Malayala Manorama Company Ltd. Versus Assistant Commissioner (Kgst), Commercial Taxes, Special Circle, Kottayam and another
VAT and Sales Tax
2006 (5) TMI 454 – KERALA HIGH COURT – [2007] 8 VST 587 (Ker)
KERALA HIGH COURT – HC
Dated:- 22-5-2006
W.P. (C) No. 4552 of 2006
CST, VAT & Sales Tax
–
BALAKRISHNAN NAIR K. , J.
K. BALAKRISHNAN NAIR J.The petitioner is a company, registered under the Companies Act, 1956 and is engaged in the business of printing and publication of a daily newspaper and other publications. It is a registered dealer under the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956 on the files of the first respondent. For printing newspaper and other journals, printing ink is an essential raw material.
Section 5(3) of the KGST Act provides for a reduced rate of tax at three per cent payable by the dealer, in respect of sale of raw materials to industrial units, for use in the production of finished products, for sale in the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
resent in the transaction. Therefore, the statutory declaration has been misused. The misuse of a statutory declaration is an offence, which should be dealt with under section 45A of the KGST Act. Based on the above facts, it was proposed to impose a fine of Rs. 14,66,256, being double the amount of tax due on the purchase turnover. The petitioner was called upon by the said notice, to file objections, if any, to the said proposal, within seven days. Similar notices, exhibits P2, P3 and P4, were also issued to it, concerning the financial years 2001-02, 2002-03 and 2003-04, by the first respondent.
The petitioner filed exhibits P5 to P8 objections to the proposals to impose penalty on it. It was pointed out that section 5(3) of the KGST Act has been amended by Finance Act, 2000, with effect from April 1, 2000, deleting the first proviso, which provided that the concessional rate of tax will be applicable, if only the finished products are taxable. So, with effect from April 1, 2000, f
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in paragraph 6 of the writ petition, which reads as follows:
"The petitioner's newspaper Malayala Manorama is having the largest circulation among newspapers in Malayalam. The petitioner's newspaper has published reports and articles of great public interest and matters vitally affecting the rights of dealers under the Kerala General Sales Tax Act, who are subjected to harassment at the checkposts by subjecting them to payment of illegal gratification. Such illegal acts and harassment were published by factual reports and photographs. The petitioner apprehends that under such circumstances, the statutory remedy of revision before the departmental officers is only an empty formality."
So, the petitioner justifies its approach to this court directly, without invoking the statutory remedy. It further submits that the impugned orders are issued without jurisdiction and relying on non-existing statutory provisions. They have been issued in violation of the principles of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e KGST Act. It is also pointed out that the petitioner has got an alternative remedy of filing a revision before the competent authority and therefore, the writ petition is not maintainable.
The writ petition was admitted and interim stay was granted on February 16, 2006. When it came up for extension of stay on March 15, 2006, the respondents appeared and contended that the writ petition is not maintainable, in view of the statutory remedy available to the petitioner. So, they were directed to file a counter-affidavit. After the filing of the counter-affidavit, the matter was finally heard on March 30, 2006.
The learned Senior Counsel Shri Pathrose Matthai met the preliminary objection raised by the respondents, relying on the various decisions of the apex court and also this court. He submitted that since the impugned orders are issued without jurisdiction and also in violation of the principles of natural justice, this court can interfere with the same. In support of the said subm
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e considered at the stage of admission of the writ petition and not after the writ petition is admitted and interim stay is granted, after hearing both parties. The learned Senior Counsel also canvassed the case of the petitioner on merits.
Shri Raju Joseph, learned Special Government Pleader (Taxes), supported the impugned orders. He also contended that the petitioner should be turned away, to avail the statutory remedy available to it, without hearing the writ petition on merits.
As per the statutory scheme, a dealer, who is aggrieved by an order of penalty under section 45A of the KGST Act, is entitled to file a revision against that order, before the statutory revisional authority. So, normally, when there is a statutory remedy available to the petitioner, this court should not invoke its extraordinary jurisdiction under article 226 of the Constitution of India. The learned Senior Counsel for the petitioner tried to canvass that the powers of this court are wider than the powers
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e writ petition. In sales tax matters, this court is consistently turning away the parties aggrieved by the orders issued under section 45A, to approach the revisional authority, before invoking the writ jurisdiction of this court. I think, no special ground has been made out in this case, to deviate from the above course, usually adopted by this court.
