TMI Blog2017 (11) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... filing any counter in this appeal. As per the statute, tax has to be paid in time, failing which interest is levied. There is no provision in the statute to pay tax in installments. The respondent has suppressed collection of tax from the buyer, and failed to remit the same to the government in time - It is thus clear that though the appellant- Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter. The respondents having collected tax from TASMAC Limited, has not only failed to remit tax, due to the Government, in time, but also withheld the same for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce / garnishee order. If the petitioner fails to pay any one of the instalments within the time stipulated by this Court, the impugned Form U notice / garnishee order will stand automatically revived without any further reference to this Court. On the petitioner clearing the entire arrears along with interest as per the time frame fixed by this Court, the third respondent shall lift the order of attachment / garnishee order.. 2. Short facts leading to the appeal are as hereunder: Respondent, is a company incorporated under the Indian Companies Act, 1956, engaged in the business of manufacture of sale of Indian Make Foreign Liquor, duly licenced by Government of Tamilnadu and supplier to Tamilnadu State Marketing Corporation (TASMAC), Chennai, 2nd respondent herein. According to the respondent company, which has been licenced to manufacture 4,19,400 cases of liquour per month has engaged about 750 workers, besides 3000 on contract basis. It is the case of the respondent that though there is increase in the cost of the manufacture of liquour, transport charges, electricity consumption charges, the purchase price of Indian Made Liquour, fixed in November 2007, revised after se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 657 of 2017 has been filed for a writ of certiorarified mandamus, calling for the records of the Deputy Commissioner (CT)-I, Large Tax Payers Unit, Chennai, the 3rd appellant vide Notice in Form U dated 31.08.2017 in TIN No.33980640189 for the return month of July 2017 and to quash the same. Consequently, the respondent has prayed for a direction to the appellants 1 to 3, to grant 10 months time to the petitioner to pay the present VAT arrears and interest for the total sum of ₹ 34,68,83,092/- (Rupees Thirty Four Crores Sixty Eight Lakhs Eighty Three Thousand Ninety Two Only). 7. Before the writ Court, reliance has also been made to an order made in W.P.No.10573 of 2017 dated 28.04.2017, permitting the respondent to pay arrears in four installments. Order dated 28.04.2017, has been clarified on 08.05.2017 permitting the respondent to pay the arrears of tax in four installments commencing from 25.05.2017 and directing the appellants to keep the garnishee order, in abeyance till the respondent completed the payment of entire arrears, subject matter in W.P.No.10573 of 2017. 8. Though submissions have been made by learned Additional Government Pleader (T) that an appeal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the month of July 2017, without accompanying the proof of payment of tax. Value Added Tax is one of the important sources of revenue to the State, through which the State Government generates 65% of the revenue and used for the welfare of the State. (d) Writ Court ought to have considered that the respondent is duty bound to pay tax collected from TASMAC to the Government on or before 12th day of the succeeding month. (e) Even if the dealer has not received the sale price from the buyer, the respondent is mandated to make payment of tax, in time, as per the statute. Even after having received the tax amount, along with the sale price, well before the date of filing the return on or before 14th day of succeeding month, the dealer / respondent, has received the sale price, with tax, not remitted to the Government and misused the tax amount, for their own purpose. (f) If the tax amount is not realized in time as scheduled, it will prolong or delay the implementation of the projects of schemes initiated for the welfare of the Public. (g) Writ Court ought to have seen that the respondent has never paid the entire tax due, along with the monthly returns and even failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for in the writ petition, while ordering notice, we dismissed, the writ miscellaneous petition. However, directed the appellants to bring it to the notice of the writ court that, challenge made to the order in W.P.No.24657 of 2017, has been entertained. 12. On this day, when the writ petition came up for further hearing, learned counsel for the appellants, further submitted that in the absence of any statutory provision, enabling payment of tax, in installments, writ Court, ought not to have permitted the petitioner to pay tax of ₹ 34,68,83,092/- for the month of July in five instalments. She further submitted that writ petition has been ordered, at the admission stage itself and therefore, the appellants, could not file a detailed counter affidavit. 