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Vari Agencies Vs. The Commercial Tax Officer and Another - Court Judgment

LegalCrystal Citation
CourtChennai Madurai High Court
Decided On
Case NumberC.R.P(PD)(MD)No. 1878 of 2016 & C.M.P(MD)No. 9001 of 2016
Judge
AppellantVari Agencies
RespondentThe Commercial Tax Officer and Another
Excerpt:
(prayer: civil revision petition filed under article 227 of the constitution of india against the fair and decreetal order passed in cfr no.2028 in unfiled o.s.no.- of 2016, dated 31.08.2016, on the file of the district munsif court, thiruvaiyaru.) 1. this civil revision petition arises out of the fair and decreetal order passed in cfr no.2028 in unfiled o.s.no.- of 2016, dated 31.08.2016, by the district munsif court, thiruvaiyaru. 2. the petitioners herein as plaintiffs have filed a suit for declaration that the 4 notices dated 29.09.2015 for the assessment years 2011-2012, 2012-2013, 2013-2014 and 2014-2015 issued by the first defendant to the plaintiff is illegal and void ab initio and consequently for an order of injunction, restraining the first defendant from passing any further.....
Judgment:

(Prayer: Civil Revision Petition filed under Article 227 of the Constitution of India against the fair and decreetal order passed in CFR No.2028 in Unfiled O.S.No.- of 2016, dated 31.08.2016, on the file of the District Munsif Court, Thiruvaiyaru.)

1. This Civil Revision Petition arises out of the fair and decreetal order passed in CFR No.2028 in Unfiled O.S.No.- of 2016, dated 31.08.2016, by the District Munsif Court, Thiruvaiyaru.

2. The petitioners herein as plaintiffs have filed a suit for declaration that the 4 notices dated 29.09.2015 for the assessment years 2011-2012, 2012-2013, 2013-2014 and 2014-2015 issued by the first defendant to the plaintiff is illegal and void ab initio and consequently for an order of injunction, restraining the first defendant from passing any further order on the strength of the notices dated 29.09.2015 issued against the plaintiff firm for the assessment years 2011-2012, 2012-2013, 2013-2014 and 2014-2015. The plaint was initially presented before the Disrict Munsif Court, Thiruvaiyaru, on 18.08.2016 and the Disrict Munsif Court, Thiruvaiyaru returned the plaint with the following endorsements:

1.How this suit is maintainable when there is a specific provisions under Sections 52 and 75 of TNVAT Act, 2006?

2. How this suit is not barred by limitation under Section 76 of TNVAT Act, 2006?

3. How this suit is maintainable when there is a specific bar under Section 77 of TNVAT Act, 2006?

The plaint was represented on 19.08.2016 with the following endorsement:

Under the notices issued by the first respondent sought to assess the plaintiff for transporting oil through the lorries owned by the persons mentioned in the above said notices issued by the first defendant. Merely because the lorries used for transporting oil from Tuticorin are owned by one of the partners of the plaintiff firm. It does not mean the plaintiff firm is involved in the business. The provisions of Section 75 and 76 prohibits the filing of suits with respect to the acts of the Government servants while exercising the powers conferred under the Act. But the Tamil Nadu Value Added Tax Act, does not authorize the officials of the Commercial Tax Department to assess the persons, who carry the commodities for trade. The plaintiff has involved in any business as alleged in the notices. Hence, the notice per se unlawful. Hence the suit is filed for a declaration that those notices are not legally valid and cannot be enforced. Under Section 9 CPC the declaratory decree can be granted only the Civil Court. The plaintiff not being a party to the business cannot be called upon to pay sale tax for the business done by somebody. As per the notice, the person owning the lorries used for transporting the oil is owned by Rajendran and merely because he happens to be one of the partners. Hence, the provisions of Sections 52, 75, 76 and 77 may not apply to this case and the suit is maintainable before the civil Court

Thereafter, by relying upon the decision of theHon'ble Supreme Courtin N.D.M.C. v. Satish Chand (deceased) by L.R.Ram Chandin AIR 2003 SC 3187, the Trial Court returned the plaint with the following endorsement:

Under the TNVAT Act, 2006, a special remedy has been provided against any order passed under the said Act and there is no bar under the Act for a third party to the commercial transaction to seek that special remedy. Further, the Act also provides for certain specific bar and preconditions for filing of a civil suit. Therefore, how this plaint is maintainable in law? Hence, returned .

