M/S GODREJ SARA LEE LTD versus THE EXCISE AND TAXATION OFFICER-CUM-ASSESSING AUTHORITY & ORS. on 1 February 2023

[2023] 3 S.C.R. 871

M/S GODREJ SARA LEE LTD.

v.

THE EXCISE AND TAXATION OFFICER-CUM-ASSESSINGAUTHORITY & ORS.

(Civil Appeal No.5393 of 2010)

FEBRUARY 01, 2023

[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]

Haryana Value Added Tax Act, 2003 : ss. 33 and 34 – Revision– As regards, tax liability on mosquito repellant manufactured bythe appellant, the Revisional Authority suo moto called for theassessment records of appellant as found that the Assessing Authorityerred in levying tax on mosquito repellant @ 4% instead of 10 % –It issued show cause notices and passed final revisional orderenhancing the liability of the appellant to tax @10% instead of 4%– Writ petition thereagainst – High Court relegated the appellant tothe alternative remedy of appeal u/s. 33, which it had not pursued –Justification of – Held: Mere availability of an alternative remedyof appeal or revision, which the party invoking the jurisdiction ofthe High Court u/Art. 226 has not pursued, would not oust thejurisdiction of the High Court and render a writ petition “notmaintainable” – Availability of an alternative remedy does notoperate as an absolute bar to the “maintainability” of a writ petition– Rule, which requires a party to pursue the alternative remedyprovided by a statute, is a rule of policy, convenience and discretionrather than a rule of law – Hence, dismissal of a writ petition by aHigh Court on the ground that the petitioner has not availed thealternative remedy without examining whether an exceptional casehas been made out for such entertainment would not be proper –Moreover, a jurisdictional issue raised in the writ petitionquestioning the very competence of the Revisional Authority toexercise suo motu power, was a pure question of law – Thus, theHigh Court erred in dismissing the writ petition – Constitution ofIndia - Art.226.

s.34 – Revisional jurisdiction – Orders of the RevisionalAuthority seeking to revise the orders of the Assessing Authoritypertaining to the Assessment Years – Held : Sine qua non for exercise

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Aof power u/s. 34 is the satisfaction of the Revisional Authority thatan order has been made by a taxing authority in any proceedingprejudicial to the interests of the State, the legality or propriety ofwhich appears to him to be prima facie vulnerable.

Constitution of India : Art.226 – Writ – “entertainability” andB“maintainability” – Difference between – Discussed.Art. 226 – Writ – Entertainability of, when effective andefficacious alternative remedy available – Discussed.”

Judicial discipline: Principle of judicial discipline – Adherenceto the decision of higher authorities – Unless the discipline ofCadhering to decisions made by the higher authorities is maintained,there would be utter chaos in administration of tax laws apart fromundue harassment to assesse – On facts, nothing on record to justifyeither illegality or procedural/moral impropriety in the proceedingsbefore the Assessing Authority or the orders passed by him, as suchD– To brand the order of the Assessing Authority as illegal, the sameappears to be not only unjustified but also demonstrates thoroughlack of understanding of the principle regulating exercise of suomotu revisional power by a quasi-judicial authority apart from beingin breach of the principle of judicial discipline, while confrontedwith orders passed by a superior tribunal/Court – It is not theEAssessing Authority’s orders but those passed by the RevisionalAuthority, which suffer from a patent illegality.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1 It is axiomatic that the High Courts (bearing inFmind the facts of each particular case) have a discretion whetherto entertain a writ petition or not. One of the self-imposedrestrictions on the exercise of power under Article 226 that hasevolved through judicial precedents is that the high courts shouldnormally not entertain a writ petition, where an effective andefficacious alternative remedy is available. It must beGremembered that mere availability of an alternative remedy ofappeal or revision, which the party invoking the jurisdiction ofthe high court under Article 226 has not pursued, would not oustthe jurisdiction of the high court and render a writ petition “notmaintainable”. Availability of an alternative remedy does notoperate as an absolute bar to the “maintainability” of a writ petitionH

and bar to the “maintainability” of a writ petition and that therule, which requires a party to pursue the alternative remedyprovided by a statute, is a rule of policy, convenience anddiscretion rather than a rule of law. Though elementary, it needsto be restated that “entertainability” and “maintainability” of awrit petition are distinct concepts. The fine but real distinctionbetween the two ought not to be lost sight of. The objection as to“maintainability” goes to the root of the matter and if suchobjection were found to be of substance, the courts would berendered incapable of even receiving the lis for adjudication. Onthe other hand, the question of “entertainability” is entirely withinthe realm of discretion of the High Courts, writ remedy beingdiscretionary. A writ petition despite being maintainable may notbe entertained by a High Court for very many reasons or reliefcould even be refused to the petitioner, despite setting up a soundlegal point, if grant of the claimed relief would not further publicinterest. Hence, dismissal of a writ petition by a High Court onthe ground that the petitioner has not availed the alternativeremedy without, however, examining whether an exceptional casehas been made out for such entertainment would not be proper.[Para 4][878-H; 879-A-F]

