Background 

This article is an analysis of judgement passed by Hon’ble Apex Court dated. 01.02.2023, where the important question of law was entertaining Writ Petitions when Alternative Remedy is available and a pure Question of Law. The appellant, Godrej Sara Lee Ltd., a manufacturer and seller of insecticides and pesticides, filed returns for the Assessment Years 2003-04 and 2004-05 declaring its gross turnover from manufacturing and sales of these products. These returns were accepted. However, due to an amendment in Entry 67 of Schedule C introduced by a notification dated 30th June, 2005, notices were issued by the Assessing Authority as to why tax liability @ 10% instead of 4% should not be imposed. The Assessing Authority passed orders accepting the classification of goods and the rate of tax as stated by the appellant in its returns, i.e., 4%. 

Prayer of the Applicant

The appellant prayed for the quashing of the impugned orders passed by the Revisional Authority, which had exercised suo moto revisional power to reassess the tax liability of the appellant.

Legal Issues Involved

The key legal issue involved was the exercise of writ powers conferred by Article 226 of the Constitution when the appellants had not exhausted the remedy of appeal provided by section 33 of the VAT Act.

Arguments by Applicant

The appellant argued that the Revisional Authority did not possess the jurisdiction to exercise suo motu power in the given circumstances. The appellant claimed that the assessment orders were legally correct and that the impugned orders were passed wholly without jurisdiction.

Submission by Opposition

The respondents contended that without exhausting the remedy of appeal provided by section 33 of the VAT Act, it would not be permissible to entertain the writ petition.

Important Provisions of Law

1. Article 226 of the Constitution: Empowers the High Courts to issue writs for enforcement of the fundamental rights or for any other purpose.
2. Section 33 of the VAT Act: Provides the remedy of appeal against the orders of the Assessing Authority.
3. Section 7 of the VAT Act: Classifies taxable goods under Schedules A, B, and C. Pesticides, weedicides, and insecticides were included in Entry 1 of Schedule C and were taxable @ 4%

Important Observations of the Court

• The court observed that the rule of not granting a writ before the alternative remedy is exhausted is a rule of policy, convenience, and discretion rather than a rule of law. The court also noted that 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.
• The court further observed that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available.
• Appellant had challenged the jurisdiction of the Deputy Excise and Taxation Commissioner (ST)-cum-Revisional Authority in Kurukshetra (hereafter referred to as ‘the Revisional Authority’) to reopen proceedings using suo motu revisional power under section 34 of the VAT Act. 

“It appears on a perusal of the order under challenge in this appeal that the appellant had questioned the jurisdiction of the Deputy Excise and Taxation Commissioner (ST)-cum-Revisional Authority, Kurukshetra (hereafter ‘the Revisional Authority’, for short) to reopen proceedings, in exercise of suo motu revisional power conferred by section 34 of the VAT Act, and to pass final orders holding that the two assessment orders, both dated 28th February, 2007 passed by the ETO-cum-Assessing Authority, Kurukshetra (hereafter ‘the Assessing Authority’, for short) for the assessment years 2003-04 and 2004-05 suffered from illegality and impropriety as delineated therein, viz. that the Assessing Authority erred in levying tax on mosquito repellant (a product manufactured by the appellant) @ 4% instead of 10%.” [Page 2, Para 3]

• The petitioners sought relief under the VAT Act but had not exhausted the remedy of appeal available under Section 33 of the Act. However, the Court rejected the presumption that the appellate authority would be unable to grant the relief sought in the writ petition. 

“The respondents that without exhausting the remedy of appeal provided by section 33 of the VAT Act “it would not be permissible to entertain this petition” and upon consideration of the decision of this Court reported in (1975) 2 SCC 436 (Titagarh Paper Mills vs. Orissa State Electricity Board & Anr.) based on which it was contended on their behalf that where any right or liberty arises under a particular Act then the remedy available under that Act has to be availed, the High Court was of the opinion that there can be no presumption that the appellate authority would not be able to grant relief sought in the writ petition; hence, the writ petition was dismissed and the appellants were relegated to the appellate remedy.” [Page 3, Para 3]

• Writ powers under Article 226 of the Constitution, focusing on certain orders passed by high courts that deemed writ petitions as “not maintainable” due to the failure of parties to pursue alternative remedies provided by relevant statutes. 

“Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by Article 226 of the Constitution having come across certain orders passed by the high courts holding writ petitions as “not maintainable” merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs under Article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself.” [Page 3, Para 4]

• Differentiation between “entertainability” and “maintainability” of a writ petition, as distinct concepts was laid out. 

“The rule, which requires 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 but real distinction between the two ought not to be lost sight of. The objection as to “maintainability” goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of “entertainability” is entirely within the realm of discretion of the high courts.” [Page 5, Para 4]

Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by Article 226 of the Constitution having come across certain orders passed by the high courts holding writ petitions as “not maintainable” merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction.” [Page 3, Para 4]

• It was observed that when a certain item’s classification under a sales tax statute is purely a question of law, the high court may entertain a writ petition at its discretion even if the alternative remedy was not pursued. The Supreme Court will only interfere if the exercise of discretion is unreasonable or perverse. In the second case, it was established that when a controversy involves only questions of law without any disputed facts, the high court should decide the matter instead of dismissing the writ petition due to the availability of an alternative remedy.

“That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 (State of Uttar Pradesh & ors. vs. Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union of India vs. State of Haryana). What appears on a plain reading of the former decision is that whether a certain item falls within an entry in a sales tax statute, raises a pure question of law and if investigation into facts is unnecessary, the high court could entertain a writ petition in its discretion even though the alternative remedy was not availed of; and, unless exercise of discretion is shown to be unreasonable or perverse, this Court would not interfere. In the latter decision, this Court found the issue raised by the appellant to be pristinely legal requiring determination by the high court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available.” [Page 8, Para 8]

Conclusion

The court concluded that the plea raised in the writ petition did deserve a consideration on merits and the appellant’s writ petition ought not to have been thrown out at the threshold. The court allowed the appeal and made the interim order absolute.

References

1. Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others (1998) 8 SCC 1.
2. Assistant Commissioner of State Tax vs. M/s. Commercial Steel Limited (2021) SC 884. 
3. State of Uttar Pradesh & ors. vs. Indian Hume Pipe Co. Ltd (1977) 2 SCC 724. 
4. Union of India vs. State of Haryana (2000) 10 SCC 482. 

Author: Parthvi Patel, United World School of Law