Thereafter, the plaint has been represented before the Trial Court on 22.08.2016 and the same was called before the Court on 26.08.2016 regarding the maintainability of the suit and after hearing the arguments advanced on the side of the petitioners/plaintiffs, the Trial Court observed that the suit is not maintainable in law and the same is also barred by law and ultimately rejected the plaint. Against which, the present Civil Revision Petition has been filed by the Petitioners.

3.The learned counsel for the petitioners submitted that the assessment orders passed by the Department violates the principles of natural justice and not following the procedures and not furnishing the documents and on that score, the suit is maintainable and therefore the Trial Court has to entertain the plaint filed by the petitioners and decide the same on merits.

4. The learned counsel for the petitioners relied upon Sections 17 and 25 of the Tamil Nadu Value Added Tax Act, 2006 and the same reads as follows:

17. Burden of proof.- (1)For the purpose of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax, shall lie on such dealer.

(2)For the purpose of claim of input tax credit, the burden of proving such claim shall lie on such dealer.

(3)Notwithstanding anything contained in this Act or in any other law for the time being in force, a dealer in any of the goods specified in the Second Schedule liable to pay tax in respect of the first sale in the State shall be the first seller of such goods and shall be liable to pay tax at the rate specified in the Second Schedule on his turnover of sale relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act .

25. Procedure to be followed in assessment of certain cases.-(1)If no return is submitted by the dealer under Section 21 within the prescribed period, or if the return submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority may, after making such enquiry as it considers necessary, determine the tax payable by the dealer to the best of its judgment:

Provided that, before taking action under this sub-section on the ground that the return submitted by the dealer is incomplete or incorrect, the dealer shall be given a reasonable opportunity of proving the correctness or completeness of the return submitted by him.

(2)If the assessing authority has reason to believe that the tax determined by it for any period was based on too low a turnover or was made at too low a rate or was based on too high a turnover or was made at too high a rate it may enhance or reduce, as the case may be, such determination of tax:

Provided that before making an enhancement of the tax payable as aforesaid, the assessing authority shall, give a reasonable opportunity to the dealer to show cause against such enhancement and make such enquiry as it may consider necessary.

(3)The determination and collection of tax under this section shall be subject to such adjustment as may be prescribed on the completion of final assessment in the manner prescribed .

5. The learned counsel for the petitioners further relied upon the following decisions:

(i)In Ramksh Gobindram (dead) through Lrs. v. Sugra Humayun Mirza Wakf reported in (2010)SCCR 919, the Hon'ble Supreme Court has held as follows:

5. Before we take up the core issue whether the jurisdiction of a civil court to entertain and adjudicate upon disputes regarding eviction of Wakf property stands excluded under the Wakf Act, we may briefly outline the approach that the Courts have to adopt while dealing with such questions. The well-settled rule in this regard is that the Civil Courts have the jurisdiction to try all suits of civil nature except those entertainment whereof is expressly or impliedly barred. The jurisdiction of Civil Courts to try suits of civil nature is very expansive. Any statue which excludes such jurisdiction is, therefore, an exception to the general rule that all disputes shall be triable by a Civil Court. Any such exception cannot be readily inferred by the Courts. The Court would, lean in favour of a construction that would uphold the retention of jurisdiction of the Civil Courts and shift the onus of proof to the party that asserts that Civil Court's jurisdiction is ousted .

(ii)In K.A.Arokkiam v. The Dindigul Municipality, rep. by its Commissioner, Municipality Campus, Main Road, Dindigul reported in 2010(2) CTC 51, this Court has held that when assessment is totally erroneous and not in compliance with provisions of Act, Civil Court has jurisdiction to entertain a suit and availability of alternate remedy of appeal under Section 89 of Tamil Nadu District Municipalities Act is not a bar for filing of a Civil Suit questioning assessment of property.

