M/S. Prathul Automobiles PVT. LTD, 6-3-899/1, Raj Bhavan vs. The State Of Telangana, Rep By Its Principal Secretary

Held

The Court held that the finding of the First Appellate Authority that there was no evidence in relation to the claim for notional input tax credit of Rs.3,93,74,203/- was a finding of fact. Such findings of fact must be agitated before the Second Appellate Authority (Telangana VAT Appellate Tribunal) and not before the High Court in a writ petition. The Court found that the present writ petition did not satisfy the parameters for bypassing the alternative remedy of appeal. Therefore, the writ petition was dismissed. The Court directed the office to return the impugned order to the petitioner to enable them to file a statutory appeal before the VAT Tribunal. The Tribunal was directed to exclude the period from August 17, 2017, up to the date of receipt of a copy of the High Court's order for calculating the condonable period of 60 days for filing the appeal.

Facts

The petitioner, M/s. Prathul Automobiles Pvt. Ltd., challenged an order of the Appellate Deputy Commissioner dismissing their appeal against an assessment order. The petitioner, a dealer in Honda Two-wheelers and Spares, was audited in July 2015. An assessment order dated May 31, 2016, was passed for the period April 2012 to June 2015, denying notional input tax credit (ITC) on the purchase value of second-hand vehicles. Initially, the petitioner challenged the denial of ITC to the tune of Rs.14,92,02,325/- through a writ petition (W.P.No.20186 of 2016), which was partly allowed by the High Court on July 19, 2016, directing the Assessing Authority to provide an opportunity for hearing and to produce documentary evidence. Subsequently, the petitioner filed a statutory appeal before the Appellate Deputy Commissioner against the remaining portion of the assessment order, specifically challenging the denial of ITC for Rs.3,93,74,203/-. The Appellate Authority rejected this claim, finding no documentary evidence was furnished. The petitioner then filed the present writ petition, bypassing the alternative remedy of appeal to the Telangana VAT Appellate Tribunal.

Key Issues

1. Whether the petitioner is entitled to bypass the alternative remedy of appeal to the Telangana VAT Appellate Tribunal, given that the First Appellate Authority allegedly omitted to consider available records? Petitioner's contention: The petitioner argued that documentary evidence had already been furnished to the Original Authority showing the purchase of used/second-hand vehicles. They contended that the Appellate Authority rejected the claim without examining these records, thus justifying bypassing the alternative remedy of appeal due to the First Appellate Authority's omission. Revenue's contention: The respondents did not explicitly record arguments in the judgment. However, the Court's reasoning implies that the revenue would have argued that the finding of the First Appellate Authority regarding the absence of evidence was a finding of fact that should be agitated before the Second Appellate Authority and not in a writ petition. The Court also noted the petitioner's prior writ petition and the subsequent statutory appeal, suggesting a procedural argument against a second writ petition on a matter that could have been raised earlier or is appealable.