Court rules alternate remedies don’t bar writ jurisdiction when legal issue already settled

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Case Name

Sony India Pvt. Ltd. Vs Assistant Commissioner of Income Tax & Ors. (High Court of Delhi)

W.P.(C) 3876/2021 & CM No. 11674/202

Date: 3rd June 2021

Key Takeaways

• Alternative remedies are self-imposed limitations: Courts can choose to hear cases even when other remedies exist - it’s their discretion, not a hard rule
• Precedent matters: When a legal issue has already been decided in a similar case, courts are more likely to hear the matter directly rather than send parties through alternative channels
• Writ jurisdiction is broad: High Courts have wide discretionary powers under Article 226 of the Constitution to entertain writ petitions
• Disputed facts don’t automatically bar writ petitions: Even when facts are in dispute, courts can still choose to hear writ petitions if they deem it appropriate

Issue

Can a High Court refuse to entertain a writ petition solely on the ground that alternative remedies are available to the petitioner, even when the legal issue has already been settled by a previous court decision?

Facts

Sony India filed a writ petition challenging certain income tax orders. The case came up for hearing, and both sides had their lawyers present - Mr. Nageswar Rao for Sony and Mr. Ruchir Bhatia for the income tax department.

The interesting twist is that Sony’s lawyer argued that their case was exactly like another case called “Concentrix Services Netherlands B.V. vs. Income Tax Officer (TDS)” that the same court had already decided on April 22, 2021. Basically, Sony was saying “Hey, you’ve already ruled on this exact issue before!”

The income tax department didn’t dispute that the legal issue was the same, but they had a different argument: “Sure, the issue might be covered by the Concentrix case, but Sony has other options - they can go through the regular income tax appeal process instead of coming straight to the High Court.”

Arguments

Sony’s Position (Petitioner):

• The legal issue in their case was identical to what was already decided in the Concentrix case
• Since the court had already ruled on this point, there was no need to go through alternative remedies
• They should get the same relief that was granted in the Concentrix case

Income Tax Department’s Position (Respondents):

• While they acknowledged the issue was covered by the Concentrix judgment, they argued Sony should use alternative remedies available under the income tax law
• Essentially, they were saying Sony should go through the normal appeal process rather than directly approaching the High Court

Key Legal Precedents

The court relied on several important precedents to make its decision:

1. Calcutta Discount Co. Ltd. vs. ITO, (1961) 2 SCR 241 - This case established that alternative remedies are self-imposed limitations by courts
2. Whirlpool Corpn. vs. Registrar of Trade Marks, (1998) 8 SCC 1 - Another case supporting the principle that alternative remedies don’t prevent courts from exercising jurisdiction
3. ABL International Ltd. vs. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553 - The Supreme Court held that even when facts are disputed, it doesn’t automatically prevent a writ court from hearing the case
4. Piramal Healthcare Limited vs. Union of India, 2013 SCC OnLine Del 2357 - Another supporting case for the same principle
5. Gunwant Kaur [(1969) 3 SCC 769] - This case went so far as to say that writ courts can even take oral evidence if needed

The court also referenced Article 226 of the Constitution, which gives High Courts broad discretionary powers to issue writs

Judgement

The court ruled in favor of Sony India. Here’s their reasoning:

The Court’s Logic:

The judges said, “Look, if the only defense the income tax department has is that Sony should use alternative remedies, we’re not buying it.”

Key Legal Reasoning:

1. Alternative remedies are discretionary: The court emphasized that alternative remedies are “a self-imposed limitation placed on itself by the Court” and don’t prevent the court from hearing a case if it has jurisdiction
2. No purpose in delay: Since the legal issue was already covered by the Concentrix case and there was no dispute about the facts, the court saw no point in making Sony go through alternative channels
3. Broad constitutional power: Under Article 226, High Courts have wide discretion to entertain writ petitions

The Order:

The court set aside the impugned orders dated March 12, 2021, and January 31, 2021, and disposed of the writ petition. Any pending applications were also closed.

FAQs

Q1: Does this mean taxpayers can always skip the normal appeal process and go straight to High Court?