(iii) In Tamil Nadu Electricity Board, Coimbatore Electrical Distribution Circle, North Coimbatore and others v. Shri Iyyan Textiles Mills Pvt. Limited, Coimbatore 641 031 reported in 2013(1) MWN (Civil) 494, wherein this Court has held that Civil Court can take cognizance in spite of bar imposed by Legislature when impugned order is tainted with mala fides and order is passed in excess of or without jurisdiction and when serious question of fact is involved which cannot be decided without recording evidence and in instance case, when impugned order was passed without resorting to procedural fairness and when recording of evidence was imperative for decision in matter, jurisdiction of Civil Court, held, would not be ousted.

(iv) The learned counsel for the petitioners further relied upon the decision of the Tamil Nadu Taxation Special Tribunal in N.Padma Coffee Works and Others v. Commercial Tax Officer, Rockfort Assmt. Circle, Trichy reported in (1999) 114 STC 0494. Even though, it is a Judgment of the Tamil Nadu Taxation Special Tribunal, the learned counsel for the petitioners would strongly rely on the same, wherein it is held as follows:

6. A reading of section 3 of the Transfer of Property Act, 1882 leads to the conclusion that, not only a wilful abstention from an enquiry which a person ought to have made, but the gross negligence to make enquiry also would amount to notice of a fact to him. When the prudence of a person requires to make enquiry, but due to his own negligence, he failed to make enquiry, he falls in the category of a person, with notice. A purchaser of the property when claims the transaction to be bona fide without notice, the yardstick to be applied for the notice is given in section 3 of the Transfer of Property Act, 1882 and only by the application of this provision, a purchaser who seeks protection under section 24-A of the Tamil Nadu General Sales Tax Act, is to be identified, whether he is a purchaser for value without notice. The necessity of the purchase, the intention of the transfer, the relationship between the vendee and vendor are all vital factors to find out the reasonableness of the person in purchasing the property. Sometimes unexplained secrecy or the haste in the transactions may also throw some light al to the bona fide or mala fide. To decide whether a transaction was genuine or bona fide or mala fide, all facts relating to the conduct of the parties to the transaction have to be weighed as a whole. Such enquiry on disputed facts is not possible in the proceedings under article 226 of the Constitution of India, because the enquiry under these proceedings will be on admitted facts or on the question of law. The controversies as to the facts can be proved only by evidence. For the mere assertions in the affidavit of these petitioners that they are bona fide purchasers, the court or Tribunal cannot simply nod its head to give the relief as prayed for. The petitioners ion these proceedings have not disputed the liability of their vendors to pay the sales tax, even at the time of the sales, but claim protection under the exception clause, for which the parameters of section 3 of the Transfer of Property Act, 1882 have to be applied. This can be done only in a regular suit where there is scope for the evidence to prove the conduct of the parties in making the enquiries with prudence, or utter negligence and the real intention in their mind. Every purchaser from the assessee is naturally interested to protect the property and will claim to be a bona fide purchaser for the sake of their claim, the court cannot approve the transaction as a bona fide sale .

6. By relying upon the above decisions of the Hon'ble Supreme Court, this Court as well as the Tamil Nadu Taxation Special Tribunal, the learned counsel for the petitioners would strenuously submit that the petitioners are nothing to do with the business transactions of Amman Oils, Karaikudi and the petitioners are not the parties to the transactions, therefore the assessment orders issued by the Department are perverse and illegal, the suit filed by the plaintiffs is maintainable and the Trial Court without considering the above decisions, has erroneously rejected the plaint on the ground of maintainability and therefore the rejection order passed by the Trial Court is liable to be set aside.

7. The learned counsel for the petitioners also submitted that in the decision of the Hon'ble Supreme Court in N.D.M.C. v. Satish Chand (deceased) by L.R.Ram Chand in AIR 2003 SC 3187, it is held that a bar to file a civil suit may be express or implied. An express bar is where a statute itself contains a provision that the jurisdiction of a civil court is barred. An implied bar may arise when a statute provides a special remedy to an aggrieved party. As per the said decision, unless it is express bar or implied bar, the suit filed by the petitioners is maintainable.

