SOUNDARARAJA MILLS LIMTED V. THE COMMERCIAL TAX OFFICER-II

WP(MD)/11407/2014

AI Insights

The case involves Soundararaja Mills Limited, which filed a writ petition against the Commercial Tax Officer-II (FAC), Dindigul, challenging an assessment order dated 16.05.2014 for the assessment year 2009-2010. The petitioner contested the imposition of tax on the disposal of the windmill division, arguing that it was eligible for exemption under Section 2 (41) of the Tamil Nadu Value Added Tax Act, 2006, as the windmill is an immovable property and should not be taxed as goods under Section 2 (21) of the Act. The court, however, found that the issues raised were mixed questions of fact and law, which required a detailed examination of facts that could not be adequately addressed in a writ petition.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 697878 (HC-MADURAI)
• Appeal Type: Others
• Pronouncement Date: 16-07-2014
• Assessment Year: misc
• Laws Referred To: Tamil Nadu Value Added Tax Act, 2006, Central Sales Tax Act, 1956, Indian Companies Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: R KARTHIKEYAN
• Assessee Lawyers: N INBARAJAN
• Keywords: Alternative remedy of appeal; Assessment Order; Jurisdictional issue; Mixed questions of fact and law; Tax imposition; Windmill division; Writ of Certiorari
• Section: 2(41); 2(21); 27(3)

