M/S.hyundai Motor India Limitedplot No.h1, Sipcot Industrial Park,Irrungattukottai, Sriperumbudur Taluk,Kancheepuram District.tamil Nadu – 602 117 v. The Deputy Commissioner Of Income Tax, Transfer Pricing Officer – 2(1), Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAMW.P.No.22508 of 2017andW.M.P.No.38346 of 2017 M/s.Hyundai Motor India LimitedPlot No.H1, SIPCOT Industrial Park,Irrungattukottai, Sriperumbudur Taluk,Kancheepuram District.Tamil Nadu – 602 117. ..Petitioner vs 1.The Deputy Commissioner of Income Tax, Transfer Pricing Officer – 2(1), Room No.506, 5[th] Floor, Tower-I, BSNL Building, No.16, Greams Road, Chennai – 600 006. 2.The Deputy Commissioner of Income-tax(LTU), Jawaharlal Nehru Inner Ring Road, Anna Nagar West Extension, Chennai – 600 101. .. Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of CertiorarifiedMandamus, to quash the giving effect order F.No.H-201/TPO-2/A.Y.2008-09 dated 27.03.2017 issued by the 1[st] respondent andto issue directions to the 1[st] respondent to give proper andspecific effect to the order of the ITAT in MiscellaneousPetition No.93/Mds/2016 in ITA No.2353/Mds/2012 dated 06.09.2016. For Petitioner : Mr.N.Venkata Raman, Senior CounselFor M/s.SP.Chidambaram For Respondents: Mrs.HemaMuraliKrishnan O R D E R The relief sought for in this writ petition is to call forthe records in pursuant to the orders passed by the 1[st]respondent in proceedings dated 27.03.2017 and quash the sameand to direct the first respondent to give proper and specificeffect to the order of the ITAT in Miscellaneous PetitionNo.93/Mds/2016 in ITA No.2353/Mds/2012 dated 06.09.2016. 2.The learned Senior Counsel appearing on behalf of the writpetitioner made a submission that the order under challenge inthe present writ petition is perverse and contrary to the orderspassed by the Income Tax Appellate Tribunal(hereinafter referredto as “the ITAT”) in M.P.No.93/Mds/2016 in ITA No.2353/Mds/2012dated 06.09.2016. The first respondent has erroneously come tothe conclusion that “the ITAT” has committed an error in respectof fixing the Transfer Prices. The learned Senior Counsel is ofan opinion that the order impugned is an error apparent onrecord in view of the fact that the findings arrived by “theITAT” ,after adjudication, in its order has been declared aserroneous by the respondents for which the respondent has nojurisdiction or authority. It is contended that no show causenotice was issued in respect of the differences now raised bythe first respondent in the notice for revising the royaltypayment. 3.The contentions of the writ petitioner is that the issuedrawing strength from the earlier decision of the Bench of theTribunal for the preceding assessment year, wherein there was acategorical finding by the Transfer Pricing Officer(TPO) thatthe average rate of royalty payment in the industry was 4.7%.Further, the contention of the writ petitioner is that theaverage royalty payment in automotive sector from the study of35 licenses is 4.7%, which is higher than the appellant'saverage rate of royalty payment of 3.60%. 4.By showing the screen shot details, the learned SeniorCounsel appearing on behalf of the writ petitioner made asubmission that the impugned order is an error apparent onrecord and the respondents have no authority to override thefindings given by “the ITAT” in the matter of the payment ofroyalty to the foreign entity. Further, it is contended that ashow cause notice in this regard in respect of the revisedassessment made in relation to royalty payment, must be given tothe writ petitioner. Admittedly, no such show cause notice wasissued to the writ petitioner and on that ground also, the writpetition deserves to be allowed. 4.By showing the screen shot details, the learned SeniorCounsel appearing on behalf of the writ petitioner made asubmission that the impugned order is an error apparent onrecord and the respondents have no authority to override thefindings given by “the ITAT” in the matter of the payment ofroyalty to the foreign entity. Further, it is contended that ashow cause notice in this regard in respect of the revisedassessment made in relation to royalty payment, must be given tothe writ petitioner. Admittedly, no such show cause notice wasissued to the writ petitioner and on that ground also, the writpetition deserves to be allowed. 