But, the learned counsel for the petitioner further pointed out that even assuming it has got a statutory remedy, it need not invoke it, when the impugned orders are passed without jurisdiction and in violation of the principles of natural justice. The impugned orders are passed, mainly on the basis of the objective assessment of the facts of the case. Therefore, hearing at the revisional stage can cure the lack of hearing at the original stage. Further, when no complicated questions of fact or law are involved, hearing need not necessarily be by words of mouth. It can be by way of a representation also. See the decision of K.S. Paripo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
as to when it can be said that in the 'public law' domain, the entire proceeding before the appropriate authority is illegal and without jurisdiction or the defect or infirmity in the order goes to the root of the matter and makes it in law invalid or void [referred to in Firm of Illuri Subbayya Chetty case [1963] 14 STC 680 (SC) and approved in Dhulabhai's case [1968] 22 STC 416 (SC)]. The matter may have to be considered in the light of the provisions of the particular statute in question and the fact-situation obtaining, in each case. It is difficult to visualise all situations hypothetically and provide an answer. Be that as it may, the question that frequently arises for consideration, is, in what situation/cases the non-compliance or error or mistake, committed by the statutory authority or Tribunal, makes the decision rendered ultra vires or a nullity or one without jurisdiction? If the decision is without jurisdiction, notwithstanding the provisions for obtaining re
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
sion of the inquiry. The said approach has been given a go-by in Anisminic case [1969] 1 All ER 208 (HL) as we shall see from the discussion hereinafter [see De Smith, Woolf and Jowell Judicial Review of Administrative Action (1995 Edition), page 238, Halsburry's Laws of England (4th Edition), page 114, para 67, footnote (9)]. As Sir William Wade observes in his book, Administrative Law (7th Edition), 1994, at page 299, 'The Tribunal must not only have jurisdiction at the outset, but must retain it unimpaired until it has discharged its task'. The decision in Anisminic case [1969] 1 All ER 208 (HL) has been cited with approval in a number of cases by this court. Citation of few such cases: Union of India v. Tarachand Gupta & Bros. AIR 1971 SC 1558 (at page 1565), A.R. Antulay v. R.S. Nayak [1988] 2 SCC 602 (at page 650), R.B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settlement Commission (IT & WT) [1989] 176 ITR 169 (SC); [1989] 1 SCC 628 (at page 634), N. Partha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mulation of this theory is that made by Lord Denman in R. v. Bolton [1841] 1 QB 66.
He said that the question of jurisdiction is determinable at the commencement, not at the conclusion of the enquiry. In Anisminic Ltd.'s case [1969] 2 AC 147 Lord Reid said:
'But there are many cases where, although the Tribunal had jurisdiction to enter on the enquiry, it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may h
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
dicta of the majority of the House of Lords, in the above case would show the extent to which "lack" and "excess" of jurisdiction have been assimilated or, in other words, the extent to which we have moved away from the traditional concept of "jurisdiction".
The effect of the dicta in that case is to reduce the difference between "jurisdictional error" and "error of law within jurisdiction" almost to vanishing point. The practical effect of the decision is that any error of law can be reckoned as jurisdictional. This comes perilously close to saying that there is jurisdiction if the decision is right in law but none if it is wrong. Almost any misconstruction of a statute can be represented as "basing their decision on a matter with which they have no right to deal", "imposing an unwarranted condition" or "addressing themselves to a wrong question". The majority opinion in the case leaves a court or Tribun
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
because the word 'jurisdiction' is an expression which is used in a variety of senses and takes its colour from its context [see per Diplock, J., at page 394 in the Anisminic case [1967] 3 W.L.R. 382]. Whereas the "pure" theory of jurisdiction would reduce jurisdictional control to a vanishing point, the adoption of a narrower meaning might result in a more useful legal concept even though the formal structure of law may lose something of its logical symmetry. "At bottom the problem of defining the concept of jurisdiction for purpose of judicial review has been one of public policy rather than one of logic".' [(S.A. De Smith, 'Judicial Review of Administrative Action, 2nd Edition, p. 98) (1968 edition)]' (emphasis(1) supplied)
The observation of the learned author (S.A. De Smith), was continued in its third edition (1973) at page 98 and in its fourth edition (1980) at page 112 of the book. The observation aforesaid was based on the then prevail
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
final and conclusive by the statute. [The superior court referred to in this decision is the (High Court) [1981] AC 374 (383, 384, 386, 391)]. (1)Here italicised.
