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Tvl. Jai Renga Mills Ltd., Rep. by its Managing Director, K.R. Geetha v/s State of Tamil Nadu, Rep. by its Secretary to Government, Chennai & Another

    W.P.(MD) No. 393 of 2022 & W.M.P.(MD) No. 306 of 2022

    Decided On, 01 February 2022

    At, Before the Madurai Bench of Madras High Court

    By, THE HONOURABLE MR. JUSTICE M. SUNDAR

    For the Petitioner: A.S. Mujibur Rahman, Advocate. For the Respondents: M. Lingadurai, Special Government Pleader.



Judgment Text

(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.)

1. 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].

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 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:

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' 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 subclause (i) of Section 2(1)(a).'

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.

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 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.

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.'

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 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 subsection (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.'

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:

'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.

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.

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 shortcircuit or circumvent statutory procedures. It is only where statutory remedies are entirely illsuited 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)''

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 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.'

(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 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.'

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 t

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he 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 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. 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. 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.
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