1.2. The appellant had claimed before the High Court thatthe suo motu revisional power could not have been exercised bythe Revisional Authority in view of the existing facts andcircumstances leading to the only conclusion that the assessmentorders were legally correct and that the final orders impugned inthe writ petition were passed upon assuming a jurisdiction whichthe Revisional Authority did not possess. In fine, the ordersimpugned were passed wholly without jurisdiction. Since ajurisdictional issue was raised by the appellant in the writ petitionquestioning the very competence of the Revisional Authority toexercise suo motu power, being a pure question of law, the plearaised in the writ petition did deserve a consideration on meritsand the appellant’s writ petition ought not to have been thrownout at the threshold. [Para 9][881-B-D]

1.3. Ordering a remand is an available option. However,having regard to the lapse of time (almost a life term of fourteen AB

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Ayears) since the orders impugned in the writ petition were made,it would not be in the best interests of justice to remit the matterto the High Court. Since prior to reserving judgment on thisappeal, the parties were heard on the merits of the jurisdictionalissue that the appellant had raised before the High Court, it istime to rule on the jurisdiction of the Revisional Authority. [ParaB13][882-F]

1.4. Suo motu power of revision could be exercised by theRevisional Authority for the purposes of satisfying himself as tothe legality or propriety of any order made in any proceedingwhich is prejudicial to the interests of the State. The first proviso,Chowever, imposed a restriction on exercise of such suo motu power,if an issue had been settled, inter alia, by an appellate authority.Thus, the sine qua non for exercise of power under section 34 isthe satisfaction of the Revisional Authority that an order has beenmade by a taxing authority in any proceeding prejudicial to theDinterests of the State, the legality or propriety of which appearsto him to be prima facie vulnerable. Nevertheless, such powercannot be exercised if the issue involved is pending before orhas been settled by an appellate authority. It cannot be disputedthat the tribunal is comprehended within the meaning of ‘appellateauthority’ as defined in section 2(b) of the VAT Act. [Para 27][888-ED-F]

1.5. While deciding the present appeal, the Court isprimarily concerned with the issue of assumption of jurisdictionby the Revisional Authority on the face of the unchallenged orderof the tribunal dated 21st November, 2001, and not with the meritsFof the decision either given by the tribunal or by the RevisionalAuthority. What stares at the face of the respondents is that thesaid decision of the tribunal, quoted in the order of the AssessingAuthority, has attained finality. Once the issue stands finallyconcluded, the decision binds the State, a fortiori, the RevisionalGAuthority. The decision of the tribunal may not be acceptable tothe Revisional Authority, but that cannot furnish any ground tosuch authority to perceive that it is either not bound by the sameor that it need not be followed. The first proviso, in such a case,gets activated and would operate as a bar to the exercise ofpowers by the Revisional Authority. [Para 33][889-F-H; 890-A]H

1.6. The Revisional Authority might have been justified inexercising suo motu power to revise the order of the AssessingAuthority had the decision of the Tribunal been set aside or itsoperation stayed by a competent Court. So long it is not disputedthat the tribunal’s decision, having regard to the framework ofclassification of products/tax liability then existing, continues toremain operative and such framework too continues to remainoperative when the impugned revisional orders were made, theRevisional Authority was left with no other choice but to followthe decision of the tribunal without any reservation. Unless thediscipline of adhering to decisions made by the higher authoritiesis maintained, there would be utter chaos in administration of taxlaws apart from undue harassment to assesses. [Para 34][890-B-D]

1.7 The submission that suo motu power of revision, onthe terms of section 34, could have been exercised only if theorders sought to be revised suffered from any illegality orimpropriety, is accepted. [Para 36][890-F-G]

1.8 A decision may be questioned as suffering from anillegality if its maker fails to understand the law that regulateshis decision making power correctly or if he fails to give effect toany law that holds the field and binds the parties. On the otherhand, having regard to the purpose section 34 seeks to serve, totake exception to a decision on the ground of lack of propriety ofany proceedings or order passed in such proceedings, itessentially ought to relate to a procedural impropriety. It isincumbent for the accuser to show that the decision maker hasfailed to observe the standard procedures applicable in case ofexercise of his power. Additionally, to impeach an order on theground of moral impropriety, it has to be shown that the weight offacts together with the applicable law overwhelmingly points toone course of action but the decision has surprisingly gone theother way, giving reason to suspect misbehaviour or misconductin the sphere of activity of the decision maker warranting arevision. [Para 37][890-G-H; 891-A-B]

1.9. There is nothing on record to justify either illegality or(procedural/moral) impropriety in the proceedings before theAssessing Authority or the orders passed by him, as such. The AB

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AAssessing Authority was bound by the order of the tribunal andelected to follow it having no other option. Such decision of thetribunal was even binding on the Revisional Authority. In suchcircumstances, to brand the orders of the Assessing Authority assuffering from illegality and impropriety appears to be not onlyunjustified but also demonstrates thorough lack of understandingBof the principle regulating exercise of suo motu revisional powerby a quasi-judicial authority apart from being in breach of theprinciple of judicial discipline, while confronted with orders passedby a superior tribunal/Court. It is not the Assessing Authority’sorders but those passed by the Revisional Authority, which sufferCfrom a patent illegality. [Para 38][891-C-E]1.10 The impugned final revisional orders dated 2nd March,2009 for the Assessment Years 2003-04 and 2004-05 isinvalidated. [Para 39][891-E]

Titagarh Paper Mills vs. Orissa State Electricity BoardD& Anr. (1975) 2 SCC 436 – held inapplicable.

