Bhawani Moulders Pvt Limited and Another vs State of Chhattisgarh and Others

Hon''ble Shri Satish K. Agnihotri, J.—WP (T) Nos.66 & 67 of 2012, involve common facts & common question of law and only assessment years are different, therefore, they are being considered and are being decided by the common order. For the purpose of convenience, the documents filed in WP (T) No.66 of 2012 are being referred, as the facts and documents of both the petitions are similar By these petitions, the petitioners seek to quash the order dated 31-12-2010 (Annexure - P/11) passed by the respondent No.4 in Case Nos.19/reopen/2008 (1-4-2002 to 31- 3-2003) and 20/reopen/2008 (1-4-2003 to 31-3-2004), in respect of WP (T) Nos.66 & 67 of 2012, respectively.

Case of the petitioners, in short, is that the petitioner No.1 - M/s Bhawani Moulders (P) Limited is a company duly incorporated under the Companies Act, 1956 having its registered office at Kolkata and the industrial unit at Urla Industrial Area, Raipur. It is engaged in manufacture of Steel Ingots (MS Ingots), Ingots Moulds & cast articles of iron, etc. The petitioner No.2 is one of the Directors of the petitioner No.1 Company.

A show cause notice dated 29-11-2007 (Annexure - P/2) was issued from the office of the Commissioner, Customs & Central Excise, Raipur (for short "the CCE, Raipur"), which was served upon the petitioners on 10-1-2008, calling upon them to show cause asto why the Central Excise Duty amounting to Rs.1,57,29,906/- on 7758.200 MTs of MS Ingot and MS Gulli were clandestinely removed during the period from December, 2002 to June, 2003 without payment of duty and penalty equal to the amount of duty should not be recovered under Sections 11A and 11AC of the Central Excise Act, 1944 (for short "the Act, 1944").

By letter dated 15-5-2008 (Annexure - P/3) the petitioners submitted their response to the show cause notice and denied the allegations leveled against them. Thereafter, on 7-10-2008 (Annexure - P/4) the CCE, Raipur, issued demand notice and demanded the Central Excise Duty of Rs.1,57,27,906/- under the provisions of Sections 11A and 11B of the Act, 1944 and imposed a penalty of Rs.1,57,68,474/- u/s 11AC of the Act, 1944.

Thereagainst, the petitioners preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (for short "the CESTAT"). The CESTAT by order dated 28-1-2009 (Annexure - P/6) passed an interim order observing that "we direct the applicant- company to deposit a sum of Rs.20,00,000/- (Rupees Twenty Lakhs Only) within 8 weeks from today and to report compliance on 2nd April, 2009. Subject to pre-deposit of the amount by the appellant-company, the pre-deposit of balance amount of duty and penalties on all the applicants stands waived till the disposal of the appeals. The stay petitions are disposed of in the above terms.

In spite of the interim order passed by the CESTAT the respondent authorities, the respondent No.4 without having jurisdiction and contrary to statutory provisions and against the principles of natural justice initiated process of re-assessment u/s 28(1) of the Chhattisgarh Commercial Tax Act, 1994 (for short "the Act, 1994"), which Act had already been repealed vide Section 72 of the Chhattisgarh Value Added Tax Act, 2005 w.e.f. 1- 4-2006 solely relying on the order dated 7-10-2008 of the Commissioner Customs & Central Excise for arriving at finding that and there was clandestine removal of goods and thereby directing the petitioner-company to deposit a sum of Rs.23,96,000/- Sales Tax and Rs.47,92,000/- penalty in total amount of Rs.71,88,000/-, in respect of WP (T) No.66 of 2012 and an amount of Rs.24,09,200/- Sales Tax and Rs.48,00,000/- penalty in total amount of Rs.72,09,200/-, in respect of WP (T) No.67 of 2012, within 30 days from the day of receipt of the said order knowing fully well that the effect and operation of the order dated 7-10-2008 of the CCE, Raipur, had already been stayed by the CESTAT.

The Act, 1994 has been repealed u/s 72 of the Chhattisgarh Value Added Tax Act, 2005 (for short "the VAT Act, 2005"), however, it was made clear that such repeal shall not affect the previous operations under the repealed Act.

Section 72(i)(a)(b) of the VAT Act, 2005 reads as under:

Repeal and savings- The Chhattisgarh Vanijyik Kar Adhiniyam, 1994 (No.5 of 1995) shall stand repealed on the date of coming into force of this Act:

Provided that -

(i) such repeal shall not affect-

(a) the previous operation of the Act so repealed or Act No. 2 of 1959 repealed by Act No.5 of 1995 (hereinafter referred to as a repealed Act) or anything duly done or suffered, thereunder; or

(b) any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act, including the facility of exemption from payment of tax/deferment of payment of tax extended to any registered dealer under that Act for his having established new industrial unit in the state or undertaken expansion, modernisation or diversification in such industrial unit:

Provided that the facility of exemption from payment of tax / deferment of payment of tax extended to any registered dealer under that Act for his having established new industrial unit in the state or undertaken expansion, modernisation or diversification in such industrial unit, shall be suitably amended/ modified as per the provisions of this Act. For this purpose the state government may issue fresh notification or amend the notification issued under the repealed Act.

