Madras High Court
T.Azhakesan vs The State Tax Officer on 5 July, 2021
W.P.Nos.31556 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 05.07.2021
CORAM
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.Nos.31556, 31564, 31569 & 31606 of 2018
and
W.M.P.Nos.36776, 36778, 36787, 36788, 36791, 36792, 36838
and 36839 of 2018
T.Azhakesan ... Petitioner in all W.Ps
- Vs -
1. The State Tax Officer,
Sholingannalur Assessment Circle,
141, 2nd Floor, Yazhini Complex,
Burma Colony 1st Main Road,
Perungudi, Chennai – 600 096.
2. The Commercial Tax Officer,
Group – III, Enforcement (East)
Greams Road, Chennai – 600 006.
3. The Deputy Commissioner (CT)
Chennai (East)
PAPJM Building, Chennai – 600 006. ... Respondents in all W.Ps
Common Prayer : Writ Petitions filed under Article 226 of the Constitution of
India praying to issue a Writ of Certiorarified Mandamus, to call for the
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W.P.Nos.31556 of 2018
impugned proceedings of the first respondent TIN/33630926483/2012-2013,
TIN/33630926483/2013-2014, TIN/33630926483/2014-2015 and
TIN/3363092643/2015-2016, and quash the impugned order dated 04.06.2018
as passed contrary to the law laid down by the Hon'ble Division Bench of the
Madras High Court in the case of Commissioner of Income Tax Vs. M/s.
Kikani Exports Pvt. Ltd., TCA No.330 of 2013 etc, batch dated 09.09.2014 and
in the case of M/s. K.Ramasamy Vs. Deputy Commercial Tax Officer,
Chidambaram-II in W.P.No.12556/2006 dated 18.12.2017.
For Petitioner
in all W.Ps : Mr.S.N.Kirubanandam
For Respondents
in all W.Ps : Mr.V.Nanmaran
Government Advocate
COMMON ORDER
The Writ Petitions on hand are filed, challenging the four assessment
orders passed for the different assessment years.
2. Pursuant to the inspection in the business place of the petitioner by the
Enforcement Wing Officers on 06.01.2017, 30.01.2017, 16.02.2017,
20.03.2017 and 30.03.2017, the defects were identified and accordingly,
reports were submitted. The impugned order states that on verification of the
records and found that the assesses have not filed option letter for payment of
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W.P.Nos.31556 of 2018
tax under compounding scheme as required under Section 6 (2) of the Act. In
the absence of filing of the option letter to the Assessing Officer is not eligible
to pay tax under Section 6 of the Act. Hence, Tax liability is arrived.
3. The learned counsel appearing on behalf of the Writ Petitioner made a
submission that not filing of option letter for payment of tax, cannot be taken as
a criteria for re-assessment and in fact, the High Court of Madras passed an
order dated 18.12.2017 in W.P.No.12556 of 2006, holding that the ''respondent
committed an error in holding that the petitioner did not exercise his option''.
There are several judgments to establish that based on the Enforcement
Directorate Authorities Report, re-assessment cannot be done.
4. The learned counsel for the petitioner reiterated that when it is not
necessary to file an option letter for payment of tax under compounding scheme
as per the Judgment of this Court, there is no reason for passing the impugned
order of assessment by the respondents. Thus, the Assessing Officer has
exercised his power beyond his jurisdiction and therefore, the orders impugned
are liable to be set aside.
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W.P.Nos.31556 of 2018
5. The learned counsel for the petitioner further contended that regarding
the discrepancies in the turn over, the assessee has filed his original return
regarding the turnover and those records were also not verified by the
respondents and unilateral decision was taken and the impugned orders were
passed and thus, the impugned orders are liable to be set aside.
6. The learned Government Counsel for the respondents disputed the
said contentions by stating that the assessment orders were passed by following
the procedures as contemplated under the provisions of the Act. The impugned
assessment orders are passed not only based on report of the Enforcement
Directorate Officials, but, on the basis that there are certain discrepancies in the
turn over and other aspects. Thus, it was the considered order passed by
following the procedures and thus, the Writ Petitions need not be entertained. If
at all, the petitioner has any grievance, he has to prefer an appeal before the
Appellate Authority under the Provisions of the Act.
