Gopal Traders vs State of U.P. trough its Prin. Secy. Tax and Registration

Satish Chandra, J.—Heard Sri Neerav Chitravanshi learned Counsel for the petitioner and Sri H.P. Srivastava learned Additional Chief Standing Counsel for the opposite parties.

Since purely substantial question of law is involved, learned Additional Chief Standing Counsel does not intend to file the counter affidavit. Hence, with the consent of the parties, we proceed to decide the writ petition finally at the admission stage.

Short question involved in the present writ petition is as to whether after submission of the annual return, the proceedings could have taken place in pursuance to the provision contained in Section 25(1)(ii) of Uttar Pradesh Value Added Tax Act, 2008 in short ''Act''.

The petitioner is a proprietorship firm engaged in the business of trading of mustered oil and cake, had filed the annual original return in pursuance to Section 24 of the Act on 09.03.2010. Thereafter by the impugned order dated 16.03.2010 passed by the opposite party No. 3, in pursuance to the power conferred u/s 25(1)(ii) of the Act, the provisional assessment was made and in pursuance to which demand notice has been issued to pay the tax.

Learned Counsel for the petitioner submits that no proceeding could have been taken place u/s 25(1)(ii) of the Act since original annual return was filed. Only option left is to proceed for the final assessment. In support of the arguments, petitioner''s counsel has relied upon a judgment reported in 2010 42 NTN 196 Dinesh Chandra Gupta & Sons v. State of U.P. and Anr.

On the other hand, Sri H.P. Srivastava leaned Additional Chief Standing counsel submits that notice u/s 25(1)(ii) of the Act was issued on 08.01.2010 and three dates were fixed. Hence, the department has got right to proceed u/s 25(1)(ii) of the Act. Submission of the learned Additional Chief Standing Counsel is that the impugned demand notice does not suffer from any illegality or impropriety. However, argument of learned Additional Chief Standing Counsel has been rebutted by the petitioner''s counsel with submission that annual original return was filed within the stipulated period. Hence, as and when return is filed, respondents looses its right to proceed u/s 25(1)(ii) of the Act. One other argument advanced by the learned Additional Chief Standing counsel is that the petitioner should approach the appellate forum u/s 55 of the Act.

For convenience Section 25(1)(ii) of the Act is reproduced as under:

Assessment of tax for a tax period : (1) Where in respect of any tax period of an assessment year-

(i) any dealer has not submitted tax return within the time prescribed or within the time extended by the assessing authority, or if tax return has been submitted without payment of tax shown payable in such return; or

(ii) preliminary examination of tax return, by the assessing authority, reveals that computations shown in the tax return are wrong or amount of input tax credit claimed or tax payable shown is incorrect; or

(iii) on the basis of material available on records with the assessing authority, it appears to the assessing authority that the turnover of sales or purchases or both, disclosed by the dealer is not worthy of credence;

the assessing authority may, after making such inquiry as it may deem fit and after giving a reasonable opportunity of being heard to the dealer, determine-

(i) to the best of its judgment the turnover, amount of tax payable and amount of input tax credit admissible, where the dealer has not submitted tax return or if the tax return has been submitted, the assessing authority is of the opinion that turnover disclosed by the dealer in such return is not worthy of credence; or

(ii) the amount of tax payable and amount of input tax credit admissible, in any other case,

by passing a provisional order of assessment for such tax period.

A plain reading of Section 25 shows that the power may be exercised only when the tax return is not being filed. Once the annual tax return is filed, then the assessing authority had to proceed in pursuance to provision contained in Section 26 of the Act. In the event of filing of annual return within the stipulated period in view of the power conferred by Section 24 of the Act, no proceeding could have been taken place under the impugned provision.

The argument of the respondents'' counsel that the appeal should be relegated to the alternative forum is not sustainable in view of the fact that their lordships of Hon''ble Supreme Court by a catena of judgments ruled that things should be done in the manner provided under the Act and statute and in case the authorities had not discharged their obligation within the four corners of law or has acted without jurisdiction, then court should not shirk from its responsibility to interfere under its extra ordinary jurisdiction under Article 226 of the Constitution of India.

The relegation of alternative remedy or exercise of power by the Court under Article 226 of the Constitution of India are discretionary in nature. The courts act under self impose restriction and whenever from the record, it appears that some decision is taken without jurisdiction, then it is the constitutional obligation of the higher judiciary to interfere and compel the authorities to act within the four corners of law within their respective jurisdiction.