(c) any penalty, forfeiture or punishment incurred in respect of any offence committed under the repealed Act; or

(d) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed and the said Act had not been repealed.

(ii) Unless it is otherwise expressly provided, anything done or any action taken (including any appointment, notification, notice, order, rule, form, regulation or certificate) in the exercise of any power conferred by or under the repealed Act shall, in so far as it is not inconsistent with the provisions of this Act, continue to be in force and be deemed to have been done or taken in the exercise of the powers conferred by or under the provisions of this Act as if this Act were in force on the date on which such thing was done or action was taken unless and until it is superseded by or under this Act and all arrears of tax and other amount due at the commencement of this Act may be recovered as if they had accrued under this Act.

(iii) Any assessment, appeal, revision or other proceedings arising under the repealed Act and the rules made thereunder and or pending before an officer or authority duly empowered to make assessment or hear and decide such appeal, revision or other proceeding immediately preceding the commencement of this Act shall, on the date of such commencement stand transferred to the officer or authority competent to make assessment or to hear and decide appeal or revision or other proceedings under this Act and thereupon such assessment, shall be made or such appeal or revision or other proceeding shall be heard and decided within the period, if any, specified therefor, by such officer or authority in accordance with the provisions of the repealed Act or the rules made thereunder as if they were the officer or authority duly empowered for the purpose under the repealed Act.

(iv) (a) any application by a dealer or the commissioner to the Tribunal for making a reference to the High Court under sub-section (1) of section 70 of the repealed Act; or

(b) any such application made under sub-section (2) of section 70 of the repealed Act; or

(c) any reference made to the High Court under sub-section (1) or sub- section (2) of section 70 of the repealed Act, is pending on the date of commencement of this Act shall be disposed of by the Tribunal or the High Court, as the case may be, in accordance with the provisions of section 70 of the repealed Act as if this Act had not been passed and the said Act had not been repealed.

(v) Notwithstanding anything contained in clause (i), any appeal, revision or other proceedings arising under the repealed Act but preferred or initiated after the commencement of this Act, shall be heard and decided by the authority competent to entertain any appeal, revision or any other proceedings in accordance with the provisions of this Act.

The question involved in this petition is asto whether the respondent No.4 has jurisdiction to consider reassessment of the escaped tax and pass the order u/s 28(1) of the Act, 1994 for the period from (1-4- 2002 to 31-3-2003 & 1-4-2003 to 31-3-2004) when after the VAT Act, 2005 came into existence.

Learned counsel appearing for the State, would submit that statutory appeal is available under the provisions of the Act, 1994 as well as under the VAT Act, 2005. Thus, this petition may not be entertained on the ground of availability of alternative, effective and statutory remedy of appeal.

I have heard learned counsel appearing for the parties, perused the pleadings and the documents appended thereto.

No provision has been pointed out to show that if the assessment in respect of concealed payment of Excise Duty is pending for consideration before the Custom Appellate Authority, the State authorities are constrained to proceed for reassessment of Sales Tax (now, Value Added Tax) in present VAT Act, 2005. The operation of Sales Tax (VAT) and Central Excise Duty are altogether different fields. They may be connected in respect of the manufacture or sale of the goods. Thus, the stay of one proceedings may not automatically restrain other proceedings.

So far as the jurisdiction is concerned, it is not a case, the respondent No.4 has no jurisdictional authority for initiating the process of re-assessment and imposing tax and penalty. The respondent No.4 has power under the law to reassess the tax and collect the same with penalty.

So far as facts are concerned, the first statutory appellate authority is the fact finding authority also. If there are factual disputes or the method of assessment is erroneous, as alleged by the petitioners, the petitioners have to approach the statutory appellate authority/ revisional authority for the same and after exhausting all the statutory remedies, the petitioners may approach this Court under writ jurisdiction.

Reliance of the petitioners upon the decision of the Supreme Court in Arun Kumar and Others v. Union of India and Others1, is misplaced, as the Supreme Court observed that the authority has assumed the jurisdictional fact erroneously, then the assessee would be entitled for the writ of certiorari prayed for by him. Thus, there is no, prima facie, error on the jurisdiction. Facts, in respect of jurisdiction as well as the dispute with regard to facts on reassessment, may also be considered before the statutory appellate authority.

Petitioner also placed reliance upon the decision of the High Court of Madhya Pradesh rendered in Firm Janta Hardware Stores, Raigarh and Others v. B.S. Parihar, Asstt. Sales Tax Officer2. The same is also of no assistance.

The Supreme Court, in State of H.P. and others v. Gujarat Ambuja Cement and another3, observed as under:

We shall first deal with the plea regarding alternative remedy as raised by the appellant State. Except for a period when Article 226 was amended by the Constitution (Forty-second Amendment) Act, 1976, the power relating to alternative remedy has been considered to be a rule of self- imposed limitation. It is essentially a rule of policy, convenience and discretion and never a rule of law. Despite the existence of an alternative remedy it is within the jurisdiction of discretion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of that though the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. If somebody approaches the High Court without availing the alternative remedy provided the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction.

