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TMI Blog2015 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... itions have been heard together. For the sake of convenience, the facts of the Writ Tax No.255 of 2012 is taken into consideration. 3. The petitioners are manufacturers and have applied for a Recognition Certificate under Section 4-B(2) of the Act for concessional rate of tax on purchase of goods for use in the manufacture of their final product which is a notified goods. The Recognition Certificate under Section 4-B(2) of the Act was granted by the Assessing Authority in which the goods 'diesel' was also mentioned under the category 'fuel'.' The petitioners were using diesel in their generator sets, which produced electricity, which was used to run the plant and machinery to manufacture the notified goods. Subsequently, the Commissioner of Trade Tax, U.P., Lucknow, issued a circular dated 20.7.2000 to all the subordinate officers directing that the benefit of form III-B for concessional rate of tax under Section 4-B of the Act shall not be given on purchase of diesel oil for use in generator sets in the factory. Consequently, notices were issued on 29.06.2000 by the Assessing Authority to the petitioners for deleting the goods 'diesel oil' from their R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court which was allowed by judgment dated 26.2.2010, State of U.P. and others Vs. Van Organic Chemicals Ltd., 2010, U.P.T.C., 413 and the matter was remanded to the Assessing Authority for de novo adjudication on the show cause notices. While allowing the Civil Appeals of respondents, Hon'ble Supreme Court observed that under the scheme of Section 4-B(2) of the Act, the Assessing Authority was vested with statutory power to issue Recognition Certificate in respect of items enumerated therein which was required by the dealer for use in the manufacture of any notified goods but the question whether the department is precluded to rectify mistake in issuing Recognition Certificate by including HSD Oil, was not answered by the High Court and, therefore, each case was required be examined by the Assessing Authority. The Supreme Court held that the show cause notices issued would constitute as a show cause notices for amending the Recognition Certificate. Hon'ble Supreme Court further directed that Assessing Authority would decide each case on its own merit uninfluenced by the decision of the High Power Committee dated 12.6.2000 and the circular issued by the Additional Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final product by the petitioners. 8. Aggrieved with the aforesaid orders, passed by the concerned Assessing Authorities, amending the Recognition Certificate by deleting the goods 'diesel oil', the petitioners have filed the present writ petition. Submission of the Petitioners 9. Learned counsel for the petitioners submitted as under ; (i) The petitioners of Writ Petition no.255 of 2012, Writ Petition No.399 of 2012, Writ Petition No.279 of 2012 and Writ Petition No.289 of 2012 have no electricity connection from the U.P. Electricity Board/U.P. Power Corporation. They run their plant and machinery by diesel generator sets only. (ii) The industry of petitioners of Writ Petition No.254 of 2012, and Writ Petition No. 342 of 2012 are continuous process industry and, therefore, the plant and machinery are necessarily required to be run continuously to manufacture final products. Diesel generator sets have been installed in the factory premises to run plant and machineries in the event of power cut/brake down and in which diesel oil is used. (iii) There is no dispute that petitioners purchased diesel oil to run diesel generator sets to obtain electricity merely to run ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since electricity is a notified goods and diesel oil is consumed as such use of diesel can not be said to be for use in the manufacture of final products of the petitioners. (iii) Use of diesel by the petitioners in diesel generator sets to produce electricity and in turn to use the same to run their plant and machinery would amount to disposal of electricity otherwise than by way of sale and thus, would attract the provisions of Section 4B(5)/(6) of the Act. (iv) Hon'ble Supreme Court has directed the Assessing Authorities for de novo adjudication and adjudication orders have been passed which are impugned in the present writ petitions. Against the impugned orders, the petitioners have a statutory remedy of first appeal under Section 9 and, thereafter IInd appeal before the Tribunal under Section 10 and thereafter revisions under Section 11 of the Act before the High Court and, therefore the present writ petitions under Article 226 of the Constitution of India are liable to be dismissed on the ground of alternative remedy. 