13. Responding to the notice and based on the typed set of papers dated 01.11.2017, Mr.Packiaraj, learned counsel for the respondent submitted that amount due and payable by the respondent as on 31.08.2017 was ₹ 34,68,83,092/-. On 14.09.2017, Writ Court directed said amount to be paid in five equal instalments with interest. On 19.09.2017, 1st installment with interest ₹ 6,93,76,618.4p was paid. The 2nd instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th in Form I on or before 20th of the succeeding month, to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax. (b) Every registered dealer who is liable to pay tax under sub-section (5) of section 3 shall file a return in Form J on or before 20th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax: Provided that a registered dealer specified in clause (a) or (b), whose taxable turnover in the preceding year is two hundred crores of rupees and above, shall file the above returns on or before 12th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax: (c) The option exercised under sub-section (4) of section 3 of the Act shall be final for the financial year and such option shall be exercised within thirty days from the date of commencement of the Act or commencement of his busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 31st day of December 2008. (8) In case of dealers making electronic payment of the tax, the dealers whose taxable turnover in the previous year is two hundred crores of rupees and above, shall file the returns on or before 14th of the succeeding month along with proof of payment of tax and the others shall file the above returns on or before 22nd of the succeeding month along with proof of payment of tax. (9) If a dealer having filed a return, finds any omission or error therein, other than as a result of an inspection or audit or receipt of any other information or evidence by the assessing authority, he shall file a revised return rectifying the omission or error within a period of six months from the last day of the relevant period to which the return relates. Where, as a result of such revised return, the tax payable by the dealer increased, the dealer shall furnish along with such revised return, proof of payment of tax and interest due thereon under sub-section (4) of Section 42 of the Act. (c) In terms of Section 22, procedure to be followed by the Assessing authority, is set out in Rule 8 of TNVAT Rules, 2007 and the same is extracted hereunder. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst bulk orders and small orders in respect of the same goods. If the difference in prices, exclusive of the tax element, is more than fifteen per cent (15%), the assessing authority shall examine the reasons for the variation, taking into account the relationship between the parties to the transactions,the charges for after sales services, packaging, transport and other expenses incurred by subsequent sellers which add to the cost of the goods at each stage of sale by successive dealers. The assessing authority shall also examine whether there is such difference in the price charged on the sales of the same goods to different customers and whether the goods are made available to all distributors or other customers in unlimited quantities and at the same prices. After making due allowance towards the variation in prices and normal profit margin, the assessing authority shall arrive at the market price that should have been charged by the dealer and levy tax on the taxable turnover so arrived at. (4) On receipt of the return in Form N, the assessing authority shall pass orders (a) demanding the tax payable on the amount received due to price variation and shall serve upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 30 (e) all amounts, including the tax collected from the customer, refunded to the customer or adjusted towards any amount payable by the customer, in respect of unexecuted portion of works contract based on the corrections on account of measurements or check measurements, subject to the conditions that (i) the turnover was included in the return and tax paid; and (ii) the amount including the tax collected from the customer is refunded or adjusted, within a period of six months from the due date for filing of the return in which the said amount was included and tax paid. (e) all amounts, including the tax collected from the customer, refunded to the customer or adjusted towards any amount payable by the customer, in respect of unexecuted portion of works contract based on the corrections on account of measurements or check measurements, subject to the conditions that (i) the turnover was included in the return and tax paid; and (ii) the amount including the tax collected from the customer is refunded or adjusted, within a period of six months from the due date for filing of the return in which the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the submissions and payments made, while disposing of W.P.No.10573 of 2017, on 28.04.2017, writ Court, ordered as follows: 7. Upon considering the facts and circumstances of the case as well as the submission made by both sides, it is seen that the petitioner has not disputed their liability to pay the arrears of tax. On the other hand, they seek only time to make such