Madras High Court
Tvl. Jai Renga Mills Ltd vs State Of Tamil Nadu on 1 February, 2022
W.P.(MD)No.393 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 01.02.2022
CORAM:
THE HONOURABLE MR.JUSTICE M.SUNDAR
W.P.(MD)No.393 of 2022
and
W.M.P.(MD)No.306 of 2022
Tvl. Jai Renga Mills Ltd.,
Rep. by its Managing Director,
K.R.Geetha,
W/o. Mr.K.J.Ravichandra Raja,
538-1834/1835, Tenkasi Road,
Rajapalayam – 626 117. ... Petitioner
Vs.
1.State of Tamil Nadu,
Rep. by its Secretary to Government,
Department of Commercial Taxes,
Fort St. George, Chennai – 9.
2.The Commercial Tax Officer – I,
(Now Re-designated as Assistant Commissioner (ST) – 1,
Rajapalayam. ... Respondents
1/26
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PRAYER: Writ Petition filed under Article 226 of the Constitution
of India for issuance of Writ of Certiorarified Mandamus, to call for
the records relating to the Assessment order passed by the second
respondent in his proceeding TNGST No.6040444/1996-97 dated
20.09.2021 quash the same and to direct the respondent to pass
fresh order of assessment considering the total turnover for the
entire financial year which is below rupees one hundred crores
after affording the opportunity of being heard for the assessment
year 1996-1997.
For Petitioner : Mr.A.S.Mujibur Rahman
For Respondent : Mr.M.Lingadurai
Special Government Pleader
ORDER
************
In the captioned main writ petition an order dated
20.09.2021 bearing reference TNGST No.6040444/1996-97 made
by the second respondent has been assailed [hereinafter 'impugned
order' for the sake of brevity, convenience and clarity].
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2.In the main writ petition Mr.A.S.Mujibur Rahman, learned
Counsel on record for writ petitioner and Mr.M.Lingadurai learned
Special Government Pleader who has accepted notice on behalf of
both the respondents are before this Court, with the consent of
learned Counsel on both sides main writ petition was taken up and
heard out owing to the short point on which the entire matter
turns.
3.Short facts shorn of elaboration or in other words facts that
are imperative for appreciating this order are that the writ
petitioner is a registered dealer on the file of second respondent
under the provisions of 'the Tamil Nadu General Sales Tax Act,
1959 (Tamil Nadu Act 1 of 1959)' [hereinafter 'TNGST Act' for the
sake of convenience and clarity]; that the second respondent
Assessing Officer [hereinafter 'AO' for the sake of brevity] vide
order dated 10.04.1998 had levied and collected additional sales
tax from writ petitioner; that such levy is under 'the Tamil Nadu
Additional Sales Tax Act, 1970 (Act No.XIV of 1970)' [hereinafter
'Additional Sales Tax Act' for the sake of convenience and clarity];
that such levy was assailed by the writ petitioner through various
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W.P.(MD)No.393 of 2022
tiers and it culminated in an order dated 12.06.2002 made in
O.P.No.559 of 2002 on the file of erstwhile Tamil Nadu Taxation
Special Tribunal, Chennai; that this 12.06.2002 order of the
erstwhile Tribunal was assailed by writ petitioner in and by a writ
petition being W.P.No.32570 of 2002 and the same came to be
disposed of by a Hon'ble Division Bench in and by order dated
22.01.2021; that by this order Hon'ble Division Bench set aside the
12.06.2002 order of the erstwhile Tribunal, remanded the matter
back to AO (Assessing Officer) with directives to decide the matter
within eight [8] weeks after affording an opportunity of personal
hearing to writ petitioner and by applying the decisions referred to
in the order; that pursuant to such order of Hon'ble Division Bench
the impugned order came to be made by the second respondent
(AO); that assailing the impugned order captioned main writ
petition has been filed.
4.Notwithstanding very many averments in the writ affidavit
and notwithstanding several grounds raised in the writ affidavit,
learned Counsel for writ petitioner made three pointed submissions
and they are as follows:
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a) The decision referred to in the order of
Hon'ble Division Bench has not been followed;
b) The issue ie., circumstances under which levy
of additional sales tax would arise owing to a mid
financial year amendment to the statute is settled;
c) Personal hearing has not been granted.
