Madras High Court
Ppn Power Generating Company Pvt. ... vs The Assistant Commissioner Of ... on 28 July, 2021
W.P.Nos.15465 & 15467 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.07.2021
CORAM:
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.Nos.15465 & 15467 of 2021
and W.M.P.Nos.16398 & 16400 of 2021
PPN Power Generating Company Pvt. Ltd.,
Represented by its Joint Managing Director,
Mr.Harshad Reddy,
1-A, III Floor, Jhaver Plaza,
Nungambakkam High Road,
Chennai 600 034. .. Petitioner in both W.Ps.
Vs.
The Assistant Commissioner of Income Tax,
Central Circle-3(1) Chennai,
Room No.316, New No.46,
Mahatma Gandhi Road,
Chennai 600 034. .. Respondent in both W.Ps.
Common Prayer: Writ Petitions filed under Article 226 of the Consitution of
India, to issue a Writ of Certiorari, calling for the records and quash the
assessment order bearing DIN ITBA/AST/M/147/2021-22/1033632435 (1)
dated 23.06.2021 and DIN ITBA/AST/M/147/2021-22/1033659609 (1) dated
24.06.2021, passed by the respondent respectively.
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W.P.Nos.15465 & 15467 of 2021
(In both W.Ps.)
For Petitioner : Mr.Aravind Dater P.
(Senior Counsel)
for Mr.Anand Sashidharan
For Respondent : Mr.A.P.Srinivas
(Senior Standing Counsel for IT)
COMMON ORDER
The lis on hand is to assail the orders of assessment dated 23.06.2021
and 24.06.2021, passed by the respondent. The orders of assessment
impugned were passed under Section 143 (3) r/w Section 147 of the Income
Tax Act, 1961 (hereinafter, referred to as, 'the Act').
2.It is not in dispute that the original orders of assessment are
appealable, under the provisions of the Act.
3.At the admission stage, when this Court raised an objection regarding
the entertainability of the Writ Petition, as the petitioner has to exhaust the
appellate remedy, as contemplated under the Act, the learned Senior Counsel
appearing on behalf of the petitioner would submit that it is a case where the
impugned orders of assessment were passed in violation of principles of
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natural justice and the authority who passed the impugned orders of
assessment lacks jurisdiction and further, the mandatory requirements as
contemplated under proviso to Section 147 of the Act has not been adhered
to.
4.To substantiate the said contention, the learned Senior Counsel
drawn the attention of this Court regarding the notice issued under Section
148 of the Act in proceedings dated 25.02.2010. Though the notice was
issued on 25.02.2010, it was received by the petitioner on 08.09.2010. There
was a delay of about 7 months even to serve Section 148 notice. Thus, a
factual inference is to be drawn that the notice was not served within the
period of limitation and the Courts have held that service of notice also to be
taken into account for the purpose of deciding the point of limitation. The
reasons furnished for reopening of assessment was communicated in
proceedings dated 16.09.2010, which reveals that “it is noticed that
provisions for anticipated contract losses of Rs.10835 Lakhs to be added back
in computing the book profit u/s 116 JB as the same is only provision and not
an ascertained liability”. The petitioner assessee submitted their objections
and thereafter, the petitioner filed W.P.Nos.989 of 2011, challenging the
initiation of reopening of assessment under Section 147/148 of the Act and
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consequential proceedings initiated. This Court passed as under:
“4.With the above observations, the Writ Petitions
stand closed with liberty to the petitioner either to file their
returns or seek for reasons, if not already given. Such an
exercise of raising their objections shall be done within a
period of four weeks from the date of receipt of a copy of
this order. In case, such objections are filed before the
assessing officer, the same shall be considered in
accordance with law and reasoned speaking orders shall
be passed, as expeditiously as possible. In case, any of the
assessees had already filed their objections, the same shall
also be considered within the said period of four weeks,
from the date of receipt of a copy of the order. No costs.
Consequently, connected Miscellaneous Petitions are
closed.”
5.Thereafter, the petitioner, vide letter dated 02.11.2020, stated that the
notice under Section 148 of the Act was issued after an expiry of four years
from the date of assessment and therefore, with reference to Paragraph No.4
at page No.5 of the order of this Court dated 19.07.2019 in W.P.No.989 of
2011, actions are to be initiated. The objections submitted by the petitioner
were considered and disposed of by the assessing authority in proceedings
dated 23.12.2020 and 22.12.2020 respectively. Detailed orders have been
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passed. Subsequently, a request for rectification of mistake apparent in the
orders of disposing the objections were filed by the petitioner on 11.01.2021.
The said applications of request for rectification of mistake were also
considered and disposed of by the assessing authority in proceedings dated
01.03.2021. Thereafter, the petitioner has stated that they were unable to file
returns electronically. Further, submitted a letter on 18.06.2021. The
authority has further passed an order and finally, orders of assessment were
passed under Section 143 (3) r/w Section 147 of the Act, which are impugned
in the present Writ Petitions.
6.The learned Senior Counsel strenuously contended that it is a case
which required an elaborate adjudication. There is a violation of principles of
natural justice. The opportunity, as contemplated, were not granted to the
petitioner. The authority was lacking in jurisdiction. Therefore, the Writ
Petitions are to be admitted and the original files are to be called for, for the
purpose of scrutinization.
7.In support of the contentions, the learned Senior Counsel relied on
the judgment in the case of International Flavours Fragrances India Pvt.
Ltd., vs. Joint Commissioner (LTU) and others, reported in [2020] 429 ITR
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28 (Mad), wherein, the Court made the following observations:
“8.Proceedings for re-assessment initiated beyond
four years from the end of the relevant assessment year
have to satisfy the added condition set out in the proviso to
Section 147 of the Act. Normally, the time limit for
initiation of re- assessment is four years from the end of the
subject assessment year with an extended period of two
years provided to the Department conditional upon the
Department establishing that the alleged escapement of
income was attributable to the failure of the assessee to file
a return or to make a full and true disclosure of its income
for the relevant period.
................
12.A perusal of the reasons extracted elsewhere in
this order only referred to the issue of classification of
royalty on merits and nowhere it is stated that there has
been any failure by the petitioner in making a disclosure in
this regard. To be fair to the Assessing Officer, he does not
even make such allegation in the reasons for re-assessment
and rightly so, since the material available would show a
full disclosure by the petitioner at all stages of assessment.
Thus I am of the view that the impugned order dated
26.08.2019 rejecting the objections to assumption of
jurisdiction is liable to be quashed and I do so.”
8.In the case of M/s.Kone Elevators (India) Pvt. Limited, Vs.
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Assistant Commissioner of Income-Tax, this Court passed the order on
16.06.2021 in W.P.No.43662 of 2016 as under:
“12.Let us now look into the conditions stipulated
under Proviso to Section 147 of the Act, which
contemplates that where an assessee under sub-Section (3)
of Section 147 or Section 147 has been made for the
relevant assessment year, no action shall be taken under
Section 147 after the expiry of four years from the end of
the relevant assessment year, unless any income
chargeable to tax has escaped assessment for such
assessment year by reason of failure on the part of the
assessee to make a return under Section 139 or in response
to a notice issued under sub-Section (1) of Section 142 or
Section 148 or to disclose fully and truly all material facts
necessary for his assessment, for that assessment year.
................
14.The language employed in the Provision is to be
interpreted constructively and pragmatically so as to
understand the purpose and object. Plain meaning would
not serve the purpose to meet out the object of the
provision. Thus, this Court is of an opinion that the
language employed under the Proviso to Section 147 i.e.,
“to disclose fully and truly all material facts” denotes that
there must be an intention or motive on the part of the
assessee to suppress certain facts at the time of passing an
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assessment order by the original authority.
15.Question may arise, if certain non-disclosure can
be a ground for reopening. In this regard, absolutely there
is no bar for reopening of assessment within a period of
four years under Section 147 of the Act and if the
reopening of assessment is to be made beyond four years,
then it must be established that the assessee has not
disclosed fully and truly all material evidence with an
intention to escape from the payment of tax. Mere non-
disclosure is insufficient in view of the fact that the
assessee may have certain opinions in the matter of
furnishing certain details to the Assessing Officer.
Therefore, the motive or intention on the part of the
assessee for such non-disclosure is also a material ground
to be considered by the Courts as well as by the authority
at the time of reopening of assessment beyond the period of
four years.
16.In respect of the case on hand, undoubtedly, the
assessee had not submitted the ratification certificate to be
obtained from the CBDT for claiming exemption under
Section 10B of the Act. However, there are certain
confusions even within the Department Officials regarding
production of such ratification certificate from the CBDT.
The dispute arises in view of the fact that the assessee is of
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an opinion that the approval granted by the STPI under the
delegated powers of the Directors of STPI by IMSC is a
valid approval for the purpose of claiming exemption
under Section 10B of the Act. Therefore, the presumption
cannot be construed as suppression on the part of the
assessee. It is not a mere presumption in the present case
by the assessee. The presumption has got a valid reason
because the assessee is holding a valid approval obtained
from the STPI and the power to grant approval was
delegated to the Directors of STPI by IMSC. It is not as if
the assessee claimed exemption under Section 10B without
any such approval. It is a case where the order of
approval, which was validly granted, was produced before
the Assessing Officer at the time of scrutiny and the
Assessing Officer also accepted the approval order and
granted exemption. Thus, the reason stated in the
impugned proceedings that the assessee committed a
mistake cannot be accepted. The assessee was possessing
a valid approval which was produced before the Assessing
Officer and if a ratification is to be obtained, then the
Assessing Officer, at the time of scrutiny, ought to have
directed the assessee to get any such ratification certificate
for the purpose of grant of exemption under Section 10B
which the Department had not done. Thus, it was a mistake
or omission committed by the Assessing Officer at the time
of passing of the original assessment order. Even in such
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cases, if the reopening of assessment is made within a
period of four years, then there is a ground for the
Department to reopen the same. However, in the present
case, the reopening of assessment is made beyond the
period of four years and therefore, the statutory
requirement contemplated under Section 147 is to be
complied with scrupulously. Thus, the ground taken for
reopening of assessment that the assessee has not disclosed
fully and truly all material facts is not established in the
present case and the assessee, in fact, submitted all the
particulars regarding the approval granted by the
authority and further ratification, if required, must be
instructed by the Department which was not done and
therefore, there was no suppression or non-disclosure of
material facts by the assessee. Thus, the initiation of
proceedings under Section 147 of the Act, beyond the
period of four years, is not sustainable and consequently,
the impugned proceedings are not in consonance with the
conditions stipulated in the Proviso to Section 147 of the
Act.”
9.The three Judges Bench of the Hon'ble Supreme Court of India, in
the case of TIN Box Company, New Delhi Vs. CIT, New Delhi, reported in
(2001) 9 SCC 725, made an observation as follows:
“2................That order must be made after the
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assessee has been given a reasonable opportunity of setting
out his case. We, therefore, do not agree with the Tribunal
and the High Court that it was not necessary to set aside
the order of assessment and remand the matter to the
assessing authority for fresh assessment after giving to the
assessee a proper opportunity of being heard.
............
5.................The matter shall now be remanded to the
assessing authority for fresh consideration, as aforestated.
No order as to costs.”
10.In the case of T.M.Hotels Private Limited Vs. The Additional
Commissioner of Central Excise, this Court passed an order on 06.07.2021
in W.P.No.14099 of 2014 as under:
“7.This Court is of the considered opinion that in all
circumstances, the parties aggrieved are bound to prefer
an appeal before the appellate authority. However, in
certain circumstances, the Courts are bound to consider
whether the denial of opportunity caused certain prejudice
to the interest of the person aggrieved. In the present case,
admittedly, the summons were issued to the petitioner.
However, the learned counsel for the petitioner entered
appearance in the proceedings before the respondent on
04.03.2014 itself. Thus, there is a possibility that the
petitioner would not have informed about the summons to
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their counsel regarding the personal hearing. Under those
circumstances, the counsel was not aware of the date of
hearing and the same resulted in passing of the final order
without hearing the learned counsel who entered
appearance on behalf of the writ petitioner.”
11.Relying on the above judgments, the learned Senior Counsel
reiterated that the petitioner need not be unnecessarily driven to approach the
appellate authority for exhausting the appeal remedy. Instead, the case is to
be admitted and the respondent must be directed to file counter in respect of
the grounds raised in the present Writ Petitions.
12.The learned Senior Standing Counsel appearing on behalf of the
respondent solicited the attention of this Court with reference to the Writ
Petition earlier filed by the very same writ petitioner in W.P.No.989 of 2011.
The petitioner challenged the 148 notice and the consequential proceedings
and this Court considered the case of the petitioner and pass an order on
19.07.2019, granting liberty to the petitioner. The petitioner also submitted
various letters and perusal of the said letters would reveal that the petitioner
has made an attempt to prolong and protract the matter, instead of defending
their case by availing the opportunities provided by the authorities competent,
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pursuant to the orders passed by this Court. Therefore, the Assessing Officer,
after providing opportunity as contemplated, passed the final orders of
assessment on merits and in accordance with law. Thus, the petitioner has to
avail the remedy provided under the Act. The petitioner may raise all the
legal and factual grounds before the appellate authority for effective
adjudication. Thus, the Writ Petitions are to be rejected.
13.The question to be considered by this Court is, whether the Court
may dispense with the appellate remedy, contemplated under the provisions
of the Act, in a routine and casual manner, which would undermine the
authorities on appeal.
14.On several occasions, the similar issue was considered by various
constitutional Courts across the Country. In all circumstances, the aggrieved
person is bound to exhaust the appellate remedy provided under the relevant
statutes. Only on exceptional circumstance, where the order in question was
issued by an incompetent authority having no jurisdiction under the
provisions of the statute or allegations of malafides are raised, then a writ
proceedings may be entertained. Even in case of raising an allegation of
malafides, the authority against whom such an allegation is raised must be
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impleaded as party respondent in his personal capacity.
15.The importance of exhausting the appellate remedy is consistently
insisted upon by the constitutional Courts. The efficacious remedy provided
under the statute need not be undermined, nor an opportunity provided to the
aggrieved person under the statute need not be taken away in casual and
routine manner. In the event of dispensing with the appellate remedy, the
aggrieved person is deprived of an opportunity to adjudicate the
disputes/merits with reference to the original documents and evidences.
Undoubtedly, the appellate authority is the final fact finding authority and
their findings in a appellate proceedings may be of valuable assistance to the
constitutional Courts to exercise the power of judicial review, effectively
under Article 226 of the Constitution of India, for the purpose of providing
complete justice to the parties to the lis. Therefore, the Courts are expected to
be cautious, while dispensing with the appellate remedy and casual
admissions of writ petitions are to be avoided. Whenever the appellate
remedy is contemplated, which is efficacious, then the parties are bound to
exhaust the same.
16.The litigants are approaching the High Court without exhausting the
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remedy. Sometimes, with an idea to avoid pre-deposits, if any prescribed, or
by stating that they may not get speedy and efficacious remedy. These
grounds cannot be countenanced as the legislative intention for providing an
appellate remedy, at no circumstances, be diluted, nor be construed as
ineffective. The appellate authorities, undoubtedly are possessing certain
expertise in a particular field and their deliberation and findings are of
paramount importance for the purpose of exercise of power of judicial review
in a writ proceedings. Therefore, in the event of entertaining a Writ Petition
against an Order-in-Original, the High Court is compelled to adjudicate the
disputed facts. It is pertinent to note that such disputed facts, on some
occasions, are adjudicated merely based on the affidavits filed by the
respective parties, as well as the selective Xerox copies of the documents
filed along with the Writ Petitions. Such an adjudication may result in
erroneous consideration of certain factual aspects and there is a possibility of
commission and omission at the instance of the parties. The High Court,
therefore, is expected to exercise restraint in adjudicating the disputed facts,
which is to be made by the final fact finding authority, based on the original
records and materials.
17.As far as exhaustion of appellate remedy is concerned, this Court
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has elaborately discussed the importance of exhausting the appellate remedy
taking note of the judgments of the Hon'ble Supreme Court of India in the
case of M/s.Sri Sathya Jewellery Vs. The Principal Commissioner of
Customs, in W.P.No.3144 of 2016 dated 15.04.2021, which reads as under:
“14.This Court elaborately discussed the importance of exhausting
the appellate remedy in the case of M/s.Hyundai Motor India Limited v.
The Deputy Commissioner of Income Tax, Chennai and another
[W.P.No.22508 of 2017 dated 16.07.2018], from which, the following
paragraphs are extracted :
“19.Unnecessary or routine invasion into the statutory
powers of the competent authorities under a statute should be
restrained by the Constitutional Courts. Frequent or unnecessary
invasions in the executive power will defeat the constitutional
perspectives enshrined under the Constitution of India.
Undoubtedly, the separation of powers under the Indian
Constitution has been narrated and settled in umpteen number of
judgments. Separation of powers demarcated in the Constitution of
India is also to be considered, while exercising the powers of
judicial review in the matter of dispensing with the appeal remedy
provided for an aggrieved person under a statute. If the High
Courts started interfering with such Appellate powers without any
valid and substantiated reasons, then the very purpose and object
of the statute and provision of appeal under the statute became an
empty formality and the High Courts also should see that the
provisions of appeal contemplated under the statutes are
implemented in its real spirit and in accordance with the
procedures contemplated under the rules constituted thereon.
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While entertaining a writ petition as narrated by the Apex Court,
the provision of efficacious alternative remedy under the statute
also to be considered. If the writ petitions are entertained in a
routine manner, by not allowing the competent Appellate authority
to exercise their powers under the provisions of the statute, then
this Court is of an opinion that the power of judicial review has not
exercised in a proper manner. Thus, it is necessary for this Court
to elaborate the legal principle settled in respect of the separation
of powers under the Constitution of India.
