Madras High Court
Tata Sky Limited vs The State Of Tamil Nadu on 22 September, 2021
W.P.No.20130 of 2021
and W.M.P.Nos.21402, 21404 & 21406 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 22.09.2021
CORAM
THE HON'BLE Mr.JUSTICE M.SUNDAR
W.P.No.20130 of 2021
and
W.M.P.Nos.21402, 21404 & 21406 of 2021
Tata Sky Limited
Rep. by its General Manager - Field Service Delivery
Mr.T.Shanmugamanivel
1st Floor, SYMTEC, F-5
3rd Phase, Ekkaduthangal
Chennai-32. ... Petitioner
-Vs.-
1. The State of Tamil Nadu
Represented by the Secretary
Commercial Taxes and Registration Department
St. George Fort,
Chennai.
2. The State Tax Officer
Guindy Assessment Circle
Integrated Commercial Taxes and Registration
Department Building (South Tower)
Room No.253, 2nd Floor
Nandanam, Chennai-600 035. .. Respondent
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and W.M.P.Nos.21402, 21404 & 21406 of 2021
Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorarified Mandamus, to call for the records
relating to the impugned order dated 30.07.2021 bearing reference
No.TIN.33100561230/2014-15 along with Form O and Form RR issued
thereon by the 2nd respondent and to set aside the same as arbitrary,
unconstitutional and against law and consequently, direct the 2nd
respondent to hold re-assessment of the matter by reconsidering the
submissions made by the petitioner on merits.
For Petitioner : Mr.Sujit Ghosh
for Mr.A.K.Rajaraman
For Respondent : Ms.Amirta Dinakaran,
Government Advocate
******
ORDER
Captioned writ petition arises under 'the Tamil Nadu Value Added
Tax Act, 2006, (Tamil Nadu Act No.32 of 2006)' [hereinafter 'TNVAT' for
the sake of convenience and clarity].
2. An 'order dated 30.07.2021 bearing reference
No.33100561230/2014-15' [hereinafter 'impugned order' for the sake of
convenience and clarity] made by the second respondent has been called
in question/assailed in the captioned main writ petition.
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3. Though the impugned order does not mention the provision of
law under which it has been made, it is submitted that a perusal of the
impugned order brings to light that it has been made under Section 27 of
TNVAT Act, which deals with assessment of escaped turnover and wrong
availment of 'Input Tax Credit' [ITC].
4. Mr.Sujit Ghosh, learned counsel appearing on behalf of
Mr.A.K.Rajaraman counsel on record for writ petitioner is before me.
5. Short facts shorn of elaboration or in other words, short facts
imperative for appreciating this order are that the writ petitioner provides
DTH services; that DTH stands for 'Direct to Home'; that it is on the basis
of contract with another company; that it is provided through what is
known as 'Tata Sky Hardware'; that the revenue received by the company
for providing service qua installation is subject to service tax; that a
surprise inspection was conducted inter-alia under Section 65 of TNVAT
Act by Enforcement Wing; that post surprise inspection, objections were
called for from the writ petitioner; writ petitioner did give objections
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inter-alia setting out their business modules, providing a copy of contract
by highlighting the position qua transfer of goods; that the second
respondent considered these objections and inter-alia came to the
conclusion that charges collected by writ petitioner are nothing but sale
price and are therefore, taxable under TNVAT Act; that the captioned writ
petition has been filed assailing the impugned order.