5.The writ petitioner had transactions with associatedenterprises and therefore, the case was referred to the TransferPricing Officer(TPO)/ the first respondent passed an order dated28.10.2011 under Section 92CA of the Income Tax Act, 1961. TheTransfer Pricing Officer(TPO) has the power only to determinethe Arms Length Price in case of international transaction orspecified domestic transaction. The order of the TransferPricing Officer(TPO) is not an assessment order but anintermediate order with regard to Arms Length Price alone. Theassessing officer, while computing the total income and taxableincome at the time of passing the assessment order, takes intoaccount the order of the Transfer Pricing Officer(TPO) for thepurpose of computation of income relatable to internationaltransaction or specified domestic transaction. Thus, on receiptof the order of the Transfer Pricing Officer(TPO), the assessingofficer/the second respondent passed a draft order under Section144C(1) on 23.12.2011. The petitioner also filed theirobjections before the Disputes Resolution Panel (DRP) underSection 144C(2) and the Disputes Resolution Panel passed ordersand issued directions under Section 144C(5). Thereafter, thesecond respondent passed an assessment order on 29.10.2012 underSection 144C(15) in accordance with the directions of theDisputes Resolution Panel. The said order dated 29.10.2012 waschallenged by the petitioner herein before “the ITAT” underSection 253 of the Income tax Act, 1961. In the meanwhilerectified directions were issued by the Disputes ResolutionPanel on 30.03.2013. “The ITAT” passed order in ITANo.93/Mds/2012 on 22.04.2016 and in M.P.93/Mds/2016 dated06.09.2016 remanding the case to the Transfer Pricing Officer(TPO). 6.Pursuant to the order of “the ITAT”, the Transfer PricingOfficer(TPO) had granted several hearings to the writ petitionerand finally passed an order on 27.03.2017, which is underchallenge in the present writ petition. Thus, the writpetitioner has made an attempt to maintain the present writpetition on merits of the issues i.e., how the arm's lengthprice has to be determined. 7.This Court is of an opinion that the said issue cannot beadjudicated in a writ petition and these factual disputes are tobe adjudicated by the competent authorities and by “the ITAT”.Bye-passing all these Appellate Forums, the writ petitionercannot approach this Hon'ble Court under Article 226 of theConstitution of India for adjudicating these factual issues inrespect of considering the arm's length price to be determined. 8.The learned counsel appearing on behalf of the respondentsopposed the contentions raised on behalf of the writ petitionerby stating that the writ petition itself is not maintainable. https://hcservices.ecourts.gov.in/hcservices/ 7.This Court is of an opinion that the said issue cannot beadjudicated in a writ petition and these factual disputes are tobe adjudicated by the competent authorities and by “the ITAT”.Bye-passing all these Appellate Forums, the writ petitionercannot approach this Hon'ble Court under Article 226 of theConstitution of India for adjudicating these factual issues inrespect of considering the arm's length price to be determined. 8.The learned counsel appearing on behalf of the respondentsopposed the contentions raised on behalf of the writ petitionerby stating that the writ petition itself is not maintainable. https://hcservices.ecourts.gov.in/hcservices/ The present writ petition has been filed, challenging the orderpassed by the Deputy Commissioner of Income Tax Transfer PricingOfficer(TPO). Based on the records provided by the writpetitioner, the Transfer Pricing Officer(TPO) conducted ascrutiny and arrived a conclusion that there was an error inrespect of royalty payment and therefore, the same is to berevised. The said exercise was done based on the records andbooks of accounts furnished by the writ petitioner themselves.Therefore, if at all, any discrepancy or an error, the writpetitioner is at liberty to file an appeal before the DisputesResolution Panel, which is a statutory body. The writ petitionfiled against the order of the Transfer Pricing Officer(TPO) ispremature in view of the fact that the Assessing Officer has topass a final order based on the proceedings of the TransferPricing Officer(TPO). Therefore, the order of the TransferPricing Officer(TPO) cannot constitute a cause of action for thepurpose of moving the present writ petition under Article 226 ofthe Constitution of India. The learned counsel for therespondents is of an opinion that the writ petitioner has toexhaust the remedy before the Disputes Resolution Panelconstituted under the statute and further, they are bound toapproach “the ITAT” for redressal of their grievances. By-passing all these statutory remedies, the present writ petitionhas been filed, challenging the proceedings of the TransferPricing Officer(TPO), which is not maintainable. 9.The learned counsel for the respondents relied on thecounter statement, showing that the Transfer Pricing Officer(TPO) has not violated the orders of “the ITAT”. In fact, thecase of the petitioner was originally adjudicated before “theITAT” and “the ITAT” remanded the case back for re-adjudication.The order of “the ITAT” dated 6[th] September 2016 is unambiguousthat there were certain discrepancies and on that ground alone,“the ITAT” has remanded the matter back for re-adjudication.Paragraphs 6 and 7 of the above said order of “the ITAT” dated6[th] September 2016, which are extracted hereunder: “6.It is submitted by the learned AuthorizedRepresentative that for the relevant assessment yearalso the average rate of royalty in the industry is4.7% which is higher than the appellant's averagerate of royalty payment of 3.6%. Therefore, there isapparent mistake in the order of the Tribunal whichis required to be rectified. 