5.In response to the aforementioned submissions of learned
Counsel for writ petitioner, learned State Counsel drew the
attention of this Court to the order of Hon'ble Division Bench and
more particularly paragraph No.8 thereat where the National
Time Co., case [State of Tamil Nadu Vs. National Time Co.,
reported in 2011 39 VST 247 (Mad)] has been extracted and
reproduced. To be noted in National Time Co., case Siemens
Ltd., case law being Siemens Ltd., Vs. State of Tamil Nadu
reported in 110 STC 313 has been followed. Learned State
Counsel drew the attention of this Court to paragraphs 15 and 19
which read as follows:
'15. Having regard to the impact made
in the amended provision, as per the
judgment of the Special Tribunal in Siemens'
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case[1998] 110 STC 313 (TNTST) on and
after August 1, 1996, the payment of
additional sales tax would arise only if the
taxable turnover for the whole of the
financial year exceeded one hundred crores of
rupees and even in such a situation, while for
the period up to July 31, 1996, the liability
will have to be worked out as per the
provision which was prevailing upto that date
namely, the unamended Section 2(1)(a) and
that for the period subsequent to August 1,
1996 up to March 31, 1997 for the taxable
turnover generated on and after August 1,
1996 alone, the applicable rate of tax will
have to be calculated.
19. Having regard to the said
position, the impugned order of the Tribunal
as well as that of the Assessing Authority are
liable to be set aside. While setting aside
the order the Assessing Authority, we direct
the Assessing Authority to pass fresh orders
by keeping the taxable turnover of the
respondent assessee upto July 31, 1996 in a
sum of Rs.54,97,880/- and calculate the tax
at the rate of 1.5% on the sum of Rs.
44,97,880/- (i.e.), after deducting the first ten
lakhs as provided under the proviso to sub-
clause (i) of Section 2(1)(a).'
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6.Adverting to the above learned State Counsel submitted
that the impugned order of second respondent is in accordance
with the directives of Hon'ble Division Bench.
7.As regards the levy and liability qua additional sales tax,
learned State Counsel submitted that the obtaining position of law
has been applied by second respondent in the impugned order.
8.As regards the personal hearing point, learned State
Counsel on perusal of the records and on instructions submitted
that post order of Hon'ble Division Bench a notice dated
01.07.2021 fixing 08.07.2021 as the date for personal hearing in
the forenoon [11.30 am] was sent to the writ petitioner and the
same was received by writ petitioner on 02.07.2021 but the writ
petitioner did not avail the opportunity of personal hearing.
Learned State Counsel submitted that the track consignment report
also shows that the notice dated 01.07.2021 was mailed to the writ
petitioner by registered post and the same was received by the writ
petitioner on 02.07.2021 with acknowledgment due.
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9.In response to the above submissions, learned Counsel for
writ petitioner fairly submitted that on the personal hearing notice
he does not have instructions with specificity.
10.This Court carefully considered the rival submissions and
on an analysis of the rival submissions in the light of the case file
before this Court, this Court is of the considered view that the
impugned order does not warrant interference in writ jurisdiction
ie., in captioned writ petition and the reasons are as follows:
10.1.A careful perusal of the order of Hon'ble
Division Bench makes it clear that the reference therein is
to National Time Co., case wherein Siemens Ltd., case
has been noticed besides Philips India Ltd., case law
being Philips India Limited Vs. The Assistant
Commissioner (CT), Fast Track Assessment Circle II
and others reported in 2004 137 STC 134 Madras in
which also Siemens Ltd., decision has been followed.
Therefore effectively the directive of the order of Hon'ble
Division Bench is to apply Siemens Ltd., case law. The
Siemens Ltd., ratio in effect is after 01.08.1996 the
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payment of additional sales tax would arise only if the
taxable turn over for the whole of the financial year
exceeds 100 crores of rupees [at the time this matter
arose pertaining to assessment year 1996-97 it was 10
lakhs] and even in such a situation for the period up to
31.07.1996 the liability will have to be worked out as per
the provisions which was prevailing up to that date viz.,
unamended Section 2(1)(a) of Additional Sales Tax Act
and for the period subsequent [up to 31.07.1996] the
taxable turn over generated on 01.08.1996 alone should
be taken into account and the tax should be calculated at
the applicable rate. To be noted this is Siemens Ltd.,
principle set out in simplified terms. A careful perusal of
the impugned order reveals that it deals with a
proportionate reduction in turn over as per High Court
judgment. This is set out in page No.2 of impugned order.
Therefore it is clear that the AO has proceeded on the
basis of Siemens Ltd., principle. This means that it
cannot be gainsaid that the impugned order has been
made without applying Siemens Ltd., principle.
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10.2.This takes us to the question as to error if any
while applying and computing Siemens Ltd., principle.
If that be the case, the remedy for writ petitioner is by
way of a statutory appeal under Section 31 to TNGST Act.
