IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.12334 of 2008 JAISWAL SOAP FACTORY, SIMRI BAKHTIYARPUR Versus THE STATE OF BIHAR & ANR WITH CWJC No. 12457 of 2008 JAISWAL SOAP FACTORY, SIMRI BAKHTIYARPUR Versus THE STATE OF BIHAR & ANR WITH CWJC No. 12518 of 2008 JAISWAL SOAP FACTORY, SIMRI BAKHTIYARPUR Versus THE STATE OF BIHAR & ANR ----------- For the Petitioner : Mr. Mrigank Mauli, Advocate Mr. Vinay Mistry, Advocate For the Respondents : Mr. Lalit Kishore, Additional Advocate General-III Mr. Satyabir Bharti, Junior Counsel to Additional Advocate General-III ----------- P R E S E N T Hon'ble the Chief Justice & Hon'ble Mr. Justice Kishore K. Mandal ----------- Dated, the 22nd August, 2008. These three writ petitions are by one assessee, namely, Jaiswal Soap Factory. Save and except that the assessment orders refers to a different period, the issues in all these three writ petitions are identical and, therefore, these three writ petitions have been taken- up together for consideration. 2. At the outset, we wanted to know from the - 2 - counsel for the petitioner as to whether the statutory remedy against the impugned assessment orders is available to the petitioner under Bihar Value Added Tax Act, 2005 (for short ‗Act, 2005‘) or not, and if it is so, why should not the petitioner be relegated to the statutory remedy. 3. The counsel for the petitioner would submit that remedy of appeal provided in the Act, 2005 is onerous inasmuch as the petitioner is required to deposit 25% of the tax assessed or full amount of admitted tax, whichever is higher. 4. According to him, by the impugned orders unwarranted tax liability has been fastened on the petitioner coupled with imposition of penalty and the petitioner is not in position to deposit 25% of the assessed tax liability and the penalty amount. Counsel relied upon : A. V. Venkareswaran v. R.S. Wadhwani, A.I.R. 1961 S.C. 1506; M.G. Abrol, Additional Collector of Customs, Bombay & Anr. V. Shantilal & Co. & Ors., A.I.R. 1966 S.C. 197 and M/S Filterco v. Sales Tax Commissioner, M.P., A.I.R. 1986 S.C. 626. 5. Although the petitioner‘s product is not having registered trade mark and the soap made by the petitioner is indigenous hand made soap whose brand or trade mark is not registered under any law in force, counsel would contend, the petitioner‘s product (hand made soap) has been taxed @ 12.5% and, - 3 - thus, an error of law has been committed affecting the very authority of the assessing authority in passing the assessment orders. Based on this, counsel contends that impugned orders suffer from lack of jurisdiction. In support of this contention, the counsel relied upon the decision of the Supreme Court in the case of Mafatlal Industries Ltd. and others v. Union of India and others, (1997) 5 SCC 536. 6. On the other hand, Mr. Lalit Kishore, Additional Advocate General-III would contend that Chapter XII of the Act, 2005, provides adequate and efficient remedy to the petitioner for redressal of his grievance. He would submit that merely because 25% of the tax liability is required to be deposited for maintaining the statutory remedy of appeal, the said remedy is not rendered onerous. In this regard, he referred to a Constitution Bench decision of the Supreme Court in the case of Thansingh v. Suptd. Of Taxes, A.I.R. 1964 S.C. 1419. He would submit that all contentions challenging the assessment orders must be raised in statutory appeal. 7. We reflected over the matter and gave a thoughtful consideration to rival contentions. 8. The petitioner is a manufacturer of handmade soap. It sells them under the brand names of ―Chasma Gola‖, ―Teer Gola‖ and ―Jaso Super Soap‖. According to the petitioner, it had applied for registration of ―Chasma Gola Sabun‖ for registration as a trade mark before the Registrar of Trade Mark, Trade Marks Registry, - 4 - Bombay in the year 1984; the registration was granted and that was renewed and kept alive upto March, 1996. As on 7th April, 2007, the petitioner‘s case is that ‗Chasma Gola brand‘ did not have any trade mark registration. The other two brands had never ever any registration. 9. In writ petition, C.W.J.C. No. 12457 of 2008, the order of assessment is for the period of third quarter of the assessment year 2006-07 and the writ petition, C.W.J.C. No. 12518 of 2008, the order of assessment relates to the period fourth quarter of assessment year 2006-07. In the third writ petition, C.W.J.C. No. 12334 of 2008, the order of assessment is of the first quarter of the assessment year 2007-08 for all these three quarters, in the assessment orders, the Assessing Officer has not accepted the version of the petitioner. The assessing officer referred to few documents including the advertisements of the petitioner and held that the petitioner‘s own documents show that tax was leviable @ 12.5% on the subject product and he held accordingly. The Assessing Officer also levied penalty under Section 32(1)(b) of the Act, 2005. 10. Chapter-XII of act, 2005 makes provisions for appeal, revision and review. 11. Section 72 provides for an appeal to Deputy Commissioner and Joint Commissioner, which reads, thus: - “72. Appeal to Deputy Commissioner and Joint Commissioner.