M/S. GODREJ SARA LEE LTD. vs. THE EXCISE AND TAXATION OFFICER CUM ASSESSING AUTHORITY

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5393 OF 2010 M/S GODREJ SARA LEE LTD. ……APPELLANT(S) VS. THE EXCISE AND TAXATION OFFICER- CUM-ASSESSING AUTHORITY & ORS. …..RESPONDENT(S) J U D G M E N T DIPANKAR DATTA, J. This appeal, by special leave, registers a th challenge to an order dated 12 October, 2009 passed by the High Court of Punjab and Haryana at Chandigarh (hereafter ‘the High Court’, for short) dismissing Civil Writ Petition No.9191 of 2009 presented by the appellant and relegating it to the remedy of an appeal under section 33 of the Haryana Value Added Tax Act, 2003 (hereafter ‘the VAT Act’, for short). 2. Two questions emerge for decision on this appeal. First, whether the High Court was justified in declining interference on the ground of Signature Not Verified availability of an alternative remedy of appeal to Digitally signed by NEETA SAPRA Date: 2023.02.01 17:29:36 IST Reason: the appellant under section 33 of the VAT Act, which 2 it had not pursued. Should the answer to the first question be in the negative, we would next be required to decide whether to remit the writ petition to the High Court for hearing it on merits or to examine the correctness or otherwise of the orders impugned before the High Court.

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’,

VAT Act, and to pass final orders holding that the

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%. Keeping in view the objection raised by counsel for 3 the respondents that without exhausting the remedy of

and upon consideration of the decision of this Court

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.

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 4 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. Profitable reference in this regard may be made to Article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on the exercise of power to issue writs. While it is true that exercise of writ powers despite availability of a remedy under the very statute which has been invoked and has given rise to the action impugned in the writ petition ought not to be made in a routine manner, yet, the mere fact that the petitioner before the high court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the high courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power under Article 226 that has evolved through judicial precedents is that the high courts should normally not entertain a writ petition, where an effective and efficacious alternative remedy 5 is available. At the same time, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the high court under Article 226 has not pursued, would not oust the jurisdiction of the high court and render a writ petition “not

Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the “maintainability” of a writ petition and that 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

restated that “entertainability” and

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, 6 writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very many reasons or relief could even be refused to the petitioner, despite setting up a sound legal point, if grant of the claimed relief would not further public interest. Hence, dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper.

Constitution Bench of this Court in its decision

“10. In the next place 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, ( Halsbury’s Laws of England , 3rd Edn., Vol. 11, p. 130 and the cases cited there). 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 7

justified in entertaining a writ petition despite the party approaching it not having availed the

read as under: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is violation of principles of natural justice; (iii) where the order or the proceedings are wholly without jurisdiction; or (iv) where the vires of an Act is challenged.

Commissioner of State Tax vs. M/s. Commercial Steel

paragraph 11. 8

decisions of this Court reported in (1977) 2 SCC 724 (State of Uttar Pradesh & ors. vs. Indian Hume Pipe

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. 9

find that the appellant had claimed before the High

have been exercised by the Revisional Authority in view of the existing facts and circumstances leading to the only conclusion that the assessment orders were legally correct and that the final orders impugned in the writ petition were passed upon assuming a jurisdiction which the Revisional Authority did not possess. In fine, the orders impugned were passed wholly without jurisdiction. Since a jurisdictional issue was raised by the appellant in the writ petition questioning the very competence of the Revisional Authority to exercise

of the considered view 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.

view, was completely misplaced. The respondent Electricity Board had levied coal surcharge on the 10 appellant company in terms of an agreement. Such agreement contained an arbitration agreement in clause 23. Instead of pursuing its remedy in arbitration, the appellant company unsuccessfully invoked the writ jurisdiction. This Court was approached whereupon it was held that in view of the issues raised, there was no reason why the appellant company should not pursue its remedy in arbitration, having solemnly accepted clause 23 of the agreement, and instead invoke the extraordinary jurisdiction of the high court under Article 226 of the Constitution to determine questions which really form the subject matter of the arbitration agreement. This decision could not have been of any relevance having regard to the issue presented for resolution before the High Court by the appellant, particularly when the

nature of objection raised by the respondents as recorded by the High Court in the impugned order, that the High Court had mistakenly referred to

on a different decision of this Court on an appeal 11 preferred by the same party, reported in (1983) 2 SCC

dismissal of the writ petition, where an order passed by the Sales Tax Officer was under challenge, this

that the challenge being confined to the regularity of proceedings before the Sales Tax Officer and there being no suggestion that the concerned officer had no jurisdiction to make an assessment, the decision in Mohd. Nooh (supra) was clearly distinguishable since in that case there was total lack of jurisdiction. This Court also held that under the scheme of the relevant Act, there was a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of and that since the authority of the concerned officer to make an assessment was not in question, recourse ought to be taken by initiating proceedings thereunder. As noted above, the very jurisdiction of the Revisional Authority having been questioned in the writ petition, the impugned order of the High Court dismissing the writ petition without examining the merits of the challenge cannot be sustained even if 12 the High Court were to rely on Titaghur Paper Mills

committed a manifest error of law for which the order under challenge is unsustainable. The same is,

ordering a remand is an available option for us. However, having regard to the lapse of time (almost a life term of fourteen years) since the orders impugned in the writ petition were made, we feel that it would not be in the best interests of justice to remit the matter to the High Court. Since prior to reserving judgment on this appeal we had heard the parties on the merits of the jurisdictional issue that the appellant had raised before the High Court, it is time to rule on the jurisdiction of the Revisional Authority.

insecticide products in various forms, viz. mosquito

13

were included in Entry 1 and taxable @ 4%.

gross turnover from manufacturing and sales of insecticides and pesticides, besides other consumer

view of an amendment in Entry 67 of Schedule C

notices were issued by the Assessing Authority as to why tax liability @ 10% instead of 4% should not be imposed. Upon hearing the representative of the

for the Assessment Years 2003-04 and 2004-05, respectively, accepting the classification of goods and the rate of tax as stated by the appellant in its returns, i.e. 4%. 14

Assessment Years 2003-04 and 2004-05 for revision of the assessment on classifying the household insecticide products of the appellant as mosquito repellants and taxable at the higher rate of tax,

notices seeking to revise the assessments made for the Assessment Years 2003-04 and 2004-05 were issued, and such exercise was followed up by identically

certain notifications were raised by the appellant before the High Court in its writ petition. Apart from the question as to whether mosquito repellants are goods classifiable as insecticides, pesticides, weedicides, etc., one other question which the appellant sought to raise was whether an amendment in the schedule of classification/rates of tax could be applied to completed assessments for the assessment years prior to the amendment coming into effect. However, before us, the only limited question which the appellant raised was, whether the orders of the 15

seeking to revise the orders of the Assessing

2008 pertaining to the Assessment Years 2003-04 and 2004-05, have been issued in exercise of jurisdiction conferred by law.

convenient at this stage to reproduce the

respect of the Assessment Year 2004-05, below: “I, xxxxxxx, Dy. Excise & Taxation Commissioner-cum- Revisional Authority, Kurukshetra called for the assessment record of M/s Godrej Sara Lee Ltd., Pipli holding TIN xxxxxxx for the assessment year 2004-05. Shri xxxxxxx, ETO-cum-Assessing Authority Kurukshetra passed this assessment order on 28.3.2008. On examination of the assessment record, I was prima facie of the view that the said assessment order suffered from the following illegalities and impropriates (sic, improprieties): The assessing authority erred in levying tax on Mosquito Repellant @ 4% Instead of 10% Accordingly, a show cause notice was issued for 2.3.2009. On 2.3.2009 Shri Ajay Goel, Advocate of the firm appeared along with application for adjournment on the plea that due to closing month of March, 2009 the dealer is unable to get the case decided. The application for adjournment is rejected as the dealer has not to produce any account books or is not to prepare any documents only law point is involved in the case. The dealer has sold mosquito repellant and deposited tax @ 4%. The Hon'ble Supreme Court of India in the case of M/s Sonic Electrochem and another vs. STO and other (1998) 12- PHT-215 (SC) held that Jet Mat Mosquito Repellant is not pesticides/insecticides. Therefore, these goods are general goods and liable to tax at general rate 16

the Assessing Authority under section 15 of the VAT

taken into consideration the decision of this Court

a mosquito repellent, it was ruled by this Court that the same was liable to tax @ 10%. Considering such decision, a notice was issued to the appellant to 17