8. Per contra, the learned Additional Government Pleader appearing for the respondents would submit that the plaint itself is not maintainable and even as per Section 77 of the Tamil Nadu Value Added Tax Act, 2006, there is a bar under the Act. Section 77 of the Act reads as follows:

77. Bar of suits and proceedings to set aside or modify assessments except as provided in this Act.- (1)No suit or other proceedings shall, except as expressly provided under this Act, be instituted in any Court to set aside or modify any assessment made under this Court.

(2)No injunction shall be granted by any Court in respect of any assessment made, or to be made, or in respect of any action taken, or to be taken, in pursuance of any of the provisions of this Act .

9. The learned Additional Government Pleader would submit that as per Section 77 of the Act, the suit is express bar and therefore the Trial Court has rightly rejected the plaint and even though the Trial Court has wrongly mentioned the provisions of the Act, there is a bar under Section 72 of the Act and therefore the suit is not maintainable before the Trial Court.

10. Further, in support of his contentions, the learned Additional Government Pleader relied upon the following decisions:

(i)In NDMC v. Satish Chand (Deceased) by LR.Ram Chand reported in (2003)10 Supreme Court cases 38, the Hon'ble Supreme Court has held as follows:

6. It will be noticed from the provisions contained in Section 9 of the Code of Civil Procedure that a bar to file a civil suit may be express or implied. An express bar is where a statute itself contains a provision that the jurisdiction of a civil court is barred e.g. the bar contained in Section 293 of the Income Tax Act, 1961. An implied bar may arise when a statute provides a special remedy to an aggrieved party like a right of appeal as contained in the Punjab Municipal Act which is the subject-matter of the present case. Section 86 of the Act restrains a party from challenging assessment and levy of tax in any manner other than as provided under the Act. A provision like this is the implied bar envisaged in Section 9 CPC against filing a civil suit. In Raja Ram Kumar Bhargava v. Union of India this Court observed: (SCC p. 689, para 19)

Generally speaking, the broad guiding considerations are that wherever a right, not pre-existing in common law, is created by a statute and that statute itself provided a machinery for the enforcement of the right, both the right and the remedy having been created uno flatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil court s jurisdiction is impliedly barred. If, however, a right pre-existing in common law is recognised by the statute and a new statutory remedy for its enforcement provided, without expressly excluding the civil court s jurisdiction, then both the common law and the statutory remedies might become concurrent remedies leaving open an element of election to the persons of inherence. To what extent, and on what areas and under what circumstances and conditions, the civil court s jurisdiction is preserved even where there is an express clause excluding their jurisdiction, are considered in Dhulabhai case.

7. Munshi Ram v. Municipal Committee, Chheharta was a case under the Punjab Municipal Act itself. The Court was considering the question of bar created under Sections 84 and 86 of the Act regarding hearing and determination of objections to levy of provisional tax under the Act. In this connection it was observed: (SCC pp. 88-89, paras 22-23)

22. From a conjoint reading of Sections 84 and 86, it is plain that the Municipal Act, gives a special and particular remedy for the person aggrieved by an assessment of tax under the Act, irrespective of whether the grievance relates to the rate or quantum of tax or the principle of assessment. The Act further provides a particular forum and a specific mode of having this remedy which is analogous to that provided in Section 66(2) of the Indian Income Tax Act, 1922. Section 86 forbids in clear terms the person aggrieved by an assessment from seeking his remedy in any other forum or in any other manner than that provided in the Municipal Act.

23. It is well recognised that where a revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all other forums and modes of seeking it are excluded. Construed in the light of this principle, it is clear that Sections 84 and 86 of the Municipal Act bar, by inevitable implication, the jurisdiction of the civil court where the grievance of the party relates to an assessment or the principle of assessment under this Act.

The Court upheld the objection regarding maintainability of the civil suit.

8. A Division Bench of the Delhi High Court in Sobha Singh and Sons (P) Ltd. v. New Delhi Municipal Committeehad occasion to consider the question of maintainability of a civil suit challenging the assessment and levy of property tax by NDMC. Sections 84 and 86 of the Act came in for consideration. It was held that the provision of appeal contained in Section 84(1) of the Act provided a complete remedy to a party aggrieved against the assessment and levy of tax. Section 86 provides that the remedy of appeal is the only remedy to a party to challenge assessment for purposes of property tax. No other remedy was available to a party in such circumstances. It follows that the remedy of civil suit is barred.

