Madras High Court
M/S.Costal Plastochem Pvt Ltd vs Assistant Commissioner (St) on 5 October, 2021
W.P.No.21363 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.10.2021
CORAM
THE HONOURABLE MR.JUSTICE M.SUNDAR
W.P.No.21363 of 2021
and W.M.P.No.22609 of 2021
M/s.Costal Plastochem Pvt Ltd.,
Rep. By Managing Director,
No.8, Rajiv Tower,
Purasawakkam High Road,
Chennai – 600 010. ... Petitioner
Vs
Assistant Commissioner (ST)
Purasawakkam Assessment Circle,
Chennai – 600 102. ... Respondent
Writ petition filed under Article 226 of the Constitution of
India praying for issuance of Writ of Certiorarified Mandamus calling
for the records of the respondent and quash the assessment
proceedings for the reversal of input tax credit under Section 19(4)(i)
of the TNVAT Act in TIN 33270483294/2015-16 dated 03.08.2020 and
direct the respondent to pass fresh orders as per the request of the
petitioner on 16.10.2020.
For Petitioner : Mr.C.Baktha Siromoni
For Respondent : Ms.Amrita Dinakaran
Government Advocate
1/16
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W.P.No.21363 of 2021
ORDER
This common order will govern the captioned main writ
petition and WMP.
2.Main writ petition has been filed assailing an 'order dated
03.08.2020 bearing reference TIN/33270483294/2015-2016',
(hereinafter referred as 'impugned order' for the sake of convenience
and clarity).
3.Impugned order arises under 'Tamil Nadu Value Added Tax
Act, 2006' (hereinafter referred as 'TNVAT Act' for brevity).
4.This is yet another case where the impugned order has
been made without mentioning the provision of law under which it has
been made. In the case on hand, this by itself leads to a sea of
confusion as would be evident from the narrative that is captured
infra.
5.Learned counsel for writ petitioner submits that the
impugned order pertains to reversal of input tax credit (ITC) under
Section 19(4) of TNVAT Act. Learned State counsel, who accepts
notice on behalf of the lone respondent, on instructions, submits that
reversal of ITC no doubt is under Section 19(4) of TNVAT Act but the
impugned order has been made under Section 27 of TNVAT Act.
Learned counsel for writ petitioner points out that there is no mention
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W.P.No.21363 of 2021
about Section 27 of TNVAT Act in the impugned order. This is the
reason why the opening remark was made saying this is yet another
case where the provision of law has not been mentioned in the
impugned order and that by itself has led to a sea of confusion in the
case on hand.
6.Be that as it may, notwithstanding very many averments
made and very many grounds raised in the writ affidavit, lone pivotal
contention of the learned counsel for writ petitioner is that reversal of
ITC should be in excess of 5% of tax or in other words, upto 5%,
there cannot be reversal.
7.There is no disputation or disagreement that the writ
petitioner was given an opportunity to show cause prior to the
impugned order and the writ petitioner has shown cause. This is owing
to notice dated 30.10.2018 issued by the respondent and reply from
the writ petitioner dated 30.11.2018 followed by explanation dated
22.02.2020, another notice from the respondent dated 28.02.2020
and a letter from the writ petitioner dated 09.03.2020. In the letter
dated 09.03.2020, writ petitioner has sought for personal hearing. In
this regard, in TNVAT Act, two different expressions are used in two
different provisions. In the common proviso to sub- sections 1 and 2 of
Section 27 of TNVAT Act, the expression 'giving the dealer a
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W.P.No.21363 of 2021
reasonable opportunity to show cause' has been used. In contra
distinction in the proviso to Section 27(4) of the TNVAT Act the
expression 'the dealer shall be given a reasonable opportunity of being
heard' has been used. I had dealt with these two expressions and the
contra distinction qua these two expressions in an elaborate order in
State Bank of India Officer's Association (CC) – SBIOA rep. by its
General Secretary Vs. The Assistant Commissioner (ST) Muthialpet
Assessment Circle, Chennai (W.P.No.22634 of 2019 dated
01.08.2019) and the most relevant paragraph therein is paragraph 41.
