Dismissed

M/s.Kanunga Extrusion Private Limited, v. The Assistant Commissioner (St)

Madras HC21 Oct 2021WP/22049/2021

Case brief

AI extract

What is this about?

High Court of Madras dismissed six writ petitions challenging revisional tax orders. The Court held that the alternate remedy rule applies with utmost rigour in fiscal statutes. Since the petitioner had a statutory appeal under Section 51 and a personal hearing was offered (though unavailed), the writ court would not examine the merits or the alleged mismatch. Jurisdiction was declined in favor of

What did the court decide?

Captioned writ petitions and connected writ miscellaneous petitions dismissed preserving rights to pursue statutory appeal under Section 51.

M/s.Kanunga Extrusion Private Limited, Vs The… — Writ and Judicial Review | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 21.10.2021

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CORAM

¶4

THE HON'BLE MR.JUSTICE M.SUNDAR

¶5

W.P.NOS.22049, 22056, 22060, 22064, 22066 AND 22069 OF 2021
AND
W.M.P.NOS.23286, 23282, 23277, 23276, 23274 AND 23265 OF 2021

¶6

M/s.Kanunga Extrusion Private Limited,
14-2 Thally Road,
Near Railway Gate,
Hosur 635109
Represented by its
Managing Director

¶7

 ...Petitioner in all W.Ps.

¶8

-Vs.-

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The Assistant Commissioner (ST)
Hosur (South) I Hosur.
...Respondent in all W.Ps.

¶10

Common Prayer :Writ Petitions filed under Article 226 of the
Constitution of India praying to issue a Writ of Certiorari, to
call for the connected records of the impugned proceedings of
the respondent herein made in TIN 33163364594/2010-11, TIN
33163364594/2011-12,TIN33163364594/2012-13,TIN
33163364594/2013-14,TIN33163364594/2014-15andTIN
33163364594/2015-16 respectively dated 21.04.2021 and quash the
same as illegal.

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For Petitioner in all W.Ps : Mr.Manoharan Sundaram

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For Respondent in all W.Ps : Ms.Amirta Dinakaran
 Government Advocate

¶13

Captioned six main writ petitions have been filed
assailing six separate revisional/re-assessment orders under
Section 27 of 'Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu
Act No.32 of 2006)' [hereinafter 'TNVAT' for the sake of
convenience and clarity]. All these six orders are dated
21.04.2021, but they pertain to six different assessment years
with different reference numbers. The details are as follows:

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https://hcservices.ecourts.gov.in/hcservices/

¶15

`S.`	`Date`	`Reference`	`Assessmen`	`W.P. No.`
`No`			`t Year`
`1`	`21.04.2021`	`TIN:33163364594/2010-11`	`2010-2011`	`22049/2021`
`2`	`21.04.2021`	`TIN:33163364594/2011-12`	`2011-2012`	`22056/2021`
`3`	`21.04.2021`	`TIN:33163364594/2012-13`	`2012-2013`	`22060/2021`
`4`	`21.04.2021`	`TIN:33163364594/2013-14`	`2013-2014`	`22064/2021`
`5`	`21.04.2021`	`TIN:33163364594/2014-15`	`2014-2015`	`22066/2021`
`6`	`21.04.2021`	`TIN:33163364594/2015-16`	`2015-2016`	`22069/2021`

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2. The aforementioned six revisional/re-assessment orders
shall be collectively referred to as 'impugned orders' in plural
and 'impugned order' in singular wherever necessary (if it
becomes necessary).

¶17

3. Mr.Manoharan Sundaram, learned counsel for writ
petitioner in all the six writ petitions, who is before this
Virtual Court submits that this is the second round of
litigation. The respondent had made revisional/re-assessment
orders earlier, the same were called in question/assailed by the
writ petitioner by way of six writ petitions in this Court being
W.P.Nos.5818 to 5823 of 2018 and all these six writ petitions
together with writ miscellaneous petition Nos.7155 to 7160 of
2018 thereat came to be disposed of by a Hon'ble Single Judge in
and by a common order dated 15.03.2018.

