TMI Blog2018 (7) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... s Resolution Panel and thereafter, if they are further aggrieved in respect of the fixing of average rate of royalty payment, then they are liberty to approach the ITAT constituted for the purpose of adjudicating the issues. This being the efficacious remedy available under the statute for the writ petitioner, there is no reason to entertain a writ petition under Article 226 of the Constitution of India, so as to adjudicate the merits and the demerits now raised before this Court in the present writ petition in respect of fixing of average rate of royalty payment. Under these circumstances, this Court is of an undoubted opinion that the writ petitioner has not made out any case for the purpose of waiving the efficacious alternate remedy available to the writ petitioner under the provisions of the Act and therefore, this Court is not inclined to entertain the writ petition on merits and adjudicate the issues involved in respect of fixing of average rate of royalty payment. - W. P. No. 22508 of 2017 and W. M. P. No. 38346 of 2017 - - - Dated:- 16-7-2018 - S. M. Subramaniam, J. For the Petitioner : Mr. N. Venkata Raman, Senior Counsel For M/s. SP. Chidambaram For the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Admittedly, no such show cause notice was issued to the writ petitioner and on that ground also, the writ petition deserves to be allowed. 5.The writ petitioner had transactions with associated enterprises and therefore, the case was referred to the Transfer Pricing Officer(TPO)/ the first respondent passed an order dated 28.10.2011 under Section 92CA of the Income Tax Act, 1961. The Transfer Pricing Officer(TPO) has the power only to determine the Arms Length Price in case of international transaction or specified domestic transaction. The order of the Transfer Pricing Officer(TPO) is not an assessment order but an intermediate order with regard to Arms Length Price alone. The assessing officer, while computing the total income and taxable income at the time of passing the assessment order, takes into account the order of the Transfer Pricing Officer(TPO) for the purpose of computation of income relatable to international transaction or specified domestic transaction. Thus, on receipt of the order of the Transfer Pricing Officer(TPO), the assessing officer/the second respondent passed a draft order under Section 144C(1) on 23.12.2011. The petitioner also filed their objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The writ petition filed against the order of the Transfer Pricing Officer(TPO) is premature in view of the fact that the Assessing Officer has to pass a final order based on the proceedings of the Transfer Pricing Officer(TPO). Therefore, the order of the Transfer Pricing Officer(TPO) cannot constitute a cause of action for the purpose of moving the present writ petition under Article 226 of the Constitution of India. The learned counsel for the respondents is of an opinion that the writ petitioner has to exhaust the remedy before the Disputes Resolution Panel constituted under the statute and further, they are bound to approach the ITAT for redressal of their grievances. By-passing all these statutory remedies, the present writ petition has been filed, challenging the proceedings of the Transfer Pricing Officer(TPO), which is not maintainable. 9.The learned counsel for the respondents relied on the counter statement, showing that the Transfer Pricing Officer(TPO) has not violated the orders of the ITAT . In fact, the case of the petitioner was originally adjudicated before the ITAT and the ITAT remanded the case back for re-adjudication. The order of the ITAT dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT , remanding the matter for re-consideration. 11.Question of issuing show cause notice, does not arise in the case of the writ petitioner in view of the fact that it is a case, which was remanded by the ITAT . The writ petitioner was aware of all the facts and circumstances and the records. Thus, the writ petitioner was invited for personal hearing and the writ petitioner had participated in three personal hearings and submitted their case before the respondents. Such being the factum of the case, now, the learned Senior Counsel appearing on behalf of the writ petitioner cannot plead that no show cause notice has been issued. It is not a fresh case, wherein a show cause notice is mandatory. It is a remanded case. Further, even while re-considering the issues, the notice was issued to the writ petitioner and they participated in three personal hearings. Therefore, the principles of natural justice had been complied with and the contentions in this regard by the learned Senior Counsel appearing on behalf of the writ petitioner deserves no merit consideration. 12.The contentions of the learned Senior Counsel appearing on behalf of the writ petitioner is that the erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass a revised order on merits and in accordance with law. This being the scope of the order of remanding the contentions raised on behalf of the writ petitioner that the average rate of royalty payment in the industry was already fixed by the ITAT can have no sanctity. These all are the points raised by the respective parties before the ITAT and the same was recorded in the order passed by the ITAT . When the ITAT itself was not decided the issues raised before the Tribunal and remanded the case back for reconsideration, then there is no point in recording the findings of the ITAT by the Transfer Pricing Officer(TPO) at the time of exercising the powers of reconsideration of the entire issues. The very contention raised in this regard also deserves no merit consideration. 