- (1) Subject to such rules as may be made by State - 5 - Government under this Act, any dealer objecting to an order of assessment or an order levying interest or penalty passed by the prescribed authority against him, or an order under section 25 or a person objecting to an order of penalty passed against him or an order under section 47 may appeal to the Joint Commissioner, or, the Deputy Commissioner specially authorised in this behalf. (2) No appeal under sub-section (1) shall be admitted unless the dealer objecting to an order of assessment has paid twenty-five percent of the tax assessed or full amount of admitted tax whichever is higher. (3) Every appeal under this section shall be filed, in such form and the manner, as may be prescribed, within forty-five days of the receipt of the notice of demand but where the appellate authority is satisfied that the appellant had sufficient reason for not preferring the appeal within time, it may condone the delay. (4) The appellate authority while disposing of an appeal against an order, other than an order under section 47, may — (a) (i) confirm, annul, reduce, enhance or otherwise modify such order; or (ii) set aside the order directing the authority below to make fresh order after further enquiry on specific points as directed; and (b) in other cases, pass such order as it may, for reasons to be recorded in writing, deem fit. (5) No order under this section shall be passed without giving reasonable opportunity of hearing to the appellant as also the authority whose order has been appealed against.‖ 12. Further appeal is provided to the Tribunal under Section 73, that reads, thus: - “73. Appeal to Tribunal.- (1) Subject to such rules as may be made by the State Government, any of the authorities mentioned in section 10 or any person - 6 - aggrieved by an order made by the Deputy Commissioner or Joint Commissioner under section 72 or the Commissioner under section 74 or section 77, may, prefer an appeal to the Tribunal. (2) Where an appeal is preferred by a dealer, such appeal shall not be entertained by the Tribunal unless such dealer has deposited with the Tribunal in the manner specified by it twenty five percent of the amount in dispute: Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount required to be deposited under this section. (3) Every application for appeal under this section shall be filed within ninety days of the communication of the order which is sought to be appealed, but where the Tribunal is satisfied that the applicant had sufficient cause for not applying within time, it may condone the delay. (4) No order under this section shall be passed without giving the applicant as also the authority whose order is sought to be appealed or their representative, a reasonable opportunity of being heard. (5) On receipt of an appeal under sub-section (1), the Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such order thereon as it think fit, confirming, modifying or setting aside the order appealed against. (6) The Tribunal shall send the copy of every order made by it to the parties to the appeal and to the concerned authority against whose order the appeal had been preferred. (7) The appeal filed before the Tribunal under sub- section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal.‖ 13. From the order of the Tribunal, an appeal - 7 - would lay to the High Court under Section 79 on substantial question of law. Section 79 which provides, thus: - ―79. Appeal before High Court.- (1) An appeal shall lie to the High Court from every order passed by the Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Commissioner or a dealer aggrieved by any order passed by the Tribunal – (i) under the Bihar Finance Act, 1981, as it stood by its repeal by section 94, on or after the date of commencement of this Act; or (ii) under this Act, may file an appeal to the High Court, and such appeal under this section shall be filed within ninety days from the date of the communication to the dealer or the Commissioner on any question of law arising out of such order. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate the question. (4) The appeal shall be heard only on the question so formulated and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the High Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) (a) The High Court shall decide the substantial question of law so formulated or involved and deliver such judgment thereon containing the grounds on which such decision is founded and may award such costs as it deems fit. (b) The High Court may determine any issue which – - 8 - i. has not been determined by the Tribunal, or ii. has been wrongly determined by the Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (6) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 relating to appeals to High Court, shall as far as may be, apply in the case of appeals under this section.‖ 14. Besides the aforesaid remedy of two tier-appeal as noticed above, an aggrieved person has remedy by way of Miscellaneous revision and revision under Sections 73A and 74. Section 73A and 74 read, thus: - “73A. Miscellaneous Revision.