In case an authority lacks jurisdiction to impose penalty, then such order is amenable to writ jurisdiction under Article 226 of the Constitution of India, vide judgment of Hon''ble Supreme Court reported in Dr (Smt.) Kuntesh Gupta Vs. Management of Hindu Kanya Mahavidyalaya, Sitapur (U.P.) and Others,

Hon''ble Supreme Court in the case reported in S.N. Sharma Vs. Bipen Kumar Tiwari and Others, , held that alternative remedy is the rule of discretion and not an exclusion of jurisdiction under Article 226. It has been further held in the case reported in Century Spinning and Manufacturing Company Ltd. and Another Vs. The Ulhasnagar Municipal Council and Another, that in case the petition may be decided on the basis of material on record, then alternative remedy shall be no bar.

In the case reported in Rashid Ahmed Vs. The Municipal Board, Kairana, Baburam Prakash Chandra Maheshwari Vs. Antarim Zila Parishad now Zila Parishad, Muzaffarnagar, and Himmatlal Harilal Mehta Vs. The State of Madhya Pradesh and Others, , it has been further held that it is self-imposed limitation and does not oust the jurisdiction of this Court to exercise power conferred by Article 226 of the Constitution of India even if an alternative remedy is available to an aggrieved person.

Their lordships of Hon''ble Supreme Court in the case reported in The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, held that alternative remedy shall not come into the way where party come to court with an allegation that his fundamental right has been violated and sought the relief under Article 226 of the Constitution of India.

It has been settled by Hon''ble Supreme Court in the case reported in Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, and AIR 1967 SC 549 (Bhopal Sugar Industry v. STO), that where mandatory provision of law has not been complied with and petitioners suffer from no fault on his or her part, the alternative remedy shall not be a bar to exercise jurisdiction under Article 226 of the Constitution of India.

It has also been settled by Hon''ble Supreme Court that where important question of law is involved it shall be open to exercise extraordinary jurisdiction of Article 226 of the Constitution of India to settle a controversy. It has further been held that where public authority is acting contrary to provision of law or taking undue advantage of its own then alternative remedy shall not be a bar, vide, judgments reported in Union of India (UOI) and Another Vs. State of Haryana and Another, and 2002 (3) SCC Maharashtra State Judicial Services Association v. High Court of Judicature at Bombay, Salonah Tea Co. Ltd. and Others Vs. Superintendent of Taxes, Nowgong and Others, M.D., Tamil Nadu State Transport Corporation Vs. Neethivilangan Kumbakonam, Shiv Shankar Dal Mills and Others Vs. State of Haryana and Others,

In a case reported in Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, Hon''ble Supreme Court had held that alternative remedy shall not be a bar and dismissal of writ petition by High Court held to be not proper. The order passed by the authorities arbitrarily by abusing the power or in violation of principle of natural justice, may always be subjected to judicial review under Article 226 of the Constitution of India.

In a case reported in Godrej Sara Lee Ltd. Vs. Asst. Commissioner (AA) and Another, Hon''ble Supreme Court observed held that if the order of statutory authority is questioned on the ground of lack of jurisdiction, Court may interfere and the alternative remedy is no bar. Their lordships held that where issue relating to jurisdictional fact is raised, it should have been determined by the High Court in exercise of writ jurisdiction under Article 226 of the Constitution of India

In the case reported in Babubhai Jamnadas Patel Vs. State of Gujarat and Others, Hon''ble Supreme Court held that High Courts and Supreme Court are sentinels of justice. They have been vested with extraordinary powers of judicial review and supervision to ensure that rights of citizens are duly protected. Courts have to maintain a constant vigil against inaction of authorities in discharging their duties and obligations in the interest of citizens for whom they exist. Directions may be issued to authorities to perform their duties as required under various statutes.

In view of the above, submission of the learned Additional Chief Standing Counsel to relegate the matter to statutory forum does not seem to be correct. Since the authorities lacks jurisdiction to pass the impugned order, it is a fit case where the jurisdiction conferred by Article 226 of the Constitution of India should be exercised keeping in view the settled propositions of law (supra).

Apart from above, the judgment relied upon by the learned Counsel for the petitioner seems to be laid down correct law on the point and we are also of the view that instead of proceeding u/s 25(1)(ii) of the Act, the department has to proceed with regard to assessment in pursuance to Section 26 of the Act. The filing of annual return u/s 24 of the Act, is one more reason for setting aside the impugned order. While proceeding u/s 26 of the Act, the revenue has got right to look into the entire facts, circumstances and material on record while dealing with the annual return. In case revenue is permitted to proceed u/s 25 of the Act, then it shall result into conflicting opinion on the part of the revenue while assessing u/s 26 of the Act. The revenue has got ample power to look into all the materials including the material gathered while passing the impugned order u/s 25 of the Act.

In view of the above, the writ petition is allowed. A writ in the nature of certiorari is issued quashing the impugned order dated 16.03.2010 passed by the opposite party No. 3 u/s 25(1)(ii) of the Act as well as the notices of demand issued in pursuance to the order dated 16.03.2010 with all consequential benefits with liberty to the revenue to proceed on the basis of the original annual return expeditiously preferably within three months on merit.

Writ petition allowed accordingly.