Dishnet Wireless Limited and Aircel Limited Vs The Commercial Tax Officer (Main) and The State of Tamil Nadu

N. Paul Vasanthakumar, J.@mdashThese writ appeals are preferred by the writ petitioners in W.P. Nos. 30351 and 30352 of 2013, which were dismissed by the learned single Judge by common order dated 28.11.2013 on the ground of availability of alternate remedy of filing appeal before the Appellate Authority against the assessment orders passed u/s 51 of the Tamil Nadu Value Added Tax Act, 2006. The brief facts necessary for disposal of these writ appeals are as follows:

(a) The appellant Companies are incorporated under the Companies Act and were granted licence u/s 4 of the Indian Telegraph Act, 1885 to set up and operate Unified Access Service Licence (UASL) in their respective licensed service areas. Appellants have established telecommunication towers and other hardwares and softwares across the country for UASL service.

(b) They have registered themselves under the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) for carrying on internet service in the State of Tamilnadu.

(c) The appellants have entered into a Business Transfer Agreement on 14.1.2010 with the Chennai Network Infrastructure Limited by which the appellants have sold the undertaking to M/s. Chennai Network Infrastructure Limited as a going concern by means of a slump price. The sale consideration was fixed at Rs. 772 crores in the case of M/s. Aircel Limited, and Rs. 1557 Crores in the case of M/s. Dishnet Wireless Limited.

(d) The Commercial Tax Officer issued a notice to the appellants on 19.7.2013 calling upon them to show cause as to why the entire sale value of the assets should not be assessed at 12.50% for the assessment year 2010-2011. A detailed objection was submitted by the appellants on 30.8.2013 contending that by the Business Transfer Agreement dated 14.1.2010 the appellants transferred only the passive infrastructure to transferee Company. According to the appellants there was no contract for sale of goods and it was only complete transfer of a running business.

(e) The Assessing Officer, after giving opportunity of hearing to the appellants, confirmed the proposal and passed the impugned assessment orders dated 30.9.2013 demanding Rs. 144.72 Crores as tax and Rs. 217.07 Crores as penalty from the appellant in W.A. No. 2408 of 2013, and Rs. 96,83,22,033/- as tax and Rs. 1,45,07,21,223/- as penalty from the appellant in W.A. No. 2409 of 2013. The said assessment orders are challenged in the writ petitions.

(f) The grounds raised by the appellants in the writ petitions are that the Business Transfer Agreement effected by them on 14.1.2010 is excluded by Explanation-III of Section 2(41) of the Tamil Nadu Value Added Tax Act, 2006; that the transaction was a business transfer of an undertaking as a whole, but the Assessing Officer erroneously treated that the installation and maintenance of telecommunication equipment are not separate business as if the buyer and seller are in Tamilnadu; that when the agreement having been approved on account of the scheme of the agreement sanctioned by this Court, particularly with regard to the contention that the element of sale of goods was even if it is there, no such sale took place in the State of Tamil Nadu; that the Assessing Authority opined that the appellants are dealing in mobile service and taxable goods purchased for tower have been installed at various sites and they become capital goods and with the help of those capital goods internet mobile services are being provided; and that the installation and maintenance of the telecommunication equipments is not a separate business.

2. The issue raised before the learned single Judge was as to whether a composite sale of running business of the concern would attract the provisions of the Tamil Nadu Value Added Tax Act, 2006, particularly when the Assessing Officer took a stand that the appellants/writ petitioners used to sell some of the assets every year as in the case of sale during the year 2010 treating it as transfer of business as a whole, and the Assessing Officer treated the same as bulk sale of assets liable to tax.

3. The learned Advocate General, who appeared for the respondents opposing the prayer in the writ petition, submitted before the learned single Judge that the very same issue is now pending before the Appellate Deputy Commissioner at the instance of M/s. Aircel Cellular Limited on similar grounds and therefore the orders challenged before the learned single Judge are appealable orders before the very same Appellate Authority and contended that the Appellate Deputy Commissioner will definitely appreciate the contentions of the writ petitioners, if appeals are filed.

4. The learned single Judge, accepting the said submission of the learned Advocate General and relying upon various decisions of the Hon''ble Supreme Court held that the transaction in question i.e., the Business Transfer Agreement and primary document, which were taken into account by the Assessing Authority to determine the taxable turnover by including the sale value, should be considered by the appellate authority before whom the very same issues are pending and there cannot be any piecemeal consideration of the matter by the Appellate Authority as well as by this Court.