7.On this issue, following our decision for thepreceding year, we have already decided that theaverage rate of royalty payment in the industry hasto be considered in the case of the assessee fordetermining the arm's length price and if the sameis more than the rate of royalty payment made by theassessee, then no adjustment is required. Since the “6.It is submitted by the learned AuthorizedRepresentative that for the relevant assessment yearalso the average rate of royalty in the industry is4.7% which is higher than the appellant's averagerate of royalty payment of 3.6%. Therefore, there isapparent mistake in the order of the Tribunal whichis required to be rectified. 7.On this issue, following our decision for thepreceding year, we have already decided that theaverage rate of royalty payment in the industry hasto be considered in the case of the assessee fordetermining the arm's length price and if the sameis more than the rate of royalty payment made by theassessee, then no adjustment is required. Since the Ld.A.R has pointed out that in the case of theassessee the rate of Royalty payment is less thanthe rate prevalent in the industry we hereby directthe learned TPO to verify the same and decide thematter in the light of our above decision. To thatextent, the order of the Tribunal stands correctedand modified.”10.It is urged before this Court that “the ITAT” has notdecided the matter in respect of the factual details and theparticulars involved in the case of the writ petitioner.Contrarily, “the ITAT” remanded the matter back for re-adjudication. When the process of re-adjudication is undertakenby the competent authority/respondents, they are duty bound toverify all the records once again and decide the matter onmerits and in accordance with law. On receipt of the order ofremand from “the ITAT”, the respondents had undertaken theprocess of scrutiny and the writ petitioner also hadparticipated in three personal hearings. The documents submittedby the writ petitioner was scrutinised and considered in allrespects. The objections from the representative of the writpetitioner Company also had been considered. By providing allopportunities to re-present their case, the Transfer PricingOfficer(TPO) found that there were certain discrepancies in thematter of royalty payment. Thus, there was no violation on thepart of the respondents in respect of implementing the orderspassed by “the ITAT”, remanding the matter for re-consideration. 11.Question of issuing show cause notice, does not arise inthe case of the writ petitioner in view of the fact that it is acase, which was remanded by “the ITAT”. The writ petitioner wasaware of all the facts and circumstances and the records. Thus,the writ petitioner was invited for personal hearing and thewrit petitioner had participated in three personal hearings andsubmitted their case before the respondents. Such being thefactum of the case, now, the learned Senior Counsel appearing onbehalf of the writ petitioner cannot plead that no show causenotice has been issued. It is not a fresh case, wherein a showcause notice is mandatory. It is a remanded case. Further, evenwhile re-considering the issues, the notice was issued to thewrit petitioner and they participated in three personalhearings. Therefore, the principles of natural justice had beencomplied with and the contentions in this regard by the learnedSenior Counsel appearing on behalf of the writ petitionerdeserves no merit consideration. 12.The contentions of the learned Senior Counsel appearingon behalf of the writ petitioner is that the erroneousimplementation of the order of “the ITAT”, resulted in issuanceof the present impugned order dated 27.03.2017 by the TransferPricing Officer(TPO). Once, it is recorded by “the ITAT” that the average rate of royalty payment in the industry was 4.7% andthe writ petitioner had paid only 3.6%, there is no reason todisbelieve the statement of “the ITAT” recorded during thehearing of the matter. In the absence of any incriminating,contrary evidences or records, the respondents cannot disbelieveor disrespect the findings made by “the ITAT” in its order. 12.The contentions of the learned Senior Counsel appearingon behalf of the writ petitioner is that the erroneousimplementation of the order of “the ITAT”, resulted in issuanceof the present impugned order dated 27.03.2017 by the TransferPricing Officer(TPO). Once, it is recorded by “the ITAT” that the average rate of royalty payment in the industry was 4.7% andthe writ petitioner had paid only 3.6%, there is no reason todisbelieve the statement of “the ITAT” recorded during thehearing of the matter. In the absence of any incriminating,contrary evidences or records, the respondents cannot disbelieveor disrespect the findings made by “the ITAT” in its order. 