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2011 Supreme(Kar) 22
High Court of Karnataka
THE HONOURABLE MR. JUSTICE ASHOK B. HINCHIGERI
M/s Bharti Airtel Ltd., Rep by its Head-Legal & Regulatory S. Nagaraj Bangalore
Versus
The State of Karnataka, Finance Department & Others
WRIT PETITION Nos.35223 – 234 of 2010 (T-RES) C/W WRIT PETITION
Nos.35950 of 2010, 35951 of 2010, 35952 of 2010, 35955-956 of 2010, 35958 of 2010 & 36304-312 of 2010, 36324-334 of 2010 & 36335 of 2010, 21836 of 2010, 21837 of 2010, 21838 of 2010, 21839 of 2010, 21840-851 of 2010, 21852-863 of 2010, 21864- 875 of 2010, 21876-887 of 2010
Decided on : 07-01-2011
For the Petitioner:N. Venkataraman, Senior Counsel for M/s Harish & Co, Advocate, Mohan Parasaran, Additional Solicitor General of India for Sri. P.S.
Dinesh Kumar & Sri. A.K. Alur, Advocate. For the Respondents:R1 & R3 -K.G. Raghavan, Senior Counsel for Sri. K.J. Kamath, Spl. Govt. Advocate, R2 -N.R.
Bhaskar, Sr. CGSC.
Headnote:KARNATAKA VALUE ADDED TAX ACT, 2003 - Section 39(1): [Ashok B. Hinchigeri, J] Artificially created light energy - Reassessment Orders passed by the Deputy Commissioner of Commercial Taxes holding that the artificially created light energy is taxable at the rate of 12.5% - Challenge as to - Petitioner’s skipping or bypassing of the statutory appeal remedy provided by Section 62 of the Value Added Tax Act and/or by Section 20 of the Karnataka Sales Tax Act - Exercise of Writ Jurisdiction - Permissibility - Held, There is no special, exceptional, extraordinary circumstances for the Assessee not going through the normal remedies provided under the statute. The skipping or bypassing of the statutory remedy is not permissible. It cannot be said with any rate of success that these petitions involve pure and simple questions of law. They involve complicated, scientific and technological questions, which certainly fall within the realm of factual controversies. The Writ Court’s interference is ruled out where factual adjudication is necessary. Further held, the statutory remedies must b exhausted before resorting to the remedy under Article 226 of the Constitution of India. The Apex Court has also emphasized the need for circumspection, caution and care by the High Courts to ensure that the statutory schemes are not defeated by exercise of writ jurisdiction. Under Article 226 the High Court does not generally enter upon a determination of questions which demand an elaborate examination of evidence. Even if the order of the first Authority requires interference, it is for the first Authority requires interference, it is for the Appellate Authority to look into it and take a decision one way or the other; it is not an extraordinary case which warrants direct interference under Article 226 of the Constitution. Even if an assessee feels that he has a good case on merits, that by itself is not a justification for the Court to entertain the writ petition by-passing the appellate remedies. In tax matters, it is not desirable for the Court to exercise the writ jurisdiction at the threshold. On facts, held, In the instant case, the Deputy Commissioner has passed the similar re-assessment orders for different assessment periods on 31.7.2006 and 12.1.2007 long before the meeting of the Committee on Sub-ordinate Legislation. On the similar set of facts, the Deputy Commissioner has passed the similar orders. Therefore he cannot be held to be at fault for passing the impugned orders. If a decision is given objectively based on the evidence and materials on record, it is subject to scrutiny by the Authority and/or by revisional Authorities. If the tests of bias, real likelihood, real danger, reasonable suspicion and real possibility are applied and if the fair-minded and informed observer finds that the decision is fair, objective and based o the materials placed on the record, then fanciful and unmeritorious allegation of bias is to be discouraged.
KARNATAKA VALUE ADDED TAX ACT, 2004 - Section 39 & Karnataka Sales Tax Act (1957), Section 12-A: [Ashok B. Hinchigeri,J] Artificially Created Light Energy (ACLE) - Quuestion whether or not ACLE carrying data to customers’ desired destinations in network could be held as goods, to be established - It involves phenomenal scientific investigation and research - Courts are not well equipped to go into scientific and technological aspects of matter. Petitioner have to file Statutory appeals.
These Writ petitions coming on for dictating orders, this day, the Court made the following:
ORDER
1. The petitioners have raised the challenge to the reassessment orders passed by the Deputy Commissioner of Commercial Taxes under Section 39(1) of the Karnataka Value Added Tax Act (for short ‘VAT Act’) and /or 12A of the Karnataka Sales Tax Act, 1957 (for short ‘KST Act”) holding that the Artificially Created Light Energy (for short “ACLE’) is taxable at the rate of 12.5%.
2. Sri. K.G.Raghavan, the learned Senior Counsel appearing for Sri. K.J. Kamath, the Special Government Advocate appearing for the respondents has raised the threshold bar to the maintainability of these writ petitions. He submits that these petitions are to be rejected relegating the petitioners to the statutory appeal remedy provided by Section 62 of the VAT Act and/or by Section 20 of the KST Act.
3. Sri. N. Venkataraman, the learned Senior Counsel appearing for M/s. Harish and Company for the petitioners (M/S. Bharathi Airtel Limited) in W.P. Nos.35223-34/2010 and other connected petitions has strenuously argued how and why these petitions are required to be considered and disposed of on merits notwithstanding the availability of the alternative remedy. He submits that the ACLE is not goods. As it has no attributes of goods, the question of buying it and selling it would not arise at all. According to him, equating ACLE with electricity is tantamount to overlooking the subtle between ACLE and electricity. He submits that there cannot be any sale of property in goods, of whose existence the buyer is unaware. He submits that as the impugned reassessment orders are without the authority of law and without jurisdiction, the writ petitions are entertainable. He submits that the levy of tax on transactions falling outside the competence of the State Legislature is without jurisdiction. He would contend that the imposition of the sales tax is in sharp contrast to the considered view taken by the Apex Court in the case of Bharat Sanchar Nigam Ltd. And Another V. Union of India and others, reported in (2006) 3 SCC 1. He read out para 24 of the said judgment, which is extracted hereinbelow:
“34. The second objection was that the writ petitions under Article 32 were not maintainable. The writ petitions raised questions relating to the competence of the States to levy sales tax on telecommunication service. This is not an issue which could have been raised and decided by the assessing authorities. If the State legislatures are incompetent to levy the tax, it would not only be an arbitrary exercise of power by the State authorities in violation of Article 14, it would also constitute an unreasonable restriction upon the right of the service providers to carry on trade under Article 19(1)(g). (See Bengal Immunity Company v. State of Bihar; Himmatlal Harilal Mehta v. State of M.P.) We are consequently unable to accept either of these contentions of the respondents.”
4. Nextly, he sought to draw support from the Honourable Supreme Court’s Judgment in the case of Calcutta Discount Co. Ltd. V. Income Tax Officer, Companies District I Calcutta and Another, reported in AIR 1961 SC 372. The relevant paragraph of the said judgment is extracted hereinbelow:
“26. Mr. Sastri next pointed out that at the stage when the Income Tax Officer issued the notices he was not acting judicially or quasi-judicially and so a writ of certiorari or prohibition cannot issue. It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequ
