Madras High Court
M/S.Sojitz India Private Ltd vs The Commercial Tax Officer on 10 March, 2021
WA.No.581 of 2021
In the High Court of Judicature at Madras
Dated : 10.3.2021
Coram :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
Writ Appeal No.581 of 2021 and CMP.No.2454 of 2021
M/s.Sojitz India Private Ltd.,
rep.by its Managing Director
Mr.Takahiro Ebisu ...Appellant
Vs
1.The Commercial Tax Officer
(Enf.), Roving Squad, Vellore.
2.The Joint Commissioner (CT),
Vellore Division, Vellore. ...Respondents
APPEAL under Clause 15 of the Letters Patent against the order
dated 08.12.2020 made in W.P.No.30257 of 2018.
For Appellant : Mr.Hari Radhakrishnan
For Respondents : Mrs.G.Dhanamadhri, GA(T)
Judgment was delivered by T.S.SIVAGNANAM,J
We have elaborately heard Mr.Hari Radhakrishnan, learned
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counsel for the appellant and Mrs.G.Dhanamadhri, learned
Government Advocate (Taxes) accepting notice for the respondents.
2. The writ appeal, filed by the dealer, is directed against the
order dated 08.12.2020 made in W.P.No.30257 of 2018.
3. The appellant filed the said writ petition challenging an order
passed by the second respondent in R.T.No.82/2016 dated 06.2.2017.
The said revision petition was filed by the appellant before the second
respondent against the order passed by the first respondent herein
dated 13.3.2016 detaining the goods, which were transported from
Maharashtra to Tamil Nadu and imposing a compounding fee. The
second respondent disposed of the said revision petition by
remanding the matter to the first respondent to fix the correct
compounding fee as per the provisions of the Statute namely Section
72(1)(a) of the Tamil Nadu Value Added Tax Act, 2006 (for short, the
Act).
4. The learned Single Judge, who heard the said writ petition,
held that as against the order passed by the second respondent dated
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06.2.2017, a second revision lies before the Additional Commissioner
(CT) (RP), office of the Commissioner of Commercial Taxes, Chepauk,
Chennai-5 and the time limit for filing the second revision was 30
days. Further, by placing reliance on the decision of the Hon'ble
Supreme Court in the case of Assistant Commissioner (CT), LTU,
Kakinada Vs. Glaxo Smith Kline Consumer Health Care Limited
[Civil Appeal No. 2413 of 2020], the learned Single Judge held that
the High Court, in exercise of powers under Article 226 of The
Constitution of India, ought not to entertain a writ petition assailing
the order passed by a statutory authority which was not appealed
against within the maximum period of limitation before the concerned
Appellate Authority and accordingly dismissed the said writ petition.
5. The learned Single Judge has not given any consequential
directions nor made any observation as to whether the appellant has
any other remedy as against the order passed by the first respondent
dated 13.3.2016.
6. We had an occasion to consider the correctness of similar
observations made by the Writ Court in the case of Mahindra &
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Mahindra Ltd. Vs. Joint Commissioner (CT) (Appeals) [W.A.No.
493 of 2021 dated 18.2.2021]. After taking note of the various
decisions, we have held that there is no absolute bar in entertaining a
writ petition under Article 226 of The Constitution of India. The
relevant portions in the said judgment read thus :
“5. In our respectful view, the decision
of the Hon'ble Supreme Court in the said
decision has not held that a writ petition under
Article 226 of the Constitution of India is an
absolute bar. We are of the said view after
noting the observations/findings rendered by
the Hon'ble Supreme Court in the following
paragraphs :
“11. In the backdrop of these facts, the
central question is: whether the High Court
ought to have entertained the writ petition
filed by the respondent? As regards the power
of the High Court to issue directions, orders or
writs in exercise of its jurisdiction
under Article 226 of the Constitution of India,
the same is no more res integra. Even though
the High Court can entertain a writ petition
against any order or direction passed/action
taken by the State under Article 226 of the
Constitution, it ought not to do so as a matter
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of course when the aggrieved person could
have availed of an effective alternative
remedy in the manner prescribed by law (see
Baburam Prakash Chandra Maheshwari vs.
Antarim Zila Parishad now Zila Parishad,
Muzaffarnagar [AIR 1969 SC 556] and
also Nivedita Sharma vs. Cellular Operators
Association of India & Ors. [2011 (14) SCC
337]. In Thansingh Nathmal & Ors. vs.
Superintendent of Taxes, Dhubri & Ors. [AIR
1964 SC 1419], the Constitution Bench of this
Court made it amply clear that although the
power of the High Court under Article 226 of
the Constitution is very wide, the Court must
exercise self imposed restraint and not
entertain the writ petition, if an alternative
effective remedy is available to the aggrieved
person.....
