of writ petitions amounts to criminal contempt." Respondent, who has suppressed the material facts, is not entitled to any equitable remedy. 33. Statute does not provide payment of tax in installments and therefore, respondent has no right to seek for payment of tax in installments and consequently, no mandamus can be issued. Reference can be made to few decisions, as to when a writ of mandamus, can be issued. (i) In Oriental Bank of Commerce v. Sunder Lal Jain reported in (2008) 2 SCC 280, the Hon'ble Supreme Court, at paragraphs 11 and 12, held thus, "11. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion dependent upon all the surrounding facts and circumstances. 34. From the above, it is manifestly clear that the respondents having collected tax from TASMAC Limited, has not only failed to remit tax, due to the Government, in time, but also withheld the same for a considerable period and by filing successive writ petitions, has been gaining long time, for payment of tax, on installment basis, which the statute does not contemplate. Taking note of the averments in the supporting affidavit to W.P.No.24657 of 2017 as regards financial constraint, respondent seemed to have persuaded the writ Court to exercise discretion in favour of the respondent, which on the facts and circumstances of the case, not entitled. 35. At the risk of repetition, Note 196 in The Law of Extraordinary Legal Remedies by F.G. Ferris and F.G. Ferris, Jr., is reproduced hereunder: "Note 196.-Mandamus is not a writ of right. Its issuance unquestionably lies in the sound judicial discretion of the court, subject always to the well-settled principles which have been established by the courts. An action in mandamus is not governed by the principles of ordinary litigation where the matters alleged on one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount to unjust enrichment and as rightly pointed out would pave way, to similar request. 40. Though, the case in Additional Secretary, Govt of India Vs. Smt.Alka Subhash Gadia and another, reported in 1992 Supp (1) SCC 496, deals with a case of detention, the Hon'ble Supreme Court has explained exercise of discretion, as hereunder. "12.....This is to point out the limitations which the High Court and the Supreme Court have to observe while exercising their respective jurisdiction in such cases. These limitations are normal and well known, and are self-imposed as a matter of prudence, propriety, policy and practice and are observed while dealing with cases under all laws. Though the Constitution does not place any restriction on these powers, the judicial decisions have evolved them over a period of years taking into consideration the nature of the right infringed or threatened to be infringed, the scope and object of the legislation or of the order or decision complained of, the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the persons by whom the jurisdiction is invoked, the nature of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef; (vii) where the satisfaction of the authority is subjective, the Court intervenes when the authority has acted under the dictates of another body or when the conclusion is arrived at by the application of a wrong test or misconstruction of a statute or it is not based on material which is of a rationally probative value and relevant to the subject matter in respect of which the authority is to satisfy itself. If again the satisfaction is arrived at by taking into consideration material which the authority properly could not, or by omitting to consider matters which it ought to have, the Court interferes with the resultant order; (viii) In proper cases the Court also intervenes when some legal or fundamental right of the individual is seriously threatened, though not actually invaded. 13. These limitations are not only equally observed by the High Court and the Supreme Court while exercising their writ jurisdiction in preventive detention matters, but in view of the object for which the detention law is enacted and is permitted by the Constitution to be enacted, the courts are more circumspect in observing them while exercising their said extraordinary equitable and discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons. When it is said that something is to be done within the discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion; according to law and not humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man, competent to the discharge of his office ought to confine himself. (Per Lord Halsbury, L.C., in Sharpe v. Wakefield, reported in 1891 AC 173 = (1886-90) All ER Rep 651 (HL). Also see S.G. Jaisinghani v. Union of India, reported in AIR 1967 SC 1427. 10. The word discretion standin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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