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W.P.Nos.31556 of 2018
7. Considering the arguments, this Court is of an opinion that the
impugned order stipulates that regarding the difference in the turnover, the
dealers have file Form WW and Profit and Trading and loss account for the
Month of December 2014 only. At the time of filing Form WW, they have
reported that the total sales turnover is Rs.56,08,055/- in the Trading Account.
At that time of inspection, they have not reconcile the above turnover before
the Enforcement Officials. Now, they have stated that the correct turnover is
Rs.62,52,658/- only. But the trading account, they have reported the turnover is
Rs.56,08,055/- only. At that time personal hearing also, they have not
reconcile how they have shown in the Trading Account.
8. On perusal of the above findings in the impugned orders, this Court is
of an opinion that an adjudication is required with reference to the disputed
facts. Regarding the discrepancies in the turnover, verification of records are
required and the Appellate Authority is the final fact finding Authority
regarding the adjudication of disputes. Therefore, preferring an appeal is
preferable for the purpose of resolving the issues in a full-fledged manner.
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9. The respondents in their counter statement also has stated that there
are variations between the turnover reported in the monthly returns filed and
the one reported in the Trading Account / Form WW Return. Thus, the
Assessing Officer / Respondent has not only acted based on the Enforcement
Directorate Officials Report, but verified the returns and considered the merits.
10. The respondents have stated that inasmuch as the returns filed by the
dealers are incorrect and incomplete, a notice proposing to re-determine and
assess the turnover at the appropriate rate of 5% and 14.5% on the difference of
turnover after adopting the ratio of 60:40 for civil contract performed by the
dealer in the absence of split figures in the books of accounts. The notice issued
on 16.10.2017, the dealers had not appeared before the Assessing Authority
and produced the books of accounts for verification. Therefore, opportunity of
personal hearing was granted to the dealers on 12.12.2017 and 21.03.2018. In
reply to this personal hearing notice, the dealer filed a representation dated Nil
along with copies of Form T and Form R Certificates and requested to drop the
assessment proposed. The reply filed by the dealers was perused with reference
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W.P.Nos.31556 of 2018
to the Inspection Report received from the Enforcement Wing. It was observed
that the dealer had not reconciled the figures during the time of inspection and
hence, the variation as pointed out by the Enforcement Wing Authorities still
persist. Even during the time of assessment also, the dealer was not interested
in reconciling the figures. Hence, in the absence of reconciliation being made
and since the dealer had not proved with documentary evidences that they had
filed option to pay tax under the compounding scheme and that the turnover as
pointed out by the Enforcement Wing Officials were already included in the
returns and tax due paid thereon, the Assessing Authorities having no other
alternative, has passed orders, confirming the revision proposed.
11. The above facts would reveal that the respondents had provided
opportunity to the Writ Petitioner to submit all his books of accounts etc., and
the opportunities provided were not availed by the petitioner. Contrarily, they
have sent representation, which was also considered by the Authorities and the
decision is taken and orders passed .
12. This Court is of the considered opinion that persons, who have not
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W.P.Nos.31556 of 2018
availed the opportunities while adjudication under a Statute and thereafter
approaching the Court by filing Writ Petition under Article 226 of the
Constitution of India cannot be encouraged. All such persons, if at all
aggrieved from and out of any such orders passed, they are bound to prefer an
appeal provided under the Act. Exhausting the Appellate remedy is of
paramount importance. Exhausting the appeal remedy is the rule. Entertaining
a writ is an exception.
13. The disputes regarding the turnover, re-conciliation etc., can never
be entertained under Article 226 of the Constitution of India nor based on the
affidavit and considering one point, the High Court cannot exonerate from the
liability to pay sales tax, otherwise in accordance with law. The intricacies
involved in business transactions, trading procedures are to be gone into by the
Competent Original Authorities as well as by the Appellate Authorities for the
purpose of forming a clear opinion in accordance with law. The Appellate
Authority is the final fact finding Authority. Thus, exhausting the appellate
remedy would be of better assistance for the High Court for exercise of power
of judicial review under Article 226 of the Constitution of India in an effective
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W.P.Nos.31556 of 2018
and efficient manner.
