THE STATE OF MAHARASHTRA AND OTHERS versus GREATSHIP (INDIA) LIMITED on 20 September 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 30.04.2021 passed by the High Court of Judicature atBombay in Writ Petition (Stamp) No. 92630 of 2020, by which the HighBCourt has, in exercise of powers under Article 226 of the Constitution ofIndia, set aside the assessment order passed by the assessing authorityand also the belated notice of demand, the State of Maharashtra andothers have preferred the present appeal.

2. That the respondent – original writ petitioner was subjected toCproceedings under the Maharashtra Value Added Tax, 2002 (hereinafterreferred to as the ‘MVAT Act’) and Central Sales Tax Act, 1956(hereinafter referred to as the ‘CST Act’). The Assessing Officer issuednotice of assessment dated 01.02.2018 calling upon the assessee toproduce relevant documents and also to show cause as to why it shouldDnot be assessed under the relevant provisions of Section 23 of the MVATAct.

2.1 According to the writ petitioner, the writ petitioner submittedthe required documents and also showed cause vide letter dated03.05.2018. That a personal hearing was fixed on 16.03.2020. However,Eon 16.03.2020 the Assessing Officer was not available and therefore nohearing took place. According to the writ petitioner, multiple telephonecalls were made to the Assessing Officer on 17.03.2020, 18.03.2020and 19.03.2020 for personal hearing, but no such hearing materialised.According to the writ petitioner, vide letter dated 20.03.2020 it wassubmitted before the Assessing Officer that for the financial year underFconsideration the relevant documents had already been submitted andpersonal hearing was requested. The Assessing Officer passed an orderon 20.03.2020 determining the tax liability along with interest and penaltyunder the MVAT Act and CST Act.

2.2 That without preferring any appeal before the first appellateGauthority, the respondent – assessee – original writ petitioner filed a writpetition before the High Court challenging the assessment order passedunder the provisions of the MVAT Act and CST Act alleging inter aliathat no order was passed on 20.03.2020 and it was passed in the monthof July, 2020, which was beyond the period of limitation. The High CourtHhas entertained the said writ petition against the assessment order under Article 226 of the Constitution of India and has passed the impugnedjudgment and order quashing and setting aside the assessment order andthe demand notice.

2.3 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court, the State of Maharashtra and othershave preferred the present appeal.

3. Number of submissions have been made by the counselappearing for the respective parties on merits and on the assessmentorder passed by the Assessing Officer. However, for the reasons givenhereinbelow, we are of the opinion that against the assessment order,the High Court ought not to have entertained the writ petition and oughtto have relegated the assessee to prefer a first appeal before the firstappellate authority. Therefore, we are not elaborating the submissionson merits.

4. Shri Sachin Patil, learned counsel appearing on behalf of theappellants has vehemently submitted that against the assessment orderpassed by the Assessing Officer under the provisions of the MVAT Actand CST Act, the High Court ought not to have entertained the writpetition under Article 226 of the Constitution of India.

4.1 It is next submitted by the learned counsel appearing on behalfof the appellants that the assessee had a statutory alternative remedyavailable by way of appeal before the first appellate authority and thesaid remedy ought to have been pursued, more so because, there werevery serious disputed facts as to whether the assessment order waspassed on 20.03.2020 or on 14.07.2020 (as alleged by the assessee).

4.2 Making the above submissions and relying upon the decisionsof this Court in the case of Titaghur Paper Mills Co. Ltd. v. State ofOrissa (1983) 2 SCC 433; Punjab National Bank v. O.C. Krishnan(2001) 6 SCC 569; Raj Kumar Shivhare v. Directorate ofEnforcement (2010) 4 SCC 772; and United Bank of India v.Satyawati Tondon and others (2010) 8 SCC 110, it is prayed to allowthe present appeal.

5. Shri Rafique Dada, learned Senior Advocate appearing on behalfof the respondent has submitted that considering the material on record,the High Court has observed that the assessment order was not passedon 20.03.2020 and must have been passed subsequently, i.e., beyond31.03.2020 and therefore as the assessment order was passed beyond A

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Athe period of limitation prescribed under the Act, the High Court wasjustified in entertaining the writ petition and quashing and setting asidethe assessment order.

5.1 Shri Rafique Dada, learned Senior Advocate appearing onbehalf of the respondent – assessee has relied upon the following decisionsBof this Court in support of his submission that the High Court has rightlyentertained the writ petition against the order of assessment,

1. M/s Filterco & Another v. Commissioner of Sales Tax,Madhya Pradesh and Another, (1986) 2 SCC 103;

2. Assistant Commissioner (CT) LTU & Another v. AmaraCRaja Batteries Limited, (2009) 8 SCC 209; and

3. Whirlpool Corporation v. Registrar of Trademarks,Mumbai, (1998) 8 SCC 1

5.2 Learned Senior Advocate appearing on behalf of the originalDwrit petitioner has further submitted that in the present case for an earlierassessment order, there was a decision against the assessee by the firstappellate authority on merits and therefore it may be a formality to preferan appeal before the first appellate authority and hence the original writpetitioner rightly filed the writ petition before the High Court.

