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2000 DIGILAW 1475 (PNJ)

Kissan Trading Company v. State Of Haryana

2000-12-04

G.S.SINGHVI, NIRMAL SINGH

body2000
Judgment G.S.Singhvi, J. 1. This is a petition for quashing of the notice, annexure P1, issued by the Excise and Taxation Officer-cum-Assessing Authority, Karnal (respondent No. 2) to the petitioner to show cause as to why the paddy purchased by it may not be subjected to tax under Section 28-B of the Haryana General Sales Tax Act, 1973 (for short, "the 1973 Act") and why interest and penalty may not be levied upon it under Section 25(5) and Section 47 respectively. 2. A perusal of the record shows that the petitioner is engaged in the business of rice shelling. It is registered as a dealer under the 1973 Act and also under the Central Sales Tax Act, 1956 (for short, "the 1956 Act"). For the year 1997-98, the petitioner filed returns showing the purchase of paddy and sale of rice exported out of India on "H" form basis and claimed exemption under Section 5(3) read with Section 15(ca) of the 1956 Act. Respondent No. 2 did not accept the return and issued the impugned notice for levy of tax, interest and penalty. 3. The petitioner has challenged the proposed levy of tax, interest and penalty on the ground that the State Government does not have the jurisdiction to levy tax on the paddy purchased by it because the rice milled out of it was exported out of India and such transaction is exempt from payment of tax in view of the provisions contained in Sections 5(3) and 15(ca) of the 1956 Act. 4. In the written statement filed on behalf of the respondents, a preliminary objection has been raised to the maintainability of the writ petition on the ground that the petitioner has failed to avail of the statutory alternative remedy of appeal under Section 39 of the 1973 Act. They have averred that the petitioner did not pay purchase tax on paddy for the years 1996-97, 1997-98, 1998-99, 1999-2000 and, therefore, notices were issued to it for provisional assessment under Section 28-B of the 1973 Act and after considering the entire matter, respondent No. 2 passed order, annexure R-1, dated July 7, 2000 for levy of tax. 5. They have averred that the petitioner did not pay purchase tax on paddy for the years 1996-97, 1997-98, 1998-99, 1999-2000 and, therefore, notices were issued to it for provisional assessment under Section 28-B of the 1973 Act and after considering the entire matter, respondent No. 2 passed order, annexure R-1, dated July 7, 2000 for levy of tax. 5. Shri K.L. Goyal, learned counsel for the petitioner, argued that the remedy of appeal available to the petitioner under Section 39 of the 1973 Act cannot be treated as an effective alternative remedy because payment of the amount of tax stipulated in the order of assessment is a condition precedent to the entertainment of the appeal and prayer for exemption made under first proviso of Section 39(5) of the 1973 Act is seldom entertained by the appellate authority and the Sales Tax Tribunal (for short, "the Tribunal"). He then argued that in view of the order dated July 13, 2000 passed by the High Court in C.W.P. No. 8725 of 2000 [Veerumal Monga and Sons v. State of Haryana [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304 (P&H)] approving the view taken by the Tribunal on the issue of levy of purchase tax on paddy, no useful purpose would be served by filing appeal under Section 39(1) of the 1973 Act. In support of his argument that the remedy of appeal available to the petitioner is not an effective remedy, Shri Goyal relied on the decisions in State of U.P. v. Indian Hume Pipe Co. Ltd. [1977] 39 STC 355 (SC), Hindsons (P) Ltd. v. State of Punjab [1982] 49 STC 136 (P&H), Filterco v. Commissioner of Sales Tax [1986] 61 STC 318 (SC), Jindal Strips Limited v. State of Haryana [1996] 100 STC 457 (P&H) and Sri Rajarajeswari Parboiled Rice Industry v. Commercial Tax Officer, Kodad, Nalgonda Dist. [1999] 115 STC 99 (AP). 6. Shri Surya Kant, learned Advocate-General, Haryana submitted, that in view of the law laid by the Supreme Court in Titaghur Paper Mills Co. [1999] 115 STC 99 (AP). 6. Shri Surya Kant, learned Advocate-General, Haryana submitted, that in view of the law laid by the Supreme Court in Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315 ; AIR 1983 SC 603, Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. [1985] 154 ITR 172 ; AIR 1985 SC 330 and by this Court in Sachdeva and Sons Rice Mills Limited v. State of Punjab [1995] 96 STC 405 ; [1994] 3 PLR 88 and order annexure R-2 dated May 8, 2000 passed in C.W.P. No. 17498 of 1999 (Hari Om Industry, Cheeka v. State of Haryana), the remedy of appeal available to the petitioner under Section 39 of the 1973 Act must be treated as an effective alternative remedy and as it has failed to avail the same, the writ petition should be dismissed. He further submitted that the adjudication of the petitioners claim for exemption from payment of tax would require detailed investigation into the issues of fact relating to the total quantity of paddy purchased by it during the relevant assessment year, the quantity of rice milled out of such paddy and the quantity of rice exported out of India and these issues cannot be determined by the High Court under Article 226 of the Constitution of India. With regard to the order passed by the High Court in Veerumal Mongas case [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304, Shri Surya Kant submitted that the same cannot be treated as a precedent and applied to the facts of each and every case and this position may be clarified by the Court. 