14. All such disputed facts regarding turnover, reconciliation,
determination of Tax, etc., cannot be done by the High Court based on the
affidavits filed by the respective parties. There is a possibility of omission,
commission or errors and such an error may cause prejudice to either of the
parties. Thus, High Court is expected to be cautious in the matter of dispensing
with the appeal provision and entertain a Writ Petition regarding the certain
disputed facts.
15. The petitioners are projected that it is a legal question. However, all
legal questions, limitation, jurisdiction, etc., shall be adjudicated by the
Appellate Authority and they are exercising the quasi-judicial powers and
therefore, they are empowered to consider both factual and legal grounds and
pass appropriate orders on merits in accordance with law. Hence, such powers
are conferred on the Appellate Authority. The institution of Appellate
Authority need not be undermined by the High Court. The avenue for an appeal
provided under the Statue to the aggrieved persons cannot be taken away by the
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W.P.Nos.31556 of 2018
High Court by entertaining a Writ Petition directly with reference to certain
disputes. In the event of entertaining the Writ Petition, opportunity of
redressing the grievances before the Appellate Authority is taken away, which
is not preferable.
16. The practice of filing the Writ Petitions are in ascending mode
without exhausting the appeal remedy mostly with an idea to avoid payment of
pre-deposit for filing an appeal. Such a practice can never be encouraged. In
all circumstances, the parties are bound to exhaust the appeal remedy in the
manner prescribed. This being the principles settled by the Courts, this Court
is of an opinion that such disputed questions raised in the Writ Petition cannot
be decided by this Court based on the affidavit or based on the orders passed by
this Court, holding that the option letters need not be submitted by the assessee.
All these issues are to be decided on merits and with reference to the
documents and evidences to be produced.
17. This Court has elaborately considered the importance of exhausting
the appeal remedy in W.P.No.3144 of 2016 dated 15.04.2021 and the relevant
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paragraphs are extracted hereunder:
''7. In order to avoid the Pre-Deposit, which is
contemplated under the Statute, the practice of filing writ
petitions is prevailing in the High Court and the High Court
cannot encourage such practice and the appellate remedy
contemplated under the Act is to be exhausted in all
circumstances and only under extraordinary circumstances, in
order to mitigate injustice, the High Court can intervene and
not otherwise. Such power of dispensing with the appeal
remedy is to be exercised sparingly and not in a routine
manner. The learned Senior Standing Counsels reiterated that,
in respect of the writ petitions on hand, the original assessment
order has been passed either by the Joint Commissioner or by
the Commissioner of Customs. Against such original orders
passed by the original authorities under the provisions of the
Customs Act, an appeal is contemplated under Sections 128
and 129 of the Customs Act, respectively. Without exhausting
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W.P.Nos.31556 of 2018
the appellate remedy, the writ petitioners have filed these writ
petitions, and therefore, the writ petitions are liable to be
dismissed.
8.With reference to the appellate remedy, the Hon'ble
Division Bench of this Court in W.A.No.640 of 2021
[M/s.Fourceess Diamond Pvt. Ltd. and another v. The Joint
Commissioner of Customs (Air Cargo), Meenambakkam,
Chennai] delivered a judgment on 25.02.2021 and the relevant
paragraphs are extracted hereunder :
“8.After elaborately hearing the learned
counsel for the appellants and the learned Senior Standing
Counsel appearing for the respondent, we are of the view
that the issues raised in the writ petition are not purely
questions of law, but mixed questions of fact, which would
require a process of adjudication. Such matters cannot be
decided by a Writ Court based on affidavits. Therefore, we
do agree with the ultimate conclusion of the learned Writ
Court that the appellant should avail the alternate remedy
available under the Act.