15. ........ The High Court may accede to
such a challenge and can also non suit the
petitioner on the ground that alternative
efficacious remedy is available and that be
invoked by the writ petitioner. However, if the
writ petitioner chooses to approach the High
Court after expiry of the maximum limitation
period of 60 days prescribed under Section
31 of the 2005 Act, the High Court cannot
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WA.No.581 of 2021
disregard the statutory period for redressal of
the grievance and entertain the writ petition of
such a party as a matter of course. Doing so
would be in the teeth of the principle
underlying the dictum of a three Judge Bench
of this Court in Oil and Natural Gas
Corporation Limited (supra). In other words,
the fact that the High Court has wide powers,
does not mean that it would issue a writ which
may be inconsistent with the legislative intent
regarding the dispensation explicitly
prescribed under Section 31 of the 2005 Act.
That would render the legislative scheme and
intention behind the stated provision otiose.
......
19........ Pertinently, no finding has been
recorded by the High Court that it was a case
of violation of principles of natural justice or
non compliance of statutory requirements in
any manner. Be that as it may, since the
statutory period specified for filing of appeal
had expired long back in August, 2017 itself
and the appeal came to be filed by the
respondent only on 24.9.2018, without
substantiating the plea about inability to file
appeal within the prescribed time, no
indulgence could be shown to the respondent
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WA.No.581 of 2021
at all.”
6. On a reading of the above extracted
paragraphs, it is seen that the Hon'ble
Supreme Court, after referring to the decision
of the Constitution Bench in the case of
Thansingh Nathmal, held that although the
power of the High Court under Article 226 of
the Constitution is very wide, the Court must
exercise self imposed restraint and not
entertain the writ petition. Further, in
paragraph 15, the Hon'ble Supreme Court
observed that the High Court may accede to
such a challenge and can also non suit the
petitioner on the ground that alternative
efficacious remedy is available and that be
invoked by the writ petitioner. In addition, in
paragraph 19, the Hon'ble Supreme Court
took note of the fact that when the High Court
refuses to exercise the jurisdiction under
Article 226 of The Constitution of India, it
would be necessary for the Court to record
that there was no case of violation of the
principles of natural justice or non compliance
of statutory requirements in any manner.
7. Therefore, there are certain broad
parameters, within which, the Court has to
exercise its jurisdiction under Article 226 of
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The Constitution of India, which read as
hereunder :
(i) if there is unfairness in the action of
the Statutory Authority;
(ii) if there is unreasonableness in the
action of the Statutory Authority;
(iii) if perversity writs large in the action
taken by the Authority;
(iv) if the Authority lacks jurisdiction to
decide the issue; and
(v) if there has been violation of the
principles of natural justice,
the Court will step in and exercise its
jurisdiction under Article 226 of The
Constitution of India.
8. Further, it would be highly beneficial
to refer to the celebrated decision of the
Constitution Bench of the Hon'ble Supreme
Court in the case of Mafatlal Industries Ltd.
Vs. Union of India [reported in 1997 (5)
SCC 536] wherein it was held that the
jurisdiction of the High Courts under Article
226 and that of the Hon'ble Supreme Court
under Article 32 of The Constitution of India
could not be circumscribed by the provisions
of the Enactment (Central Excise Act) and
they would certainly have due regard to the
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WA.No.581 of 2021
legislative intent evidenced by the provisions
of the Act and would exercise their jurisdiction
consistent with the provisions of the Act.
Further, the Court directed that the writ
petition would be considered and disposed of
in the the light of and in accordance with the
provisions of Section 11B of the Central Excise
Tax Act and for such a reason, the power
under Article 226 of The Constitution of India
has to be exercised to effectuate rule of law
and not for abrogating it.
9. In the light of the above, we have no
hesitation to hold that the observation of the
learned Single Judge to the effect that there is
absolute bar for entertaining a writ petition
does not reflect the correct legal position.
Hence, we are inclined to interfere with the
observation made in the impugned order.”
7. In the light of the said decision rendered by us, one of the
parameters, which can be taken note of by the Constitutional Court is
as to whether there is unreasonableness in the action of the statutory
authority; whether perversity writs large on the face of the action
taken by the Authority; if the Authority lacks jurisdiction to decide
the issue; and if there has been violation of the principles of
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natural justice.
8. Bearing in mind the above legal principles, we have
examined the order passed by the second respondent dated
06.2.2017. We have no hesitation to hold that the perversity writs
large on the face of the order dated 06.2.2017. The second
respondent has virtually abdicated his power as a Revisional
Authority and all that he has done was extracting the entire
objections filed by the appellant and held that the Roving Squad
Officer collected one time compounding fee under Section 72(1)(a) of
the Act and that therefore, the correct compounding fee had to be
fixed and accordingly remitted the matter back to the first
respondent.
9. There is absolutely no discussion as to how the grounds
raised by the appellant were not tenable and as to how the
documents, which were filed by the appellant, were not admissible or
sustainable. We have also seen the order of detention passed by the
first respondent, in which, one of the grounds of detention was that
the goods were transported from Mumbai to Chennai in the name of
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stock transfer 'with defective documents'. The first respondent did not
state as to why, in his opinion, the documents produced by the
appellant were defective.