Sonic Electrochem vs. S.T.O.(1998) 6 SCC 397 : [1998]3 SCR 1102 – distinguished.

Union of India and Ors. Vs. Kamlakshi FinanceECorporation Ltd. 1992 SUPP (1) SCC 443 – relied on.Titaghur Paper Mills Co. Ltd. vs. State of Orissa (1983)2 SCC 433 : [1983] 2 SCR 743; State of Uttar Pradeshvs. Mohd. Nooh [1958] SCR 595;WhirlpoolCorporation vs. Registrar of Trade Marks, Mumbai andFOthers (1998) 8 SCC 1 : [1998] 2 Suppl. SCR 359;Assistant Commissioner of State Tax vs. M/s. CommercialSteel Limited 2021 SCC OnLine SC 884; State of UttarPradesh & ors. vs. Indian Hume Pipe Co. Ltd. (1977) 2SCC 724 : [1977] 3 SCR 120; Union of India vs. Stateof Haryana (2000) 10 SCC 482 – referred to.G

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No.5393of 2010.

From the Judgment and Order dated 12.10.2009 of the High Courtof Punjab and Haryana at Chandigarh in WP No.9191 of 2009.

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V. Lakshmikumaran, Rajiv Tyagi, Ms. Apeksha Mehta, CharanyaLakshmikumaran, Rohit Gupta, Pranav Mundra, Ms. Falguni Gupta, Advs.for the Appellant.

Alok Sangwan, Sr. Adv., Sumit Sharma, Anurag Kulharia, Sandeep,Apoorv Yadav, Vipul Dahiya, Rajat Sangwan, Samar Vijay Singh, KamalMohan Gupta, Advs. for the Respondents.

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The Judgment of the Court was delivered by DIPANKAR DATTA, J.

1. This appeal, by special leave, registers a challenge to an orderdated 12[th] October, 2009 passed by the High Court of Punjab and Haryanaat Chandigarh (hereafter ‘the High Court’, for short) dismissing CivilWrit Petition No.9191 of 2009 presented by the appellant and relegatingit to the remedy of an appeal under section 33 of the Haryana ValueAdded Tax Act, 2003 (hereafter ‘the VAT Act’, for short).

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2. Two questions emerge for decision on this appeal. First, whetherthe High Court was justified in declining interference on the ground ofavailability of an alternative remedy of appeal to the appellant undersection 33 of the VAT Act, which it had not pursued. Should the answerto the first question be in the negative, we would next be required todecide whether to remit the writ petition to the High Court for hearing iton merits or to examine the correctness or otherwise of the ordersimpugned before the High Court.

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3. It appears on a perusal of the order under challenge in thisappeal that the appellant had questioned the jurisdiction of the DeputyExcise and Taxation Commissioner (ST)-cum-Revisional Authority, H

AKurukshetra (hereafter ‘the Revisional Authority’, for short) to reopenproceedings, in exercise of suo motu revisional power conferred bysection 34 of the VAT Act, and to pass final orders holding that the twoassessment orders, both dated 28[th] February, 2007 passed by the ETO-cum-Assessing Authority, Kurukshetra (hereafter ‘the AssessingAuthority’, for short) for the assessment years 2003-04 and 2004-05Bsuffered from illegality and impropriety as delineated therein, viz. thatthe Assessing Authority erred in levying tax on mosquito repellant (aproduct manufactured by the appellant) @ 4% instead of 10%. Keepingin view the objection raised by counsel for the respondents that without exhausting the remedy of appeal provided by section 33 of the VAT ActC“it would not be permissible to entertain this petition” and uponconsideration of the decision of this Court reported in (1975) 2 SCC 436(Titagarh Paper Mills vs. Orissa State Electricity Board & Anr.) basedon which it was contended on their behalf that where any right or libertyarises under a particular Act then the remedy available under that Acthas to be availed, the High Court was of the opinion that there can be noDpresumption that the appellate authority would not be able to grant reliefsought in the writ petition; hence, the writ petition was dismissed and theappellants were relegated to the appellate remedy.

4. Before answering the questions, we feel the urge to say a fewwords on the exercise of writ powers conferred by Article 226 of theEConstitution having come across certain orders passed by the high courtsholding writ petitions as “not maintainable” merely because the alternativeremedy provided by the relevant statutes has not been pursued by theparties desirous of invocation of the writ jurisdiction. The power to issueprerogative writs under Article 226 is plenary in nature. Any limitationFon the exercise of such power must be traceable in the Constitutionitself. Profitable reference in this regard may be made to Article 329and ordainments of other similarly worded articles in the Constitution.Article 226 does not, in terms, impose any limitation or restraint on theexercise of power to issue writs. While it is true that exercise of writ