5. Mr. R. Natarajan, learned Senior Counsel appearing for the appellant in W.A. No. 2408 of 2013 raised the very same contentions raised before the learned single Judge and submitted that the first respondent has no jurisdiction to initiate the proceedings insofar as the appellant''s transaction are concerned, as the whole transaction had taken place outside Tamilnadu, as the appellant''s equipments are located outside Tamilnadu. Learned Senior Counsel relied on certain decisions of the Hon''ble Supreme Court in support of his contentions.

6. Mr. Arvind P. Dattar, learned Senior Counsel appearing for the appellant in W.A. No. 2409 of 2013 submitted that some of the appellant''s equipments are located in Tamilnadu and most of them are located outside Tamilnadu, and contended that apart from lack of jurisdiction to the first respondent, the first respondent has usurped the jurisdiction, even though he has no jurisdiction; no reason is stated in the impugned order; and if the writ petitions are not entertained by this Court, the appellants will be put to serious hardships/prejudice as the demands are extremely high and for filing appeal 25% pre-deposit is mandatory. Therefore by taking note of the hardship faced by the appellant, the writ petition may be entertained. Learned Senior Counsel also relied on some judgments in support of his contentions.

7. Mr. A.L. Somayaji, learned Advocate General on the other hand submitted that in tax matters the hardship plea is not maintainable as Taxing Statutes should be viewed strictly and the Appellate Authority will definitely consider the contentions raised by the appellants as held by the learned single Judge, which requires no interference. The learned Advocate General submitted that the order of the learned single Judge is based on the decisions of the Hon''ble Supreme Court.

8. We have considered the rival submissions of the respective learned Senior Counsel appearing for the appellants as well as the learned Advocate General appearing for the respondents.

9. The appellants are not disputing the availability alternate statutory appeal u/s 51 of the Tamil Nadu Value Added Tax Act, 2006. The points urged by the learned senior Counsels for the appellants are that if the appellants are forced to file appeal, they have to deposit 25% of the tax assessed at the time of filing appeal and may also be directed to pay further 25% of the tax for the grant of interim stay. The said amount payable will be huge, and therefore they are facing severe hardships. The learned Senior Counsels also contended that the first respondent has usurped the non-existent jurisdiction.

10. It is not in dispute that the very same issue is already pending before the Appellate Authority as pointed out by the learned single Judge in his order. Therefore, it is not appropriate for this Court to entertain the writ petitions, when connected matter is pending with the Appellate Authority. Further, there are disputed questions of facts in these cases and only if appeals are filed, the Appellate Authority will be in a position to appreciate the facts and give a finding on facts. This Court, sitting under Article 226 of the Constitution of India, cannot appreciate the factual aspects, unless the same is proved before the appropriate fact finding forum.

11. The grievance of the appellants are that the Assessing Officer has not given any reason. The said plea can also be raised before the Appellate Authority, who is bound to consider the same before deciding the appeals, including the jurisdictional aspect.

12. When the facts are in dispute, the writ petition filed under Article 226 of the Constitution of India is not maintainable. The said issue is no longer res integra. In the decisions reported in Himmat Singh Vs. State of Haryana and Others, and Food Corporation of India and Others Vs. Harmesh Chand, the Hon''ble Supreme Court held that if the facts are seriously disputed, no factual finding can be recorded without considering the evidence adduced by the parties. It was not appropriate for the writ Court to exercise its jurisdiction. The said position is reiterated in the decision reported in Kanaiyalal Lalchand Sachdev and Others Vs. State of Maharashtra and Others, .

13. It is also to be noted that if a statute provides for determining the issues, the writ Court is not justified in entertaining the writ petition, without exhausting the alternate statutory and effective remedy. For coming to the said conclusion the learned single Judge relied on the following decisions of the Hon''ble Supreme Court:

(i) Munshi Ram and Others Vs. Municipal Committee, Chheharta, ;

(ii) Titaghur Paper Mills Co. Ltd. and Another Vs. State of Orissa and Others, ;

(iii) U.O.I. v. Guwahati Carbon Ltd., (2012) 3 SCALE 359

(iv) Commissioner of Income Tax and Others Vs. Chhabil Dass Agarwal, The said approach of the learned single Judge cannot be found fault with, particularly with respect to the disputed question of facts. In this respect the following decisions can also be usefully cited.

(a) A Constitution Bench of the Supreme Court in Veerappa Pillai Vs. Raman and Raman Ltd. and Others, held that as the Motor Vehicles Act is a self-contained code and Act itself provides for a forum for appeal/revision, the writ jurisdiction should not be invoked in matters relating to its provisions. A similar view was taken in Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, .