6. We have heard the learned counsel for the respective partiesEat length.

At the outset, it is required to be noted that against the assessmentorder passed by the Assessing Officer under the provisions of the MVATAct and CST Act, the assessee straightway preferred writ petition underArticle 226 of the Constitution of India. It is not in dispute that the statutesFprovide for the right of appeal against the assessment order passed bythe Assessing Officer and against the order passed by the first appellateauthority, an appeal/revision before the Tribunal. In that view of thematter, the High Court ought not to have entertained the writ petitionunder Article 226 of the Constitution of India challenging the assessmentGorder in view of the availability of statutory remedy under the Act. Atthis stage, the decision of this Court in the case of Satyawati Tondon(supra) in which this Court had an occasion to consider the entertainabilityof a writ petition under Article 226 of the Constitution of India by by-passing the statutory remedies, is required to be referred to. Afterconsidering the earlier decisions of this Court, in paragraphs 49 to 52, itHwas observed and held as under:

“49. The views expressed in Titaghur Paper Mills Co.Ltd. vs. State of Orissa (1983) 2 SCC 433 were echoedin CCE v. Dunlop India Ltd. (1985) 1 SCC 260 in the followingwords: (SCC p. 264, para 3)

“3. … Article 226 is not meant to short-circuit or circumventstatutory procedures. It is only where statutory remedies areentirely ill-suited to meet the demands of extraordinarysituations, as for instance where the very vires of the statute isin question or where private or public wrongs are so inextricablymixed up and the prevention of public injury and the vindicationof public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have goodand sufficient reason to bypass the alternative remedy providedby statute. Surely matters involving the revenue where statutoryremedies are available are not such matters. We can also takejudicial notice of the fact that the vast majority of the petitionsunder Article 226 of the Constitution are filed solely for thepurpose of obtaining interim orders and thereafter prolong theproceedings by one device or the other. The practice certainlyneeds to be strongly discouraged.”

50. In Punjab National Bank v. O.C. Krishnan (2001) 6 SCC569 this Court considered the question whether a petition underArticle 227 of the Constitution was maintainable against an orderpassed by the Tribunal under Section 19 of the DRT Act andobserved: (SCC p. 570, paras 5-6)

“5. In our opinion, the order which was passed by the Tribunaldirecting sale of mortgaged property was appealable underSection 20 of the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 (for short ‘the Act’). The HighCourt ought not to have exercised its jurisdiction under Article227 in view of the provision for alternative remedy containedin the Act. We do not propose to go into the correctness of thedecision of the High Court and whether the order passed bythe Tribunal was correct or not has to be decided before anappropriate forum.

6. The Act has been enacted with a view to provide a specialprocedure for recovery of debts due to the banks and the A

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financial institutions. There is a hierarchy of appeal providedin the Act, namely, filing of an appeal under Section 20 and thisfast-track procedure cannot be allowed to be derailed eitherby taking recourse to proceedings under Articles 226 and 227of the Constitution or by filing a civil suit, which is expresslybarred. Even though a provision under an Act cannot expresslyoust the jurisdiction of the Court under Articles 226 and 227 ofthe Constitution, nevertheless, when there is an alternativeremedy available, judicial prudence demands that the Courtrefrains from exercising its jurisdiction under the saidconstitutional provisions. This was a case where the High Courtshould not have entertained the petition under Article 227 ofthe Constitution and should have directed the respondent totake recourse to the appeal mechanism provided by the Act.”

51. In CCT v. Indian Explosives Ltd. [(2008) 3 SCC 688] theCourt reversed an order passed by the Division Bench of theOrissa High Court quashing the show-cause notice issued to therespondent under the Orissa Sales Tax Act by observing that theHigh Court had completely ignored the parameters laid down bythis Court in a large number of cases relating to exhaustion ofalternative remedy.

52. In City and Industrial Development Corpn. v. DosuAardeshir Bhiwandiwala [(2009) 1 SCC 168] the Courthighlighted the parameters which are required to be kept in viewby the High Court while exercising jurisdiction under Article 226of the Constitution. Paras 29 and 30 of that judgment which containthe views of this Court read as under: (SCC pp. 175-76)

“29. In our opinion, the High Court while exercising itsextraordinary jurisdiction under Article 226 of the Constitutionis duty-bound to take all the relevant facts and circumstancesinto consideration and decide for itself even in the absence ofproper affidavits from the State and its instrumentalities as towhether any case at all is made out requiring its interferenceon the basis of the material made available on record. There isnothing like issuing an ex parte writ of mandamus, order ordirection in a public law remedy. Further, while considering thevalidity of impugned action or inaction the Court will not consideritself restricted to the pleadings of the State but would be free to satisfy itself whether any case as such is made out by aperson invoking its extraordinary jurisdiction under Article 226of the Constitution.