powers despite availability of a remedy under the very statute which hasGbeen invoked and has given rise to the action impugned in the writ petitionought not to be made in a routine manner, yet, the mere fact that thepetitioner before the high court, in a given case, has not pursued thealternative remedy available to him/it cannot mechanically be construedas a ground for its dismissal. It is axiomatic that the high courts (bearingHin mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions onthe exercise of power under Article 226 that has evolved through judicialprecedents is that the high courts should normally not entertain a writpetition, where an effective and efficacious alternative remedy is available.At the same time, it must be remembered that mere availability of analternative remedy of appeal or revision, which the party invoking thejurisdiction of the high court under Article 226 has not pursued, wouldnot oust the jurisdiction of the high court and render a writ petition “notmaintainable”. In a long line of decisions, this Court has made it clearthat availability of an alternative remedy does not operate as an absolutebar to the “maintainability” of a writ petition and that the rule, whichrequires a party to pursue the alternative remedy provided by a statute,is a rule of policy, convenience and discretion rather than a rule of law.Though elementary, it needs to be restated that “entertainability” and“maintainability” of a writ petition are distinct concepts. The fine butreal distinction between the two ought not to be lost sight of. The objectionas to “maintainability” goes to the root of the matter and if such objectionwere found to be of substance, the courts would be rendered incapableof even receiving the lis for adjudication. On the other hand, the questionof “entertainability” is entirely within the realm of discretion of the highcourts, writ remedy being discretionary. A writ petition despite beingmaintainable may not be entertained by a high court for very many reasonsor relief could even be refused to the petitioner, despite setting up asound legal point, if grant of the claimed relief would not further publicinterest. Hence, dismissal of a writ petition by a high court on the groundthat the petitioner has not availed the alternative remedy without, however,examining whether an exceptional case has been made out for suchentertainment would not be proper.

5. A little after the dawn of the Constitution, a Constitution Benchof this Court in its decision reported in 1958 SCR 595 (State of UttarPradesh vs. Mohd. Nooh) had the occasion to observe as follows:

“10. In the next place it must be borne in mind that there is norule, with regard to certiorari as there is with mandamus, that itwill lie only where there is no other equally effective remedy. It iswell established that, provided the requisite grounds exist, certiorariwill lie although a right of appeal has been conferred by statute,(Halsbury’s Laws of England, 3rd Edn., Vol. 11, p. 130 and thecases cited there). The fact that the aggrieved party has anotherand adequate remedy may be taken into consideration by the

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Asuperior court in arriving at a conclusion as to whether it should,in exercise of its discretion, issue a writ of certiorari to quash theproceedings and decisions of inferior courts subordinate to it andordinarily the superior court will decline to interfere until theaggrieved party has exhausted his other statutory remedies, ifany. But this rule requiring the exhaustion of statutory remediesBbefore the writ will be granted is a rule of policy, convenience anddiscretion rather than a rule of law and instances are numerouswhere a writ of certiorari has been issued in spite of the fact thatthe aggrieved party had other adequate legal remedies. ***”

6. At the end of the last century, this Court in paragraph 15 of theCits decision reported in (1998) 8 SCC 1 (Whirlpool Corporation vs.Registrar of Trade Marks, Mumbai and Others) carved out theexceptions on the existence whereof a Writ Court would be justified inentertaining a writ petition despite the party approaching it not havingavailed the alternative remedy provided by the statute. The same readDas under:

(i) where the writ petition seeks enforcement of any of thefundamental rights;

(ii) where there is violation of principles of natural justice; E(iii)where the order or the proceedings are wholly withoutjurisdiction; or

(iv) where the vires of an Act is challenged.

7. Not too long ago, this Court in its decision reported in 2021SCC OnLine SC 884 (Assistant Commissioner of State Tax vs. M/s.FCommercial Steel Limited) has reiterated the same principles in paragraph11.

8. That apart, we may also usefully refer to the decisions of thisCourt reported in (1977) 2 SCC 724 (State of Uttar Pradesh & ors. vs.Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union of IndiaGvs. State of Haryana). What appears on a plain reading of the formerdecision is that whether a certain item falls within an entry in a sales taxstatute, raises a pure question of law and if investigation into facts isunnecessary, the high court could entertain a writ petition in its discretioneven though the alternative remedy was not availed of; and, unlessexercise of discretion is shown to be unreasonable or perverse, this CourtHwould not interfere. In the latter decision, this Court found the issue raised by the appellant to be pristinely legal requiring determination bythe high court without putting the appellant through the mill of statutoryappeals in the hierarchy. What follows from the said decisions is thatwhere the controversy is a purely legal one and it does not involve disputedquestions of fact but only questions of law, then it should be decided bythe high court instead of dismissing the writ petition on the ground of analternative remedy being available.

9. Now, reverting to the facts of this appeal, we find that theappellant had claimed before the High Court that the suo motu revisionalpower could not have been exercised by the Revisional Authority inview of the existing facts and circumstances leading to the only conclusionthat the assessment orders were legally correct and that the final ordersimpugned in the writ petition were passed upon assuming a jurisdictionwhich the Revisional Authority did not possess. In fine, the ordersimpugned were passed wholly without jurisdiction. Since a jurisdictionalissue was raised by the appellant in the writ petition questioning the verycompetence of the Revisional Authority to exercise suo motu power,being a pure question of law, we are of the considered view that the plearaised in the writ petition did deserve a consideration on merits and theappellant’s writ petition ought not to have been thrown out at the threshold.