13.This Court is of an opinion that certain factual detailsbased on the records can be re-adjudicated or verified onceagain when the matter was remanded back for re-consideration.Though there is a finding recorded by “the ITAT” during thecourse of presenting the case, ultimately the case was remandedto the original authority for re-consideration by “the ITAT”.When the case was remanded back for re-adjudication, thefindings made by “the ITAT” cannot be taken or relied upon as itis. The very purpose of remanding the matter to the originalauthority by the Courts/Tribunals are to ensure that all therecords and relevant factors are to be re-considered, re-adjudicated and a revised order is to be passed. When the orderof “the ITAT” is unambiguous and when the case of the writpetitioner was remanded back for reconsideration in the hands ofthe original authorities, then the original authorities arebound to conduct an enquiry by verifying the original recordsonce again and re-adjudicate the matter, re-consider the factualaspects and accordingly, pass a final order. The said exercisewas done in the present case. Thus, this Court do not find anyerror on the part of the Transfer Pricing Officer(TPO) inreconsidering the entire books of accounts submitted by the writpetitioner for the purpose of assessing the average rate ofroyalty payment in the industry. The findings made by “the ITAT”in the order need not be directly taken into account for thepurpose of considering the average rate of royalty payment inthe industry in view of the fact that, if that is taken intoaccount, then there is no point in remanding the matter forreconsideration. The very purpose and object of theCourts/Tribunals to remand the matter is that the authoritiesmust reconsider the case in all respects independently and passa revised order on merits and in accordance with law. This beingthe scope of the order of remanding the contentions raised onbehalf of the writ petitioner that the average rate of royaltypayment in the industry was already fixed by “the ITAT” can haveno sanctity. These all are the points raised by the respectiveparties before “the ITAT” and the same was recorded in the orderpassed by “the ITAT”. When “the ITAT” itself was not decided theissues raised before the Tribunal and remanded the case back forreconsideration, then there is no point in recording thefindings of “the ITAT” by the Transfer Pricing Officer(TPO) atthe time of exercising the powers of reconsideration of theentire issues. The very contention raised in this regard alsodeserves no merit consideration. 14.The learned counsel for the respondents urged this Courtthat the royalty has been computed by three different methods asunder:- “It may be seen from the chart that royalty has beencomputed by three different methods as under:-(a)5% of sales value for models like Santro, Accent,Sonata, Getz, Elantra and Verna in domestic market(b)100$ per i-10 car sold in domestic and exportmarket(c)8% of sales value for models like Santro, Accentand Getz in export market. Sales Value has been computed as under:- 14.The learned counsel for the respondents urged this Courtthat the royalty has been computed by three different methods asunder:- “It may be seen from the chart that royalty has beencomputed by three different methods as under:-(a)5% of sales value for models like Santro, Accent,Sonata, Getz, Elantra and Verna in domestic market(b)100$ per i-10 car sold in domestic and exportmarket(c)8% of sales value for models like Santro, Accentand Getz in export market. Sales Value has been computed as under:- Gross sales = xxxxLess:Excise Duty = xxxLanded cost of imported components = xxxCost of standard bought-out components=xxx = xxxxSale Value for computation of royalty = xxxxRoyalty has been computed @ 5% or 8% of the above salevalue and paid. But for Transfer Pricing purposes, the Petitioner hascomputed a higher sales value by reducing only the Exciseduty from the gross sales and not reducing the other twoitems, viz, landed cost of imported components and cost ofstandard bought-out components. This has been done only tobring down the royalty ratio as seen from the chart, whichis re-presented in a comparative form in the table belowto enable totaling of crucial columns which has beenavoided by the Petitioner: (Figures in Rs.in crores) *Royalty Ratio=Royalty amount in col.7/Sales figure inCol.4 * 100 If the total royalty paid(364.11 crores) is worked out asa percentage of net sales as per RBI guidelines(7275.94crores), the average royalty rate works out to 5.0043 or5%. But since the Petitioner adopted different salesfigures to compute the royalty ratio, the royalty ratioworked out to 3.67%. 