12. In support of his submissions learned Special Counsel has relied upon the judgment of Hon'ble Supreme Court in the case of Union of India an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al justice. (iv) Where enforcement of any fundamental right is sought by the petitioner. (v) Where procedure required for decision has not been adopted. (vi) Where Tax is levied without authority of law. (vii) Where decision is an abuse of process of law. (viii) Where palpable injustice shall be caused to the petitioner, if he is forced to adopt remedies under the statute for enforcement of any fundamental rights guaranteed under the Constitution of India. (ix) Where a decision or policy decision has already been taken by the Government rendering the remedy of appeal to be an empty formality or futile attempt. (x) Where there is no factual dispute but merely a pure question of law or interpretation is involved. 16. The above principles are supported by law laid down by Hon'ble Supreme Court in the case of Himmatlal Harilal Mehta v. State of Madhya Pradesh, AIR 1954 SC 403, Collector of Customs v. Ramchand Sobhraj Wadhwani, AIR 1961 SC 1506, Collector Of Customs & Excise ,Cochin & Ors. vs A. S. Bava, AIR 1968 SC 13, Dr. Smt. Kuntesh Gupta vs Management Of Hindu Kanya Mahavidyalaya, L.K. Verma v. HMT Ltd. and anr., (2006) 2 SCC 269, Paras 13 and 20, M.P. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se any goods" in Sub-clause (d) of Clause (29-A) of Article 366 of the Constitution. By the impugned judgment, the High Court has dismissed the writ petitions filed by the appellant on the view that the alternative remedy of an appeal against order of assessment is available under the sales tax law and since the said remedy is available the writ petitions could not be entertained. Having regard to the question that was involved in the writ petitions relating to interpretation of sub-clause (d) of Clause (29-A) of Article 366 of the Constitution and the taxability of the transactions in respect of which sales tax has been assessed by the Sales Tax Officer, we are of the view that the High Court should have entertained the writ petitions and should have considered the said question instead of requiring the appellant to avail the remedy of appeal under the Sales Tax Act, The appeals are, therefore, allowed, the impugned judgment of the High Court is set aside and the writ petitions filed by the appellant are remitted to the High Court for consideration on merits. No order as to costs. (Emphasis supplied by us) 18. In the case of State of Tripura vs. Manoranjan Chakraborty, (2001) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. In support of his aforesaid submissions Mr. Chakraborty firstly relied on and referred to the decision of this Court in Harbanslal Sahnia v. Indian Oil Corporation Ltd. (2003) 2 SCC 107, wherein this Court observed that the Rule of exclusion of writ jurisdiction by availability of an alternative remedy, was a rule of discretion and not one of compulsion and there could be contingencies in which the High Court exercised its jurisdiction inspite of availability of an alternative remedy. 33. Apart from the above, even on the question of maintainability of the writ petition on account of the Arbitration Clause included in the agreement between the parties, it is now well-established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 of the Constitution is a discretionary power. Similar view has been reiterated in N.T. Veluswami Thevar v. G. Raja Nainar, AIR (1959) SC 422; Municipal Council, Khurai v. Kamal Kumar, AIR (1965) SC 1321;Siliguri Muncipality v. Amalendu Das, AIR (1984) SC 653; S.T. Muthusami v. K. Natarajan, AIR 1988 SC 616; Rajasthan S.R.T.C. v. Krishna Kant, AIR (1995) SC 1715; Kerala State Electricity Board v. Kurien E. Kalathil, AIR (2000) SC 2573; A. Venkatasubbiah Naidu v. S. Chellappan, 2000(7) SCC 695; L.L. Sudhakar Reddy v. State of Andhra Pradesh,2001(6) SCC 634; Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha v. State of Maharashtra, 2001, 8 SCC 509; Pratap Singh and Anr. v. State of Haryana, [2002] 7 SCC 484 and GKN Driveshafts (India) Ltd. v. ITO 2003 (1) SCC 72. 20. In Harbans Lal Sahnia v. Indian Oil Corporation Ltd., 2003(2) SCC 107, this Court held that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and the Court must consider the pros and cons of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. ITO, Bareilly, AIR 1971 SC 33 that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non exhaustion of statutory remedies; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition." (Emphasis supplied by us) 22. In the case of Union of India and others Vs. Major General Shri Kant Sharma, (2015) 6 SCC 773, the respondent, Army personn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court would not normally interfere in exercise of its jurisdiction under Article 226 of the Constitution of India where statutory alternative remedy is available. It