HC should not have directly entertained writ petitions challenging fresh assessment orders, if they were pending consideration before First Appellate Authority pursuant to order of remand: SC

Read Judgment: State Of Andhra Pradesh & Ors. V. S. Pitchi Reddy & Ors

Pankaj Bajpai

New Delhi, January 4, 2022: The Supreme Court has opined that when fresh assessment orders were passed consequent upon the remand of the case by the First Appellate Authority pending the revisional proceedings against the order of remand, then fresh assessment orders could not have been set aside merely on that ground.

A Division Bench of Justice M.R. Shah and Justice B.V. Nagarathna observed that the High Court ought not to have directly entertained the writ challenging the fresh assessment orders, and the respective dealers – assessees ought to have availed the alternative remedy of appeals before the FAA which were availed earlier when the earlier assessment orders were passed.

The observation came pursuant to appeals challenging certain orders whereby the High Court had quashed the respective assessment orders passed by the AO – Commercial Tax Officer, Brodipet Circle, Guntur, the State of Andhra Pradesh. 

The background of the case was that, the AO assessed the tax in respect of S. Pitchi Reddy & Ors (Respondents – Registered dealers) who were holding VAT Registration. The First Appellate Authority (FAA) remanded the case to the AO, and thereafter the Commissioner of Commercial Taxes exercised suo-moto revisional powers against the order of FAA remanding the matter to the AO. Pending the revisional proceedings, the AO issued show cause notices for making fresh assessment orders consequent to the remand of the cases by the FAA. 

In the meanwhile, the AO passed fresh assessment orders consequent upon the remand. However, instead of preferring appeal before the FAA against the fresh assessment orders, the dealer’s straight way filed petitions before the High Court, which was allowed and fresh assessment was quashed, solely on the ground that pending suo-moto revisional proceedings, the AO ought not to have proceeded further with the fresh assessment. 

After considering the arguments, the Apex Court noted that if the fresh assessment orders would have gone against the State, in that case the State would have been the aggrieved party and the State could have raised the objection that pending suo-moto revisional proceedings against the order of remand, the AO ought not to have proceeded further with the fresh assessments. 

However, in the present case the fresh assessments had gone against the respective dealers, and therefore, as such the respective dealers were required to prefer the appeals before the First Appellate Authority against the fresh assessment orders, added the Court.

Hence, the Top Court concluded that orders passed by the High Court setting aside the fresh assessment orders in the writ petitions under Article 226 of the Constitution of India were unsustainable.