This Court is informed that this order of mine has not been reported in
any Law Journal. Therefore, I am mentioning the date of the order
and the case number. Paragraph 41 reads as follows:
'41. This takes us to the alternate remedy available to
the writ petitioner in the instant case. This Court is
informed without disputation or disagreement by both
sides that an alternate remedy is available to the writ
petitioner qua the impugned order by way of an appeal to
the jurisdictional Appellate Deputy Commissioner under
Section 51 of TNVAT Act. Therefore, with regard to the
grounds canvassed on merits, which are more in the
nature of errors in computation, it is well open to the writ
petitioner to avail alternate remedy of a statutory appeal
to the jurisdictional Appellate Deputy Commissioner under
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W.P.No.21363 of 2021
Section 51 of TNVAT Act.'
8.Be that as it may, it is also necessary to capture the
obtaining position that the aforementioned order of mine was carried
in appeal by way of intra-court appeal vide W.A.No.4073 of 2019 and
the writ appeal came to be dismissed by a Hon'ble Division Bench vide
order dated 06.12.2019. Therefore, the aforementioned order of mine
stands confirmed. In the instant case, if the impugned order is under
Section 19(4) of TNVAT Act, it may not be necessary to go into the
same, is the contention of the learned counsel for writ petitioner. On
the contrary, if the impugned order is under Section 27(2) of TNVAT
Act, as contended by the learned Revenue counsel, at the highest,
reasonable opportunity to show cause against such an order should
have been given to the dealer going by the common proviso to sub-
sections 1 and 2 of Section 27, which read as follows:
27. Assessment of escaped turnover and wrong
availment of input tax credit.
(1) (a) Where, for any reason, the whole or any
part of the turnover of business of a dealer has escaped
assessment to tax, the assessing authority may, subject to
the provisions of sub-section (3), at any time within a
period of five years from the date of assessment order by
the assessing authority, determine to the best of its
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W.P.No.21363 of 2021
judgment the turnover which has escaped assessment and
assess the tax payable on such turnover after making such
enquiry as it may consider necessary.
(b) Where, for any reason, the whole or any part
of the turnover of business of a dealer has been assessed
at a rate lower than the rate at which it is assessable, the
assessing authority may, at any time within a period of five
years from the date of order of assessment by the
assessing authority, reassess the tax due after making
such enquiry as it may consider necessary.
(2) Where, for any reason, the input tax credit
has been availed wrongly or where any dealer produces
false bills, vouchers, declaration certificate or any other
documents with a view to support his claim of input tax
credit or refund, the assessing authority shall, at any time,
within a period of five years from the date of order of
assessment, reverse input tax credit availed and determine
the tax due after making such a enquiry, as it may
consider necessary:
Provided that no order shall be passed under sub-
sections (1) and (2) without giving the dealer a reasonable
opportunity to show cause against such order.
9.In the instant case, as would be evident from the trajectory
which lead to the impugned order has been captured supra, it is clear
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W.P.No.21363 of 2021
that more than reasonable i.e., adequate and ample opportunity has
been given to the writ petitioner for showing cause against the
impugned order. So there can be no grievance in this regard.
10.This takes me back to the lone pivotal submission that
has been canvassed by the learned counsel for writ petitioner in his
campaign against the impugned order i.e., the submission that
reversal of ITC if at all and if that be so, can be only for excess of 5%
of tax and the impugned order has contravened this. This argument
may at best qualify as a good ground for an appeal or revision as the
case may be. I am constrained to say appeal or revision as the case
may be as if the impugned order is construed to be made under
Section 19(4) of TNVAT Act, it will be a revision under Section 54 of
TNVAT Act and if it is under Section 27(2) of TNVAT Act, as contended
by the learned Revenue counsel, it will be an appeal under Section 51
of TNVAT Act.
11.Either way, there is an alternate remedy and in this writ
jurisdiction, for the limited purpose of disposal of the captioned writ
petition, it will suffice to say that there is an alternate remedy. This
takes me to alternate remedy rule. Alternate remedy rule no doubt is
not an absolute rule, in other words, it is discretionary rule. It is not
only a discretionary rule and it is also a self-imposed restraint qua writ
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W.P.No.21363 of 2021
jurisdiction.