14.The learned counsel for the respondents urged this Court that the royalty has been computed by three different methods as under:- It may be seen from the chart that royalty has been computed by three different methods as under:- (a)5% of sales value for models like Santro, Accent, Sonata, Getz, Elantra and Verna in domestic market (b)100$ per i-10 car sold in domestic and export mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.84 Export Santro 1164.36 1605.37 8% of value in col.3 5.80 93.15 Accent 149.33 329.67 8% of value in col.3 3.62 11.95 Getz 500.64 888.95 8% of value in col.3 4.51 40.05 i-10 572.97 782.03 100 $ each for 26691 cars 1.37 10.71 Total 7275.94 9912.97 3.67 364.11 *Royalty Ratio=Royalty amount in col.7/Sales figure in Col.4 * 100 If the total royalty paid(364.11 crores) is worked out as a percentage of net sales as per RBI guidelines(7275.94 crores), the average royalty rate works out to 5.0043 or 5%. But since the Petitioner adopted different sales figures to compute the royalty ratio, the royalty ratio worked out to 3.67%. 15.The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the ITAT had a doubt in respect of these factual aspects and remanded the matter back. The very intention of the ITAT for remanding the matter back is to make the authorities to reconsider the entire issues, more specifically, the royalty payment. Such being the scope of the order passed by the ITAT , the respondents had not violated the orders passed by the ITAT and the petitioner cannot insist the respondents that the average rate of royalty payment recorded by the ITAT should be followed as it is mechanically without verification of any records thereafter. Such an idea is ill-motivated and the competent authorities are empowered to look into the records and the books of accounts submitted by the writ petitioner to find out the discrepancies or otherwise, if any exists, during the course of arriving the average rate of royalty payment. 19.Unnecessary or routine invasion into the statutory powers of the competent authorities under a statute should be restrained by the Constitutional Courts. Frequent or unnecessary invasions in the executive power will defeat the constitutional perspectives enshrined under the Constitution of India. Undoubtedly, the separation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) 4 SCC 225]. That separation of powers between the legislature, the executive and the judiciary is the basic structure of the Constitution is expressly stated by Sikri, C.J. 3. P. Kannadasan and Ors. v. State of T.N. and Ors. [MANU/SC/0650/1996 : (1996) 5 SCC 670] the Supreme Court noted that the Constitution of India recognised the doctrine of separation of powers between the three organs of the State, namely, the legislature, the executive and the judiciary. The Court said: It must be remembered that our Constitution recognises and incorporates the doctrine of separation of powers between the three organs of the State, viz., the Legislature, the Executive and the Judiciary. Even though the Constitution has adopted the parliamentary form of government where the dividing line between the legislature and the executive becomes thin, the theory of separation of powers is still valid. 4. State of Tamil Nadu and Ors. vs. State of Kerala and Ors. (07.05.2014 - SC) : MANU/SC/0425/2014 121. On deep reflection of the above discussion, in our opinion, the constitutional principles in the context of Indian Constitution relating to separation of powers between legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. (vi) If the legislature has the power over the subject-matter and competence to make a validating law, it can at any time make such a validating law and make it retrospective. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation law it removes the defect which the courts had found in the existing law. 20.This Court is of a strong opinion that institutional respects are to be maintained by the constitutional Courts. Whenever there is a provision for an appeal under the statute, without exhausting the remedies available under the statute, no writ petition can be entertained in a routine manner. Only on exceptional circumstances, the remedy of appeal can be waived, if there is a gross injustice or if there is a violation of fundamental rights ensured under the Constitution of India. Otherwise, all the aggrieved persons from and out of the order passed by the original authority is bound to approach the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in ThansinghNathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition Under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 4. Authorized Officer, State Bank of Travancore and Ors. vs. Mathew K.C. (30.01.2018 - SC) : MANU/SC/0054/2018 The petitioner argued that the SARFAESI Act is a complete code by itself, providing for expeditious recovery of dues arising out of loans gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extraordinary jurisdiction. 6. K.S. Rashid and Sons v. Income Tax Investigation Commission and Ors., AIR (1954) SC 207; Sangram Singh v. Election Tribunal, Kotah and Ors., AIR (1955) SC 425; Union of India v. T.R. Varma, AIR (1957) SC 882; State of U.P. and Ors. v. Mohammad Nooh, AIR (1958) SC 86 and M/s K.S. Venkataraman and Co. (P) Ltd. v. State of Madras, AIR (1966) SC 1089, Constitution Benches of the Supreme Court held that Article 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted. 7. First Income-Tax Officer, Salem v. M/s. Short Brothers (P) Ltd., [1966] 3 SCR 84 and State of U.P. and Ors. v. M/s. Indian Hume Pipe Co. Ltd., [1977] 2 SCC 724. There are two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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