10. The appellant's case is quite simple in the sense that they
are in the business of selling and marketing of mini excavators and
spare parts. Based on the request made from Mumbai and Pune, one
mini excavator of Japanese make was transported to Mumbai for
demonstration and training to customers. By letter dated 25.1.2016,
one M/s.FYN Technologies Pvt. Ltd., addressed to the Mumbai office
of the appellant requesting to arrange for a free demo and training to
their customers about the new machine in Maharashtra location on
returnable basis. The said letter also mentioned that in more than 15
locations, free demo and training was to be conducted during
16.2.2016 to 31.3.2017. Further, the said M/s.FYN Technologies Pvt.
Ltd., stated that the machine would be returned to the appellant upon
completing the demo in the same condition.
11. The machines were transported to Maharashtra
accompanied by a clarification by the appellant dated 25.1.2016. This
was accompanied by a stock transfer invoice of even date wherein it
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had been stated 'not for sale', but for demonstration purpose on
returnable basis. The stock transfer delivery note also stated that it
was not for sale, but for demonstration on returnable basis. Soon
after the detention, though the appellant paid one time tax for
release of the equipment, they filed their objections dated 12.3.2016
mentioning among other things that the mini excavator was
dispatched from Chennai branch on 25.1.2016, that the same
returned on 09.3.2016 and that there was no possibility to sell the
machine to the said M/s.FYN Technologies Pvt. Ltd.
12. The appellant also enclosed a copy of LR for transfer of
machines from Mumbai to Chennai for the reference of the first
respondent. Further, the appellant explained that they raised a stock
transfer invoice on 07.3.2016, that due to some technical issues, they
were unable to dispatch the materials on the particular date and that
the same were dispatched from the Mumbai branch of the appellant
to Chennai on 09.3.2016.
13. Thereafter, the first respondent issued a compounding
notice dated 13.3.2016 wherein he verbatim extracted the
objections/reply filed by the appellant dated 12.3.2016 and stated
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that the reply filed by the dealer could not be accepted, as there was
no proof of documents enclosed or produced for verification of
branches and the relation between the other dealer involvement.
14. In our considered view, the first respondent has not
recorded as to why the documents produced by the appellant cannot
be accepted. If any clarification is required, the same could have
been called for. Therefore, it is clear that the compounding notice
dated 13.3.2016 is not only a non-speaking notice, but a notice in
violation of the principles of natural justice, as the grounds raised by
the appellant have not been considered by the first respondent.
15. The same mistake was committed by the second respondent
– the Revisional Authority, who is in the cadre of Joint Commissioner.
We have observed that the order is devoid of any reasons. Therefore,
not only the compounding notice, but also the detention order are
arbitrary, unreasonable and in violation of the principles of natural
justice. Further, this Court is not denuded of its jurisdiction to
interfere with the same.
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16. The learned Government Advocate appearing for the
respondents vehemently contends that in terms of Section 57 of the
Act, the second revisional power is vested with the Additional
Commissioner.
17. A revisional power cannot be akin to appellate power and at
best, the Revisional Authority can consider as to whether there was
any procedural error committed by the Lower Authority, but would
not be justified in re-appreciating the entire facts. The remedy
provided under Section 57 of the Act, in so far as the appellant's case
is concerned, is not an effective remedy because the First Revisional
Authority failed to record any reasons nor there was any fairness in
the approach of the second respondent apart from violating the
principles of natural justice. This issue can never be set right by the
Second Revisional Authority, who appears to be an officer in the
cadre of Additional Commissioner.
18. Therefore, in the facts and circumstances of the case, we
hold that the writ petition is maintainable before this Court. Having
been satisfied with the facts and circumstances of the case, the order
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passed by the second respondent dated 06.2.2017 and the demand
notice dated 03.3.2017 issued by the first respondent are
unsustainable and we are constrained to interfere with the same.
19. For the foregoing reasons, the writ appeal is allowed and
the impugned order passed by the learned Single Judge is set aside.
The writ petition is allowed. Consequently, the order passed by the
second respondent dated 06.2.2017 in R.P.No.82/2016 and the
demand notice dated 03.3.2017 issued by the first respondent are set
aside. The first respondent is directed to refund the sum of
Rs.6,50,000/- (Rupees six lakhs and fifty thousand only) paid by the
appellant dealer at the time of release of goods. The said amount
shall be refunded to the appellant – dealer within a period two
months from date of receipt of a copy of this judgment with an option
to adjust the same against any other tax liability that may arise in
respect of the appellant. No costs. Consequently, the connected CMP
is closed.
RS 10.3.2021
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WA.No.581 of 2021
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
To
1.The Commercial Tax Officer (Enf.), Roving Squad, Vellore.
2.The Joint Commissioner (CT), Vellore Division, Vellore.
WA.No.581 of 2021 &
CMP.No.2454 of 2021
10.3.2021
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