- Subject to the provisions of Section 73, any order, other than an order passed by the Commissioner or orders against which an appeal has been provided under Section 72, passed under this Act or the rules made thereunder may, on application, be revised: (1) by the Joint Commissioner (Administration), if the said order has been passed by an authority not above the rank of Deputy Commissioner; (2) by the Commissioner, if the said order has been passed by an authority not above the rank of Joint Commissioner; (3) by the Tribunal, if the said order has been passed by the Commissioner.‖ ―74. Revisionary Powers of Commissioner.-The Commissioner may, suo moto, call for and examine the record of any proceeding recorded by any authority, officer or person subordinate to him under this Act and if he considers that any order passed therein is erroneous or it is prejudicial to the interest of revenue, pass such order as he deems fit after giving the dealer or the person - 9 - concerned an opportunity of being heard.‖ 15. There is also provision for Review provided under Section 76, which reads, thus: - “76. Review. - Subject to such rules as may be made by the State Government under this Act, any authority appointed under section 10 or the Tribunal may review any order passed by it, if such review is, in the opinion of the said authority or Tribunal, as the case may be, necessary on account of a mistake which is apparent from the record: Provided that no such review, if it has the effect of enhancing the tax, interest or penalty or of reducing a refund shall be made unless the said authority or the Tribunal, as the case may be, has given the dealer, or the person concerned a reasonable opportunity of being heard.‖ 16. Section 77 provides for determination of disputed questions for the purposes of the Act. Its read, thus: - “77. Determination of Disputed Questions.- (1) If any question arises, otherwise than in proceedings before a court, or before the prescribed authority has commenced assessment of a dealer under section 27 or section 28 or section 29 or section 30 or section 31 or section 32 or section 33, whether, for the purposes of this Act — (a) any person, society, club or association or any firm or any branch or department of any firm, is a dealer, or (b) any particular thing done to any goods amounts to or results in the manufacture of goods, within the meaning of that term, or (c) any transaction is a sale or a purchase, or where it is a sale or a purchase the sale price or the purchase price, as the case may be, thereof, or (d) any particular person or dealer is required to - 10 - be registered, or (e) in the case of any person or dealer liable to pay tax, any tax is payable by such person or dealer in respect of any particular sale or purchase, or if tax is payable, the rate thereof, or (f) input tax credit can be claimed on any particular transaction of purchase and if it can be claimed, what are the conditions and restrictions subject to which such input tax credit can be claimed, or (g) the order passed under sub-section (2) of section 25 is just and proper; or (h) any other question involving interpretation of any provisions of the Act, the Commissioner shall, subject to such rules as may be made, make an order determining such question. Explanation: For the purposes of this sub-section, the prescribed authority shall be deemed to have commenced assessment of the dealer under section 27 or section 28 or section 29 or section 30 or section 31 or section 32 or section 33, when the dealer is served with any notice by the prescribed authority under the said sections. (2) The Commissioner may direct that the determination shall not affect the liability of any person under this Act, as respect any sale or purchase affected prior to the determination or such date as he may specify. (3) If any such question arises from any order already passed by any authority or court under this Act or the Bihar Finance Act, 1981, as it stood by its repeal by section 94, no such question shall be entertained for determination under this section; but such question may be raised in appeal against such order.‖ 17. The survey of aforesaid provisions leaves no manner of doubt that the Act, 2005 is a self contained code and - 11 - provides complete machinery for redressal of grievance to an aggrieved party. Merely because for maintaining an appeal, 25% of tax liability is required to be deposited, the said remedy does not become unduly onerous. Moreso, looking to the large sale of the petitioner‘s product, it cannot be inferred that the petitioner has no financial capacity to pay 25% of the tax liability. 