payment. It is further seen that the petitioner has also effected a part payment of ₹ 10,48,49,403.20p, out of the total demand as on today. The said payment is is not disputed, but at the same time, this Court is of the view that the petitioner cannot seek indulgence of this Court every time to make the payment in installments by stating one reason or other. Once the tax is fixed and also admitted by the petitioner, it is their bounden duty to pay without dragging the matter. As I have already pointed supra, this Court also granted one indulgence in the year 2015. Therefore, this writ petition is disposed of, with a direction to the petitioner, to pay the balance of arrears with interest in four monthly installments commencing from 15.05.2017. It is made clear that no further indulgence shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The petitioner states that the aggrieved the act of the 3rd respondent without having an any other effective and efficacious remedy approached this Hon'ble Court by filing this petition under Article 226 of the Constitution of India in W.P.No.10573 of 2017 and the same was allowed to pay the VAT arrears in four installments with interest and the said order condition has been complied by the petitioner from the month of May to July 2017. 25. As per Rules 7(1)(a) and 7(1) (b), respondent has to pay tax due along with the monthly returns in Form I, as prescribed. Submission of returns alongwith, proof of payment of tax, is mandatory. 26. As per the statutory provisions, tax has to be paid, before the 12th day of the succeeding month. Contention of the appellant in the grounds of appeal that even after receiving the tax amount along with the sale price from TASMAC Limited, well before the date of filing of the return, the respondent has not remitted the tax to the government, has not been refuted by filing any counter in this appeal. 27. Contention of the appellants that the respondent has not paid the entire tax along with the monthly returns within the time, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. The Hon'ble Madras High Court in Writ Petition No.24657 of 2017 WMP No.26018 of 2017 was pleased to order payment of the VAT arrears in five equal monthly instalments with the first instalments to be paid on 25.09.2017. We now send herewith a copy of the Order dated 14.09.2017 issued by the Hon'ble High Court of Madras and would request you to kindly lift the Form U Notice in order to enable us to resume our normal manufacturing operations and meet the VAT commitments. Your kind co-operation at this juncture will be of great help to our Company in rebuilding our business, which needless to say, would held generate higher revenue to the Government. We once again request your kindly lift the Form U Notice at the earliest. Thanking you, Yours sincerely, for EMPEE DISTILLERIES LTD Sd/- AUTHORISED SIGNATORY 29. Nowhere in the said letter, the respondent has averred about the escalation cost of manufacture, electricity consumption charges and other reasons stated in the supporting affidavit to W.P.No.24657 of 2017, except to state that the company is facing continued financial constraint, due to reasons beyond their control. Lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. State Bank of India reported in 2007 (8) SCC 449, at Paragraphs 27, 33, 34 and 35, held as follows: 26. In Gorden v. Gorden, (1904) 73 LJ 41 : 90 LT 597 : 16 Dig 90, 1128, Cozens Hardy, L.J. put the principle succinctly in the following words; I desire expressly to limit my judgment to a case in which the [party in contempt] is saying that the order complained of is outside the jurisdiction of the court, as distinguished from the case of an order which, although it is within the jurisdiction of the court, ought not, it is said, to have been made. ........ 33. It is thus clear that though the appellant- Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is supposed to be based, one receives in answer the maxim that anyone coming to equity must come with clean hands. I think the expression clean hands is used more often in the textbooks than it is in the judgments, though it is occasionally used in the judgments, but I was very much surprised to hear that when a contract, obtained by the giving of a bribe, had been affirmed by the person who had a primary right to affirm it, not being an illegal contract, the courts of equity could be so scrupulous that they would refuse any relief not connected at all with the bribe. I was glad to find that it was not the case, because I think it is quite clear that the passage in Dering v. Earl of Winchelsea [(1787) 1 Cox Eq Cas 318: 2 Bos P 270], which has been referred to, shows that equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for. 14. In Halsbury s Laws of England, 4th Edn., Vol. 16, pp. 874-76, the law is stated in the following terms: 1303. He who seeks equity must do equity. In granting relief peculiar to its own jurisdiction a court of equity acts upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court held as follows: appellants and their predecessors, are also guilty of suppressio veri. Ordinarily, a statute shall prevail over the common law principle. However, in a