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2013 Supreme(Mad) 4063
High Court of Judicature at Madras
N. PAUL VASANTHAKUMAR & P. DEVADASS, JJ.
Dishnet Wireless Limited, rep. by its Authorised Signatory Ritish Sankarankutty & Another
Versus
The Commercial Tax Officer (Main) & Another
Writ Appeal Nos. 2408, 2409 of 2013 & & Connected Miscellaneous Petitions
Decided On : 09-12-2013
For the Appellants:R. Natarajan, Arvind P. Dattar, Senior Counsels for N. Sriprakash, Sathish Parasaran, Advocates.
For the Respondents:A.L. Somayaji, Advocate General assisted by A.R. Jayapratap, AGP (Taxes).
The main legal point established in the judgment is the principle that when there are disputed questions of facts and alternate statutory remedies available, writ jurisdiction should not be invoked. Statutory remedies should be exhausted before resorting to writ jurisdiction.
Headnote:
Tamil Nadu Value Added Tax Act - Business Transfer Agreement - Section 51 of the Tamil Nadu Value Added Tax Act, 2006 - Summary of Acts and Sections: The court discussed the applicability of the Tamil Nadu Value Added Tax Act, 2006, particularly in relation to a composite sale of a running business. The court emphasized the availability of alternate statutory appeal under Section 51 of the Act and the need to exhaust statutory remedies before resorting to writ jurisdiction.
Fact of the Case:
The appellants, telecommunication companies, sold their undertaking to another company and were issued assessment orders for tax and penalty. They filed writ petitions challenging the orders, arguing that the transaction was a business transfer and should not be assessed under the Tamil Nadu Value Added Tax Act, 2006.
Finding of the Court:
The court found that the matter was pending before the Appellate Authority and that there were disputed questions of facts, which should be addressed by the Appellate Authority. The court held that the writ petitions were not maintainable and emphasized the need to exhaust alternate statutory remedies.
Issues: The issues included the applicability of the Tamil Nadu Value Added Tax Act, 2006 to a composite sale of a running business and the availability of alternate statutory appeal under Section 51 of the Act.
Ratio Decidendi: The court emphasized that when there are disputed questions of facts and alternate statutory remedies available, writ jurisdiction should not be invoked. It cited various decisions to support the principle that statutory remedies should be exhausted before resorting to writ jurisdiction.
Final Decision: The writ appeals were dismissed, and the court confirmed the order of the learned single Judge. The appellants were granted liberty to file appeal before the Appellate Authority, and time for filing appeal was granted till a specified date. No costs were awarded, and connected miscellaneous petitions were dismissed.
N. Paul Vasanthakumar, J.
1. These writ appeals are preferred by the writ petitioners in W.P.Nos.30351 and 30352 of 2013, which were dismissed by the learned single Judge by common order dated 28.11.2013 on the ground of availability of alternate remedy of filing appeal before the Appellate Authority against the assessment orders passed under Section 51 of the Tamil Nadu Value Added Tax Act, 2006.
2. The brief facts necessary for disposal of these writ appeals are as follows:
(a) The appellant Companies are incorporated under the Companies Act and were granted licence under Section 4 of the Indian Telegraph Act, 1885 to set up and operate Unified Access Service Licence (UASL) in their respective licensed service areas. Appellants have established telecommunication towers and other hardwares and softwares across the country for UASL service.
(b) They have registered themselves under the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) for carrying on internet service in the State of Tamilnadu.
(c) The appellants have entered into a Business Transfer Agreement on 14.1.2010 with the Chennai Network Infrastructure Limited by which the appellants have sold the undertaking to M/s.Chennai Network Infrastructure Limited as a going concern by means of a slump price. The sale consideration was fixed at Rs.772 crores in the case of M/s. Aircel Limited, and Rs.1557 Crores in the case of M/s.Dishnet Wireless Limited.
(d) The Commercial Tax Officer issued a notice to the appellants on 19.7.2013 calling upon them to show cause as to why the entire sale value of the assets should not be assessed at 12.50% for the assessment year 2010-2011. A detailed objection was submitted by the appellants on 30.8.2013 contending that by the Business Transfer Agreement dated 14.1.2010 the appellants transferred only the passive infrastructure to transferee Company. According to the appellants there was no contract for sale of goods and it was only complete transfer of a running business.
(e) The Assessing Officer, after giving opportunity of hearing to the appellants, confirmed the proposal and passed the impugned assessment orders dated 30.9.2013 demanding Rs.144.72 Crores as tax and Rs.217.07 Crores as penalty from the appellant in W.A.No.2408 of 2013, and Rs.96,83,22,033/- as tax and Rs.1,45,07,21,223/- as penalty from the appellant in W.A.No.2409 of 2013. The said assessment orders are challenged in the writ petitions.
(f) The grounds raised by the appellants in the writ petitions are that the Business Transfer Agreement effected by them on 14.1.2010 is excluded by Explanation-III of Section 2(41) of the Tamil Nadu Value Added Tax Act, 2006; that the transaction was a business transfer of an undertaking as a whole, but the Assessing Officer erroneously treated that the installation and maintenance of telecommunication equipment are not separate business as if the buyer and seller are in Tamilnadu; that when the agreement having been approved on account of the scheme of the agreement sanctioned by this Court, particularly with regard to the contention that the element of sale of goods was even if it is there, no such sale took place in the State of Tamil Nadu; that the Assessing Authority opined that the appellants are dealing in mobile service and taxable goods purchased for tower have been installed at various sites and they become capital goods and with the help of those capital goods internet mobile services are being provided; and that the installation and maintenance of the telecommunication equipments is not a separate business.
3. The issue raised before the learned single Judge was as to whether a composite sale of running business of the concern would attract the provisions of the Tamil Nadu Value Added Tax Act, 2006, particularly when the Assessing Officer took a stand that the appellants/writ petitioners used to sell some of the assets every year as in the case of sale during the year 2010 treating it as transfer of business as a whole, and