10. Reliance placed by the High Court on the decision in TitagarhPaper Mills (supra), in our view, was completely misplaced. Therespondent Electricity Board had levied coal surcharge on the appellantcompany in terms of an agreement. Such agreement contained anarbitration agreement in clause 23. Instead of pursuing its remedy inarbitration, the appellant company unsuccessfully invoked the writjurisdiction. This Court was approached whereupon it was held that inview of the issues raised, there was no reason why the appellant companyshould not pursue its remedy in arbitration, having solemnly acceptedclause 23 of the agreement, and instead invoke the extraordinaryjurisdiction of the high court under Article 226 of the Constitution todetermine questions which really form the subject matter of the arbitrationagreement. This decision could not have been of any relevance havingregard to the issue presented for resolution before the High Court by theappellant, particularly when the disputes inter se were not referable toarbitration.

11. We have reasons to believe, considering the nature of objectionraised by the respondents as recorded by the High Court in the impugnedorder, that the High Court had mistakenly referred to Titagarh Paper

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AMills (supra) while intending to rely on a different decision of this Courton an appeal preferred by the same party, reported in (1983) 2 SCC 433(Titaghur Paper Mills Co. Ltd. vs. State of Orissa). While upholdingthe impugned order of dismissal of the writ petition, where an orderpassed by the Sales Tax Officer was under challenge, this Court inTitaghur Paper Mills Co. Ltd. (supra) held that the challenge beingBconfined to the regularity of proceedings before the Sales Tax Officerand there being no suggestion that the concerned officer had no jurisdictionto make an assessment, the decision in Mohd. Nooh (supra) was clearlydistinguishable since in that case there was total lack of jurisdiction. ThisCourt also held that under the scheme of the relevant Act, there was aChierarchy of authorities before which the petitioners can get adequateredress against the wrongful acts complained of and that since theauthority of the concerned officer to make an assessment was not inquestion, recourse ought to be taken by initiating proceedings thereunder.As noted above, the very jurisdiction of the Revisional Authority havingbeen questioned in the writ petition, the impugned order of the HighDCourt dismissing the writ petition without examining the merits of thechallenge cannot be sustained even if the High Court were to rely onTitaghur Paper Mills Co. Ltd. (supra) to support such order.

12. The High Court by dismissing the writ petition committed amanifest error of law for which the order under challenge is unsustainable.EThe same is, accordingly, set aside.

13. Moving on to decide the second question, ordering a remandis an available option for us. However, having regard to the lapse of time(almost a life term of fourteen years) since the orders impugned in thewrit petition were made, we feel that it would not be in the best interestsFof justice to remit the matter to the High Court. Since prior to reservingjudgment on this appeal we had heard the parties on the merits of thejurisdictional issue that the appellant had raised before the High Court, itis time to rule on the jurisdiction of the Revisional Authority.

14. The appellant is engaged in the business of manufacturing,Gmarketing and sales of household insecticide products in various forms,viz. mosquito coils, mats, refills, aerosols, baits and chalks under thepopular brand name “Good Knight” and “Hit” from, inter alia, its salesoffice at Kurukshetra, and is an ‘assessee’ under the VAT Act.

15. In terms of section 7 of the VAT Act, the taxable goods haveHbeen classified under Schedules A, B and C. It is found from Schedule

C (as originally enacted) that pesticides, weedicides and insecticideswere included in Entry 1 and taxable @ 4%.

16. Returns were filed by the appellant for the Assessment Years2003-04 and 2004-05 declaring its gross turnover from manufacturingand sales of insecticides and pesticides, besides other consumer goods.Such returns were duly accepted. However, in view of an amendmentin Entry 67 of Schedule C introduced by a notification dated 30[th] June,2005, notices were issued by the Assessing Authority as to why taxliability @ 10% instead of 4% should not be imposed. Upon hearing therepresentative of the appellant, orders dated 28[th] February, 2007 and28[th] March, 2008 were passed by the Assessing Authority for theAssessment Years 2003-04 and 2004-05, respectively, accepting theclassification of goods and the rate of tax as stated by the appellant in itsreturns, i.e. 4%.

17. Subsequently, the Revisional Authority called for theassessment records of the appellant for the Assessment Years 2003-04and 2004-05 for revision of the assessment on classifying the householdinsecticide products of the appellant as mosquito repellants and taxableat the higher rate of tax, i.e. 10%, instead of 4%. Initially, show-causenotices seeking to revise the assessments made for the AssessmentYears 2003-04 and 2004-05 were issued, and such exercise was followedup by identically worded final orders, both dated 2[nd] March, 2009.

18. Several legal questions including validity of certain notificationswere raised by the appellant before the High Court in its writ petition.Apart from the question as to whether mosquito repellants are goodsclassifiable as insecticides, pesticides, weedicides, etc., one other questionwhich the appellant sought to raise was whether an amendment in theschedule of classification/rates of tax could be applied to completedassessments for the assessment years prior to the amendment cominginto effect. However, before us, the only limited question which theappellant raised was, whether the orders of the Revisional Authority,both dated 2[nd] March, 2009, seeking to revise the orders of the AssessingAuthority dated 28[th] February, 2007 and 28[th] March, 2008 pertaining tothe Assessment Years 2003-04 and 2004-05, have been issued in exerciseof jurisdiction conferred by law.