case of this nature, in the event of any conflicting interest, this Court in exercise of its equity jurisdiction under Article 142 of the Constitution is to weigh the effect of a fraud and the consequences of non-impleadment of a necessary party. We would hold that the scale of justice weighs in favour of the person, who is a victim of fraud and thus, we should not refuse any relief in his favour, only because he might have been wrongly advised. (iv) In Udayami Evan Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in 2008 (1) SCC 560, at Paragraph 16, the Hon'ble Supreme Court held as follows: 15. A writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should not suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. In Advocate General, State of Bihar v. M/s.Madhya Death Khair Industries and Anr. [1980 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e courts. An action in mandamus is not governed by the principles of ordinary litigation where the matters alleged on one side and not denied on the other are taken as true, and judgment pronounced thereon as of course. While mandamus is classed as a legal remedy, its issuance is largely controlled by equitable principles. Before granting the writ the court may, and should, look to the larger public interest which may be concerned-an interest which private litigants are apt to overlook when striving for private ends. The court should act in view of all the existing facts, and with due regard to the consequences which will result. It is in every case a discretion dependent upon all the surrounding facts and circumstances. 34. From the above, it is manifestly clear that the respondents having collected tax from TASMAC Limited, has not only failed to remit tax, due to the Government, in time, but also withheld the same for a considerable period and by filing successive writ petitions, has been gaining long time, for payment of tax, on installment basis, which the statute does not contemplate. Taking note of the averments in the supporting affidavit to W.P.No.24657 of 2017 as regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of the dealer or other person who has become liable to pay any amount due under this Act, to pay to the assessing authority either forthwith upon the money becoming due or being held at or within the time specified in the notice, (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the dealer or other person in respect of the arrears that have become payable under this Act or the whole of the money when it is equal to or is less than the arrears aforesaid. 39. When the dealer had collected the tax from the buyer, the tax should be paid to the Government, within time. Retention of the same, would amount to unjust enrichment and as rightly pointed out would pave way, to similar request. 40. Though, the case in Additional Secretary, Govt of India Vs. Smt.Alka Subhash Gadia and another, reported in 1992 Supp (1) SCC 496, deals with a case of detention, the Hon'ble Supreme Court has explained exercise of discretion, as hereunder. 12.....This is to point out the limitations which the High Court and the Supreme Court have to observe while exercising their respective jurisdiction in such cases. These l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers or jurisdiction or has failed or refused to exercise jurisdiction vested in it; or (c) where the authority has not applied its mind at all or has exercised its power dishonestly or for an improper purpose; (vi) where the Court cannot grant a final relief, the Court does not entertain petition only for giving interim relief. If the Court is of opinion that there is no other convenient or efficacious remedy open to the petitioner, it will proceed to investigate the case on its merits and if the Court finds that there is an infringement of the petitioner's legal rights, it will grant final relief but will not dispose of the petition only by granting interim relief; (vii) where the satisfaction of the authority is subjective, the Court intervenes when the authority has acted under the dictates of another body or when the conclusion is arrived at by the application of a wrong test or misconstruction of a statute or it is not based on material which is of a rationally probative value and relevant to the subject matter in respect of which the authority is to satisfy itself. If again the satisfaction is arrived at by taking into consideration material which the authority properly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India, reported in 1981 Supp SCC 87 = AIR 1982 SC 149). In Halsbury's Laws of England, 4th Edn., Vol. I, it has been observed: 28. Duty and discretion.-- A statutory discretion is not, however, necessarily or, indeed, usually absolute: It may be qualified by express and implied legal duties to comply with substantive and procedural requirements before a decision is taken whether to act and how to act. Moreover, there may be a discretion whether to exercise a power, but no discretion as to the mode of its exercise; or a duty to act when certain conditions are present, but a discretion how to act. Discretion may thus be coupled with duties. 9. Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