9. In view of the aforesaid position in law, we are of the considered view that the civil suit filed by the respondent challenging the assessment and demand of property tax by the appellant was clearly barred. The judgments of the lower appellate court and the High Court are, therefore, set aside and the judgment of the trial court is hereby restored. The civil suit filed by the respondent is dismissed as not maintainable. The appeal is allowed. There will be no order as to costs .

(ii) In Commissioner, Bangalore Development Authority and Another v. Brijesh Reddy and Another reported in (2013)3 Supreme Court cases 66, the Hon'ble Supreme Court has held as follows:

18. It is clear that the Land Acquisition Act is a complete code in itself and is meant to serve public purpose. By necessary implication, the power of the civil court to take cognizance of the case under Section 9 CPC stands excluded and a civil court has no jurisdiction to go into the question of the validity or legality of the notification under Section 4, declaration under Section 6 and subsequent proceedings except by the High Court in a proceeding under Article 226 of the Constitution. It is thus clear that the civil court is devoid of jurisdiction to give declaration or even bare injunction being granted on the invalidity of the procedure contemplated under the Act. The only right available for the aggrieved person is to approach the High Court under Article 226 and this Court under Article 136 with self-imposed restrictions on their exercise of extraordinary power.

... ... ...

20. Having regard to the fact that the acquisition proceedings had been completed way back in 1960-1970, the plaintiffs who purchased the suit land in 1995 cannot have any right to maintain the suit of this nature particularly, against Defendants 1 and 2, namely, BDA. The High Court clearly erred in remanding the matter when the suit was not maintainable on the face of it. The High Court failed to take note of the fact that even in the plaint itself, the plaintiff-respondents herein have stated that the suit land was acquired and yet they purchased the suit land in 1995 and undoubtedly have to face the consequence. The possession vests with BDA way back in 1969 and 1978 and all the details have been asserted in the written statements, hence the remittal order cannot be sustained.

21. In the light of the above discussion, the impugned judgment dated 27-7-2005 passed by the High Court in Brijesh Reddy v. Bangalore Development Authority remitting the matter to the trial court is set aside and the judgment dated 18-6-2003 of the trial court in OS No. 4267 of 1996 is restored. The appeal is allowed with no order as to costs .

(iii)The decision in K.Damodara Menon, Partner of Guru Industries v. The Deputy Commercial Tax Officer, Dharmapuri and others (W.A.No.1800 of 2001), dated 04.04.2007, wherein this Court has held as follows:

5. Heard the counsel. Section 51 of the Tamil Nadu General Sales Tax Act reads as follows:

51. Bar of suits and proceedings to set aside or modify assessment except as provided in this Act -

(a) No suit or proceedings shall, except as expressly provided under this Act be instituted in any court to set aside or modify any assessment made under this Act.

(b) No injunction shall be granted by any court in respect of any assessment made, or to be made, or in respect of any action taken, or to be taken, in pursuance of any of the provisions of this Act.

From bare reading of the above provision, it is clear that no suit or proceedings can be initiated in any Civil Court to set aside or modify any assessment made under the Act. Further it is stated that no injunction can be granted by any Civil Court in respect of any assessment made, or to be made, or in respect of any action taken, or to be taken, in pursuance of any of the provisions of this Act. The Act provides complete machinery for adjudication as well as recovery and when there is a specific bar, the appellant has no right to file a suit in the Civil Court and the Civil Court has no jurisdiction to entertain and grant any injunction. The only remedy open to the assessee is to avail the remedies as contemplated under the provisions of the Act. The effect of Section 51 of the Act is that no suit can be brought in any Civil Court to set aside or modify or grant any injunction in respect of any assessment or any action taken in pursuance of the provisions of the Act. Sales tax is complete code by itself and it provides for complete assessment, raising demand and Recovery Proceedings. Section 51 of the Act prohibits a Civil Court to grant injunction in respect of any action taken in pursuance of the provisions of the Act. Therefore the decree of the Civil Court cannot be put in defence or sealed against the coercive or Recovery Proceedings initiated under the Act. We do not find any error or legal infirmity in the order of the Single Judge and the reasons given by the Single Judge are based on valid materials and evidence. Hence the order of the Single Judge is in accordance with law and the same does not require interference.