is equally settled that this canon of law is not free of exceptions. The courts, including this Court, have taken the view that the statutory remedy, if provided under a specific law, would impliedly oust the jurisdiction of the Civil Courts. The High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India can entertain writ or appropriate proceedings despite availability of an alternative remedy. This jurisdiction, the High Court would exercise with some circumspection in exceptional cases, particularly, where the cases involve a pure question of law or vires of an Act are challenged. This class of cases we are mentioning by way of illustration and should not -be understood to be an exhaustive exposition of law which, in our opinion, is neither practical nor possible to state with precision. The availability of alternative statutory or other remedy by itself may not operate as an absolute bar for exercise of jurisdiction by the Courts. It will normally depend upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(1)(c) lies to this Court. Therefore, we have no hesitation in issuing a direction of caution that it will not be a proper exercise of jurisdiction by the High Courts to entertain writ petitions against such orders of the Commission." 33. Another Division Bench of this Court in CIT vs. Chhabil Dass Agrawal, 2014(1) SCC 603 held: (SCC pp. 608-11, paras 11-13 and 15) "11. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR p. 1423, para 7) "7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by the statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up." 13. In Titaghur Paper Mills Co. Ltd. v. State of Orissa 1983(2) SCC 433 this Court observed: (SCC pp. 440-41, para 11) "11. ... It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Waterworks Co. v. Hawkesford, 1859(6) CBNS 336 in the following passage: (ER p. 495) * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory dispensation." (Emphasis supplied by us) 24. The aforenoted judgment In the case of Major General Shri Kant Sharma, (supra) relied by the respondents shows that Hon'ble Supreme Court has held in the case of Southern Electricity Supply Co. of Orissa Ltd.(supra) that it is a settled canon of law that the High Court should not normally interfere in exercise of its jurisdiction under Article 226 of the Constitution of India where statutory alternative remedy is available but it is equally settled that this canon of law is not free of exceptions. The Courts, including the Supreme Court, have taken the view that statutory remedy, if provided under a specific law, would impliedly oust the jurisdiction of the civil courts. The High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India can entertain writ or appropriate proceedings despite availability of an alternative remedy. This jurisdiction, the high Court would exercise with some circumspection in exceptional cases, particularly, where the cases involve a pure question of law or vires of an Act are challenged. Hon'ble Supreme Court further clarified that this class of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been installed in the factory in which diesel oil has been used to run the plant and machinery. 28. Thus, there is no dispute that in order to run plant and machinery, the generators are essential, and for that purpose, diesel oil has been used in the generators. There is no denial of the fact that the entire process of manufacture carried on by the petitioners for converting raw material into finished goods essentially require generators in which diesel oil has been used. Thus the generation of power by generators by use of diesel oil so as to run plant and machinery is integrally connected with the manufacture of the notified goods i.e. the final product of the petitioners. Thus the manufacture of the notified goods itself is dependent upon the use of diesel oils in the generator sets directly. 29. Even if it is assumed that the use of diesel oil is indirectly connected with the manufacture of the notified goods yet there is no denial of the fact by the Assessing Authority that the use of diesel oil in generator sets was essential for manufacture of the notified goods of the petitioners and the manufacturing itself is dependent on such use of diesel oil. 30. The only ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive from a date not earlier than the first day of May, 1977: Provided further that the rules to carry out the objects of this clause or clause (a) may also be made effective from a date not earlier than the first day of May, 1977: (b) Where any goods liable to tax under any other provision of this Act are sold by a dealer to another dealer and such other dealer furnishes to the selling dealer in prescribed form and manner a certificate to the effect that he holds a recognition certificate issue under sub-section (2) in respect thereof, the selling dealer shall be