7. We have given serious thought to the respective submissions and have carefully gone through the record. Admittedly, during the pendency of the writ petition, respondent No. 2 passed order (annexure R-1) dated July 7, 2000 for levy of purchase tax amounting to Rs. 3,40,999. That order is appealable under Section 39(1) of the 1973 Act, but no appeal has so far been filed by the petitioner. According to Shri K.L. Goyal, the remedy of appeal available to the petitioner under Section 39(1) of the 1973 Act cannot be treated as an effective alternative remedy because the deposit of the amount of tax is a condition precedent to the entertainment of appeal. According to Shri K.L. Goyal, the remedy of appeal available to the petitioner under Section 39(1) of the 1973 Act cannot be treated as an effective alternative remedy because the deposit of the amount of tax is a condition precedent to the entertainment of appeal. He further submitted that in view of the observations made by this Court in Veerumal Mongas case [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304, the appellate authority cannot be expected to take a different view in the petitioners case and, therefore, no useful purpose would be served by filing appeal against the order dated July 7, 2000. 8. In our opinion, neither of the two reasons put forward by Shri Goyal can justify a departure from the well-recognised rule that the High Court will not entertain a petition under Article 226 of the Constitution of India if an effective alternative remedy is available to the petitioner. There is nothing in the language of Article 226 or any other provision of the Constitution or the law enacted by the Parliament from which it can be inferred that the availability of alternative remedy is a bar to the entertainment of a petition filed for issuance of order, direction or writ in the nature of mandamus, certiorari, prohibition, qua warrants or habeas corpus. However, this is one of the several rules of self-imposed restraint evolved by the superior courts for regulating the exercise of jurisdiction by the High Courts under Article 226 of the Constitution of India. By and large, the courts have insisted that the petitioner must exhaust the alternative remedy before invoking jurisdiction of the High Court under Article 226 of the Constitution of India. The reason as to why the High Court should refrain from entertaining a petition under Article 226 if an equally efficacious alternative remedy is available to the petitioner, is not far to seek. The power conferred upon the High Court to issue appropriate writ, order or direction is extraordinary in nature and is meant to be used for reaching injustice and for protecting the rights of the citizens and it cannot be used as a substitute of the jurisdiction of other courts, Tribunals, quasi-judicial authorities, etc. The rule of alternative remedy has been applied with greater rigour in the case involving levy and collection of the taxes. 9. The rule of alternative remedy has been applied with greater rigour in the case involving levy and collection of the taxes. 9. In Rashid Ahmed v. Municipal Board, Kairana AIR 1950 SC 163, their Lordships of the Supreme Court observed that, "the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs. And where such a remedy exists it will be a sound exercise of discretion to refuse to interfere in a writ unless there are good grounds therefor". 10. In Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315 ; AIR 1983 SC 603, the Supreme Court upheld the order passed by the Orissa High Court dismissing the writ petition filed by the appellant on the ground of availability of an alternative remedy. Some of the observations made in that case are extracted below : "Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the prescribed authority under Sub-section (1) of Section 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under Sub-section (3) of Section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under Section 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. It is now well-recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford (1859) 6 C.B. (NS) 336 at 356 in the following passage : There are three classes of cases in which a liability may be established founded upon statute........ This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford (1859) 6 C.B. (NS) 336 at 356 in the following passage : There are three classes of cases in which a liability may be established founded upon statute........ But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it...... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to." 11. In Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. [1985] 154 ITR 172 (SC) ; AIR 1985 SC 330, the rule of alternative remedy was reiterated by the Supreme Court in the following words : "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." 12. In State of Goa v. Leukoplast (India) Ltd. [1997] 105 STC 318 ; (1997) 3 JT 322, the Supreme Court reversed the order passed by the Goa Bench of the Bombay High Court and held that the assesses should not have been allowed to bypass the statutory remedies where the questions of fact could have been properly agitated and ascertained. 13. 13. In the case of Hari Om Industry (C.W.P. No. 17498 of 1.999 decided on May 8, 2000) a division Bench of this Court refused to entertain the petition filed for quashing of the order passed by the Additional Excise and Taxation Commissioner-cum-Revisional Authority under Section 40 of the 1973 Act on the ground that remedy of appeal is available to the petitioner under Section 39 of the 1973 Act. The court also rejected the argument of the petitioner that the remedy of appeal cannot be treated as an effective alternative remedy because the Tribunal has already taken an adverse view in other similar cases. Some of the observations made in that order are reproduced below : "We are unable to accept the contention of the learned counsel. The decision given by the Tribunal in the case of some other asses see is not a precedent so as to bind the authorities below and that the same would be binding only between the parties and it will be open to the petitioner in this case to contend to the contrary before the Tribunal. It will be equally open to the Tribunal to take a view different from the one taken in the earlier case and there is no question of that view being binding on the Tribunal in another case or even on the authorities below. As a matter of fact, in tax matters each assessment year is a separate unit for the purposes of assessment and the findings recorded by the Tribunal in any one of the assessment years are not binding even in the case of the same assessee in the subsequent assessment years and it is open to the Tribunal and the authorities below to take a view different from the one taken in the previous year. We are, therefore, of the view that merely because the Tribunal has expressed its view on the merits of the issue in another case is by itself no ground to allow the assessee to circumvent the statutory remedies which have been provided under the Act." 14. We are, therefore, of the view that merely because the Tribunal has expressed its view on the merits of the issue in another case is by itself no ground to allow the assessee to circumvent the statutory remedies which have been provided under the Act." 14. In the backdrop of the proposition of law laid down in the aforementioned decisions, we have to determine whether the remedies of appeal, etc., available under the 1973 Act can be treated as effective alternative remedies so as to warrant dismissal of this petition on the ground that the petitioner has failed to avail of such remedy. The 1973 Act provides for levy of tax on sale and purchase of goods. It also prescribes the mode and machinery for collection of tax and at the same time, provides remedies by way of appeal, revision and reference to the persons aggrieved by the orders/decisions of the authorities constituted under the Act. In other words, the 1973 Act is a code unto itself. Therefore, the remedies available under the said Act will have to be treated as effective alternative remedies for the purpose of invoking the rule to which reference has been made hereinabove. The requirement of deposit of tax as a condition precedent for entertaining the appeal cannot be made a ground for making departure from the rule of alternative remedy. 15. In Anant Mills Co, Ltd. v. State of Gujarat AIR 1975 SC 1234 and Sham Kishore v. Municipal Corporation of Delhi (1993) 1 SCC 22, their Lordships of the Supreme Court have upheld the constitutional validity of the provisions relating to deposit of tax, etc., as a condition to the entertainment of appeal. Therefore, the remedy available to the petitioner under Section 39(1) of the 1973 Act cannot be declared as ineffective only on the ground that it may have to deposit the amount of tax in terms of Section 39(5) of the 1973 Act. 16. The apprehension expressed by Shri K.L. Goyal that in view of the order passed by this Court in Veerumal Mongas case [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304, the appellate authority and the Tribunal may not be able to objectively decide the petitioners plea, must be held as mis-conceived. 