A: Not necessarily. This case had special circumstances - the legal issue was already decided in a previous case (Concentrix), and there were no disputed facts. Courts will still generally prefer that parties use alternative remedies when appropriate.

Q2: What’s the significance of the Concentrix case mentioned throughout?

A: The Concentrix case dealt with the same legal issue that Sony was facing. Since the court had already ruled on this point, it made sense to apply the same reasoning rather than making Sony go through the entire appeal process again.

Q3: Can this principle apply to non-tax cases?

A: Yes, the principle that alternative remedies don’t automatically bar writ jurisdiction applies across different areas of law, not just tax matters.

Q4: What does “impugned orders” mean?

A: “Impugned orders” simply means the orders that were being challenged or disputed - in this case, the income tax orders that Sony was fighting against.

Q5: Why did the court emphasize that alternative remedies are “self-imposed limitations”?

A: This is important because it means courts choose to defer to alternative remedies as a matter of judicial policy, not because they’re legally required to. When circumstances warrant it (like when the legal issue is already settled), courts can choose to hear the case directly.

1. Pursuant to the last date of hearing, Mr. Ruchir Bhatia, who appears

for respondent nos. 1 to 3/revenue, says that the counter-affidavit has been

filed. Mr. Nageswar Rao, who appears for the petitioner, affirms that he has

received a copy of the aforesaid counter-affidavit.

2. It is, however, Mr. Rao‟s submission that the issue, which arises for

consideration in the present petition, is squarely covered by the judgement

of this Court dated 22.04.2021, passed in W.P.(C) No. 9051/2020, titled

Concentrix Services Netherlands B. V. vs. Income Tax Officer (TDS) &

2.1. Mr. Bhatia, on the other hand, says that, although, the issue arising in the present petition is covered by the aforementioned judgment, the

petitioner, unlike the Concentrix case, can take recourse to an alternate

remedy.

3. To our minds, in these proceedings, if this is the only defence

available to respondent nos. 1 to 3/revenue, as is evident from Mr. Bhatia‟s

submission, i.e., an alternative remedy is available with the petitioner, we

are not inclined to reject this petition on that score.

3.1. As has been observed by this Court and other courts including the

Supreme Court in several judgments, an alternate remedy is a self-imposed

limitation placed on itself by the Court. It does not prevent the Court from

entertaining an action, if it, otherwise, has jurisdiction in the matter. [See Calcutta Discount Co. Ltd. vs. ITO2, (1961) 2 SCR 241; Also see

Whirlpool Corpn. vs. Registrar of Trade Marks3, (1998) 8 SCC 1]

In short „Concentrix Case‟

“27. Mr Sastri mentioned more than once the fact that the Company would have

sufficient opportunity to raise this question viz. whether the Income Tax Officer had reason to believe that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the Appellate Tribunal or in the High Court under Section 66(2) of the Indian Income Tax Act. The existence of such alternative remedy

is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.”

[Emphasis is ours]

“14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for

3.2. In this case, particularly, we do not see any purpose in relegating the

petitioner to the alternate forum, in view of the fact that the issue raised

stands already covered by the judgment of this Court in Concentrix case;

there being no dispute qua the facts. As a matter of fact, the Supreme Court, in ABL International Ltd. vs. Export Credit Guarantee Corpn. of India

Ltd., (2004) 3 SCC 5534 has observed that even where the facts are disputed,

it does not, willy-nilly, restrain a writ Court from entertaining such an

action, if it, otherwise, chooses to do so. [Also see Piramal Healthcare

Limited vs. Union of India, 2013 SCC OnLine Del 23575]

“any other purpose”.

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. ...”

[Emphasis is ours]

“19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur [(1969) 3 SCC 769] this

Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact.”

“16.4 For the sake of brevity, I would advert to principles enunciated in the judgment of the Supreme Court in the case of ABL International Ltd., in which the court considered the very same submissions, which is that, the dispute in issue was contractual in nature, and no mandamus could be issued for recovery of money. This is, in addition to the fact that in ABL's case the Supreme Court discussed, distinguished and explained its earlier

3.3. Accordingly, the impugned orders dated 12.03.2021 and 31.01.2021

are set aside.

4. The writ petition is disposed of in the aforesaid terms. Pending

application stands closed too.