Judgement Text

"1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 16.07.2014 CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.(MD) No.11407 of 2014 and M.P.(MD) Nos.1 & 2 of 2014 Soundararaja Mills Limited rep.by it's Chairman and Managing Director Ranjit Soundararajan GTN Salai, Dindigul ... Petitioner -vs- The Commercial Tax Officer-II (FAC) Dindigul ... Respondent PRAYER: Writ Petition is filed under Article 226 of the Constitution of India to issue a writ of certiorari, to call for the records, on the file of the respondent herein, in Assessment No.33265220052/2009-10, dated 16.05.2014 and to quash the same. For Petitioner : Mr.N.Inbarajan For Respondent : Mr.R.Karthikeyan Addl. Govt. Pleader O R D E R The petitioner is a Company, registered under the Indian Companies Act and registered as a dealer on the file of the respondent, under the Tamil Nadu Value Added Tax Act, 2006 (VAT Act) (hereinafter it may be referred to as 'the Act' ) as well as under the Central Sales Tax Act, 1956. The petitioner is the manufacturer of cotton, polyester/viscose yarn and operating three divisions namely Textile, Windmills and Property Development. https://hcservices.ecourts.gov.in/hcservices/ 2 2. The petitioner has filed this writ petition to quash the order of assessment, dated 16.05.2014, for the assessment year 2009-2010, passed by the respondent. The petitioner is aggrieved by the imposition of tax on the disposal of the windmill division as a going concern, which according to the petitioner, is eligible for exemption as provided under Section 2 (41) of the Act. The petitioner would contend that the windmill, being an immovable property, cannot be treated as goods as provided under Section 2 (21) of the Act, in order to get the liability of any tax on the disposal of the same under the Act. 3. Mr.N.Inbarajan, learned counsel for the petitioner, would submit that the issue raised by the petitioner is a jurisdictional issue and therefore he is entitled to challenge the same by filing the writ petition. Learned counsel made elaborate reference to the factual position and drew the attention of this Court to the provisions of the VAT Act, 2006. It is submitted that the goods, as defined under Section 2 (21) of the Act, means all kinds of movable properties and the windmill, being an immovable property, cannot be treated as goods and there is no jurisdiction to levy tax under the Act. 4. It is further submitted that the respondent did not conduct any enquiry, with regard to whether the windmill is sold along with the land, which is attached to the earth, and in the absence of the same, the respondent has no jurisdiction. Further, he has submitted that the intention of the petitioner was to stop the windmill division as a whole by which he is eligible for claiming deduction, as provided under Explanation (III) to Section 2 (41) of the Act. 5. Further, it is submitted that the Assessing Officer did not record any finding of willfulness for invoking Section 27 (3) of the Act and for the purpose of levying penalty. Further, the learned counsel referred to the slump sale agreement, which was entered into by the petitioner, on 05.10.2009, with M/s.Shriram Epc Company Limited, which was shown as a purchaser in the slump sale agreement and submitted that the Assessing Officer erroneously rejected the agreement on the ground that it is an unregistered document and such agreement was accepted while assessment was done under the provision of the Income Tax Act. 6. Further, the learned counsel would submit that the statement recorded from the Director (Legal) of the petitioner Company has been erroneously interpreted by the Assessing Officer as if there is an admission. By referring to the said statement, the learned counsel would state that there is no admission made by the Director (Legal) in his statement dated 19.07.2011 and the finding of the Assessing Officer is erroneous. https://hcservices.ecourts.gov.in/hcservices/ 3 7. Heard the learned counsel appearing for the parties and perused the materials placed on record. 8. The first hurdle, which the petitioner has to get over, is to satisfy this Court as to how the writ petition could be entertained, when the petitioner has an effective alternative remedy of appeal before the Deputy Commissioner of Commercial Tax, Madurai (North), which has to be preferred within a period of thirty days from the date of receipt of a copy of the order of assessment. The learned counsel endeavored to submit that the petitioner is canvassing the jurisdictional issue and therefore he is justified in approaching this Court. 9. On a careful perusal of the grounds raised in this writ petition and the documents placed in the typed set as well as in the additional typed set of papers, it is seen that the contention of the petitioner is not purely a question of law. To appreciate the contention raised by the petitioner, the factual aspect has to be gone into. In order to appreciate whether the petitioner is entitled to take umbrage under Section 2 (21) of the Act, whether he is entitled to exemption in terms of Explanation (III) to Section 2 (41) of the Act are mixed questions of fact and law and ignoring facts, these issues cannot be examined independently. 10. It is to be noted that the petitioner has participated in the assessment proceedings, did not approach this Court when a show cause notice was issued, but contested the assessment proceedings (revision of assessment), submitted their factual explanation, produced documents in support of their claim, recorded oral statement and thereafter the impugned order has been passed. Therefore, this Court is unable to accept the contentions raised by the learned counsel for the petitioner for entertaining the writ petition and bye-passing the statutory appeal remedy. 11. Furthermore, in the grounds raised in this writ petition, the petitioner has not alleged any violation of principles of natural justice or any technical violation by which the petitioner was put to prejudice. The challenge is to the order of assessment on merits whether the property in question would fall within the definition of the goods, as defined under Section 2 (21) of the Act, which prima facie is a question of fact and it cannot be decided on affidavits without examining the nature of transactions. Likewise, the effect of the slump sale agreement, dated 05.10.2009, requires to be gone into, moreso when it is stated to be an unregistered agreement. Further, it is to be seen as to under what circumstances, the said agreement was accepted while finalizing the assessment under the Income Tax Act and if the agreement was accepted by the Income Tax Department to what extent the agreement was accepted and the purpose for which the petitioner relied upon the agreement have to be gone into. This https://hcservices.ecourts.gov.in/hcservices/ 4 exercise cannot be made in a writ petition. Therefore, the petitioner should necessarily avail the alternative remedy of appeal. It is not the case of the petitioner that the appeal remedy is not an efficacious remedy. The appellate authority is entitled to appreciate and re-appreciate the facts. Therefore, the petitioner shall avail the appellate statutory remedy. 12. For all the above reasons, the petitioner has not made out any prima facie case for entertaining the writ petition against the order of assessment under the provisions of the VAT Act. 13. In the result, the writ petition fails and the same is dismissed. The petitioner is granted thirty days time to prefer appeal before the appellate authority from the date of receipt of a copy of this order and if the same is presented within the period stipulated, the appellate authority shall entertain the appeal on merits and in accordance with law, without reference to limitation, uninfluenced by any observation made in this order. Consequently, connected miscellaneous petitions are closed. No costs. Sd/- Assistant Regstrar(C.O) /True Copy/ Sub-Assistant Registrar To: The Commercial Tax Officer-II (FAC), Dindigul. +One cc to M/s.N.Inbarajan, Advocate, SR>No.39446 krk RL/3 c- 21/7/2014 ORDER IN W.P.(MD) No.11407 of 2014 16.07.2014 https://hcservices.ecourts.gov.in/hcservices/ "