In this regard this Court deems it appropriate to make it
clear that the schemes of TNGST Act and Additional Sales
Tax Act are dovetailed vide Rule 9 of 'the Tamil Nadu
Additional Sales Tax Rule, 1970' [hereinafter 'Additional
Sales Tax Rules' for the sake of convenience and clarity],
which is a saving clause by which the provisions of
TNGST Act has been made applicable mutatis mutandis
qua additional tax leviable under Section 2 of Additional
Sales Tax Act. Rule 9 of Additional Sales Tax Rules reads
as follows:
''Rule 9. Savings.- Save as otherwise
expressly provided for in these rules, the
provisions of the Tamil Nadu General Sales Tax
Rules, 1959 shall apply mutatis mutandis to the
additional tax leviable under Section 2 of the Act.'
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10.3.This takes us to the TNGST Act. Before doing
that, it is to be noted that Additional Sales Tax Rules
itself is a piece of subordinate legislation, the same
having made in exercise of rule making power under
Section 4(1) of Additional Sales Tax Act which is
captioned 'Power To Make Rules'.
10.4.As already alluded to supra, this takes us to
TNGST Act and the tiers of appeal and revision provided
under the TNGST Act which are applicable to the
Additional Sales Tax Act owing to Rule 9 of Additional
Sales Tax Rules. This means that the appeal remedy for
the writ petitioner is under Section 31 of TNGST Act
which reads as follows:
''31.Appeal to the Appellate Assistant
Commissioner.- (1) Any person objecting to an
order passed by the appropriate authority under
Section 4-A, sub-section (3) of Section 10,
Section 12, Section 12-A, Section 14, Section 15,
sub-sections (1) and (2) of Section 16, Section 18,
sub-sections (2) of Section 22, Section 23 or
Section 27 other than an order passed by an
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Assistant Commissioner (Assessment) may, within
a period of thirty days from the date on which the
order was served on him in the manner
prescribed, appeal against such order to the
Appellate Assistant Commissioner having
jurisdiction.'
10.5.To be noted there is a further second appeal
to the Sales Tax Appellate Tribunal under Section 36 of
TN GST Act and the same reads as follows:
''36.Appeal to the Appellate Tribunal.-
(1) Any officer empowered by the Government or
any person objecting to an order passed by the
Appellate Assistant Commissioner under sub-
section (3) of Section 31, or by the Appellate
Deputy Commissioner under sub-section (3) of
Section 31-A, or by the Deputy Commissioner
under sub-section (1) of Section 32, may,-
(i) within a period of one hundred and
twenty days, in the case of an officer so
empowered by Government,
(ii) within a period of sixty days, in the case
of any other person,
from the date on which the order was served in
the manner prescribed, appeal against such
order to the Appellate Tribunal.'
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10.6.Thereafter there is a further revision to the
erstwhile Special Tribunal under Section 38 of TN GST
Act. The Special Tribunal has since been abolished and
therefore the revision now lies to a Division Bench of this
Court. Section 38 of TN GST Act reads as follows:
''38.Revision by Special Tribunal.- (1)
Within ninety days from the date on which a copy
of the order under sub-sections(3), (3-A) or (6) of
Section 36 is served in the manner prescribed, any
person who objects to such order or the Deputy
Commissioner may prefer a petition to the Special
Tribunal on the ground that the Appellate Tribunal
has either decided erroneously or failed to decide
any question of law.'
10.7.In this regard, before proceeding further, as
this matter pertains to assessment year 1996-97, this
Court deems it appropriate to extract and reproduce
Section 2(1)(a) as it then existed in the Statute book the
same reads as follows:
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'2.Amendment of section 2, Tamil Nadu Act
14 of 1970.- In section 2 of the Tamil Nadu
Additional Sales Tax Act, 1970 (Tamil Nadu Act
14 of 1970), in sub-section (1), in clause (a),-
(a) for the words “three lakhs of rupees”,
the words “ten lakhs of rupees” shall be
substituted.''
10.8.The next point urged is with regard to the
law being settled. The case laws placed before this
Court are order of a Hon'ble Division Bench in Tax Case
(R) No.2375 of 2008 dated 18.02.2010, and another is
an order of a Hon'ble Division Bench in Tax Case (R) No.
71 of 2017 dated 08.01.2017.
10.9.A careful perusal of these two orders of
Hon'ble Division Benches make it clear that they are
cases where the orders of the erstwhile Special Tribunal
have been assailed by way of a statutory revision under
Section 38. Therefore these case laws (obviously) do not
deal with alternate remedy.
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10.10.This takes us to the question of alternate
remedy. Alternate remedy no doubt is not an absolute
rule. It is a rule of discretion. It is a self imposed rule
qua writ jurisdiction. In the light of this obtaining legal
position, Hon'ble Supreme Court in a long line of case
laws ie., 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 repeatedly held
that when it comes to Revenue matters ie., fiscal
Statutes alternate remedy rule has to be applied with
utmost rigour. These three case laws mentioned here do
not make a exhaustive list, they are only illustrative and
what I have mentioned are oft quoted judgments for the
proposition that alternate remedy rule has to be applied
with utmost rigour in fiscal Statutes.