1. Madras Bar Association vs. Union of India (UOI)
(25.09.2014 - SC) : MANU/SC/0875/2014
If the historical background, the preamble, the entire
scheme of the Constitution, relevant provisions thereof including
Article 368 are kept in mind there can be no difficulty in discerning
that the following can be regarded as the basic elements of the
constitutional structure. (These cannot be catalogued but can only
be illustrated):
(1) The supremacy of the Constitution.
(2) Republican and Democratic form of government and
sovereignty of the country.
(3) Secular and federal character of the Constitution.
(4) Demarcation of power between the Legislature, the
executive and the judiciary.
(5) The dignity of the individual secured by the various freedoms
and basic rights in Part III and the mandate to build a welfare State
contained in Part IV.
(6) The unity and the integrity of the Nation.
2. Holiness Kesavananda Bharati Sripadagalvaru v. State
of Kerala and Anr. [MANU/SC/0445/1973 : (1973) 4 SCC
225].
That separation of powers between the legislature,
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the executive and the judiciary is the basic structure of the
Constitution is expressly stated by Sikri, C.J.
3. P. Kannadasan and Ors. v. State of T.N. and Ors.
[MANU/SC/0650/1996 : (1996) 5 SCC 670] the Supreme
Court noted that the Constitution of India recognised the doctrine
of separation of powers between the three organs of the State,
namely, the legislature, the executive and the judiciary. The Court
said:
It must be remembered that our Constitution recognises and
incorporates the doctrine of separation of powers between the
three organs of the State, viz., the Legislature, the Executive and
the Judiciary. Even though the Constitution has adopted the
parliamentary form of government where the dividing line between
the legislature and the executive becomes thin, the theory of
separation of powers is still valid.
4. State of Tamil Nadu and Ors. vs. State of Kerala and Ors.
(07.05.2014 - SC) : MANU/SC/0425/2014
121. On deep reflection of the above discussion, in our opinion, the
constitutional principles in the context of Indian Constitution
relating to separation of powers between legislature, executive and
judiciary may, in brief, be summarized thus:
(i) Even without express provision of the separation of powers,the
doctrine of separation of powers is an entrenched principle in the
Constitution of India.
The doctrine of separation of powers informs the Indian
constitutional structure and it is an essential constituent of
rule of law.
In other words, the doctrine of separation of power though not
expressly engrafted in the Constitution, its sweep, operation and
visibility are apparent from the scheme of Indian Constitution.
Constitution has made demarcation, without drawing formal lines
between the three organs- legislature, executive and judiciary. In
that sense, even in the absence of express provision for separation
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of power, the separation of power between legislature, executive
and judiciary is not different from the constitutions of the countries
which contain express provision for separation of powers.
(ii) Independence of courts from the executive and
legislature is fundamental to the rule of law and one of the
basic tenets of Indian Constitution.
Separation of judicial power is a significant constitutional principle
under the Constitution of India.
(iii) Separation of powers between three organs--
legislature, executive and judiciary--is also nothing but a
consequence of principles of equality enshrined in Article
14 of the Constitution of India. Accordingly, breach of
separation of judicial power may amount to negation of equality
Under Article 14. Stated thus, a legislation can be invalidated on
the basis of breach of the separation of powers since such breach
is negation of equality Under Article 14 of the Constitution.
(iv) The superior judiciary (High Courts and Supreme Court) is
empowered by the Constitution to declare a law made by the
legislature (Parliament and State legislatures) void if it is found to
have transgressed the constitutional limitations or if it infringed the
rights enshrined in Part III of the Constitution.
(v) The doctrine of separation of powers applies to the final
judgments of the courts. Legislature cannot declare any decision of
a court of law to be void or of no effect. It can, however, pass an
amending Act to remedy the defects pointed out by a court of law
or on coming to know of it aligned.
In other words, a court's decision must always bind unless the
conditions on which it is based are so fundamentally altered that
the decision could not have been given in the altered
circumstances.
(vi) If the legislature has the power over the subject-matter and
competence to make a validating law, it can at any time make such
a validating law and make it retrospective. The validity of a
validating law, therefore, depends upon whether the legislature
possesses the competence which it claims over the subject-matter
and whether in making the validation law it removes the defect
which the courts had found in the existing law.