30. The Court while exercising its jurisdiction under Article226 is duty-bound to consider whether:

(a) adjudication of writ petition involves any complex anddisputed questions of facts and whether they can besatisfactorily resolved; (b) the petition reveals all material facts;

(c) the petitioner has any alternative or effective remedy forthe resolution of the dispute; (d) person invoking the jurisdiction is guilty of unexplained delayand laches; (e) ex facie barred by any laws of limitation; (f) grant of relief is against public policy or barred by any validlaw; and host of other factors.

The Court in appropriate cases in its discretion may direct theState or its instrumentalities as the case may be to file properaffidavits placing all the relevant facts truly and accurately forthe consideration of the Court and particularly in cases wherepublic revenue and public interest are involved. Such directionsare always required to be complied with by the State. No reliefcould be granted in a public law remedy as a matter of courseonly on the ground that the State did not file its counter-affidavitopposing the writ petition. Further, empty and self-defeatingaffidavits or statements of Government spokesmen by themselvesdo not form basis to grant any relief to a person in a public lawremedy to which he is not otherwise entitled to in law.”

53. In Raj Kumar Shivhare v. Directorate of Enforcement [(2010)4 SCC 772] the Court was dealing with the issue whether thealternative statutory remedy available under the Foreign ExchangeManagement Act, 1999 can be bypassed and jurisdiction underArticle 226 of the Constitution could be invoked. After examiningthe scheme of the Act, the Court observed: (SCC p. 781, paras31-32)

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“31. When a statutory forum is created by law for redressalof grievance and that too in a fiscal statute, a writ petitionshould not be entertained ignoring the statutory dispensation.In this case the High Court is a statutory forum of appeal on aquestion of law. That should not be abdicated and given a go-by by a litigant for invoking the forum of judicial review of theHigh Court under writ jurisdiction. The High Court, with greatrespect, fell into a manifest error by not appreciating this aspectof the matter. It has however dismissed the writ petition on theground of lack of territorial jurisdiction.

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32. No reason could be assigned by the appellant’s counsel todemonstrate why the appellate jurisdiction of the High Courtunder Section 35 of FEMA does not provide an efficaciousremedy. In fact there could hardly be any reason since theHigh Court itself is the appellate forum.”

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7. Applying the law laid down by this Court in the aforesaidDdecision, the High Court has seriously erred in entertaining the writ petitionunder Article 226 of the Constitution of India against the assessmentorder, by-passing the statutory remedies.

8. Now so far as the reliance placed upon the decisions of thisCourt by the learned Senior Advocate appearing on behalf of theErespondent, referred to hereinabove, are concerned, the question is notabout the maintainability of the writ petition under Article 226 of theConstitution, but the question is about the entertainability of the writpetition against the order of assessment by-passing the statutory remedyof appeal. There are serious disputes on facts as to whether theFassessment order was passed on 20.03.2020 or 14.07.2020 (as allegedby the assessee). No valid reasons have been shown by the assessee toby-pass the statutory remedy of appeal. This Court has consistently takenthe view that when there is an alternate remedy available, judicial prudencedemands that the court refrains from exercising its jurisdiction underconstitutional provisions.

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9. In view of the above and in the facts and circumstances of thecase, the High Court has seriously erred in entertaining the writ petitionagainst the assessment order. The High Court ought to have relegatedthe writ petitioner – assessee to avail the statutory remedy of appealand thereafter to avail other remedies provided under the statute.

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10. Under the circumstances, the impugned judgment and orderpassed by the High Court is hereby quashed and set aside. The writpetition filed before the High Court challenging the assessment orderand consequential notice of demand of tax is hereby dismissed. Therespondent – assessee is relegated to avail the statutory remedy of appealand other remedies available under the MVAT Act and CST Act. It isdirected that if such a remedy is availed within a period of four weeksfrom today, the appellate authority shall decide and dispose of the sameon its own merits in accordance with law without raising any question oflimitation, however, subject to fulfilling the other conditions, if any, underthe statute. It is made clear that we have not expressed any opinion onthe merits of the case in favour of either of the parties and it is for theappellate authority and/or appropriate authority to consider the appeal/proceedings on its/their own merits and without being influenced in anyway by any of the observations made by the High Court which otherwisehave been set aside by the present order. The present appeal is allowedin the aforesaid terms. However, in the facts and circumstances of thecase, there shall be no order as to costs.

Divya Pandey

Appeal allowed.

(Assisted by : Roopanshi Virang, LCRA)

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