In the meanwhile, the House of Lords in Council for Civil Services Unions v. Minister for the Civil Services [1985] 1 AC 374 enunciated three broad grounds for judicial review, as 'legality', 'procedural propriety' and 'rationality' and this decision had its impact in the development of the law in post-Anisminic period. In the light of the above four important decisions of the House of Lords, other decisions of the court of appeal, Privy Council, etc., and the later academic opinion in the matter the entire case law on the subject has been reviewed in leading text books. In the latest edition of De Smith on 'Judicial Review of Administrative Action'edited by Lord Woolf and Jowell, Q.C. [(Professor of Public Law) (Fifth edition)-(1995)]. In chapter 5, titled as 'Jurisdiction, Vires, Law a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Lord Diplock in Racal Communications Ltd., In re [1981] AC 374 when he suggested that a Tribunal is entitled to make an error when the matter 'involves, as many do inter-related questions of law, fact and degree'. Thus it was for the county court Judge in Pearlman to decide whether the installation of central heating in a dwelling amounted to a 'structural alteration extension or addition'. This was a 'typical question of mixed law, fact and degree which only a scholiast would think it appropriate to dissect into two separate questions, one for decision by the superior court, viz., the meaning of these words, a question which must entail considerations of degree, and the other for decision by a county court, viz., the application of words to the particular installation, a question which also entails considerations of degree'.
It is, however, doubtful whether any test of jurisdictional error will prove satisfactory. The distinction between jurisdictional and n
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ion outside its limited area of competence. Not every error committed by an inferior court or Tribunal or other body, however, goes to jurisdiction. Jurisdiction to decide a matter imports a limited power to decide that matter incorrectly.'
'A Tribunal lacks jurisdiction if (1) it is improperly constituted, or (2) the proceedings have been improperly instituted or (3) authority to decide has been delegated to it unlawfully, or (4) it is without competence to deal with a matter by reason of the parties, the area in which the issue arose, the nature of the subject-matter, the value of that subject-matter, or the non-existence of any other prerequisite of a valid adjudication. Excess of jurisdiction is not materially distinguishable from lack of jurisdiction and the expressions may be used interchangeably.'
'Where the jurisdiction of a Tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or col
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ourts were more likely to find that errors of law were within jurisdiction; but with the modern approach, errors of law will be held to fall within a body's jurisdiction only in exceptional cases.
The courts will generally assume that their expertise in determining the principles of law applicable in any case has not been excluded by Parliament.' (p. 120)
'Errors of law include misinterpretation of a statute or any other legal document or a rule of common law; asking oneself and answering the wrong question, taking irrelevant considerations into account or failing to take relevant considerations into account when purporting to apply the law to the facts; admitting inadmissible evidence or rejecting admissible and relevant evidence; exercising a discretion on the basis of incorrect legal principles; giving reasons which disclose faulty legal reasoning or which are inadequate to fulfil an express duty to give reasons, and misdirecting oneself as to the burden of proof.'
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nt them. A summary can therefore only state the long-established rules together with the simpler and broader rules which have now superseded them, much for the benefit of the law. Together they are as follows:
Errors of fact
Old rule: The court would quash only if the erroneous fact was jurisdictional.
New rule: The court will quash if an erroneous and decisive fact was
(a) jurisdictional;
(b) found on the basis of no evidence; or
(c) wrong, misunderstood or ignored.
Errors of law
Old rule: The court would quash only if the error was
(a) jurisdictional; or
(b) on the face of the record.
New rule: The court will quash any decisive error, because all errors of law are now jurisdictional." (Emphasis Here italicised. supplied) So, if an order without jurisdiction is permitted to be challenged directly before this court, bypassing the statutory remedy, now, every order can be challenged before this court, going by the expanded meaning given to the word "jurisdiction&quo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in Kanubhai Brambhatt v. State of Gujarat [1989] 2 SCC 310. The relevant portion of the said judgment reads as follows:
"If this court takes upon itself to do everything which, even the High Court can do, this court will not be able to do what this court alone can do under article 136 of the Constitution of India and other provisions conferring exclusive jurisdiction on this court. There is no reason to assume that the concerned High Court will not do justice.
Or that this court alone can do justice. If this court entertains writ petitions at the instance of parties who approach this court directly instead of approaching the concerned High Court in the first instance, tens of thousands of writ petitions would in course of time be instituted in this court directly. The inevitable result will be that the arrears pertaining to matters in respect of which this court exercises exclusive jurisdiction under the Constitution will assume more alarming proportions. As it is, more than te
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t in the High Court by directing the litigants to approach the High Court in the first instance. Besides, as a matter of fact, if matters like the present one are instituted in the High Court, there is a likelihood of the same being disposed of much more quickly and equally effectively, on account of the decentralisation of the process of administering justice.
We are of the opinion that the petitioner should be directed to adopt this course and approach the High Court."
I think the principle analogous to what is stated above, will apply in this case, where the petitioner has a statutory remedy, but it elects to approach this court directly. In a recent decision in Union of India v. Hindalco Industries [2004] 135 STC 281 (SC); [2003] 5 SCC 194, the apex court has held as follows:
"There can be no doubt that in matters of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under article 226 of the Constitution either at the stage of sho
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