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20.This Court is of a strong opinion that institutional respects
are to be maintained by the constitutional Courts. Whenever there is
a provision for an appeal under the statute, without exhausting the
remedies available under the statute, no writ petition can be
entertained in a routine manner. Only on exceptional circumstances,
the remedy of appeal can be waived, if there is a gross injustice or if
there is a violation of fundamental rights ensured under the
Constitution of India. Otherwise, all the aggrieved persons from and
out of the order passed by the original authority is bound to
approach the Appellate Authority. The Constitutional Courts cannot
make an appeal provision as an empty formality. Every Appellate
Authority created under the statute to be trusted in normal
circumstances unless there is a specific allegation, which is
substantiated in a writ proceedings. Thus, the institutional functions
and exhausting the appeal remedies by the aggrieved persons, are
to be enforced in all circumstances and writ proceedings can be
entertained only on exceptional circumstances. Rule is to prefer an
appeal and entertaining a writ is only an exception. This being the
legal principles to be followed, this Court cannot entertain the writ
petitions in a routine manner by waiving the remedy of appeal
provided under the statute.
21.Now, let us look into the legal principles settled by the
Apex Court for exhausting the efficacious alternative remedy
provided under the statute.
22.When an effective alternative remedy is available, a writ
petition cannot be maintained
1. In City and Industrial Development Corporation v.
DosuAardeshirBhiwandiwala and Ors. MANU/SC/8250/2008 :
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(2009) 1 SCC 168, this Court had observed that:
The Court while exercising its jurisdiction under Article 226 is duty-
bound to consider whether:
(a) adjudication of writ petition involves any complex and disputed
questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the Petitioner has any alternative or effective remedy for the
resolution of the dispute;
(d) person invoking the jurisdiction is guilty of unexplained delay and
laches;
(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by any valid law;
and host of other factors.
2. KanaiyalalLalchand Sachdev and Ors. vs. State of
Maharashtra and Ors. (07.02.2011 - SC) : MANU/SC/0103/2011
It is well settled that ordinarily relief Under Articles 226/227 of the
Constitution of India is not available if an efficacious alternative
remedy is available to any aggrieved person. (See Sadhana Lodh v.
National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and
SBI v. Allied Chemical Laboratories.)
3. Commissioner of Income Tax and Ors. v. ChhabilDass
Agarwal, MANU/SC/0802/2013 : 2014 (1) SCC 603, as follows:
Para 15. while it can be said that this Court has recognised some
exceptions to the Rule of alternative remedy i.e. where the statutory
authority has not acted in accordance with the provisions of the
enactment in question, or in defiance of the fundamental principles
of judicial procedure, or has resorted to invoke the provisions which
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are repealed, or when an order has been passed in total violation of
the principles of natural justice, the proposition laid down in
ThansinghNathmal case, Titaghur Paper Mills case and other similar
judgments that the High Court will not entertain a petition Under
Article 226 of the Constitution if an effective alternative remedy is
available to the aggrieved person or the statute under which the
action complained of has been taken itself contains a mechanism for
redressal of grievance still holds the field. Therefore, when a
statutory forum is created by law for redressal of grievances, a writ
petition should not be entertained ignoring the statutory
dispensation.
4. Authorized Officer, State Bank of Travancore and Ors. vs.
Mathew K.C. (30.01.2018 - SC) : MANU/SC/0054/2018
The petitioner argued that the SARFAESI Act is a complete code by
itself, providing for expeditious recovery of dues arising out of loans
granted by financial institutions, the remedy of appeal by the
aggrieved under Section 17 before the Debt Recovery Tribunal,
followed by a right to appeal before the Appellate Tribunal
under Section 18. The High Court ought not to have entertained the
writ petition in view of the adequate alternate statutory remedies
available to the Respondent. The interim order was passed on the
very first date, without an opportunity to the Appellant to file a reply.
Reliance was placed on United Bank of India vs. Satyawati Tandon
and others, 2010 (8) SCC 110, and General Manager, Sri
Siddeshwara Cooperative Bank Limited and another vs. Ikbal and
others, 2013 (10) SCC 83. The writ petition ought to have been
dismissed at the threshold on the ground of maintainability. The
Division Bench erred in declining to interfere with the same. The
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Supreme Court agreed to the arguments and held the same also
noted that the writ petition ought not to have been entertained and
the interim order granted for the mere asking without assigning
special reasons, and that too without even granting opportunity to
the Appellant to contest the maintainability of the writ petition and
failure to notice the subsequent developments in the interregnum.
