Madras High Court
Emrald Resilient Tyre ... vs The Assistant Commissioner (St) on 21 January, 2021
W..A.Nos.10 to 12 and 15 to 18 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.01.2021
CORAM:
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Writ Appeal Nos.10 to 12 and 15 to 18 of 2021
and
C.M.P.Nos.154, 158, 161, 200, 213, 231 and 245 of 2021
Emrald Resilient Tyre Manufacturers Pvt. Ltd.,
Rep., by CEO & Joint Managing Director,
V.Krishnaram,
No.3, 9th Lane, Sastri Nagar,
Adyar, Chennai-600 020. .. Appellant in all Appeals
-vs-
The Assistant Commissioner (ST),
Adyar Assessment Circle,
46, Greenways Road,
Chennai-600 006. .. Respondent in all Appeals
Appeals under Clause 15 of the Letters Patent to set aside the common
order dated 16.08.2019, made in W.P.Nos.11107, 12126, 11092, 11119, 11117,
11084 and 12130 of 2019.
1/14
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For Appellant : Mr.N.Prasad
(In all Appeals)
For Respondent : Mr.Md.Shaffiq,
(In all Appeals) Special Government Pleader (Taxes)
*******
COMMON JUDGMENT
These appeals have been filed by the appellant/writ petitioner
challenging the common order dated 16.08.2019, passed in W.P.Nos.11107,
12126, 11092, 11119, 11117, 11084 and 12130 of 2019 respectively.
2.The writ petitions were filed challenging the assessment orders
passed by the respondent under the provisions of the Tamil Nadu Value
Added Tax Act, 2006 (hereinafter referred to as “the TNVAT Act”) for the
assessment years 2009-10 to 2015-16.
3.The principal ground, on which the writ petitions were filed, is
alleging that there has been serious violation of principles of natural justice,
since no personal hearing was granted after the evidence and documents were
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filed by the appellant/writ petitioner pursuant to the notices issued by the
respondent proposing to revise the assessment by invoking his power under
Section 27 of the TNVAT Act. Apart from the said ground, other subsidiary
grounds were raised on the computation of taxable turnover more particularly,
with regard to the percentage adopted for manufacturing loss, which the
Assessing Officer fixed at 10%, which according to the appellant would not
exceed 0.50%. Apart from these grounds, the appellant contended that an
amount of Rs.76,84,309/- is to be refunded by the Department to the appellant
with regard to the input tax credit on export sales on corresponding purchases
between January, 2013 and February, 2014.
4.The learned Single Bench has dismissed the writ petitions on the
ground that the appellant has invoked the alternate remedy available under the
Act by filing a statutory appeal before the Appellate Authority under Section
51 of the Act.
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5.With regard to the exercise of jurisdiction under Article 226 of the
Constitution of India, the learned Single Bench rightly noted that the rule of
alternate remedy is self-imposed by exercising jurisdiction. The learned
Single Bench, to support his conclusion, referred to the decision of the
Hon'ble Supreme Court in the case of Assistant Collector of Central Excise,
Chandan Nagar, West Bengal vs. Dunlop India Ltd. and Ors., [(1985) 1
SCC 260] and the decision in the case of United Bank of India vs. Satyawati
Tondon and Ors., [(2010) 8 SCC 110]. After referring to the judgments, the
learned Writ Court, further, rightly noted that the rule of alternate remedy is
not a rule of compulsion, but it is a rule of discretion. Though it is not an
absolute rule, the same has to be applied with utmost rigour when it comes to
matters relating to tax, cess etc.