19. For facility of understanding, it would be convenient at thisstage to reproduce the material part from the revisional order passed inrespect of the Assessment Year 2004-05, below:

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“I, xxxxxxx, Dy. Excise & Taxation Commissioner-cum- RevisionalAuthority, Kurukshetra called for the assessment record of M/sGodrej Sara Lee Ltd., Pipli holding TIN xxxxxxx for theassessment year 2004-05. Shri xxxxxxx, ETO-cum-AssessingAuthority Kurukshetra passed this assessment order on 28.3.2008.On examination of the assessment record, I was prima facie ofthe view that the said assessment order suffered from the followingillegalities and impropriates (sic, improprieties):

The assessing authority erred in levying tax on Mosquito Repellant@ 4% Instead of 10%

Issues

Accordingly, a show cause notice was issued for 2.3.2009. On2.3.2009 Shri Ajay Goel, Advocate of the firm appeared alongwith application for adjournment on the plea that due to closingmonth of March, 2009 the dealer is unable to get the case decided.The application for adjournment is rejected as the dealer has notto produce any account books or is not to prepare any documentsonly law point is involved in the case. The dealer has sold mosquitorepellant and deposited tax @ 4%. The Hon’ble Supreme Courtof India in the case of M/s Sonic Electrochem and another vs.STO and other (1998) 12- PHT-215 (SC) held that Jet MatMosquito Repellant is not pesticides/insecticides. Therefore, thesegoods are general goods and liable to tax at general rate of tax.Hence, a notice was issued to the dealer to explain as to why taxshould not be levied at general rate of tax on the sale of mosquitorepellants. The counsel of the firm has not offered any argumentson the issue. In view of the decision of the Hon’ble Apex Court inthe case of M/s Sonic Electrochem and another vs. STO andother (1998) 12- PHT-215 (SC), it is unarguable clear that mosquitorepellant mats being unscheduled goods are taxable at generalrate of tax. Confusion was also cleared with the amendment toentry 67 vide notification dated 1.7.2005.

In view of the above facts, it is clear that assessing authoritywhile framing assessment has erred in levying tax @ 4% onmosquito repellants. Hence the assessment order dated 28.3.2008is revised u/s 34 of the Act ibid as under:

TTO @ 10%Rs.5,28,89,282(Mosquito Repellants)

Rs.52,88,928Tax already assessed

Issue Tax Demand Notice Challan for Rs.31,73,357 along with acopy of the order to the dealer.”

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20. The assessment order dated 28[th] March, 2008 of the AssessingAuthority under section 15 of the VAT Act pertaining to AssessmentYear 2004-05, which was sought to be revised by the Revisional Authority,had taken into consideration the decision of this Court reported in (1998)6 SCC 397 (Sonic Electrochem vs. S.T.O.). The appellant therein havingsold ‘Jet Mat’, a mosquito repellent, it was ruled by this Court that thesame was liable to tax @ 10%. Considering such decision, a notice wasissued to the appellant to explain as to why tax should not be levied @10% on the sale of ‘Godrej Mat’. Put to notice, it was inter alia arguedon behalf of the appellant before the Assessing Authority that theHaryana Tax Tribunal (hereafter ‘the Tribunal’, for short), constitutedunder section 57 of the VAT Act, by its order dated 21[st] November, 2001had the occasion to dismiss a petition filed by the department seekingreview of an earlier order dated 22[nd] March, 2000. The AssessingAuthority extracted the relevant part of the order 21[st] November, 2001of the Tribunal passed on the review petition in its order dated 28[th] March,2008, reading as follows:

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“The only limited question to be addressed is whether the ratio ofthe judgment of the Hon’ble Apex Court delivered in the abovementioned case of M/s Sonic Electrochem and others is applicablein the present case? This judgment of the Hon’ble Supreme Courtis clearly distinguishable from the facts of the present case as thesaid judgment was delivered in special circumstances were therewas specific an entry 129 dealing with mosquito repellants andhence the Court held that judgment would be covered under entry129. However, there is no such corresponding entry in the HaryanaGeneral Sales Tax Act and therefore the issue would be whethermosquito repellant would fall within the entry dealing withinsecticide etc. or not? The Hon’ble Madras High Court, theTribunal in the case of Transelektra Domestic Products Pvt. Ltd.,and others vs. Commercial Tax Officer, Porur Assessment CircleMadras and others has clearly held that mosquito repellants FGH

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Acontaining 4% Alethrin’ was an insecticide and relying on thejudgment of the Hon’ble Madras High Court, the Tribunal in thecase of M/s Balsara Hygiene Products Ltd. Kundli (Sonepat) vsState of Haryana has also held that Mosquito Repellants is aninsecticide and hence liable to concessional rate of tax. The sameview has been taken by the Hon’ble Tribunal in the impugnedBorder and I do not find any infirmity in this order. It has not beencontested that Jet Mats does contain ‘Allethrin’ which is aninsecticide. Hence, in these circumstances, the present reviewpetition is dismissed.”

Being bound by the decision of the Tribunal, the Assessing AuthorityCformed an opinion and returned a finding that he had no other alternativebut to vacate the notice issued by him proposing to levy tax @ 10%instead of 4% and proceeded to do so.