5. State of Himachal Pradesh v. Gujarat Ambuja Cement
Ltd. reported at AIR 2005 SC 3856, the Supreme Court explained
the rule of 'alternate remedy' in the following terms
Considering the plea regarding alternative remedy as raised by the
appellant-State. Except for a period when Article 226 was amended
by the Constitution (42nd Amendment) Act, 1976, the power
relating to alternative remedy has been considered to be a rule of
self imposed limitation. It is essentially a rule of policy, convenience
and discretion and never a rule of law. Despite the existence of an
alternative remedy it is within the jurisdiction of discretion of the
High Court to grant relief under Article 226 of the Constitution. At the
same time, it cannot be lost sight of that though the matter relating
to an alternative remedy has nothing to do with the jurisdiction of
the case, normally the High Court should not interfere if there is an
adequate efficacious alternative remedy. If somebody approaches
the High Court without availing the alternative remedy provided the
High Court should ensure that he has made out a strong case or that
there exist good grounds to invoke the extraordinary jurisdiction.
6. K.S. Rashid and Sons v. Income Tax Investigation
Commission and Ors., AIR (1954) SC 207; Sangram Singh v.
Election Tribunal, Kotah and Ors., AIR (1955) SC 425; Union
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of India v. T.R. Varma, AIR (1957) SC 882; State of U.P. and
Ors. v. Mohammad Nooh, AIR (1958) SC 86 and M/s K.S.
Venkataraman and Co. (P) Ltd. v. State of Madras, AIR
(1966) SC 1089,
Constitution Benches of the Supreme Court held that Article 226 of
the Constitution confers on all the High Courts a very wide power in
the matter of issuing writs. However, the remedy of writ is an
absolutely discretionary remedy and the High Court has always the
discretion to refuse to grant any writ if it is satisfied that the
aggrieved party can have an adequate or suitable relief elsewhere.
The Court, in extraordinary circumstances, may exercise the power if
it comes to the conclusion that there has been a breach of principles
of natural justice or procedure required for decision has not been
adopted.
7. First Income-Tax Officer, Salem v. M/s. Short Brothers (P)
Ltd., [1966] 3 SCR 84 and State of U.P. and Ors. v. M/s.
Indian Hume Pipe Co. Ltd., [1977] 2 SCC 724.
There are two well recognized exceptions to the doctrine of
exhaustion of statutory remedies. First is when the proceedings
are taken before the forum under a provision of law which is ultra
vires, it is open to a party aggrieved thereby to move the High
Court for quashing the proceedings on the ground that they are
incompetent without a party being obliged to wait until those
proceedings run their full course. Secondly, the doctrine has no
application when the impugned order has been made in violation of
the principles of natural justice. We may add that where the
proceedings itself are an abuse of process of law the High Court in
an appropriate case can entertain a writ petition.”
18.The Hon'ble Supreme Court of India, in the case of M/s.Canon
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India Private Limited v. Commissioner of Customs [Civil Appeal No.1827
of 2018, dated 09.03.2021] dealt with the jurisdiction aspect with reference to
the provisions of the statute in paragraph Nos.9, 12, 13 and 15, which all are
extracted hereunder:
“9.The question that arises is whether the
Directorate of Revenue Intelligence had authority in law to
issue a show cause notice under Section 28(4) of the Act
for recovery of duties allegedly not levied or paid when the
goods have been cleared for import by a Deputy
Commissioner of Customs who decided that the goods are
exempted. It is necessary that the answer must flow from
the power conferred by the statute i.e. under Section 28(4)
of the Act. This Section empowers the recovery of duty not
paid, part paid or erroneously refunded by reason of
collusion or any wilful mis-statement or suppression of
facts and confers the power of recovery on “the proper
officer”. The obvious intention is to confer the power to
recover such duties not on any proper officer but only on
“the proper officer”. This Court in Consolidated Coffee
Ltd. and Another vs. Coffee Board, Bangalore has held:-
“14. ...Secondly, and more importantly,
the user of the definite article ‘the’ before the
word ‘agreement’ is, in our view, very
significant. Parliament has not said ‘an
agreement’ or 'any agreement’ for or in
relation to such export and in the context the
expression ‘the agreement’ would refer to that
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agreement which is implicit in the sale
occasioning the export.”
In Shri Ishar Alloy Steels Ltd. vs.
Jayaswals Neco Ltd. has held:-
“9. ...’The’ is the word used before
nouns, with a specifying or particularising
effect as opposed to the indefinite or
generalizing force of ‘a’ or ‘an’. It determines
what particular thing is meant; that is, what
particular thing we are to assume to be meant.
‘The’ is always mentioned to denote a
particular thing or a person.” ...