15.The learned counsel for the respondents citing the aboveparagraph of the counter statement filed by the respondentsemphasized that there is a logic behind the re-assessment of thepayment of royalty. The authorities competent now came to a conclusion that the average royalty rate works out to 5.0043 or5%. But since the petitioner adopted different sales figures tocompute the royalty ratio, the royalty ratio worked out to3.67%. Thus, the revised calculation now arrived by theauthorities are to be enforced, which was done after verifyingthe books of accounts and the records produced by thepetitioners themselves. 16.This Court is of an opinion that all these disputedfactual details cannot be gone into deep by this Court underArticle 226 of the Constitution of India. The preliminary groundraised on behalf of the writ petitioner is that the orderimpugned in the present writ petition is an error apparent andthe findings recorded by “the ITAT” had been violated. In suchan event, the parties need not be driven to exhaust the appealremedies provided under the statute. When there is an errorapparent in the impugned order or violation of principles ofnatural justice, then a writ petition can be entertained by theHigh Courts under Article 226 of the Constitution of India. 17.In respect of these two grounds, the respondents repliedthat the question of issuing show cause notice does not arise atall, in view of the fact that the case of the writ petitionerhad already been adjudicated before “the ITAT” and it wasremanded back for reconsideration and accordingly, therespondents invited the writ petitioner for personal hearingsand the writ petitioner also participated in three personalhearings and submitted all their books of accounts and records.Thus, the principles of natural justice has been complied withand there is no question of issuing any further show causenotice in respect of the discrepancies now arrived by theTransfer Pricing Officer(TPO). This apart, if at all the writpetitioners are aggrieved, they are at liberty to approach theDisputes Resolution Panel and thereafter “the ITAT” for completeadjudication of their grievances, if any exists. 18.In respect of the ground of error apparent on record, itis contended on behalf of the respondents that the findings madeby “the ITAT” need not be taken into account as a conclusive onein view of the fact that “the ITAT” had a doubt in respect ofthese factual aspects and remanded the matter back. The veryintention of “the ITAT” for remanding the matter back is to makethe authorities to reconsider the entire issues, morespecifically, the royalty payment. Such being the scope of theorder passed by “the ITAT”, the respondents had not violated theorders passed by “the ITAT” and the petitioner cannot insist therespondents that the average rate of royalty payment recorded by“the ITAT” should be followed as it is mechanically withoutverification of any records thereafter. Such an idea is ill-motivated and the competent authorities are empowered to look into the records and the books of accounts submitted by the writpetitioner to find out the discrepancies or otherwise, if anyexists, during the course of arriving the average rate ofroyalty payment. 19.Unnecessary or routine invasion into the statutory powersof the competent authorities under a statute should berestrained by the Constitutional Courts. Frequent or unnecessaryinvasions in the executive power will defeat the constitutionalperspectives enshrined under the Constitution of India.Undoubtedly, the separation of powers under the IndianConstitution has been narrated and settled in umpteen number ofjudgments. Separation of powers demarcated in the Constitutionof India is also to be considered, while exercising the powersof judicial review in the matter of dispensing with the appealremedy provided for an aggrieved person under a statute. If theHigh Courts started interfering with such Appellate powerswithout any valid and substantiated reasons, then the verypurpose and object of the statute and provision of appeal underthe statute became an empty formality and the High Courts alsoshould see that the provisions of appeal contemplated under thestatutes are implemented in its real spirit and in accordancewith the procedures contemplated under the rules constitutedthereon. While entertaining a writ petition as narrated by theApex Court, the provision of efficacious alternative remedyunder the statute also to be considered. If the writ petitionsare entertained in a routine manner, by not allowing thecompetent Appellate authority to exercise their powers under theprovisions of the statute, then this Court is of an opinion thatthe power of judicial review has not exercised in a propermanner. Thus, it is necessary for this Court to elaborate thelegal principle settled in respect of the separation of powersunder the Constitution of India. 