21. Appearing in support of the appeal, Mr. V. Lakshmikumaran,learned counsel, contended that the Assessing Authority having passedDthe order dated 28[th] March, 2008 taking into consideration the decisionof the Tribunal, which in turn distinguished the decision in SonicElectrochem (supra), and such decision having attained finality, theRevisional Authority could not have assumed a jurisdiction to suo motuissue the impugned show-cause notices as well as the final revisionalEorders under section 34 of the VAT Act holding that mosquito repellentmats being unscheduled goods, are taxable at the general rate of tax.According to him, the Revisional Authority was as much bound by theorder of the Tribunal as the Assessing Authority was having regard tothe similarity of issues involved and it was not open to such authority totake a view different from the one expressed by the Tribunal.F

22. Our attention was drawn by Mr. Lakshmikumaran to thedecision of this Court reported in 1992 SUPP (1) SCC 443 (Union ofIndia and Ors. Vs. Kamlakshi Finance Corporation Ltd.) in supportof the proposition that in disposing of quasi-judicial issues before them,the Revenue Officers are bound by the decisions of the appellateGauthorities and that the principle of judicial discipline requires that theorders of the higher appellate authorities are followed unreservedly bythe subordinate authorities.

23. Mr. Lakshmikumaran, accordingly, prayed that upon therevisional orders being set aside, the orders of the Assessing AuthorityHbe restored.

24. Per contra, Mr. Alok Sangwan, learned counsel appearingfor the respondents, contended that the Revisional Authority did notexceed its jurisdiction in exercising suo motu powers under section 34of the VAT Act. By referring to notifications issued at or about the relevanttime amending Schedule C and the decision in Sonic Electrochem (supra),he sought to argue on the merits of the determination made by theRevisional Authority and how she was right in her findings that themosquito repellants manufactured by the appellant were liable to be taxed@ 10% in terms of the decision in Sonic Electrochem (supra), and not4% as assessed by the Assessing Authority in the orders under revision.He also submitted that the orders of the Revisional Authority do notmerit interference, and the appeal ought to be dismissed.

25. At the hearing, we made it clear that the issue as to whetherthe impugned orders of the Revisional Authority were sustainable onmerits would not be examined unless the Court was persuaded by Mr.Sangwan to accept that the Revisional Authority did have the authority,competence and jurisdiction to issue the impugned show-cause noticesand pass the consequential final revisional orders impugned in the writpetition enhancing the liability of the appellant to tax @ 10% instead of4%.

26. Since section 34 of the VAT Act appears to have been thesource of power exercised by the Revisional Authority, we shall firstnotice its contents as it stood on the date of the impugned orders, i.e. 2[nd]March, 2009. Prior to its amendment with effect from 20[th] March, 2009,section 34 read as follows:

“Section 34. Revision. : - (1) The Commissioner may, on his ownmotion, call for the record of any case pending before, or disposedof by, any taxing authority for the purposes of satisfying himselfas to the legality or to the propriety of any proceeding or of anyorder made therein which is prejudicial to the interests of the Stateand may, after giving the persons concerned a reasonableopportunity of being heard, pass such order in relation thereto, ashe may think fit:

Provided that no order passed by a taxing authority shall be revisedon an issue, which on appeal or in any other proceeding fromsuch order is pending before, or has been settled by, an appellateauthority or the High Court or the Supreme Court, as the casemay be:

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Provided further that no order shall be revised after the expiryof a period of three years from the date of the supply of the copyof such order to the assessee except where the order is revisedas a result of retrospective change in law or on the basis of adecision of the Tribunal in a similar case or on the basis of lawdeclared by the High Court or the Supreme Court.”

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(2) The State Government may, by notification in the OfficialGazette, confer on any officer not below the rank of Deputy Exciseand Taxation Commissioner, the powers of the Commissionerunder sub-section (1) to be exercised subject to such exceptions,conditions and restrictions as may be specified in the notificationCand where an officer on whom such power have been conferredpasses an order under this section, such order shall be deemed tohave been passed by the Commissioner under sub-section (1).”

27. To the extent relevant for the present decision, suo motu powerof revision could be exercised by the Revisional Authority for the purposesDof satisfying himself as to the legality or propriety of any order made inany proceeding which is prejudicial to the interests of the State. The firstproviso, however, imposed a restriction on exercise of such suo motupower, if an issue had been settled, inter alia, by an appellate authority.Thus, the sine qua non for exercise of power under section 34 is theEsatisfaction of the Revisional Authority that an order has been made bya taxing authority in any proceeding prejudicial to the interests of theState, the legality or propriety of which appears to him to be prima facievulnerable. Nevertheless, such power cannot be exercised if the issueinvolved is pending before or has been settled by an appellate authority.It cannot be disputed that the Tribunal is comprehended within theFmeaning of ‘appellate authority’ as defined in section 2(b) of the VATAct.

28. These being the contours of section 34, as it then stood, itneeds to be seen how far the Revisional Authority was justified in drawingpower from such provision and exercising it.G

29. A bare perusal of the impugned revisional orders reveals thatthe decision in Sonic Electrochem (supra) formed the plinth for thesatisfaction that the orders of assessment are liable to be revised. Thedecision in Sonic Electrochem (supra) was rendered upon considerationof the Gujarat Sales Tax Act, 1969 (hereafter ‘the Sales Tax Act’, forHshort). The short question that arose for a decision was, whether ‘Jet

Mat’ produced by the appellant therein would come within Entry 129 ofSchedule II Part A of the Sales Tax Act, issued under section 49 thereof.Entry 129, at the relevant point of time, read thus:

30. Having regard to the specific entry, i.e. Entry 129, dealingwith mosquito repellents, this Court overruled the contention of theappellant therein that ‘Jet Mat’ would not come within the ambit of Entry129 since one of its constituents happens to be an insecticide. It wasalso held that the product manufactured by the appellant therein, viz.‘Jet Mat’, which was commercially known as “Mosquito Repellent Mat”is a mosquito repellant notwithstanding the fact that it not only repelsmosquitoes but is also capable of killing mosquitoes. For the reasonsassigned in the decision, it was held that ‘Jet Mat’ is not an insecticidewhich would be entitled for partial exemption under Entry 98 of theSales Tax Act.