¶18

4. Adverting to aforementioned common order in earlier
round of litigation and more particularly paragraph Nos.3 and 5
thereat, learned counsel submitted that this is a case of
mismatch and if the dealer at the far end had not paid the tax,
the writ petitioner cannot be penalized for the same. According
to learned counsel for writ petitioner, the impugned orders are
not in accordance with directions given by this Court in the
aforementioned previous common order, more particularly,
paragraph No.3 thereat wherein paragraph Nos.56 to 58 of another
order made in W.P.No.105 of 2016 etc., dated 01.03.2017 have
been extracted and reproduced. To be noted, this W.P.No.105 of
2016 etc., has now come to stay as what is known as JKM Graphics
Solutions principle in litigation parlance. However, in the case
on hand, notwithstanding very many averments and several grounds
raised in writ affidavit, the lone grievance projected by
learned counsel for writ petitioner in the hearing is, this
being a case of alleged mismatch, writ petitioner cannot be
penalized if the dealer at the far end had not paid the tax.

¶19

5. Ms.Amirta Dinakaran, learned State counsel
(hereinafter 'Revenue counsel' for the sake of convenience and
clarity), accepts notice on behalf of lone respondent in all six

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https://hcservices.ecourts.gov.in/hcservices/

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writ petitions. Owing to the narrow compass of captioned writ
petitions and acute/short legal angle on which the matters turn,
main captioned writ petitions were taken up with the consent of
learned counsel on both sides.

¶22

6. Adverting to the impugned orders and more
particularly, No.3 in reference thereat, learned Revenue counsel
submits that the respondent has in fact given an opportunity of
personal hearing to writ petitioner in and by communication
dated 11.02.2021, but writ petitioner-dealer had failed to even
submit a reply. It was pointed out that this is not disputed by
writ petitioner. Learned Revenue counsel also submits that if
reply had been filed by the dealer and if the dealer had
responded to 11.02.2021 personal hearing notice (issued pursuant
to aforementioned earlier common order of this Court), the
respondent would have got an opportunity to examine the same,
but not having done that, the dealer/writ petitioner has now
embarked upon second round of litigation to avoid pre-deposit
qua alternate remedy. Learned Revenue counsel pointed out that
the writ petitioner has appeal remedy by way of statutory Appeal
under Section 51 of TNVAT Act. To be noted, this is mentioned in
the impugned order itself by way of a note and the same reads as
follows:

¶23

'Note:- An appeal against this order lies before
the Appellate Deputy Commissioner of Commercial Taxes,
Salem within 30 days of receipt of this order.'

¶24

7. Before proceeding further, this Court is constrained
to record that this is yet another case where the respondent has
made the impugned order without mentioning exact provision of
law under which it has been made. However, in this case, there
is no disputation or disagreement between the parties that the
impugned orders have been made under Section 27 of TNVAT Act. By
way of reply, learned counsel for writ petitioner besides
reiterating his submissions made in the opening arguments,
submitted that personal hearing was no doubt offered vide
11.02.2021 communication, but the respondent should have gone
into the question of whether the dealer at the far end has paid
the tax, the same has not been done in spite of specific
observations in this regard made by this Court in aforementioned
previous common order dated 15.03.2018.

¶25

8. This Court now considers the rival submissions or in
other words, this Court now embarks upon the exercise of
discussion, dispositive reasoning and arriving at a conclusion.

¶26

9. At the outset, this Court is clear in its mind that
personal hearing is not statutorily imperative for a legal drill
i.e., assessment of escaped turnover/wrong availment of 'Input
Tax Credit' ['ITC']. This is owing to the language in which
common proviso to sub-sections (1) and (2) of Section 27 of

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TNVAT Act is couched. Common proviso to sub-sections (1) and (2)
of Section 27 of TNVAT Act reads as follows:

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'27. Assessment of escaped turnover and wrong
availment of input tax credit.-

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(1) (a) Where, for any reason, the whole or any part
of the turnover of business of a dealer has escaped
assessment to tax, the assessing authority may, subject
to the provisions of sub-section (3), at any time within
a period of five years from the date of assessment order
by the assessing authority, determine to the best of its
judgment the turnover which has escaped assessment and
assess the tax payable on such turnover after making such
enquiry as it may consider necessary.