1. Madras Bar Association vs. Union of India (UOI) (25.09.2014 - SC) : MANU/SC/0875/2014 If the historical background, the preamble, theentire scheme of the Constitution, relevant provisionsthereof including Article 368 are kept in mind therecan be no difficulty in discerning that the followingcan be regarded as the basic elements of theconstitutional structure. (These cannot be cataloguedbut can only be illustrated): (1) The supremacy of the Constitution. (2) Republican and Democratic form of government andsovereignty of the country. (3) Secular and federal character of the Constitution. (4) Demarcation of power between the Legislature, theexecutive and the judiciary. (5) The dignity of the individual secured by thevarious freedoms and basic rights in Part III and themandate to build a welfare State contained in Part IV.(6) The unity and the integrity of the Nation. 2. Holiness Kesavananda Bharati Sripadagalvaru v.State of Kerala and Anr.[MANU/SC/0445/1973: (1973)4 SCC 225]. That separation of powers between the legislature,theexecutiveand the judiciary is the basic structureof the Constitution is expressly stated by Sikri, C.J. (1) The supremacy of the Constitution. (2) Republican and Democratic form of government andsovereignty of the country. (3) Secular and federal character of the Constitution. (4) Demarcation of power between the Legislature, theexecutive and the judiciary. (5) The dignity of the individual secured by thevarious freedoms and basic rights in Part III and themandate to build a welfare State contained in Part IV.(6) The unity and the integrity of the Nation. 2. Holiness Kesavananda Bharati Sripadagalvaru v.State of Kerala and Anr.[MANU/SC/0445/1973: (1973)4 SCC 225]. That separation of powers between the legislature,theexecutiveand the judiciary is the basic structureof the Constitution is expressly stated by Sikri, C.J. 3. P. Kannadasan and Ors. v. State of T.N. and Ors.[MANU/SC/0650/1996 : (1996) 5 SCC 670] the SupremeCourt noted that the Constitution of India recognisedthe doctrine of separation of powers between the threeorgans of the State, namely, the legislature, theexecutive and the judiciary. The Court said: It must be remembered that our Constitution recognisesand incorporates the doctrine of separation of powersbetween the three organs of the State, viz., theLegislature, the Executive and the Judiciary. Eventhough the Constitution has adopted the parliamentaryform of government where the dividing line between thelegislature and the executive becomes thin, the theoryof separation of powers is still valid. 4. State of Tamil Nadu and Ors. vs. State of Keralaand Ors. (07.05.2014 - SC) : MANU/SC/0425/2014 121. On deep reflection of the above discussion, inour opinion, the constitutional principles in thecontext of Indian Constitution relating to separationof powers between legislature, executive and judiciarymay, in brief, be summarized thus: (i) Even without express provision of the separationof powers,the doctrine of separation of powers is anentrenched principle in the Constitution of India. The doctrine of separation of powers informs theIndian constitutional structure and it is an essentialconstituent of rule of law. In other words, the doctrine of separation of powerthough not expressly engrafted in the Constitution,its sweep, operation and visibility are apparent fromthe scheme of Indian Constitution. Constitution hasmade demarcation, without drawing formal lines betweenthe three organs- legislature, executive andjudiciary. In that sense, even in the absence ofexpress provision for separation of power, theseparation of power between legislature, executive andjudiciary is not different from the constitutions ofthe countries which contain express provision forseparation of powers. (ii) Independence of courts from the executive andlegislature is fundamental to the rule of law and oneof the basic tenets of Indian Constitution. Separation of judicial power is a significantconstitutional principle under the Constitution ofIndia. (iii) Separation of powers between three organs--legislature, executive and judiciary--is also nothingbut a consequence of principles of equality enshrinedin Article 14 of the Constitution of India.Accordingly, breach of separation of judicial powermay amount to negation of equality Under Article 14.Stated thus, a legislation can be invalidated on thebasis of breach of the separation of powers since suchbreach is negation of equality Under Article 14 of theConstitution. (iv) The superior judiciary (High Courts and SupremeCourt) is empowered by the Constitution to declare alaw made by the legislature (Parliament and Statelegislatures) void if it is found to have transgressedthe constitutional limitations or if it infringed therights enshrined in Part III of the Constitution. (iii) Separation of powers between three organs--legislature, executive and judiciary--is also nothingbut a consequence of principles of equality enshrinedin Article 14 of the Constitution of India.Accordingly, breach of separation of judicial powermay amount to negation of equality Under Article 14.Stated thus, a legislation can be invalidated on thebasis of breach of the separation of powers since suchbreach is negation of equality Under Article 14 of theConstitution. (iv) The superior judiciary (High Courts and SupremeCourt) is empowered by the Constitution