In G. Veerappa Pillai v. Raman & Raman Ltd.;CCE v. Dunlop India Ltd.; Ramendra Kishore Biswas v. State of Tripura; Shivgonda Anna Patil v. State of Maharashtra; C.A. Abraham v. ITO; Titaghur Paper Mills Co. Ltd. v. State of Orissa; H.B. Gandhi v. Gopi Nath and Sons; Whirlpool Corpn. v. Registrar of Trade Marks; Tin Plate Co. of India Ltd. v. State of Bihar; Sheela Devi v. Jaspal Singh and Punjab National Bank v. O.C. Krishnan, this Court held that where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedies before resorting to writ jurisdiction.

Further applying the said ratio in U.P. State Spinning Co. Ltd. v. R.S. Pandey and another4, the Supreme Court observed as under:

In U.P. State Bridge Corpn. Ltd. v. U.P. Rajya Setu Nigam S. Karamchari Sangh it was held that when the dispute relates to enforcement of a right or obligation under the statute and specific remedy is, therefore, provided under the statute, the High Court should not deviate from the general view and interfere under Article 226 except when a very strong case is made out for making a departure. The person who insists upon such remedy can avail of the process as provided under the statute. To same effect are the decisions in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke, Rajasthan SRTC v. Krishna Kant, Chandrakant Tukaram Nikam v. Municipal Corpn. of Ahmedabad and in Scooters India v. Vijai E.V. Eldred.

In another decision on the concept of maintainability of writ petition vis--vis availability of alternative remedy, the Supreme Court, in Secy. U.P. High School & Intermediate Education, Allahabad & another v. H.K. Lal5, observed as under:

From the records it is borne out that the question as to whether the respondent has a legal right to alter his date of birth recorded in the certificate granted by the Board was pending consideration before the appellate court. The writ petition filed by the respondent should, therefore, not have been entertained particularly in view of the fact that the appeal thereagainst was pending. Writ jurisdiction is discretionary jurisdiction and should not ordinarily be exercised if there is an alternative remedy.

In Kamal Narayan Goswami v. Akhilesh Puri Goswami & Others6, this Court observed as under :

A common thread running into the dicta laid down by the Supreme Court in the aforementioned cases is that, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. Where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedy before resorting to writ jurisdiction, except when a very strong case is made out to making a departure.

Applying the well settled dicta laid down by the Supreme Court on the issue of availability of alternative remedy to the facts of the case, wherein, the petitioner has challenged the order of Tahsildar as without jurisdiction can also be considered by the statutory appellate authority. No strong case has been made out for making out a departure from normal rules. Thus, this petition is dismissed as not maintainable, in view of the availability of statutory alternative remedy. However, it is open to the petitioner to take recourse to statutory alternative forum that may be available to him, if so advised.

Against the order by this Court in Kamal Narayan Goswami (supra), the petitioner therein approached the Supreme Court by filing a Special Leave Petition, being SLP (C) No.162 of 2009, which was dismissed by the Supreme Court on 16-1-2009.

This Court, in Maa Sharda Sahkari Upbhokta Bhandar Maryadit, Pratappur v. State of Chhattisgarh & Others7, reiterated that normally, the High Court should not interfere if there is an adequate efficacious alternative remedy where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedy before resorting to writ jurisdiction, except when a very strong case is made out for making a departure.

In Steel Authority of India Limited v. Controlling Authority under Payment of Gratuity Act & Assistant Labour Commissioner, Durg & Another8 and other connected matters, observed as under:

It is a trite law that there is no bar against the High Court to entertain a petition against the order passed by the Controlling Authority, in exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution, but only in special circumstances where the validity of a statutory provision is under challenge or principle of natural justice has not been followed or there is infringement of some constitutional or statutory right. Nothing has been pointed out in this case and there is no reason to entertain these petitions directly, bye-passing the statutory appellate forum. If the issue raised by the petitioner has already been concluded, as pleaded by learned counsel for the petitioner, the petitioner may point out the same before the appellate authority for proper adjudication.

In view of the above, without expressing any opinion on merit of the cases, all the petitions are dismissed on the ground of availability of alternative and efficacious remedy.

It is well settled principle of law that this Court may not entertain a writ petition directly before the assessee exhausts all the statutory remedies available to him under the provisions of law.

For the reasons mentioned hereinabove, without expressing any opinion on the merits of the cases, both the petitions are dismissed on the ground of availability of alternative, statutory and efficacious remedy of appeal. However, liberty is reserved to the petitioners to take recourse to appellate forum, as aforestated, if so advised, under appropriate provisions of law. It is made clear that, prima facie, the aforesaid observations, if any, may not be treated as finding of the Court, in respect of the jurisdiction also. The appellate authority may consider the case independently and pass an appropriate order, in accordance with law.