Case: Titaghur Paper Mills Company Limited and Another Vs. State of Orissa and Others

2. By one of the writ petitions, the petitioners challenged the validity of the order of assessment underthe Central Sales Tax Act, 1956 for the assessment year 1980-81 passed by the Assistant Sales Tax Officer, Cuttack II Circle, Cuttack dated February 16, 1983 under Rule 15 of the Central Sales Tax (Orissa) Rules, 1957 treating the gross turnover of Rs. 7, 13, 94, 903.63 as returned by the petitioners to be their taxable turnover and the tax payable thereon at 10 per cent at Rs. 71, 39, 490.36. By the other, the petitioners challenged the validity of an order of assessment under the Orissa Sales Tax Act, 1947 for the assessment year 1980-81 passed by the Assistant Sales Tax Officer, Cuttack II Circle, Cuttack dated February 16, 1983 under sub-section (4) of Section 12 of the Orissa Sales Tax Act, 1947 treating the gross turnover of Rs. 2, 02, 07, 852.65 as returned by the petitioner to be their taxable turnover and the tax payable thereon at 7 per cent at Rs. 14, 14, 549.71.3. It appears from the impugned orders of assessment that proceedings under Rule 12 (5) of the Central Sales Tax (Orissa) Rules, 1957 (Rules for short) and under sub-section (4) of Section 12 of the Orissa Sales Tax Act, 1947 (Act for short) were initiated against the petitioners for the assessment year 1980-81 in relation to assessment of tax on sales in the course of inter-State trade and commerce underthe Central Sales Tax Act, 1956 and inside sales effected during the year in question under the Orissa Sales Tax Act, 1947. The provisions contained in Rule 12 (5) of the Rules and in sub-section (4) of Section 12 of the Act enjoin the affording of reasonable opportunity to the dealer for completion of assessment. The learned Sales Tax Officer observes that he gave repeated opportunities to the petitioners to get themselves ready for the assessment of tax and to produce their account books and other documents but they sought adjournments on one pretext or another. Eventually on February 16, 1983 the learned Sales Tax Officer refused to grant any further adjournment holding that the petitioners had sufficient opportunity and accordingly proceeded to best judgment under Rule 15 of the Rules and sub-section (4) of Section 12 of the Act. In the absence of any material, the learned Sales Tax Officer made an assessment under Rule 15 of the Rules treating the gross turnover of sales in the course of inter-State trade and commerce amounting to Rs. 7, 13, 94, 903.63 as returned by the petitioners underthe Central Sales Tax Act, 1956 to be their taxable turnover and the tax payable thereon at 10 per cent at Rs. 71, 39, 490.36. After allowing an adjustment of Rs. 27, 88, 388.47 paid by the petitioners along with the quarterly return, the learned Sales Tax Officer has raised a demand for payment of a sum of Rs. 43, 51, 101.89. He disallowed their claim for deduction of Rs. 6, 74, 99, 085.65 representing sales to registered dealers and departments of Government as well as of Rs. 28, 24, 224.42 claimed as deduction on account of tax collected from purchasers as the requisite declarations in Form C were not forthcoming. He also disallowed the concessional rate of tax at 4 per cent. Similarly, while making an assessment under sub-section (4) of Section 12 of the Orissa Sales Tax Act, 1947, he treated the gross turnover of inside sales amounting to Rs. 2, 02, 07, 852.65 as returned by the petitioners to be their taxable turnover and the tax payable thereon at 7 per cent at Rs. 14, 14, 549.71. After allowing an adjustment of Rs. 1, 08, 480.11 paid by the petitioners along with the quarterly return, the learned Sales Tax Officer has raised a demand for payment of a sum of Rs. 13, 06, 069.60. It would thus appear that by the impugned orders of assessment the petitioners are faced with a total demand of Rs. 56, 57, 171.49 for the assessment year 1980-81. The petitioners instead of preferring appeals under sub-section (1) of Section 23 of the Act filed petitions before the High Court under Article 226 of the Constitution challenging the validity of the two orders of assessment.4. The only contention raised before the High Court was that the impugned orders of assessment being a nullity, the petitioners were entitled to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution, but the High Court was not satisfied that this was a case of inherent lack of jurisdiction. The High Court while dismissing the writ petition observedheard the learned counsel for both the parties and having gone through the records, we are not inclined to interfere with the impugned order (s) in exercise with our extraordinary jurisdiction since there is a right of appeal against the same. It is contended on behalf of the petitioner that the impugned order being a nullity is entitled to invoke our extraordinary jurisdiction. We are not satisfied that this is a case of inherent lack of jurisdiction. There is no violation of principles of natural justice.

Court's reasoning:
10. The decision in Mohammad Nooh case, is clearly distinguishable as in that case there was total lack of jurisdiction. There is no suggestion that the learned Sales Tax Officer had no jurisdiction to make an assessment. Nor can it be contended that he had acted in breach of rules of natural justice. There is no denying the fact that the petitioner was served with a notice of the proceedings under Rule 12 (5) of the Rules and sub-section (4) of Section 12 of the Act. The impugned orders clearly show that the petitioners were afforded sufficient opportunity to place their case. Merely because the learned Sales Tax Officer refused to grant any further adjournment and decided to proceed to best judgment, it cannot be said that he acted in violation of the rules of natural justice. The question whether another adjournment should have been granted or not was within the discretion of the learned Sales Tax Officer and is a matter which can properly be raised only in an appeal under sub-section (1) of Section 23 of the Act. All that this Court laid down in Mohammad Nooh case (1958 scr 595   : air 1958 SC 86   : 1958 SCJ 242  ), is that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law; in other words, it does not bar the jurisdiction of the court.11. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the Prescribed Authority under sub-section (1) of Section 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-section (3) of Section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under Section 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rules was stated with great clarity by Willes, J. in Wolverhampton New Waterworks Co. v. Hawkesford (1859) 6 CBNS 3336, 356 : 28 LJCP 242 : 141 ER 486 : 7 WR 464) in the following passageare three classes of cases in which a liability may be established founded upon statute.... But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it... the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adheredrule laid down in this passage was approved by the House of Lords in Neville v. London, Express Newspapers Ltd.(1919 AC 368 : 1919 All ER Rep 61 : 88 LJKB 282 : 120 LT 299) and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant & Co. Ltd. (1935 AC 532 : 104 LJ PC 82 : 153 LT 441 (PC)) and Secretary of State v. Mask & Co. (AIR 1940 PC 105   : 67 IA 222 : 188 IC 231). It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine.12. Furthermore, the Act provides for an adequate safeguard against an arbitrary or unjust assessment. The petitioners have a right to prefer an appeal under sub-section (1) of Section 23 of the Act subject to their payment of the admitted amount of tax as enjoined by the proviso thereto. As regards the disputed amount of tax, the petitioners have the remedy of applying for stay of recovery to the Commissioner of Sales Tax under clause (a) of the second proviso to sub-section (5) of Section 13 of the Act which runsfurther that -(a) when the dealer or person, as the case may be, has presented an appeal under sub-section (1) of Section 23, the Commissioner may, on an application in that behalf filed by such dealer or person within thirty days from the date of receipt by him of the notice under sub-section (4), in his discretion, stay the recovery of the amount in respect of which such notice has been issued or any portion thereof, for such period and subject to such conditions as the Commissioner thinks fit;The petitioners are at liberty to make an application for stay of the disputed amount and the Commissioner will decide whether or not there should be such stay on such terms and conditions as he thinks fit, looking to the nature of the demand raised in the facts and circumstances of the present case.