12.Though there can be no disputation or disagreement on
the aforesaid rule, what is of relevance is Honourable Supreme Court
in a catena and series of judgments i.e., a long line of case laws
commencing from Dunlop India case [Assistant Collector of
Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India
Ltd. and others reported in (1985) 1 SCC 260], Satyawati
Tandon Case [United Bank of India Vs. Satyawati Tondon and
others reported in (2010) 8 SCC 110] and K.C.Mathew case
[Authorized Officer, State Bank of Travancore Vs. Mathew K.C.
reported in (2018) 3 SCC 85], has held that when it comes to
Revenue matters, the alternate remedy rule should be applied with
utmost rigour. Relevant paragraph in Dunlop India case is paragraph
3 and relevant paragraph in K.C.Mathew case is paragraph 10, which
read as follows:
Paragraph 3 of Dunlop India case
'3. ....... Article 226 is not meant to short-circuit or
circumvent statutory procedures. It is only where statutory
remedies are entirely ill-suited to meet the demands of
extraordinary situations, as for instance where the very vires of
the statute is in question or where private or public wrongs are
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W.P.No.21363 of 2021
so inextricably mixed up and the prevention of public injury and
the vindication of public justice require it that recourse may be
had to Article 226 of the Constitution. But then the Court must
have good and sufficient reason to bypass the alternative remedy
provided by statute. Surely matters involving the revenue where
statutory remedies are available are not such matters. We can
also take judicial notice of the fact that the vast majority of the
petitions under Article 226 of the Constitution are filed solely for
the purpose of obtaining interim orders and thereafter prolong
the proceedings by one device or the other. The practice
certainly needs to be strongly discouraged.'
(Underlining made by this Court to
supply emphasis and highlight)
Paragraph 10 of K.C.Mathew case
'10. In Satyawati Tondon the High Court had
restrained further proceedings under Section 13(4) of the Act.
Upon a detailed consideration of the statutory scheme under the
SARFAESI Act, the availability of remedy to the aggrieved under
Section 17 before the Tribunal and the appellate remedy under
Section 18 before the Appellate Tribunal, the object and purpose
of the legislation, it was observed that a writ petition ought not to
be entertained in view of the alternate statutory remedy available
holding: (SCC pp.123 & 128, Paras 43 & 55)
“43. Unfortunately, the High Court overlooked the
settled law that the High Court will ordinarily not entertain a
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W.P.No.21363 of 2021
petition under Article 226 of the Constitution if an effective
remedy is available to the aggrieved person and that this Rule
applies with greater rigour in matters involving recovery of taxes,
cess, fees, other types of public money and the dues of banks and
other financial institutions. In our view, while dealing with the
petitions involving challenge to the action taken for recovery of
the public dues, etc., the High Court must keep in mind that the
legislations enacted by Parliament and State Legislatures for
recovery of such dues are a code unto themselves inasmuch as
they not only contain comprehensive procedure for recovery of
the dues but also envisage constitution of quasi-judicial bodies
for redressal of the grievance of any aggrieved person.
Therefore, in all such cases, the High Court must insist that
before availing remedy under Article 226 of the Constitution, a
person must exhaust the remedies available under the relevant
statute.
55.It is a matter of serious concern that despite
repeated pronouncement of this Court, the High Courts continue
to ignore the availability of statutory remedies under the DRT Act
and the SARFAESI Act and exercise jurisdiction under Article
226 for passing orders which have serious adverse impact on the
right of banks and other financial institutions to recover their
dues. We hope and trust that in future the High Courts will
exercise their discretion in such matters with greater caution,
care and circumspection.'
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W.P.No.21363 of 2021
(underlining made by this Court to supply
emphasis and highlight)
13.To be noted, paragraph 10 of K.C.Mathew case captures
paragraph 10 of Satyawati Tondon case law and therefore I am not
extracting and reproducing relevant paragraphs from Satyawati
Tondon case law separately.
14.Be that as it may, following the decisions in Dunlop,
Satyawati Tondon and K.C. Mathew (cited supra), I have held that in
revenue matters, alternate remedy rule has to be applied with utmost
rigour. This Court took this view on alternate remedy vide orders
dated 28.06.2019 made in W.P.No.17804 of 2019 [M/s.Sekar
Exports Pvt. Ltd., Vs. The Appellate Deputy Commissioner and
another]. This was carried in appeal vide an intra-court appeal in
W.A.No.196 of 2020 and the writ appeal came to be dismissed by a
Hon'ble Division Bench of this Court vide order dated 10.02.2020.
Therefore, this view of mine has been sustained by a Honourable
Division Bench i.e., the view pertaining to alternate remedy rule in
revenue matters.