16. The apprehension expressed by Shri K.L. Goyal that in view of the order passed by this Court in Veerumal Mongas case [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304, the appellate authority and the Tribunal may not be able to objectively decide the petitioners plea, must be held as mis-conceived. A careful reading of the order passed in Veerumal Mongas case [2001] 123 STC 158 (P&H) ; (2000) 16 P&H Taxes 304, shows that after taking into consideration the facts of that particular case, the High Court had held that the transaction involving purchase of paddy by the petitioner did not fall within the ambit of Section 5(3) read with Section 15(ca) of the 1956 Act. Therefore, the said decision cannot be treated as laying down an absolute proposition that all transaction involving purchases of paddy would be subject to the purchase tax irrespective of the use thereof and in our considered view, the appellate authority and the Tribunal are bound to independently consider the facts of each case and then decide whether or not the dealer is entitled to get exemption under Section 5(3) read with Section 15(ca) of the 1956 Act. 17. Before concluding, we may refer to the decisions relied upon by Shri K.L. Goyal. 18. In State of U.P. v. Indian Hume Pipe Co. Ltd. [1977] 39 STC 355, a two Judges Bench of the Supreme Court held that the availability of alternative remedy is not a bar to the entertainment of a petition under Article 226 of the Constitution of India and if the discretion exercised by the High Court to entertain a petition is not unreasonable, then the Supreme Court would not interfere in appeal. 19. In Hindsons (P) Ltd. v. State of Punjab [1982] 49 STC 136, a division Bench of this Court held that where the Sales Tax Tribunal earlier gave considered decision adverse to the petitioner, the remedies available to it under the statute could not be regarded as effective and the High Court could grant relief to it under Article 226 of the Constitution of India. 20. 20. In Filterco v. Commissioner of Sales Tax [1986] 61 STC 318, their Lordships of the Supreme Court held that when a superior officer had already passed a well-considered order in exercise of his statutory jurisdiction under Section 42-B(1) of the Madhya Pradesh General Sales Tax Act, 1958, the High Court ought to have decided the petition on merits. 21. In Jindal Strips Limited v. State of Haryana [1996] 100 STC 457, a division Bench of this Court held that where petition filed under Article 226 against the demand of sales tax has been admitted and has remained pending for three years, it would not be justified to relegate the petitioner to the alternative remedies available under the statute. 22. In our opinion, none of the aforementioned decisions laid down a proposition that the High Court is bound to entertain a petition filed under Article 226 of the Constitution of India for quashing of the demand of tax if the amount stipulated in the notice is substantial and the petitioner will have to deposit the tax, for availing the remedy of appeal or simply because in another case, the authority constituted under the Act have taken a particular view. In Hindsons (P) Ltd. v. State of Punjab [1982] 49 STC 136, this Court had entertained the petition filed under Article 226 of the Constitution because in the petitioners own case the appellate authority had earlier taken an adverse view. In Filterco v. Commissioner of Sales Tax [1986] 61 STC 318, the Supreme Court entertained the writ petition because the authority higher than the assessing authority had passed a well-considered adverse order in the case of the petitioner. In Jindal Strips Limited v. State of Haryana [1996] 100 STC 457 (P&H), the division Bench entertained the petition and decided in favour of petitioner because the same had been admitted and remained pending for a period of three years. 23. For the reasons mentioned above, the writ petition is dismissed with the liberty to the petitioner to avail of an alternative remedy of appeal. We also direct that if the petitioner files an appeal within four weeks, then the same shall be entertained and decided on merit subject to the fulfilment of statutory conditions. 23. For the reasons mentioned above, the writ petition is dismissed with the liberty to the petitioner to avail of an alternative remedy of appeal. We also direct that if the petitioner files an appeal within four weeks, then the same shall be entertained and decided on merit subject to the fulfilment of statutory conditions. The application, if any, filed by the petitioner under first proviso to Section 39 of the 1973 Act, shall also be decided by the competent authority without being influenced by the observations made in this order.