12.The nature of the power to recover the duty, not
paid or short paid after the goods have been assessed and
cleared for import, is broadly a power to review the earlier
decision of assessment. Such a power is not inherent in any
authority. Indeed, it has been conferred by Section 28 and
other related provisions. The power has been so conferred
specifically on “the proper officer” which must necessarily
mean the proper officer who, in the first instance, assessed
and cleared the goods i.e. the Deputy Commissioner
Appraisal Group. Indeed, this must be so because no fiscal
statute has been shown to us where the power to re-open
assessment or recover duties which have escaped
assessment has been conferred on an officer other than the
officer of the rank of the officer who initially took the
decision to assess the goods.
13.Where the statute confers the same power to
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perform an act on different officers, as in this case, the two
officers, especially when they belong to different
departments, cannot exercise their powers in the same
case. Where one officer has exercised his powers of
assessment, the power to order re-assessment must also be
exercised by the same officer or his successor and not by
another officer of another department though he is
designated to be an officer of the same rank. In our view,
this would result into an anarchical and unruly operation
of a statute which is not contemplated by any canon of
construction of statute.
...
15.It is obvious that the re-assessment and recovery
of duties i.e. contemplated by Section 28(4) is by the same
authority and not by any superior authority such as
Appellate or Revisional Authority. It is, therefore, clear to
us that the Additional Director General of DRI was not
“the” proper officer to exercise the power under Section
28(4) and the initiation of the recovery proceedings in the
present case is without any jurisdiction and liable to be set
aside.”
19.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
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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 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.
20.The growing practice in the High Court is to file writ petitions
under Article 226 of the Constitution of India without exhausting the
statutory remedies provided under the Act. The point raised in this regard are
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statutory violations. However, such statutory violations can be dealt with by
the Appellate authorities or the Appellate Tribunals. This apart, in a writ
petition, if such orders passed with jurisdictional errors are quashed without
any remand, then an injustice would be caused to the very spirit of the Statute
enacted for the benefit of the public at large. The procedures to be followed
in the department for assessment is well settled. Thus, the authorities
competent are not expected to commit patent jurisdictional errors in a routine
manner. In these circumstances, review of such orders by the higher
authorities are imminent to form an opinion that there is any willful or
intentional act for commission of such jurisdictional errors, enabling the
assesses to get exonerated from the liability. Liability and jurisdictional errors
are distinct factors, and therefore, Courts are expected to provide an
opportunity to the Department to decide the liability on merits and in
accordance with law with reference to the provisions of the Act and Rules
and guidelines issued by the Department.
22.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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statutory provisions regarding the appeal to be preferred 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.
23.Regarding the contentions raised on behalf of the writ petitioner
with reference to the jurisdiction and violations of the principles of natural
justice, they are not striking the conscious of this Court, so as to invoke the
extraordinary jurisdiction, as the adjudication on disputed facts became
necessary. The point of jurisdiction and principles of natural justice are
pleaded commonly, which all are deeply associated with the disputed facts
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and circumstances. Thus, an elaborate adjudication with reference to the
original documents and records are necessary. Undoubtedly, the appellate
authority or the Tribunal, as the case may be, are the quasi-judicial authorities
and competent to adjudicate the ground raised regarding jurisdiction and
violations of principles of natural justice. Thus, the opportunity of an
aggrieved person to adjudicate the legal grounds must be allowed to be
provided before the appellate authority or before the Tribunal, as the case
may be. The High Court cannot adjudicate the disputed facts in a writ
proceedings for the purpose of considering certain legal grounds. When the
appellate authority is competent to adjudicate such legal grounds, the
opportunity and the benefit of an appeal cannot be denied to an aggrieved
person. In such circumstances, the aggrieved persons are loosing one
opportunity of adjudication for the purpose of redressing their grievances.
24.In view of the discussions made above, this Court emphatically
made it clear that all the Orders-in-Original are to be decided before the
appellate authority, in the event of an appeal provision under the statute
concerned. Thus, in the present case, the petitioner is at liberty to prefer an
appeal before the jurisdictional appellate authority in the prescribed format
and by complying with the provisions of the statute and in the event of filing
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any such appeal, the appellate authority is bound to adjudicate the issues on
merits and in accordance with law and dispose of the same as expeditiously
as possible.
With these observations, both the Writ Petitions stand disposed of. No
costs. Consequently, connected Miscellaneous Petitions are closed.
28.07.2021
gsa
Index : Yes
Speaking Order : Yes
To
The Assistant Commissioner of Income Tax,
Central Circle-3(1) Chennai,
Room No.316, New No.46,
Mahatma Gandhi Road,
Chennai 600 034.
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S.M.SUBRAMANIAM, J.
gsa
W.P.Nos.15465 & 15467 of 2021
28.07.2021
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