(iv)The decision of the Hon'ble Punjab and Haryana High Court in Byford Leasing Limited v. Excise and Taxation Officer, Gurgaon reported in (2002) 126 STC 89 (PandH), wherein it is held as follows:

8. There is serious doubt and which has rightly been expressed by the learned courts below in the impugned order relating to the very jurisdiction of the civil court to entertain and decide such suit. The order has been passed by the Delhi sales tax authorities and admittedly the plaintiff-company is an assessee before that authority for the purpose of sales tax. It does not stand to reason that such orders could be assailed before the learned Senior Sub-Judge, Gurgaon, by means of the present suit. Section 67 of the Delhi Sales Tax Act and for that matter Section 62 of the Haryana General Sales Tax Act, 1973 imposes a complete bar to the very maintainability of the suit. However, in order to avoid prejudice to either parties to the suit, I do not consider it appropriate, at this stage, to finally determine this question either way.

... ... ...

12. Keeping in view the orders of various authorities, the facts narrated above and the conduct of the plaintiff, I have no hesitation in affirming the concurrent view taken by the learned courts below that the plaintiff has no prima facie case nor balance of convenience is in favour of the plaintiff.

13. The learned courts below have exercised their judicial discretion in consonance with the settled principle of law. Thus, such exercise of jurisdiction by the learned courts below would hardly justify interference by this Court, within the limited scope of its revisional jurisdiction under Section 115 of the Code of Civil Procedure. However, nothing observed in this order would affect the rights and contentions of the either parties to the proceedings .

(v)The decision in Rajesh Traders v. The State of Tamil Nadu and Ors. (CRP(NPD)(MD)No.1400 of 2015, dated 27.07.2015, wherein this Court has held as follows:

11. The Trial Court in a very mechanical manner entertained the suits without addressing the basic issue as to whether the suit is maintainable. The Trial Court is having jurisdiction to decide as to whether the suit is maintainable. There is no need to wait till the appearance of the defendant to file an application under Order 7 Rule 11 of Code of Civil Procedure. Since the matter is covered by a special Statute, the Trial Court, at the first instance, should have considered as to whether the suit is legally maintainable.

12. Section 77 of the Tamil Nadu Value Added Tax Act, 2006 contains a statutory bar. The said provision bars the Civil Court from entertaining a civil suit to set aside or modify any assessment made under the Act. The Act is a special Statute. The Legislature has constituted a machinery under the Act to redress the grievances of the assessees. The assessee is given a right to file appeal before the appellate authority and revision before the revisional authority. In case the Act contains a machinery to redress the grievances, the civil suit is impliedly barred. However, in the subject case, there is a specific statutory bar under Section 77(1) of the Tamil Nadu Value Added Tax Act, 2006, prohibiting the Civil Court from entertaining civil suits. This provision was overlooked by the learned Principal Subordinate Judge, while entertaining the suit in O.S.No.448 of 2007.

13. The petitioner wanted the Civil Court to be converted as an appellate authority over the authorities constituted under the Tamil Nadu Value Added Tax Act, 2006. In any case, the petitioner has not made out any case to restore the suit in O.S.No.448 of 2007.

11. The learned Additional Government Pleader further submitted that in the light of the catena of Judgments of the Hon'ble Supreme Court as well as this Court referred to supra, the suit itself is not maintainable and there is a provision under Section 77(1) of the Tamil Nadu Value Added Tax Act, 2006, restraining the Civil Court from entertaining the civil suit and therefore the Trial Court has rightly rejected the plaint in view of the provisions of the Act as well as the decisions cited supra.

12. In view of the above said facts and circumstances of the case along with the decisions cited supra, I am of the view that the order of the Court below does not warrant any interference of this Court and the Civil Revision Petition fails and the same is liable to be dismissed.

13. Accordingly the Civil Revision Petition is dismissed, however, liberty is given to the petitioners to approach the appellate authority, if they are so advised, within a period of two weeks from the date of receipt of a copy of this order. Consequently, connected Miscellaneous Petition is dismissed. No costs.


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