Assessing Authority that the Haryana Tax Tribunal (hereafter ‘the Tribunal’, for short), constituted under section 57 of the VAT Act, by its order dated

petition filed by the department seeking review of an

reading as follows: “The only limited question to be addressed is whether the ratio of the judgment of the Hon'ble Apex Court delivered in the above mentioned case of M/s Sonic Electrochem and others is applicable in the present case? This judgment of the Hon'ble Supreme Court is clearly distinguishable from the facts of the present case as the said judgment was delivered in special circumstances were there was specific an entry 129 dealing with mosquito repellants and hence the Court held that judgment would be covered under entry 129. However, there is no such corresponding entry in the Haryana General Sales Tax Act and therefore the issue would be whether mosquito repellant would fall within the entry dealing with insecticide etc. or not? The Hon'ble Madras High Court, the Tribunal in the case of Transelektra Domestic Products Pvt. Ltd., and others vs. Commercial Tax Officer, Porur Assessment Circle Madras and others has clearly held that mosquito repellants containing 4% Alethrin' was an insecticide and relying on the judgment of the Hon'ble Madras High Court, the Tribunal in the case of M/s Balsara Hygiene Products Ltd. Kundli (Sonepat) vs State of Haryana has also held that 18

Assessing Authority formed an opinion and returned a finding that he had no other alternative but to vacate the notice issued by him proposing to levy tax @ 10% instead of 4% and proceeded to do so.

Lakshmikumaran, learned counsel, contended that the

the Tribunal, which in turn distinguished the

decision having attained finality, the Revisional Authority could not have assumed a jurisdiction to

well as the final revisional orders under section 34 of the VAT Act holding that mosquito repellent mats

rate of tax. According to him, the Revisional Authority was as much bound by the order of the 19 Tribunal as the Assessing Authority was having regard to the similarity of issues involved and it was not

the decision of this Court reported in 1992 SUPP (1)

proposition that in disposing of quasi-judicial issues before them, the Revenue Officers are bound by the decisions of the appellate authorities and that the principle of judicial discipline requires that the orders of the higher appellate authorities are followed unreservedly by the subordinate authorities.

upon the revisional orders being set aside, the orders of the Assessing Authority be restored.

appearing for the respondents, contended that the Revisional Authority did not exceed its jurisdiction

VAT Act. By referring to notifications issued at or about the relevant time amending Schedule C and the 20

argue on the merits of the determination made by the Revisional Authority and how she was right in her findings that the mosquito repellants manufactured by the appellant were liable to be taxed @ 10% in terms

not 4% as assessed by the Assessing Authority in the orders under revision. He also submitted that the orders of the Revisional Authority do not merit interference, and the appeal ought to be dismissed.

as to whether the impugned orders of the Revisional Authority were sustainable on merits would not be examined unless the Court was persuaded by Mr. Sangwan to accept that the Revisional Authority did have the authority, competence and jurisdiction to issue the impugned show-cause notices and pass the consequential final revisional orders impugned in the writ petition enhancing the liability of the appellant to tax @ 10% instead of 4%.

been the source of power exercised by the Revisional Authority, we shall first notice its contents as it 21

March, 2009. Prior to its amendment with effect from

Revisional Authority for the purposes of satisfying 22 himself as to the legality or propriety of any order made in any proceeding which is prejudicial to the interests of the State. The first proviso, however,

exercise of power under section 34 is the satisfaction of the Revisional Authority that an order has been made by a taxing authority in any proceeding prejudicial to the interests of the State, the legality or propriety of which appears to him to

cannot be exercised if the issue involved is pending before or has been settled by an appellate authority. It cannot be disputed that the Tribunal is comprehended within the meaning of ‘appellate authority’ as defined in section 2(b) of the VAT Act.

then stood, it needs to be seen how far the Revisional Authority was justified in drawing power from such provision and exercising it.