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(b) Where, for any reason, the whole or any part
of the turnover of business of a dealer has been assessed
at a rate lower than the rate at which it is assessable,
the assessing authority may, at any time within a period
of five years from the date of assessment, reassess the
tax due after making such enquiry as it may consider
necessary.

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(2) Where, for any reason, the input tax credit
has been availed wrongly or where any dealer produces
false bills, vouchers, declaration certificate or any
other documents with a view to support his claim of input
tax credit or refund, the assessing authority shall, at
any time, within a period of five years from the date of
order of assessment, reverse input tax credit availed and
determine the tax due after making such a enquiry, as it
may consider necessary:

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Provided that no order shall be passed under sub-sections
(1) and (2) without giving the dealer a reasonable
opportunity to show cause against such order.

¶34

(underlining made by this Court to supply emphasis
and highlight)

¶35

10. The expression 'a reasonable opportunity to show
cause against such order' occurring in the proviso has been
explained by this Court in a detailed and elaborate order in
State Bank of India officers case law, [State Bank of India
Officer's Association (CC) - SBIOA Vs. The Assistant
Commisioner, Chennai-1 in W.P.No.22634 of 2019 order dated
01.08.2019]. This Court is informed that this order has not been
reported in any law journal. Therefore, this Court deems it
appropriate to give case number and date of order for the
benefit of all concerned. Be that as it may, what is of greater
significance is, this order made in State Bank of India officers
case law was carried in appeal by way of intra-Court appeal vide
W.A.No.4073 of 2019 and a Hon'ble Division Bench of this Court
dismissed the writ appeal in and by order dated 16.12.2019.
Therefore, the order of this Court made in State Bank of India

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https://hcservices.ecourts.gov.in/hcservices/

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officers case law, has been sustained vide order of Hon'ble
Division Bench.

¶38

11. Be that as it may, in State Bank of India officers
case law, this Court noticed that the language in which proviso
to sub-section (4) of Section 22 of TNVAT Act is couched is
different from the language in which common proviso to sub-
sections (1) and (2) of Section 27 of TNVAT Act is couched.
This Court observed that the expression used in sub-section (4)
of Section 22 of TNVAT Act is 'a reasonable opportunity of being
heard'. This is distinguishable from the expression 'reasonable
opportunity to show cause' and it was on this basis that this
Court has held that personal hearing is not statutorily
imperative qua a legal drill under Section 27 of TNVAT Act.
However, it is not necessary to dilate or elaborate further on
this facet of the case on hand, as this Court has considered it
appropriate to direct the respondent to give personal hearing
and personal hearing has also been given. To be noted, even in
State Bank of India officers case law, this Court has made it
clear that if the Assessing Authority considers it necessary to
hold a personal hearing, it is well open to the Authority to
hold a personal hearing if it appears necessary owing to the
nature of the issue raised and therefore, personal hearing for
revision of assessments under Section 27(1) and/or 27(2) is
optional depending on the nature of the issues involved, but it
is not statutorily imperative. It is not necessary to elaborate
any further on this facet of the matter.

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12. Reverting to the case on hand, from the narrative
thus far, it will be clear that there is no disputation or
disagreement that the writ petitioner has been given an
opportunity of personal hearing vide communication dated
11.02.2021 (cited in reference as No.3 in the impugned orders),
but the writ petitioner did not respond/avail the same.
Therefore, the only grievance of the writ petitioner is,
mismatch ought to have been examined by the Assessing Officer
though the writ petitioner has not responded. However, learned
Revenue counsel points out that it would have been examined if
the dealer/writ petitioner had responded. It may not be
necessary to delve further into this aspect of the matter, owing
to alternate remedy that is available to the writ petitioner
i.e., statutory appeal under Section 51 of TNVAT Act. There is
no disputation or disagreement before this Court that alternate
remedy against impugned orders is available to writ petitioner-
dealer by way of statutory appeal under Section 51 of TNVAT Act.

¶40

13. This takes us to alternate remedy rule. Law is well
settled that alternate remedy rule is not an absolute rule. In
other words, alternate remedy rule is a discretionary rule and
it is a self-imposed restraint qua writ jurisdiction. In this
scenario, in a long line of authorities i.e., catena of case

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https://hcservices.ecourts.gov.in/hcservices/

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laws, Hon'ble Supreme Court has repeatedly held that alternate
remedy rule though not absolute, should be applied with utmost
rigour when it comes to fiscal Statutes. The authorities are
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]. To be noted, these are only illustrative and not
exhaustive.