6. Notwithstanding very many grounds raised and very many
averments in the writ affidavit, in the hearing learned counsel appearing
on behalf of counsel for writ petitioner made focused submissions and
assailed the impugned order on the following points:
(a) Learned counsel, elaborating on perversity,
submitted that the second respondent called for
objections, the writ petitioner gave objections along with
a contract captioned 'Specific Terms and Conditions of
Tata Sky Subscription Contract' and drew the attention of
second respondent to Clause 10 therein, but in the
impugned order the second respondent has proceeded on
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the basis that crux of the issue is transfer of goods
involved and transmission of signals without the goods,
would not be possible as the subscribers cannot make
use of the broadcasting services for viewing the
programmes. Learned counsel went on to say that the
second respondent has noticed the correct provision of
law but has arrived at this conclusion which is clearly
perverse. Elaborating further on perversity, learned
counsel, notwithstanding very many case laws (slew of
case laws rather) that were placed before this Court
pressed into service one case law and that is Seema
Ghosh case law [Seema Ghosh Vs. Tata Iron and Steel
Co., reported in (2006) 7 SCC 722];
(b) The impugned order has been made without
appreciating the correct obtaining position of law and it
has levied tax resulting in a jurisdictional impediment
and therefore, this is effectively violation of Article 265 of
the Constitution of India;
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7. I have carefully considered the submissions advanced by learned
counsel appearing on behalf of writ petitioner, I am not inclined to
interfere qua the impugned order and the reasons are as follows:
(a) There is a statutory appeal provided under
TNVAT Act as against the impugned order and this
statutory appeal is available to writ petitioner under
Section 51 of TNVAT Act. Therefore, there is an alternate
remedy;
(b) There is nothing to demonstrate that alternate
remedy is not efficacious;
(c) Alternate remedy does not fall in any of the
exceptions adumbrated by Hon'ble Supreme Court in a
recent judgment rendered in Commercial Steel Limited
case [The Assistant Commissioner of State Tax and
others Vs. M/s.Commercial Steel Limited in Civil
Appeal No.5121 of 2021] by a three Judge Bench on
03.09.2021. To be noted, there will be a little more
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discussion on this elsewhere infra in this order;
(d) Prior to aforementioned case law, Hon'ble
Supreme Court, in a long line of authorities including but
not limited to 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 [United Bank of India Vs.
Satyawati Tondon and others reported in (2010) 8 SCC
110] and K.C.Mathew [Authorized Officer, State Bank
of Travancore and another Vs. Mathew K.C. reported in
(2018) 3 SCC 85] has held that alternate remedy no
doubt is not an absolute rule, it is a self imposed restraint
and it is discretionary, but it has to be applied with
utmost rigour when it comes to fiscal Statutes;
(e) Relevant paragraph in aforementioned Dunlop
case law is paragraph No.3 and most relevant portion of
the same reads as follows:
'3. ....... Article 226 is not meant to short-circuit or
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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 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)
(f). Satyawati Tandon principle was reiterated by
Hon'ble Supreme Court in K.C.Mathew case. Relevant
paragraph in K.C.Mathew case is paragraph 10 and the
same reads as follows:
'10. In Satyawati Tondon the High Court had
restrained further proceedings under Section 13(4) of the
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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 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
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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.'
(underlining made by this Court to supply emphasis
and highlight)
(g). Relevant paragraphs in Commercial Steel
case are paragraph Nos.11 and 12 and the same 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
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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. 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.'
(h). This takes us to Seema Ghosh case law which
was pressed into service by the learned counsel for writ
petitioner;
(i). A careful perusal of Seema Ghosh case law
brings to light that it pertains to Labour law and it
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pertains to an award made by a Labour Court. That was
a case where Hon'ble Supreme Court held that the Labour
Court passed an award contrary to law laid down by
Hon'ble Supreme Court as a measure of what has been
described as 'misplaced sympathy' by Hon'ble Supreme
Court and was thus perverse. Therefore, Seema Ghosh
case law stands entirely on a different footing. Applying
Seema Ghosh principle to the case on hand, which arises
under a fiscal Statute would tantamount to comparing
Apples and Oranges or like comparing chalk and cheese.
Suffice to say that Seema Ghosh case law does not aid
the writ petitioner in the case on hand and I would rather
go by Commercial Steel Limited judgment rendered
recently on 03.09.2021 by Hon'ble Supreme Court which
is preceded by a long line of authorities/catena of case
laws including but not limited to Dunlop India case law,
Satyawati Tandon principle and K.C.Mathew case all of
which arose under fiscal law Statute and have been
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alluded to supra. This takes us to exceptions to alternate
remedy. As would be evident from Paragraph No.11 of
Commercial Steel Limited case law, it will be clear that
exceptions adumbrated herein by Hon'ble Supreme Court
are four in number and in the case on hand, from the
narrative thus far, it will be clear that none of these
exceptions are attracted. Even if this adumbration is
construed to be illustrative and exhaustive there is noting
before me to demonstrate any other exception as settled
in lead case laws in this regard i.e., Whirlpool principle
[Whirlpool Corporation Vs. Registrar of Trade Marks,
Mumbai and others reported in (1998) 8 SCC 1]
Whirlpool principle [Whirlpool Corporation Vs.
