2017 (2) TMI 1341 - HC - VAT and Sales Tax

Maintainability of appeal - alternative remedy - Penalty u/s 53(12) of the KVAT Act - Release of detained goods - Held that - petitioner has not been able to explain as to how the remedy prescribed under the Act is not efficacious one especially when in catena of cases the Hon ble Supreme Court has observed that the remedy of appeal provided under the Act is indeed efficacious - once an alternative remedy is provided under the Act a litigant is expected to first take recourse to the said remedy and only thereafter to approach this Court. Petition dismissed being not maintainable.

Summary

Issues:
Challenge to legality of order under Rule 66(6) of Karnataka Value Added Tax Rules - Detention of goods for non-payment of VAT by consignee - Maintainability of writ petitions invoking Article 226 of the Constitution of India.

Analysis:

1. Challenge to Legality of Order under Rule 66(6) of Karnataka Value Added Tax Rules:
The petitioner, a registered dealer under Gujarat Value Added Tax Act and CST Act, challenged an order passed by the Assistant Commissioner of Commercial Taxes, Bengaluru, under Rule 66(6) of the Karnataka Value Added Tax Rules. The petitioner claimed that the goods detained were part of a credit sale to M/s. Mahaveer Traders, who failed to pay VAT, leading to detention and penalty imposition. Despite paying the penalty, the Assistant Commissioner passed a warrant of distraint or attachment for the goods, alleging they belonged to the consignee. The petitioner filed for release of goods, which was rejected by the Assistant Commissioner, prompting the petition to the High Court.

2. Detention of Goods for Non-Payment of VAT by Consignee:
The Assistant Commissioner justified the detention and attachment of goods on the grounds that they belonged to the consignee, M/s. Mahaveer Traders, who defaulted in paying VAT. The petitioner argued that the detention was unjustified as it was a credit sale, and the penalty was paid to secure release of goods. The dispute centered on ownership and liability for VAT payment, leading to conflicting claims between the petitioner and the tax authorities.

3. Maintainability of Writ Petitions invoking Article 226 of the Constitution of India:
The Revenue's counsel raised a preliminary objection on the maintainability of the writ petitions, citing Section 62 of the KVAT Act providing an alternative remedy through appeal before the Appellate Authority. The petitioner contended that the appeal remedy was not efficacious, justifying the invocation of writ jurisdiction. The High Court held that once an alternative remedy is provided under the Act, the petitioner should exhaust it before approaching the Court. As the petitioner failed to demonstrate the inefficacy of the appeal remedy, the Court dismissed the writ petitions on the ground of non-maintainability.

In conclusion, the High Court dismissed the writ petitions challenging the legality of the order under Rule 66(6) of the Karnataka Value Added Tax Rules and the detention of goods for non-payment of VAT by the consignee, emphasizing the importance of exhausting statutory remedies before seeking judicial intervention under Article 226 of the Constitution of India.