1998 (4) TMI 575 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of Writ Application due to the existence of an alternative remedy of appeal.
2. Validity of Sub-section (3) of Section 45 of the Bihar Finance Act, 1981 requiring a deposit of 20% of the assessed tax before admitting an appeal.

Detailed Analysis:

1. Maintainability of Writ Application:
The petitioner challenged the assessment orders for the financial year 1995-96 under the Bihar Finance Act, 1981, and the Central Sales Tax Act, 1956. The petitioner also sought to quash the demand notices issued pursuant to these assessment orders. The learned Senior Counsel (S.C.) for the respondents raised a preliminary objection regarding the maintainability of the writ application, arguing that an alternative remedy of appeal was available under Section 45 of the Act. The petitioner countered this by asserting that the assessment orders were arbitrary and that Section 45(3) of the Act barred the admission of an appeal unless 20% of the assessed tax was paid.

The court held that the existence of an efficacious and adequate remedy of appeal precluded the maintainability of the writ application. The court cited the Supreme Court's ruling in Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., which emphasized that Article 226 of the Constitution should not be used to circumvent statutory procedures unless extraordinary situations justified such recourse.

2. Validity of Sub-section (3) of Section 45 of the Bihar Finance Act, 1981:
The petitioner argued that the requirement to deposit 20% of the assessed tax before admitting an appeal was an onerous condition that effectively nullified the right of appeal, thereby violating Article 14 of the Constitution. The petitioner also contended that this provision was discriminatory, as other states allowed appellate authorities the discretion to waive or modify such preconditions.

The court examined the statutory provision in question, noting that Section 45(3) stipulated that no appeal shall be admitted unless the dealer objecting to the order of assessment paid 20% of the tax assessed or the full amount of admitted tax, whichever was greater. The court referred to a recent division bench ruling in Tinplate Company of India Ltd. v. State of Bihar, which upheld the validity of Section 45(3) by emphasizing that the right of appeal is a statutory right and can be regulated by imposing conditions.

The court also referred to the Supreme Court's decision in Anant Mills Co. Ltd. v. State of Gujarat, which upheld the imposition of conditions on the right of appeal, asserting that such conditions were valid as long as they regulated the exercise of the right and did not make it illusory.

The court rejected the petitioner's reliance on the Gauhati High Court's decision in Monoranjan Chakraborty v. State of Tripura, which had declared a similar provision requiring a 50% deposit of the assessed tax as ultra vires. The court distinguished the present case by noting that the Bihar Finance Act required only a 20% deposit, which was not exorbitant or unreasonable. The court agreed with the Madhya Pradesh High Court's decision in Lachhmandas v. State of M.P., which upheld a similar provision under the Madhya Pradesh General Sales Tax Act.

The court concluded that the absence of a provision allowing the appellate authority to waive or modify the precondition of deposit did not render Section 45(3) ultra vires. Each state has its own legislative framework and considerations, and the differences in statutory provisions among states do not inherently make them discriminatory.

Conclusion:
The court upheld the validity of Sub-section (3) of Section 45 of the Bihar Finance Act, 1981, and dismissed the writ application on the grounds of the availability of an alternative remedy. The petitioner was advised to pursue the statutory appeal process. No costs were awarded.