18. We may at this stage refer to the decisions cited by the counsel for the petitioner. In the case of A. V. Venkateshwaran v. R.S. Wadhwani, the Constitution Bench of the Supreme Court expounded the legal position with regard to petitions under Article 226 vis-a-vis existence of alternative remedy, thus: - ―8. The only point, therefore, requiring to be considered is whether the high Court should have rejected the writ petition of the respondent in limine because he had not exhausted all the statutory remedies open to him for having his grievance redressed. The contention of the learned Solicitor-General was that the existence of an alternative remedy was a bar to the entertainment of a petition under Art. 226 of the Constitution unless (1) there was a complete lack of jurisdiction in the officer or authority to take the action impugned, or (2) where the order prejudicial to the writ petitioner has been passed in violation of the principles of natural justice and could, therefore, be treated as void or nonest. In all other cases, he submitted, Courts should not entertain petitions under Art.226, or in any event not grant any relief to such petitioners. In the present case, he urged, the High Court in appeal had expressly dissented from the reasoning of the learned Single Judge as regards the lack of jurisdiction of the Customs officers to adjudicate regarding the item under which the article imported fell and the duty leviable thereon. Nor was there any complaint in this case that the order had been passed without an opportunity to the importer to be heard, so as to be in violation of the principles of natural justice. The learned Solicitor-General questioned the - 12 - correctness of the reasoning of the learned Chief Justice in condoning the conduct of the respondent in not moving the Government in revision by taking into account the time that had elapsed between the date of the impugned order and that on which the appeal was heard. The submission was that if this were a proper test, the rule as to a petitioner under Art.226 having to exhaust his remedies before he approached the Court would be practically a dead letter because in most cases by the date the petition comes on for hearing, the time for appealing or for applying in revision to the departmental authorities would have lapsed. 9. We see considerable force in the argument of the learned Solicitor-General. We must, however, point out that the rule that the party who applies for the issue of a high prerogative writ should, before he approaches the Court, have exhausted other remedies open to him under the law, is not one which bars the jurisdiction of the High Court to entertain the petition or to deal with it, but is rather a rule which Courts have laid down for the exercise of their discretion. The law on this matter has been enunciated in several decisions of this Court but it is sufficient to refer to two case: In Union of India v. T.R.Varma, 1958 SCR 499 at PP. 503-504: 9 (S) AIR1957 SC 882 at p.884). Venkatarama Ayyar speaking for the Court said: ―It is well settled that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative writ. It is true that the existence of another remedy does not affect the jurisdiction of the Court to issue a writ; but, as observed by this Court in Rashid Ahmed v. Municipal Board, Kairna, AIR 1950 SC 163, `the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writ.‘ Vide also K.S.Rashid and Son vs. the Income-tax Investigation Commission, AIR 1954 SC 207. And where such remedy exists, it will be a sound exercise of discretion to refuse to interfere in a petition under Art.226, unless there are good grounds therefor.‖ There is no difference between the above and the formulation by Das, C.J., in State of Uttar Pradesh v. Mohammad Nooh,1958 SCR 595 at pp.605-607: (AIR - 13 - 1958 SC 86 at p.93), where he observed: …………It must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute. The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.‖ After referring to a few cases in which the existence of an alternative remedy had been held not to bar the issue of a prerogative writ, the learned Chief Justice added: ―It has also been held that a litigant who has lost his right of appeal or has failed to perfect an appeal by no fault of his own may in a proper case obtain a review by certiorari.‖ In the result, this Court held that the existence of other legal remedies was not per se a bar to the issue of a writ of certiorari and that the Court was not bound to relegate the petitioner to the other legal remedies available to him.‖ 19. The Supreme Court, thus, held that existence of an alternative remedy by itself does not operate as a bar to maintain a petition under Article 226 in two exceptional situation, namely; (i) where there is complete lack of jurisdiction in the officer or authority - 14 - to take the action impugned; and (ii) where the impugned order has been passed in violation of principles of natural justice. The present case does not make out any of the two exceptions, which may justify bypassing the statutory remedy. That the Assessing Officer has competence to pass the order of assessment is not in question at all. The order has been passed after hearing the petitioner and there is not an iota of allegation that the order suffers from the vice of infraction of principles of natural justice. A. V. Venkateshwaran does not help the case of the petitioner at all. 20. In the case of M.G. Abrol, Supreme Court dealing with the provisions of Sea Customs Act, held in paragraph 15 of the report, thus: - ―15. Lastly, it was argued that the High Court should not have exercised its jurisdiction under Art.226 of the Constitution, as the respondents had an effective remedy by way of appeal to higher Customs Authorities. But the High Court rightly pointed out that the respondents had no effective remedy, for they could not file an appeal without depositing as a condition precedent the large amount of penalty imposed on them. That apart the existence of