Natural justice – Alternative remedy-Beyond limitation period-Order passed by VAT authorities to Audit of business and reassessing the income is held to be bad in law and quashed.

Alternative Remedy

58. The fourth issue which we have framed pertains to the objection raised by the respondents that the writ petitions should not be entertained as the petitioners have not availed of the alternative remedy provided under the statute. In support of this contention, reference has been made to section 74 of the VAT Regulations which provides for appeal. As per sub-section (1), any person who is aggrieved by an assessment under the VAT Regulations or any other order or decision made under the said Regulations may prefer appeal before the hierarchy of authorities as mentioned therein.

59. We have already held the impugned notices dated 25.09.2020 to be barred by limitation and consequently, the orders of audit dated 12.10.2020 and 13.10.2020 are also time barred. It is a settled proposition of law that question of limitation involves a question of jurisdiction. A plea of limitation is a plea of law which concerns the jurisdiction of the Court trying the proceeding. Consequently, when an impugned notice or an impugned order is held to be beyond limitation, needless to say it becomes a notice or an order which is without jurisdiction.

60. In Whirlpool Corporation Limited Vs. Registrar of Trade Marks, (1998) 8 SCC 1, Supreme Court has held that under Article 226 of the Constitution, the High Court has a discretion to entertain or not to entertain a writ petition. High Court has imposed upon itself certain restrictions, one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, viz., – (1) where the writ petition has been filed for the enforcement of any of the fundamental rights; or (2) where there has been a violation of the principles of natural justice; or (3) where the order or proceedings are wholly without jurisdiction or the vires of an act is challenged. It has been held as under:-

“15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.

20. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spire of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.”

61. In the present case, we have already arrived at the conclusion that the impugned orders of audit were passed in violation of the principles of natural justice. We have also arrived at the conclusion that the impugned notices and the consequential orders of audit are barred by limitation and thus without jurisdiction. In such circumstances, question of relegating the petitioners to the appellate remedy simply does not arise. This issue is answered accordingly.