15.To cap it all, in a very recently rendered judgment,
Honourable Supreme Court in Commercial Steel case [The
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W.P.No.21363 of 2021
Assistant Commissioner of State Tax Appellant(s) and Others
Vs.M/s Commercial Steel Limited] vide order dated 03.09.2021 in
Civil Appeal No.5121 of 2021 has clearly held that though the
alternate remedy rule is not absolute, a writ petition under Article 226
of the Constitution of India can be entertained only in exceptional
circumstances (in revenue matters) and the exceptions have been
carved out and adumbrated in paragraph 11. Paragraph 12 of
Commercial Steel case is also of relevance. Paragraphs 11 and 12 of
Commercial Steel case read as follows:
'11 The respondent had a statutory remedy under
section 107. Instead of availing of the remedy, the respondent
instituted a petition under Article 226. The existence of an
alternate remedy is not an absolute bar to the maintainability of a
writ petition under Article 226 of the Constitution. But a writ
petition can be entertained in exceptional circumstances where
there is: (i) a breach of fundamental rights; (ii) a violation of the
principles of natural justice; (iii) an excess of jurisdiction; or (iv)
a challenge to the vires of the statute or delegated legislation.
12 In the present case, none of the above exceptions
was established. There was, in fact, no violation of the principles
of natural justice since a notice was served on the person in
charge of the conveyance. In this backdrop, it was CA 5121/2021
7 not appropriate for the High Court to entertain a writ petition.
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W.P.No.21363 of 2021
The assessment of facts would have to be carried out by the
appellate authority. As a matter of fact, the High Court has while
doing this exercise proceeded on the basis of surmises. However,
since we are inclined to relegate the respondent to the pursuit of
the alternate statutory remedy under Section 107, this Court
makes no observation on the merits of the case of the
respondent.'
16.None of the aforesaid exceptions are attracted in the case
on hand. To be noted, the argument that Section 19(4) reversal of
ITC can be only for 5% and above of tax will not qualify as excess of
jurisdiction and it would at the highest qualify only as an error. To be
noted, this Court is not expressing any view as it is relegating writ
petitioner to alternate remedy of revision/appeal. Even if this
argument is to be accepted, it would only qualify as an error and it
may not qualify as excess of jurisdiction. To be noted, besides the
aforesaid exceptions carved out by Hon'ble Supreme Court in
Commercial Steel case penned by Hon'ble Dr.Dhananjaya
Y.Chandrachud, the exceptions to alternate remedy rule are well
settled vide Whirlpool principle [Whirlpool Corporation Vs.
Registrar of Trade Marks, Mumbai and others reported in (1998)
8 SCC 1] and Harbanslal principle [Harbanslal Sahnia and
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W.P.No.21363 of 2021
another Vs. Indian Oil Corpn. Ltd., and others reported in (2003)
2 SCC 107].
17. To be noted, the above exceptions are so well settled and
well entrenched in litigation circuit that it has come to stay as
'Whirlpool exception' in litigation parlance.
18.From the narrative that has been captured supra, it is
very clear that none of the exceptions are attracted in the case on
hand.
19.If the writ petitioner chooses to file appeal under Section
51 or revision under Section 54 as the case may be (subject to
limitation) the same can be dealt with on its own merits and in
accordance with law by the appellate authority or revisional authority
as the case may be.
20.If the appellate authority or the revisional authority as the
case may be entertains the appeal or revision (subject of course to
limitation), the observation made in this order will neither be an
impediment nor serve as an impetus qua appeal or revision, in other
words, the appellate authority or revisional authority shall deal with it
on its own merits and in accordance with law untrammeled by any
observation made in this order.
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W.P.No.21363 of 2021
21.Captioned writ petition is dismissed albeit preserving a
small window for the writ petitioner qua appeal or revision in the
aforesaid manner. No costs. Consequently, connected WMP is closed.
05.10.2021
Index: Yes/No
mmi
Post Script:
After the order was passed Mr.C.Baktha Siromoni, learned counsel on
record for the writ petitioner on instructions submitted that he would pursue
appeal/revision and requested for the original impugned order to be returned.
Registry to return the original of the impugned order forthwith to the counsel on
record for the writ petitioner (under due acknowledgement).
To
The Assistant Commissioner (ST)
Purasawakkam Assessment Circle,
Chennai – 600 102.
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W.P.No.21363 of 2021
M.SUNDAR, J.,
mmi
W.P.No.21363 of 2021
05.10.2021
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