The aggressive position being adopted by revenue authorities across the country in income tax matters have seen a surge in the number of writ petitions being filed by tax-payers in the high courts — the pretext for taking recourse to a writ remedy being the safeguard of natural justice and fundamental rights.

The power of high courts to issue writs emanates from Article 226 of the Constitution. It is exercised where the judicial conscience of a court dictates it to act for the enforcement of the fundamental rights of any citizen. Any citizen can invoke the aid of the court under Article 226 against illegal encroachment of rights, attempted by order of any authority, which takes or proposes to take action not authorised under the law.

Article 226 empowers high courts to issue writs in the nature of habeas corpus , mandamus , prohibition, quo warranto and certiorari , to enforce not only fundamental rights, but also to redress any other injury or illegality due to contravention of ordinary law.

Normally, the following types of writ remedies or a combination of them are preferred under income tax proceedings:

Prohibition writ : issued to subordinate authorities to stop continuing the proceedings which is without or in excess of jurisdiction.

Certiorari writ : issued for quashing the order passed by lower authorities without or in excess of jurisdiction or acting in flagrant disregard of law or in violation of principles of natural justice.

Mandamus writ : issued for performing legal duty of a public nature when such performance cannot be enforced by any other adequate legal remedy.

If there’s an alternative Historically, courts have on numerous occasions laid down the “doctrine of alternative remedy”, by which any petitioner, before seeking relief under Article 226 jurisdiction, should have exhausted all the alternatives available to him under the applicable law. However, the mere existence of alternative remedy may not be ground for refusal of admissibility of writ. If it can be shown to the satisfaction of the court that though the alternative remedy is available, is onerous, it may invoke its writ jurisdiction.

In the case of Central Coalfields Limited, the high court recognised that in exceptional circumstances where the authority went beyond statutory powers or acted in excess of its jurisdiction, a writ petition could be entertained.

But it is also true that courts are adopting a cautious approach while exercising their jurisdictional power.

For instance, the courts do not entertain writs where alternate remedies by way of appeal or revision are available and as long as the error can be corrected through them. They appear to be guided by procedure and do not entertain merits whilst disposing them.

We have seen the dismissal of writ petitions including those involving high-pitched transfer pricing cases of the likes of Vodafone India involving adjustment of Rs 8,500 crore on the ground of alternate remedy. In another case involving the company, the court dismissed the writ, although it then remanded it for reconsideration. Appropriate safeguards were built in to go to courts in case the decision of the revenue authorities was patently illegal, in spite of the availability of alternative remedy of filing an appeal before higher appellate authorities.

Looking at the present judicial environment, it will be interesting to see whether the Bombay High Court will deviate from recent jurisprudence and grant relief to Shell India in the writ filed against a huge transfer pricing adjustment case involving Rs 15,000 crore which will give us an indication of how the courts are viewing this issue.

With inputs from Vikash Dhariwal, Manager

(The author is Executive Director, Tax and Regulatory Services, PwC India. The views are personal.)

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