Tax Authorities Should Maintain Discipline To Follow Decisions Of Higher Authorities : Supreme Court

"Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses", the Bench of Justice S. Ravindra Bhat and Justice Dipankar Datta observed.

In this case, the High Court of Punjab and Haryana dismissed a writ petition on the ground of maintainability, relegating the petitioner to the remedy of an appeal under section 33 of the Haryana Value Added Tax Act, 2003. The writ petitioner had questioned the jurisdiction of the Deputy Excise and Taxation Commissioner (ST)-cum-Revisional Authority to reopen proceedings, in exercise of suo motu revisional power conferred by section 34 of the VAT Act.

The writ petitioner (assessee) is engaged in the business of manufacturing, marketing and sales of household insecticide products under the brand name “Good Knight” and “Hit”. When the returns were filed by the petitioner for the assessment years 2003-04 and 2004-05, the Assessing Authority had issued notice as to what greater tax liability should not be imposed on it in view of reclassification of the goods in the tax statute. After hearing the assessee, the authority accepted the lower rate of tax returns. Thereafter, the Revisional Authority called for the assessment records of the assessee and determined that it should pay the higher rate of tax. The assessee approached the High Court challenging the jurisdiction of Revisional Authority to issue show cause notice.

The writ petitioner had claimed before the High Court that suo moto revisional power could not have been exercised by the Revisional Authority. The Apex Court noted that a jurisdictional issue which is a pure question of law was raised by the petitioner, it should have been considered on merit and the petition ought not to have been dismissed at the threshold. It took note of the fact that the reliance placed by the High Court in Titagarh Paper Mills v. Orissa State Electricity Board And Anr. to dismiss the petition on the threshold was irrelevant. The Apex Court held -

“The High Court by dismissing the writ petition committed a manifest error of law for which the order under challenge is unsustainable. The same is, accordingly, set aside.”

The Supreme Court noted that while passing orders for accepting concessional rate of tax, the Assessing Authority had referred to the judgment of the Tax Tribunal, that has attained finality. It observed that -

“Once the issue stands finally concluded, the decision binds the State, a fortiori, the Revisional Authority. The decision of the Tribunal may not be acceptable to the Revisional Authority, but that cannot furnish any ground to such authority to perceive that it is either not bound by the same or that it need not be followed.”

It added that -

“...the Revisional Authority might have been justified in exercising suo moto power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation was stayed by a competent Court.”

Case details

M/s. Godrej Sara Lee Ltd. v. The Excise And Taxation Officer Cum Assessing Authority And Ors.| 2023 LiveLaw (SC) | Civil Appeal No. 5393 of 2010| 1 Feb 2023 | Justice S. Ravindra Bhat and Justice Dipankar Datta

For Appellant(s) Mr. V. Lakshmikumaran, Adv. Mr. Rajiv Tyagi, AOR Mr. Rohit Gupta, Adv. Ms. Apeksha Mehta, Adv. Ms. Falguni Gupta, Adv. Mr. P. Mundra, Adv.

For Respondent(s) Mr. Kamal Mohan Gupta, AOR

Headnotes

Constitution of India, 1950 ; Article 226 - Dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper - Mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the high court under Article 226 has not pursued, would not oust the jurisdiction of the high court and render a writ petition “not maintainable" - Where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available. (Para 4-8)

Tax Administration - Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses - Para 34

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