31. It is, therefore, clear that because of the specific entry dealingwith mosquito repellents, this Court held ‘Jet Mat’ to be covered underEntry 129.

32. As the Tribunal in its order dated 21[st] November, 2001 found,there was no such corresponding entry in the VAT Act. Bearing in mindthe same as well as on consideration of a decision of the Madras HighCourt and other decisions, the Tribunal had proceeded to hold that mosquitorepellents containing 4% ‘Alethrin’ was an insecticide and hence, liableto concessional rate of tax.

33. While deciding the present appeal, we are primarily concernedwith the issue of assumption of jurisdiction by the Revisional Authorityon the face of the unchallenged order of the Tribunal dated 21[st] November,2001, and not with the merits of the decision either given by the Tribunalor by the Revisional Authority. What stares at the face of the respondentsis that the aforesaid decision of the Tribunal, quoted in the order of theAssessing Authority, has attained finality. Once the issue stands finallyconcluded, the decision binds the State, a fortiori, the Revisional Authority.The decision of the Tribunal may not be acceptable to the RevisionalAuthority, but that cannot furnish any ground to such authority to perceive

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Athat it is either not bound by the same or that it need not be followed.The first proviso, in such a case, gets activated and would operate as abar to the exercise of powers by the Revisional Authority.

34. In our view, the Revisional Authority might have been justifiedin exercising suo motu power to revise the order of the AssessingBAuthority had the decision of the Tribunal been set aside or its operationstayed by a competent Court. So long it is not disputed that the Tribunal’sdecision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and suchframework too continues to remain operative when the impugnedrevisional orders were made, the Revisional Authority was left with noCother choice but to follow the decision of the Tribunal without anyreservation. Unless the discipline of adhering to decisions made by thehigher authorities is maintained, there would be utter chaos in administrationof tax laws apart from undue harassment to assesses. We share theview expressed in Kamlakshi Finance Corporation Ltd. (supra).

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35. In the midst of hearing, we had enquired from Mr. Sangwanwhether there has been any decision of any other competent Tribunal orHigh Court taking a view different from the one taken by the Tribunal inits order dated 21[st] November, 2001, which was considered by theAssessing Authority. Fairly, he answered in the negative. If only Mr.ESangwan could have invited our attention to any such decision, whichwere acceptable to us, the issue decided by the Tribunal could havebeen reopened on the ground that it is a debatable issue and interferencewith the final orders passed by the Revisional Authority may not havebeen resorted to, leaving the appellant to pursue the appellate remedyunder the VAT Act.F

36. There is also substance in the contention of Mr.Lakshmikumaran that suo motu power of revision, on the terms of section34, could have been exercised only if the orders sought to be revisedsuffered from any illegality or impropriety.

37. A decision may be questioned as suffering from an illegality ifits maker fails to understand the law that regulates his decision makingpower correctly or if he fails to give effect to any law that holds the fieldand binds the parties. On the other hand, having regard to the purposesection 34 seeks to serve, to take exception to a decision on the groundof lack of propriety of any proceedings or order passed in such G

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proceedings, it essentially ought to relate to a procedural impropriety. Itis incumbent for the accuser to show that the decision maker has failedto observe the standard procedures applicable in case of exercise of hispower. Additionally, to impeach an order on the ground of moralimpropriety, it has to be shown that the weight of facts together with theapplicable law overwhelmingly points to one course of action but thedecision has surprisingly gone the other way, giving reason to suspectmisbehaviour or misconduct in the sphere of activity of the decisionmaker warranting a revision.

38. There is nothing on record to justify either illegality or(procedural/moral) impropriety in the proceedings before the AssessingAuthority or the orders passed by him, as such. As noted above, theAssessing Authority was bound by the order of the Tribunal and electedto follow it having no other option. Such decision of the Tribunal waseven binding on the Revisional Authority. In such circumstances, to brandthe orders of the Assessing Authority as suffering from illegality andimpropriety appears to us to be not only unjustified but also demonstratesthorough lack of understanding of the principle regulating exercise ofsuo motu revisional power by a quasi-judicial authority apart from beingin breach of the principle of judicial discipline, while confronted withorders passed by a superior Tribunal/Court. We are inclined to the viewthat it is not the Assessing Authority’s orders but those passed by theRevisional Authority, which suffer from a patent illegality.

39. For the foregoing reasons, we have no other option but toinvalidate the impugned final revisional orders dated 2[nd] March, 2009 forthe Assessment Years 2003-04 and 2004-05. It is ordered accordingly.

40. The interim order dated 18[th] January, 2010 is made absolute.

41. The appeal stands allowed. However, the parties are left tobear their own costs.

Nidhi Jain(Assisted by : Tamana, LCRA)

Appeal allowed.

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