9.For the reasons, which we have assigned in the
preceding paragraph, the Writ Appeal stands dismissed
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and the appellants are granted 60 days time from the date
of receipt of a copy of this judgment to file an appeal
before the Commissioner of Customs (Appeals) and if the
same is filed, the Commissioner of Customs (Appeals)
shall entertain the appeal, without reference to the
limitation as the writ petition was filed before this Court
in the year 2016, which is well within the period of
limitation, had the appellants filed appeals before the
Commissioner of Customs (Appeals) at the relevant point
of time.
10.Since the learned counsel for the appellants
submitted that the certified copy of the impugned order
was filed in the writ petition, the Registry is directed to
return the impugned original order filed in the writ
petition, after retaining a photostat copy. No costs.
Consequently, connected miscellaneous petition is
closed.”
....
....
11.This Court is of the considered opinion that all such
grounds raised on merits are to be adjudicated with reference
to the documents and evidences to be produced and the scope of
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W.P.Nos.31556 of 2018
the writ petition under Article 226 of the Constitution of India
cannot be expanded so as to exercise the powers of the
appellate authority in the matter of examination or scrutiny of
original documents and evidences produced by the respective
parties. The very purpose of the statutory appeal is to
scrutinize the orders passed by the original authorities, and
therefore, the legislative intention in this regard is to be
scrupulously followed in the mater of adjudication of merits
with reference to the documents and evidences.
12.In common parlance, Statutes contain appeal
provisions. In some of the Statutes, there are two-tier appeal
provisions in order to ensure that the facts, grounds, evidences
are appreciated and the grievances are redressed in the manner
known to law. Such appeal provisions are provided with the
legislative intention to provide remedy to the aggrieved
persons. The High Court, in normal circumstances, would not
interfere nor dispense with the appellate remedy.
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13.The High Court cannot adjudicate the facts and merits
with reference to documents and evidences. Trial is not
entertainable under Article 226 of the Constitution of India. All
such procedural aspects are to be followed by complete
adjudication/trial by the original authorities as well as by the
appellate authorities under the provisions of the Statute and the
powers under Article 226 of the Constitution of India is limited
to find out whether the processes contemplated under the
Statutes and the procedural aspects are followed by the
competent authorities as well as the appellate authorities or
not. The High Court, under Article 226 of the Constitution of
India, is not expected to usurp the powers of the appellate
authorities by adjudicating the merits of the matter on certain
documents and evidences. In the event of adjudication of
merits under Article 226 of the Constitution of India in the
absence of complete trial with reference to the documents and
evidences, there is a possibility of miscarriage of justice, and
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therefore, the High Court is expected to be cautious, while
entering into the venture of adjudication of certain merits with
reference to the original documents and evidences produced by
the respective parties to the lis. This being the legislative
intention, High Court is expected to trust the institutional
authorities as well as the hierarchy of institutions contemplated
under the Statutes. Institutional respects are of paramount
importance for providing complete justice to the parties and the
various stages of adjudication are important for the purpose of
correcting omissions, commissions, errors in appreciation of
evidence, etc. Powers of the High Court under Article 226 of
the Constitution of India cannot be extended nor widened so as
to allow lay hands on the facts and circumstances by
conducting the trial, nor certain facts and circumstances with
reference to documents and evidences can be assumed or
presumed or inference can be drawn, which is not preferable.
....
15.As far as the judgment of the Hon'ble Supreme Court
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of India in the case of M/s.Canon India Private Limited (supra)
is concerned, as rightly pointed out by the learned Senior
Standing Counsels appearing on behalf of the respondents that
the matter went to the Hon'ble Apex Court by way of regular
appeal and the Hon'ble Supreme Court of India, while
adjudicating the final orders passed by the Appellate Tribunal,
formed an opinion that the issuance of show cause notice itself
was by an improper authority. Thus, by citing the said finding,
the appellate remedy otherwise provided under the Statute
cannot be dispensed with, and in the event of accepting the said
contention, in all such cases, every litigant will approach the
High Court by way of writ petition bypassing the appellate
remedy, which is not desirable and cannot be accepted. As
observed earlier, Institutional respect is of paramount
importance. Even the point of jurisdiction, limitation, error
apparent on the face of the record, are on merits and all are to
be adjudicated before the appellate authority and the appellate
authority, more specifically, the Appellate Tribunal or the
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W.P.Nos.31556 of 2018
Commissioner (Appeals), as the case may be, is empowered to
adjudicate all such legal grounds raised by the respective
parties and make a finding on merits. Thus, usurping the
powers of the appellate authorities by the High Court by
invoking its powers under Article 226 of the Constitution of
India is certainly unwarranted. The parties must be provided
an opportunity to approach the appropriate authorities for
redressal of their grievances in the manner known to law. In
the event of entertaining all such writ petitions, the High Court
will not only be over-burdened, but usurping the powers of the
appellate authority is certainly not desirable.