Registrar of Trade Marks, Mumbai and others reported
in (1998) 8 SCC 1] and Harbanslal principle
[Harbanslal Sahnia and another Vs. Indian Oil Corpn.
Ltd., and others reported in (2003) 2 SCC 107]. This is
such an oft quoted case law that it has come to stay as
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'Whirlpool exceptions' in litigation parlance. Without
burdening order with extracts in this regard, it will suffice
to say that the challenge qua impugned order is
predicated on points urged in the hearing
(notwithstanding very many averments/grounds in writ
affidavit and case law compilations) qualify only as
grounds of appeal in a regular Statutory appeal and do
not warrant interference in writ jurisdiction. For an
illustration, arguments such as impugned order has
misread contract covenants or has noticed correct
provision of law, but has come to wrong conclusion are
typical appeal grounds and are far from persuasions
calling for writ jurisdiction interference on the teeth of
alternate remedy, that too in fiscal law;
(j). On perversity, learned counsel for writ
petitioner may have a good ground of appeal. I refrain
myself from expressing any opinion on the submissions
made by learned counsel for writ petitioner on this as that
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can impact the Appellate authority. Pointed submission
made by learned counsel for writ petitioner on the
impugned order noticing the correct position of law, but
coming to wrong conclusion that charges collected are
effectively sale price and taxable in accordance with the
provisions of TNVAT Act is a point which is not
something which cannot be corrected in appeal if the
argument finds favour with the Appellate authority.
Interference on such grounds at the first tier of a multi-
tiered redressal mechanism under fiscal Statute gives
scope to an assessee to perambulate in the first orbit i.e.,
first tier without moving to the second orbit. This does
not serve the purpose of either side. As a sequitur, this
Court observes that this only leaves the assessee with
uncertainty and Revenue not being able to move to next
tier of mechanism, so that it can ultimately recover tax
dues if the liability is finally and conclusively confirmed;
(k). I am unable to persuade myself to believe that
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the Appellate Authority cannot correct the aforementioned
error (if that be so) and on a demurrer, even if it be a
case of perversity, that can always be corrected by the
Appellate Authority and it does not involve an exception
warranting interference under Article 226 of the
Constitution of India in fiscal law, more particularly,
when the objections have been considered and when
Hon'ble Supreme Court has repeatedly held that
exceptions have to be applied strictly in fiscal law;
(l). Interestingly and intriguingly, I find that the
writ affidavit refers to modus operandi. I can understand
if the contract is referred to as business module as
modus operandi has a negative connotation. However, I
refrain myself from saying anything further on this as I
intend to relegate the writ petitioner to alternate remedy
under Section 51 of TNVAT Act. Constitution Bench
Judgement of Hon'ble Supreme Court in Oudh Sugar
Mills Ltd., Vs. Union of India reported in 1978 (2) ELT
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(J 172) was referred to as a last desperate effort to
convince this Court. That was a case where Hon'ble
Supreme Court came to the conclusion that there was
inference involving unwarranted assumptions. That was
a case under Central Excise where there were certain
calculations made based on certain assumptions. For
instance, difference of 56 maunds noticed by the
Assistant Chemical Examiner during the two and quarter
hours test conducted by him was uniform for certain
specific hours working throughout the working hours of
the crushing season which began beyond the day when
the test was conducted and there was another assumption
that the persons in-charge of the operation of letting in
mixed juice filled the tanks uniformly upto a level beyond
the fixed mark and never below that level or at that level
and there were several assumptions. This is not a matter
which turns on such a factual matrix is my considered
view. In this regard, I remind myself of law laid down
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nay law declared by another Constitution Bench Padma
Sundara Rao principle [Padma Sundara Rao Vs. State