liable in respect of those goods to tax at such concessional rate or be wholly or partly exempt from tax, whether unconditionally or subject to the conditions and restrictions specified in that behalf as may be notified in the Gazette by the State Government in that behalf. Explanation- For the purpose of this sub-section the conditions and restrictions that may be specified for the grant of concession in respect of, or exemption from tax, may include the requirement that the notified goods referred to in sub-clause (2) shall be manufactured in a "new unit" as defined in section 4-A, which goes into production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, penalty or other dues became payable; or (c) has failed to furnish the security required under section 8-C; or (d) is a firm, association or a joint Hindu family which, within the meaning of the explanation to sub-section (1) of section 18, is deemed to h ave discontinued its business, such authority may, either of its own motion or on the application of the dealer, cancel the recognition certificate with effect from such date as it may specify. ii.The assessing authority may amend a recognition certificate granted under sub-section (2) either of its own motion or on the application of the dealer, where the dealer has changed the name or place of his business or has closed down any branch or opened a branch or for any other sufficient reason: Provided that no registration certificate shall be cancelled or amended by assessing authority of its own motion except after reasonable opportunity of being heard has been given to the dealer. iii.The Joint Commissioner may, on the application of the dealer, and after satisfying himself that the goods referred to in sub-section (1) were actually used in the manufacture of the notified goods, or in the packing of such n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te has been granted to the petitioners under Section 4-B(2) of the Act for concessional rate of tax on purchase of goods required by the petitioners for use in the manufacture by them in the State of any notified goods. Thus the entire controversy is dependent upon the interpretion of the expression "for use in the manufacture of any notified goods" 33. In the case of M/s. J.K. Cotton Spinning and Weaving Mills, Co. Ltd. Vs. The Sales Tax Officer, Kanpur and another, AIR 1965 SC 1310, Hon'ble Supreme Court considered a similar expression, namely, "in the manufacture of goods" and while interpreting the provisions of Section 8 (3)(b) of the Sales Tax Act, held as under: 8. Section S. 8(3)(b) authorises the Sales Tax Officer to specify, subject to any rules made by the Central Government, goods intended for use by the dealer in the manufacture or processing of goods for sale or in mining, or in the generation or distribution of electricity or any other form of power. By Rule 13 the Central Government has prescribed the goods referred to in S. 8(3)(b) : such goods must be intended for use in the manufacture or processing of goods for sale or in mining or generation or distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he processes, nor must they be directly and actually needed for "turning out or the creation of goods." 9. In our judgment if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment. This is not to say that every category of goods "in connection with" manufacture of or "in relation to" manufacture, or which facilitates the conduct of the business of manufacture will be included within Rule 13. Attention in this connection may be invited to a judgment of this Court in which it was held that vehicles used by a Company (which mined ore and turned out copper in carrying on activities as a miner and as manufacturer) fell within Rule 13, even if the vehicles were used merely for removing ore from the mine to the factory, and finished goods from the factory to the place of storage. Spare parts and accessories required for the effective operation of those vehicles were also held to fall within Rule 13. See Indian Copper Corporation Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricals" is somewhat vague. But in a factory manufacturing cotton and other textiles, certain electrical equipment in the present stage of development would be commercially necessary. For instance, without electric lighting it would be very difficult to carry on the business. Again electrical humidifiers, exhaust fans and similar electrical equipment would in the modern conditions of technological development normally be regarded as equipment necessary to effectually carry on the manufacturing process. We are not prepared to agree with the High Court that in order that "electrical equipment" should fall within the terms of Rule 13, it must be an ingredient of the finished goods to be prepared, or "it must be a commodity which is used in the creation of goods". If, having regard to