...
...
18.Large number of writ petitions are filed without
exhausting the statutory appeal remedies and High Court is
also entertaining such writ petitions in a routine manner.
Keeping such writ petitions pending for long time would cause
prejudice to the interest of the assessee also. Thus, such
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W.P.Nos.31556 of 2018
statutory provisions regarding the appeal are to be decided at
the first instance, enabling the litigants to avail the remedy by
following the procedures as contemplated under law. Such writ
petitions are filed may be on the ground of jurisdiction or
otherwise. However, the Courts are expected to ensure that all
such legal grounds available to the parties are adjudicated
before the proper Forum and only after exhausting the
statutory remedies, writ petitions are to be entertained. In the
absence of exhausting such remedies, High Court is loosing the
benefit of deciding the matter on merits as the High Court
cannot conduct a trial or examine the original records in the
writ proceedings under Article 226 of the Constitution of India.
Thus, the Courts shall not provide an unnecessary opportunity
to the assessee to escape from the liability merely on the ground
on jurisdictional error, which is rectifiable.
19.This being the facts and circumstances established,
this Court has no hesitation in arriving at a conclusion that the
petitioners are bound to exhaust the appellate remedy, either
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W.P.Nos.31556 of 2018
under Section 128 or Section 129 of the Customs Act,
respectively. Thus, the petitioners are at liberty to approach
the appellate authority and file an appeal by following the
procedures contemplated and by complying with the conditions
to prefer the appeal, within a period of 60 days from the date of
receipt of a copy of this order, and in the event of filing of
appeal(s) by the writ petitioners within a period of 60 days, all
such appeals are directed to be entertained without reference to
the period of limitation, and the matters are to be adjudicated
on merits and in accordance with law and by affording
opportunity to all the parties, and the appeals are to be
disposed of as expeditiously as possible.''
18. In view of the principles laid down in the Judgment cited supra, the
petitioner has to exhaust the Appellate remedy as contemplated under the
provisions of the Act. Accordingly, the petitioner is at liberty to prefer an
appeal in a prescribed format by applying the provisions of Statute and Rules,
within a period of six weeks from the date of receipt of a copy of this order. If
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W.P.Nos.31556 of 2018
any such appeal is received from the petitioner, the Appellate Authority shall
condone the delay, if any, entertain the appeal and dispose of the same on
merits in accordance with law by affording an opportunity to the Writ
Petitioner and independently without reference to the observations made in this
order.
19. With these directions, the Writ Petitions stand disposed of. No costs.
Consequently, connected miscellaneous petitions are closed.
05.07.2021
Index:Yes / No
Internet:Yes
Speaking / Non-Speaking Order
dh/ssn
To
1. The State Tax Officer,
Sholingannalur Assessment Circle,
141, 2nd Floor, Yazhini Complex,
Burma Colony 1st Main Road,
Perungudi, Chennai – 600 096.
2. The Commercial Tax Officer,
Group – III, Enforcement (East)
Greams Road, Chennai – 600 006.
3. The Deputy Commissioner (CT)
Chennai (East), PAPJM Building,
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W.P.Nos.31556 of 2018
Chennai – 600 006.
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W.P.Nos.31556 of 2018
S.M.SUBRAMANIAM, J.,
dh
W.P.Nos.31556, 31564, 31569
& 31606 of 2018
05.07.2021
https://www.mhc.tn.gov.in/judis/