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10.11.Relevant paragraph in Dunlop India case
is paragraph No.3 and excerpted portion of the same
reads as follows:
''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 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)''
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10.12.Relevant paragraph in K.C.Mathew case is
paragraph No.10 and the same reads as follows:
'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
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
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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
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discretion in such matters with greater
caution, care and circumspection.'
(underlining made by this Court to supply
emphasis for ease of reference and to highlight)'
10.13.To be noted, in paragraph No.10 of
K.C.Mathew case, excerpted portions of Satyawati
Tondon case law have been set out, reproduced,
reiterated and therefore, I deem it appropriate not to
burden this order with extracts from Satyawati Tondon
case also.
10.14.Very recently in Commercial Steel case
being The Assistant Commissioner of State Tax and
others Vs. M/s.Commercial Steel Limited, it was
made clear that intervention in writ jurisdiction in fiscal
matters of this nature shall be exceptional. The same are
set out in paragraphs 11 and 12 which reads 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
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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 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.'
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10.15.Therefore this is a clear case where the writ
petitioner may have to avail alternate remedy if the writ
petitioner is aggrieved that the manner in which
Siemen's ratio has been applied qua proportionate
reduction is incorrect. In other words, it cannot be said
that Siemen's ratio has not been applied. It can at best
be said that Siemen's ratio has been incorrectly applied.
This becomes a ground for appeal ie., statutory appeals
and revision in a multitier mechanism under the
TNGST Act which has been made applicable to
Additional Sales Tax Act vide Rule 9 of Additional Sales
Tax Rules as already alluded to supra.
10.16.The case laws which have been referred to
as already alluded to supra, are all matters arising out of
statutory revision. Therefore they cannot be applied to
the case on hand wherein interference with the first tier
ie., AO in writ jurisdiction is sought for, when exceptions
to alternate remedy rule are absent. The only exception
(exception to alternate remedy rule) which comes close
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to an exception personal hearing point (NJP) and that is
being answered against the writ petitioner infra.
10.17.This leaves this Court with the last point
viz., personal hearing. A careful perusal of the judgment
of the Hon'ble Division Bench makes it clear that the
Hon'ble Division Bench in its wisdom directed personal
hearing to be granted but as already alluded to supra,
personal hearing notice has been sent and the writ
petitioner has not availed the same. Therefore the
personal hearing point also gets neutralised. To be noted
all official acts are presumed to have been done
officiously. Learned Counsel for writ petitioner fairly
submitted that he does not have instructions with regard
to the notice of personal hearing. Therefore there is no
disputation or disagreement on the submission made by
learned State Counsel regarding personal hearing notice
dated 01.07.2021 fixing personal hearing on 08.07.2021
same being served on writ petitioner on 02.07.2021 and
writ petitioner not availing the same.
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11.The above will mean that all the points made as part of
writ petitioner's campaign against the impugned order do not find
favour with this Court in writ jurisdiction [as already alluded to
supra].
12.After the order was dictated learned Counsel sought
permission to take back the original impugned order for the
purpose of approaching the appellant authority. The request is
acceded to. Registry to return the original impugned order to the
Counsel on record for writ petitioner forthwith under due
acknowledgment. If the writ petitioner approaches the appellate
authority, the matter shall be dealt with by the appellate authority
on its own merits in accordance with law subject to limitation and
conditions of pre-deposit if any. With regard to limitation if any
plea predicated and posited on Section 14 of Limitation Act is
made, the same shall also be dealt with by the appellate authority
on its own merits and in accordance with law.
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13.Captioned writ petition fails and the same is dismissed.
Consequently, captioned Writ Miscellaneous Petition is also
dismissed. There shall be no order as to costs.
01.02.2022
Index : Yes / No
Internet: Yes / No
MR
NOTE: In view of the present lock down
owing to COVID-19 pandemic, a
web copy of the order may be
utilized for official purposes, but,
ensuring that the copy of the order
that is presented is the correct copy,
shall be the responsibility of the
advocate/litigant concerned.
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To
1.The Secretary to Government,
State of Tamil Nadu,
Department of Commercial Taxes,
Fort St. George, Chennai – 9.
2.The Commercial Tax Officer – I,
(Now Re-designated as Assistant Commissioner (ST) – 1,
Rajapalayam.
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M.SUNDAR., J.
MR
ORDER MADE IN
W.P.(MD)No.393 of 2022
01.02.2022
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