of Tamil Nadu reported in (2002) 3 SCC 533] i.e., that a
case law has to be interpreted to the facts situation of the
case on hand more particularly, emphasizing that the
facts have to be mentioned while referring to case laws
and principles laid down. I respectfully follow Padma
Sundara Rao principle which is also a constitution
Bench judgement and therefore, a declaration of law. If I
read Oudh Sugar Mills case law in the light of Padma
Sundara Rao principle, I find that it does not aid the writ
petitioner in the case on hand;
(m). Though it was not emphasised, I deem it
appropriate to reiterate that in State Bank of India
officers case law, I had explained proviso to Section
27(2) of TNVAT Act vide order dated 01.08.2019 in
W.P.No.22634 of 2019 and WMP therein. I am informed
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that this order has not been reported in any journal. I am
also informed that this order was carried in an appeal by
way of a writ appeal being W.A.No.4073 of 2019 and a
Hon'ble Division Bench vide order dated 16.12.2019 has
confirmed this order. Most relevant paragraph of my
order is paragraphs Nos.23 and 24. This is mentioned
to say that this is not a case where reasonable opportunity
to show cause has not been given to writ petitioner. This
is also not a case where the second respondent has not
closed his eyes and accepted the submissions made by
Enforcement Wing. In other words, the second
respondent has applied his mind and made the impugned
order (on a demurer, erroneous may be as contended by
writ petitioner) and therefore, it does not warrant
interference in exercise of powers under Article 226 of
Constitution of India on this facet also. As I am taking
the view that this case does not warrant interference
under Article 226 of Constitution of India, in the light of
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alternate remedy, I refrain from expressing any opinion or
view on merits of the matter and traces or trappings of
observations on merits which may appear to have been
made in this order are for the limited purpose of disposal
of captioned writ petition and therefore, the same should
not come in the way of a Statutory appeal i.e., this order
should not in any way either impede or serve as a impetus
if the writ petitioner chooses to avail alternate remedy and
statutory appeal under Section 51 of TNVAT Act. In
other words, the Appellate Authority shall consider the
appeal on its own merits and in accordance with law
without being either impeded or getting an impetus from
this order (if the writ petitioner chooses to file a statutory
appeal);
8. I had refused to interfere in writ jurisdiction owing to alternate
remedy (in similar fact setting) vide order dated 28.06.2019 made in
W.P.No.17804 of 2019 [M/s.Sekar Exports Pvt. Ltd., Vs. The Appellate
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Deputy Commissioner and another], matter was carried in appeal by
way of an intra Court appeal and was confirmed by Hon'ble Division
Bench vide order dated 10.02.2020 in W.A.No.196 of 2020.
9. The above draws the curtains on captioned writ petition,
W.M.P.Nos.21404 and 21406 of 2021 therein and the same stand
dismissed albeit preserving rights of writ petitioner to avail alternate
remedy of statutory appeal under Section 51 of TNVAT Act, if so advised
and if the writ petitioner chooses to do so. As regards W.M.P.No.21402
of 2021, which has been filed to dispense with the production of original
copy of impugned order dated 30.07.2021, a photocopy of the impugned
order has been produced before this Court, and therefore, the dispense
with prayer is answered in affirmative owing to reasons adduced in
supporting affidavit. In other words, dispense with prayer alone i.e.,
W.M.P.No.21402 of 2021 alone is acceded to. There shall be no order as
to costs.
22.09.2021
Speaking/Non-speaking order
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Index: Yes/No
Internet : Yes/No
mk
M.SUNDAR.J.,
mk
To
1. The State of Tamil Nadu
Represented by the Secretary
Commercial Taxes and Registration Department
St. George Fort, Chennai.
2. The State Tax Officer
Guindy Assessment Circle
Integrated Commercial Taxes and Registration
Department Building (South Tower)
Room No.253, 2nd Floor
Nandanam, Chennai-600 035.
W.P.No.20130 of 2021
and
W.M.P.Nos.21402, 21404 & 21406 of 2021
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and W.M.P.Nos.21402, 21404 & 21406 of 2021
22.09.2021
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