23

the orders of assessment are liable to be revised.

rendered upon consideration of the Gujarat Sales Tax Act, 1969 (hereafter ‘the Sales Tax Act’, for short). The short question that arose for a decision was, whether ‘Jet Mat’ produced by the appellant therein would come within Entry 129 of Schedule II Part A of the Sales Tax Act, issued under section 49 thereof. Entry 129, at the relevant point of time, read thus:

Entry 129, dealing with mosquito repellents, this Court overruled the contention of the appellant therein that ‘Jet Mat’ would not come within the ambit of Entry 129 since one of its constituents happens to be an insecticide. It was also held that the product manufactured by the appellant therein, viz. ‘Jet Mat’, which was commercially known as “Mosquito Repellent Mat” is a mosquito repellant notwithstanding the fact that it not only repels mosquitoes but is also capable of killing mosquitoes. 24 For the reasons assigned in the decision, it was held that ‘Jet Mat’ is not an insecticide which would be entitled for partial exemption under Entry 98 of the Sales Tax Act.

specific entry dealing with mosquito repellents, this Court held ‘Jet Mat’ to be covered under Entry 129.

November, 2001 found, there was no such corresponding entry in the VAT Act. Bearing in mind the same as well as on consideration of a decision of the Madras High Court and other decisions, the Tribunal had proceeded to hold that mosquito repellents containing 4% ‘Alethrin’ was an insecticide and hence, liable to concessional rate of tax.

primarily concerned with the issue of assumption of jurisdiction by the Revisional Authority on the face

November, 2001, and not with the merits of the decision either given by the Tribunal or by the Revisional Authority. What stares at the face of the respondents is that the aforesaid decision of the 25 Tribunal, quoted in the order of the Assessing Authority, has attained finality. Once the issue stands finally concluded, the decision binds the

decision of the Tribunal may not be acceptable to the Revisional Authority, but that cannot furnish any ground to such authority to perceive that it is either not bound by the same or that it need not be followed. The first proviso, in such a case, gets activated and would operate as a bar to the exercise of powers by the Revisional Authority.

the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by a competent Court. So long it is not disputed that the Tribunal’s decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such framework too continues to remain operative when the impugned revisional orders were made, the Revisional Authority was left with no other choice but to follow the decision of the Tribunal 26 without any reservation. Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses. We share the view expressed

Mr. Sangwan whether there has been any decision of any other competent Tribunal or High Court taking a view different from the one taken by the Tribunal in

considered by the Assessing Authority. Fairly, he answered in the negative. If only Mr. Sangwan could have invited our attention to any such decision, which were acceptable to us, the issue decided by the Tribunal could have been reopened on the ground that it is a debatable issue and interference with the final orders passed by the Revisional Authority may not have been resorted to, leaving the appellant to pursue the appellate remedy under the VAT Act.

the terms of section 34, could have been exercised 27 only if the orders sought to be revised suffered from any illegality or impropriety.

an illegality if its maker fails to understand the law that regulates his decision making power correctly or if he fails to give effect to any law that holds the field and binds the parties. On the other hand, having regard to the purpose section 34 seeks to serve, to take exception to a decision on the ground of lack of propriety of any proceedings or order passed in such proceedings, it essentially ought to relate to a procedural impropriety. It is incumbent for the accuser to show that the decision maker has failed to observe the standard procedures applicable in case of exercise of his power. Additionally, to impeach an order on the ground of moral impropriety, it has to be shown that the weight of facts together with the applicable law overwhelmingly points to one course of action but the decision has surprisingly gone the other way, giving reason to suspect misbehaviour or misconduct in the sphere of activity of the decision maker warranting a revision. 28

illegality or (procedural/moral) impropriety in the proceedings before the Assessing Authority or the orders passed by him, as such. As noted above, the Assessing Authority was bound by the order of the Tribunal and elected to follow it having no other option. Such decision of the Tribunal was even binding on the Revisional Authority. In such circumstances, to brand the orders of the Assessing Authority as suffering from illegality and impropriety appears to us to be not only unjustified but also demonstrates thorough lack of understanding

revisional power by a quasi-judicial authority apart from being in breach of the principle of judicial discipline, while confronted with orders passed by a superior Tribunal/Court. We are inclined to the view that it is not the Assessing Authority’s orders but those passed by the Revisional Authority, which suffer from a patent illegality.

option but to invalidate the impugned final

29 Assessment Years 2003-04 and 2004-05. It is ordered accordingly.

made absolute.

are left to bear their own costs. …………………………………………….J (S. RAVINDRA BHAT) NEW DELHI; ………………………………………J st 1 FEBRUARY, 2023. (DIPANKAR DATTA)