(b) In Union of India (UOI) Vs. T.R. Varma, the Supreme Court held that 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 will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution unless there are good grounds to do otherwise.

(c) In C.A. Abraham, Uppoottil, Kottayam Vs. The Income Tax Officer, Kottayam and Another, ; H. B. Gandhi v. Gopi Nath and Sons ; and in Karnataka Chemical Industries and Others Vs. Union of India and Others, the Supreme Court held that where there is a hierarchy of appeals provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction. All these decisions are related to taxing statutes, like the present case.

(d) It is well settled by a series of decisions of the Supreme Court that particularly in tax matters there should be no short circuiting of the statutory remedies, vide Titaghur Paper Mills Co. Ltd. and Another Vs. State of Orissa and Others, , Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, .

(e) It is well settled that when there is an alternative remedy, ordinarily writ jurisdiction of this Court under Article 226 of the Constitution, should not be invoked. This principle applies with greater force regarding tax proceedings as observed by the Supreme Court in Titaghur Paper Mills Co. Ltd. and Another Vs. State of Orissa and Others, :

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.

(f) In Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, the Supreme Court observed:

In Titaghur Paper Mills Co. Ltd. and Another Vs. State of Orissa and Others, A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ. held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the Tribunal and thereafter to have the case stated to the High Court, it was not for the High Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Article 226 is not meant to short circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Art. 226 of the Constitution. But, then the Court must have good and sufficient reason to by pass the alternative remedy provided by statute. Surely, matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Art. 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.

(g) In Sheela Devi Vs. Jaspal Singh, and Punjab National Bank Vs. O.C. Krishnan and Others, the Supreme Court held that if the statute provides for remedy of revision or appeal, writ jurisdiction should not be invoked.

(h) In A. Venkatasubbiah Naidu Vs. S. Challappan and Others, the Supreme Court deprecated the practice of exercising the writ jurisdiction when an efficacious alternative remedy is available.

(i) In the decision reported in Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Another, the Hon''ble Supreme Court held that if appeal is provided in a statute, without availing the appeal remedy, the party cannot file writ petition. In the said judgment, non-availing of statutory remedy u/s 35 of the FEMA Act was taken note and held that the writ petition filed was not maintainable.

(j) In W.P. No. 981 of 2003 (Tax) (M/s. Khandelwal Soya Industries Ltd. v. State of U.P. and others) decided on 27.8.2003 a Division Bench of the Allahabad High Court dismissed a writ petition challenging the provisional assessment orders under the U.P. Trade Tax Act on the ground of alternative remedy u/s 9 of that Act. Against the aforesaid judgment, SLP was filed before the Supreme Court, which was also dismissed. We respectfully agree with the view taken by the Allahabad High Court in the aforesaid decision.

14. In the decision reported in C.C.T. Orissa and Others Vs. Indian Explosives Ltd., the Hon''ble Supreme Court cautioned the High Courts not to entertain writ petitions before exhausting the alternate remedies. Same is the view taken by the Division Bench of this Court in the decision reported in Chopard Builders (P) Ltd. Vs. Deputy Commercial Tax Officer and Another, . The said position is reiterated in the decision reported in Union of India (UOI) and Another Vs. Guwahati Carbon Ltd., . In the said case the Supreme Court disapproved the action of the Division Bench in interfering with the order of the learned single Judge, who dismissed the writ petition on the ground of availability of alternate remedy. In paragraph 15, the Hon''ble Supreme Court held thus,

15. In our opinion, the assessee ought not to have filed a writ petition before the High Court questioning the correctness or otherwise of the orders passed by the Tribunal. The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution. Therefore, the learned Single Judge was justified in observing that since the assessee has a remedy in the form of a right of appeal under the statute, that remedy must be exhausted first. The order passed by the learned Single Judge, in our opinion, ought not to have been interfered with by the Division Bench of the High Court in the appeal filed by the respondent assessee.

15. In the light of the above facts and the decisions cited, both the writ appeals are liable to be dismissed. The appellants have to approach the appellate authority u/s 51 of the Tamil Nadu Value Added Tax Act, 2006. Want of jurisdiction can also be raised before the appellate authority. In this case, the first respondent issued show cause notices and granted personal hearing to appellants before passing the impugned orders. In fine, both the writ appeals are dismissed. The common order of the learned single Judge dated 28.11.2013 made in W.P. Nos. 30351 and 30352 of 2013 is confirmed. The appellants are granted liberty to file appeal before the Appellate Authority as ordered by the learned single Judge. Time for filing appeal by the appellants before the Appellate Authority is granted till 13.12.2013. There is no order as to costs. Connected miscellaneous petitions are dismissed.