normal conditions prevalent in the industry, production of the finished goods would be difficult without the use of electrical equipment, the equipment would be regarded as intended for use in the manufacture of goods for sale and such a test, in our judgment, is satisfied by the expression "electricals". This would of course not include electrical equipment not directly connected with the process of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the expression "for use by him in the manufacture of goods for sale." Identical words are used in Section 8(b) of the Central Sales Tax Act 1956. This court was called upon to find out the scope of that expression in M/s. J.K. Cotton Spinning and Weaving Mills, Co. Ltd. Vs. The Sales Tax Officer, Kanpur and another, AIR 1965 SC 1310 Dealing with that expression this Court observed: The expression "in the manufacture of goods" would normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression "in the manufacture of goods. In the present case the assessee company has sold the goods in question to certain manufactures who were manufacturing iron steel materials. It is also clear from question No. (1) that those gloves were to be used by workmen who were engaged in hot jobs or in handling corrosive substances in the course of manufacture. That being so it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of fertilisers. The exemption notification must be so construed as to give due weight to the liberal language it uses. The ammonia used in the water treatment, steam generation and inert gas generation plants, which are a necessary part of the process of manufacturing urea, must, therefore, be held to be used in the manufacture of ammonia and the raw naphtha used for the manufacture thereof is entitled to the duty exemption. 8. For our conclusion we draw support from the judgment of this court in CCE Vs. Eastend Paper Industries Ltd. : 1989(4) SCC 244, where it was held, (SCC pp.248-49, para 5) "Where any particular process ........... is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, articles required in that process, would fall within the expression in the manufacture of goods'". This was a reiteration of the view expressed in M/s. J.K. Cotton Spinning & Weaving Mills Co. Ltd., vs. STO, [1965]1SCR 900 . It was there held: "The expression 'in the manufacture" takes in within its compass, all processes which are directly related to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Act and held that Oxygen gas captively consumed by the manufacturer of iron and steel would amount to use in the manufacture of iron. In the case of Commercial Tax Officer Vs. Rajasthan Electricity (1997) 10 SCC 330. Hon'ble Supreme Court again followed the law laid down in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. (Supra) 39. In the case of Collector of Central Excise and others Vs. Solaris Chemtech Ltd. and others (2007) 7 SCC 347, Hon'ble Supreme Court had considered a similar controversy as involved in the present writ petitions that Low Sulpher Heavy Stock (LSHS) and furnace oil used for generating electricity captively consumed to manufacture the final product such as caustic soda, cement etc. is qualified for MODVAT credit under Rule 57-A of the Central Excise Rules,1944 and held as under: "15. In the present case, the LSHS is used to generate electricity which is captively consumed. Without continuous supply of such electricity generated in the plant it is not possible to manufacture cement, caustic soda etc. Without such supply the process of electrolysis was not possible. Therefore, keeping in mind the expression "used in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try for carrying on its manufacturing process. In most cases, these fuels are used to generate electricity which is then used in the manufacture of end products like caustic soda, industrial chemicals, etc." (Emphasis supplied by us) 42. In the case of Collector of Central Excise, Jaipur Vs. Rajasthan State Chemical Works, Deedwana, Rajasthan 1991(4) SCC 473, Hon'ble Supreme Court explained that manufacturing process to bring out a complete transformation for the whole component so as to produce a commercially different article or a commodity may itself consist of several processes and held as under: "20. A process is a manufacturing process when it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity. But, that process itself may consist of several processes which may or may not bring about any change at every intermediate stage. But the activities or the operations may be so integrally connected that the final result is the production of a commercially different article. Therefore, any activity or operation which is the essential requirement and is so related to the further operations for the end ..... X X X X Extracts X X X X X X X X Extracts X X X X
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