¶43

14. Relevant paragraph in Dunlop case is paragraph No.3
and relevant portion of the same reads as follows:

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'3. ....... Article 226 is not meant to

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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.'

¶46

(Underlining made by this Court to
supply emphasis and highlight)

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15. 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:

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'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)

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https://hcservices.ecourts.gov.in/hcservices/

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“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.

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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.'

¶52

(underlining made by this Court to supply emphasis and
highlight)

¶53

16. To be noted in paragraph No.10 of K.C.Mathew's case,
Satyawati Tondon principle has been extracted and reproduced.
Therefore, this Court refrains itself from embarking upon
exercise of extracting and reproducing relevant paragraphs from
Satyawati Tondon case law. More importantly, in a very recent
judgment in Commercial Steel Limited case [Civil Appeal No 5121
of 2021, The Assistant Commissioner of State Tax and Others Vs.
M/s Commercial Steel Limited], Hon'ble Supreme Court i.e., a
three member Bench of Hon'ble Supreme Court speaking through
Hon'ble Justice Dr.Dhananjaya Y Chandrachud reiterated this
alternate remedy rule and held that writ jurisdiction can be

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https://hcservices.ecourts.gov.in/hcservices/

¶55

exercised only if any of the exceptions arise, exceptions have
also been adumbrated and all these are captured in paragraph
Nos.11 and 12 of Commercial Steel Limited case which read as
follows:

¶56

'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.

¶57

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.'

¶58

17. From the narrative, discussion and dispositive
reasoning thus far, it is very clear that this case does not
fall under any of the aforementioned exceptions. The question of
looking into the records, going into the facts and examining
mismatch, this exercise can be done by the Appellate Authority.
This Court is of the considered view that the Appellate
Authority doing such an exercise would be appropriate. This is
more so as the Appellate Authority can well go into facts. This
Court, therefore, is of the considered view that this is not a
case for exercising writ jurisdiction for interference qua
impugned orders. Therefore, the campaign against impugned orders
in writ jurisdiction in the captioned main writ petitions fail.
However, it is made clear that it is open to the writ petitioner
to avail alternate remedy under Section 51 of TNVAT Act, if the
writ petitioner chooses to do so, subject to limitation and pre-
deposit conditions set out therein, i.e., if the writ petitioner
satisfies these conditions and takes alternate remedy route
i.e., statutory appeal, the Appellate Authority shall deal with
the appeals on its own merits and in accordance with law,

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¶60

uninfluenced by any of the observations made in this order. In
any event, though obvious, it is made clear that no opinion has
been expressed on the merits of the matter in this order.

¶61

18. The sequitur that follows from the narrative
discussion and dispositive reasoning set out thus far is
captioned writ petitions fail and the same deserve to be
dismissed albeit preserving the rights of the writ petitioner to
pursue alternate remedy subject to pre-deposit and limitation
conditions.

¶62

19. Captioned Writ Petitions are dismissed preserving
rights of the writ petitioner in the above manner. Consequently,
connected writ miscellaneous petitions are also dismissed as
closed. There shall be no order as to costs.

¶63

Sd/-

¶64

Assistant Registrar (CS-III)

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// True Copy //

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Sub Assistant Registrar

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mk/nsa

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To

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The Assistant Commissioner (ST)
Hosur (South) I Hosur.

¶70

+6ccs to M/s.Manoharan Sundaram, Advocate SR.Nos.53793, 53794,
 53795, 53796, 53797, 53798 & 53793.

¶71

+1cc to the Special Government Pleader SR.No.54390

¶72

W.P.Nos.22049, 22056, 22060, 22064, 22066 and 22069 of 2021
and
W.M.P.Nos.23286, 23282, 23277, 23276, 23274 and 23265 of 2021

¶73

RR(CO)

¶74

RVM(10/11/2021)

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M/s.Kanunga Extrusion Private Limited, v. The Assistant Commissioner (St)

Case brief

What is this about?

What did the court decide?

M/s.Kanunga Extrusion Private Limited, v. The Assistant Commissioner (St)

Case brief

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What the court decided

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