6.With regard to the allegation of violation of principles of natural
justice, which was taken as a ground in the writ petitions, the learned Single
Bench took a view that opportunity was afforded to the appellant not once,
but twice, but they did not avail the same. Therefore, it ultimately concluded
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that the Writ Court will not exercise its discretion and the writ petitions are
not maintainable. Though we fully agree with the legal aspect as brought out
by the learned Single Bench in the impugned order, we have taken note of the
factual position in the assessee's case and would make a slight departure from
the ultimate conclusion reached by the learned Single Bench. Though we
fully agree with regard to the opinion rendered by the learned Single Bench
qua the availment of alternate remedy in respect of cases arising under tax
statute, we are inclined to take a slightly different view on the concluding part
of the order owing to the fact that the first pre-revision notice given by the
Assessing Officer granted 15 days time to the appellant to file their objections
and also avail an opportunity of personal hearing. The effectiveness of such
notice was considered by one of us (TSSJ) while hearing W.P.Nos.21193 to
21195 of 2017, dated 16.08.2017 in the case of TJSV Steel Fabrication and
Galvanising (India) Pvt. Ltd., vs. Assistant Commissioner (CT), Udumalpet
North Circle. In the said case also, the Assessing Officer granted 15 days
time to the dealer to submit his objection also to avail an opportunity of
personal hearing. It was held in the said writ petitions that the notice dose not
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satisfy the principles of natural justice because the opportunity of personal
hearing should be afforded after the objections are considered by the
Assessing Officer and prima facie, if the Assessing Officer is not in
agreement with the objections, then he will have to hear the dealer, who will
be entitled to place documents and also explain the facts and circumstances.
Therefore, it was held that the opportunity of personal hearing, at that stage,
would be an effective opportunity and not when in the pre-revision notice
itself, it is communicated that an opportunity of personal hearing is available.
It was so held taking note of the fact that there may be cases where on
objections being received to the revision notice, the Assessing Officer may
agree with the dealer and drop the revision proceedings. Though this may be
a rare phenomena, yet it cannot be said that it will never occur. Therefore, we
are of the view that the first pre-revision notice does not satisfy the principles
of natural justice.
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7.The appellant would contend that after they had filed objections and
submitted the documents, they were eagerly waiting for the Assessing Officer
to call them for a personal hearing. This did not happen and the assessment
orders were passed and communicated to the appellant.
8.The Hon'ble Division Bench in SRC Projects Private Limited vs.
Commissioner of Commercial Taxes, Chennai & Anr. [(2010) 33 VST 333
(Madras)], has considered as to why opportunity of personal hearing is to be
afforded. It would be beneficial to refer to the operative portion of the
judgment, which is quoted hereinbelow:-
“22.This Court, therefore, holds that the provision of
Section 16(1)(a) of the said Act has to be construed in
accordance with the said Circular which is by way of
contemporanea exposito. So when a specific demand is made
for personal hearing the reasonable opportunity of showing
cause should include the same in the interest of fairness in
procedure.
23. The finding of the learned single Judge that the writ
petition cannot be entertained in view of the non-exhaustion
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of alternative remedy by the petitioner cannot be sustained in
the facts of the case.
24. It is well settled that the existence of an alternative
remedy does not oust the jurisdiction of a writ court under
Article 226 of the Constitution. Such jurisdiction is plenary in
nature. But the existence of alternative remedy operates as an
automatic restrain on the discretion of the writ court in the
exercise of its jurisdiction. But law in this aspect is well
settled and there are well known exceptions where a writ
petition is entertained despite non-exhaustion of statutory
remedy. If any one of the exceptions exists, it is open to the
writ court to exercise its jurisdiction. Those exceptions are if a
writ petition has been filed for an enforcement of any
fundamental right where there has been a violation of
principles of natural justice at the instance of an inferior
authority or where the proceedings are wholly without
jurisdiction or ultra vires the statute under which such
proceedings have been initiated (see Whirlpool Corporation v.
Registrar of Trade Marks, 1998 (8) SCC page 1 at paragraphs
14 & 15, Pages 9 & 10 of the report), a writ petition can be
entertained.
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25. In Whirlpool Corporation (supra), the learned
Judges have considered the various judgments in coming to
the aforesaid conclusion. In this connection, learned counsel
for the appellant also cited a judgment of a Division Bench of
this Court in the case of Sree Murugan Engineering Products
v. Commercial Tax Officer, Coimbatore reported in 2006 (148)
STC 419 (Mad). In paragraph-14 of the said judgment, the
learned Chief Justice quoting the judgment of the Supreme
Court in the case of State of H.P. v. Gujarat Ambuja Cement
Limited reported in 2005 (142) STC 1 (SC), wherein the same
principles have been reiterated, held that in a case where
there is violation of principles of natural justice, alternative
remedy will not be a bar. We respectfully concur with the
views expressed in the said judgment.
26. Another judgment was also cited by the learned
counsel for the appellant in the case of Jayam Traders v.
Tamil Nadu Taxation Special Tribunal and others reported in
2004 (Vol.136) STC page 302 (Mad.). In this case also, the
learned Judges held that though Section 28-A of the said Act
does not in terms require a hearing to be given to a dealer
who seeks the clarification, but in cases where dealer seeks
for a personal hearing, such dealer should be afforded the
same in all cases where the Commissioner proposes to record
a finding, which is adverse to the dealer, and such adverse
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order to the assessee can only be made after giving the
assessee a hearing.
27. We also hold, in the facts and circumstances of this
case, the impugned order by way of revision of assessment
should not have been passed without giving the assessee an
opportunity of personal hearing. But since the same has been
denied, the impugned order is hereby quashed.
Therefore, opportunity of personal hearing especially, in matters
relating to taxation is a very effective tool where the dealer and the Assessing
Officer have an opportunity to interact and certain facts will emerge during
the interaction, which may not be apparent on print. That apart, we have also
noted that the current situation is not very conducive both for the appellant as
well as the state exchequer and the appellant has also claimed for refund,
which according to them, they are rightfully entitled. This Court deems it
appropriate to modify the ultimate conclusion arrived at by the learned Single
Bench by directing an opportunity to be granted to the appellant, which shall
be subject to certain conditions.
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9.In the light of the above, the writ appeals are allowed and the ultimate
conclusion arrived at by the learned Single Bench for dismissing the writ
petitions is set aside and the appellant is directed to remit 15% of the disputed
tax for each of the assessment years on or before 29.03.2021. If the appellant
complies with the said condition within 7 days there from, the appellant shall
file their objections by treating the impugned assessment orders dated
25.02.2019 as show cause notices, file the documents which they propose to
rely upon. The Assessing Officer upon going through the same and
familiarizing himself with the subject, shall afford an opportunity of personal
hearing to the authorized representative of the appellant, hear the appellant in
full and pass a speaking order on merits and in accordance with law.
10.The learned counsel for the appellant submitted that they had
submitted a representation dated 10.03.2020 to the Joint Commissioner of
Sales Tax (East), Greams Road, Chennai, requesting for processing their
refund claim. The said representation was handed over to the Joint
Commissioner of Sales Tax (East) in person on the said date, viz., 10.03.2020.
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The appellant has also addressed a representation to the Assessing Officer, the
respondent on 15.06.2020 explaining their financial hardship they are
undergoing, which has escalated due to the prevailing pandemic situation.
These representations are also pending with the authorities. Since according
to the appellant they are entitled for refund of the input tax credit on export
sales for transactions done between January, 2013 and February, 2014, the
Department should process the same.
11.The learned Special Government Pleader is right in his submission
that the refund claim is an independent claim and cannot be clubbed along
with the assessment proceedings. However, taking note of the fact that the
claim is pending, it is appropriate for the authorities to take a decision in the
matter and not to keep the matter indefinitely pending. Therefore, we are
inclined to issue appropriate direction to the Joint Commissioner of Sales Tax
(East) to consider the representation submitted by the petitioner on
10.03.2020 and take a decision in the matter as expeditiously as possible
preferably within a period of three months from the date of receipt of a copy
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of this judgment. Since the Joint Commissioner of Sales Tax (East) is not a
party to the proceedings, Registry is directed to mark a copy of this judgment
to the Joint Commissioner of Sales Tax (East), Greams Road, Chennai. No
costs. Consequently, connected miscellaneous petitions are closed.
(T.S.S., J.) (R.N.M., J.)
21.01.2021
abr
Index :Yes/No
Speaking Order/Non-Speaking Order
T.S.Sivagnanam, J.
and
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R.N.Manjula, J.
(abr)
To
1.The Assistant Commissioner (ST),
Adyar Assessment Circle,
46, Greenways Road,
Chennai-600 006.
2.The Joint Commissioner of Sales Tax (East),
Greams Road, Chennai.
W.A.Nos.10 to 12 and 15 to 18 of 2021
21.01.2021
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