to declare alaw made by the legislature (Parliament and Statelegislatures) void if it is found to have transgressedthe constitutional limitations or if it infringed therights enshrined in Part III of the Constitution. (v) The doctrine of separation of powers applies tothe final judgments of the courts. Legislature cannotdeclare any decision of a court of law to be void orof no effect. It can, however, pass an amending Act toremedy the defects pointed out by a court of law or oncoming to know of it aligned.In other words, a court's decision must always bindunless the conditions on which it is based are sofundamentally altered that the decision could not havebeen given in the altered circumstances. (vi) If the legislature has the power over thesubject-matter and competence to make a validatinglaw, it can at any time make such a validating law and make it retrospective. The validity of a validatinglaw, therefore, depends upon whether the legislaturepossesses the competence which it claims over thesubject-matter and whether in making the validationlaw it removes the defect which the courts had foundin the existing law.” 20.This Court is of a strong opinion that institutionalrespects are to be maintained by the constitutional Courts.Whenever there is a provision for an appeal under the statute,without exhausting the remedies available under the statute, nowrit petition can be entertained in a routine manner. Only onexceptional circumstances, the remedy of appeal can be waived,if there is a gross injustice or if there is a violation offundamental rights ensured under the Constitution of India.Otherwise, all the aggrieved persons from and out of the orderpassed by the original authority is bound to approach theAppellate Authority. The Constitutional Courts cannot make anappeal provision as an empty formality. Every AppellateAuthority created under the statute to be trusted in normalcircumstances unless there is a specific allegation, which issubstantiated in a writ proceedings. Thus, the institutionalfunctions and exhausting the appeal remedies by the aggrievedpersons, are to be enforced in all circumstances and writproceedings can be entertained only on exceptionalcircumstances. Rule is to prefer an appeal and entertaining awrit is only an exception. This being the legal principles to befollowed, this Court cannot entertain the writ petitions in aroutine manner by waiving the remedy of appeal provided underthe statute. 21.Now, let us look into the legal principles settled by theApex Court for exhausting the efficacious alternative remedyprovided under the statute. 22.When an effective alternative remedy is available, a writpetition cannot be maintained 1. In City and Industrial Development Corporation v.DosuAardeshirBhiwandiwala and Ors. MANU/SC/8250/2008 :(2009) 1 SCC 168, this Court had observed that:The Court while exercising its jurisdiction underArticle 226 is duty-bound to consider whether: (a) adjudication of writ petition involves any complexand disputed questions of facts and whether they can besatisfactorily resolved; (b) the petition reveals all material facts; (c) the Petitioner has any alternative or effectiveremedy for the resolution of the dispute; (d) person invoking the jurisdiction is guilty ofunexplained delay and laches; (e) ex facie barred by any laws of limitation; 22.When an effective alternative remedy is available, a writpetition cannot be maintained 1. In City and Industrial Development Corporation v.DosuAardeshirBhiwandiwala and Ors. MANU/SC/8250/2008 :(2009) 1 SCC 168, this Court had observed that:The Court while exercising its jurisdiction underArticle 226 is duty-bound to consider whether: (a) adjudication of writ petition involves any complexand disputed questions of facts and whether they can besatisfactorily resolved; (b) the petition reveals all material facts; (c) the Petitioner has any alternative or effectiveremedy for the resolution of the dispute; (d) person invoking the jurisdiction is guilty ofunexplained delay and laches; (e) ex facie barred by any laws of limitation; (f) grant of relief is against public policy or barredby any valid law; and host of other factors. 2. KanaiyalalLalchand Sachdev and Ors. vs. State ofMaharashtra and Ors. (07.02.2011 - SC) :MANU/SC/0103/2011 It is well settled that ordinarily relief UnderArticles 226/227 of the Constitution of India is notavailable if an efficacious alternative remedy isavailable to any aggrieved person. (See Sadhana Lodh v.National Insurance Co. Ltd.; Surya Dev Rai v. RamChander Rai and SBI v. Allied Chemical Laboratories.) 3. Commissioner of Income Tax and Ors. v. ChhabilDassAgarwal, MANU/SC/0802/2013 : 2014 (1) SCC 603, asfollows: Para 15. while it can be said that this Court hasrecognised some exceptions to the Rule of alternativeremedy i.e. where the statutory authority has not actedin accordance with the provisions of the enactment inquestion, or in defiance of the fundamental principlesof judicial procedure, or has resorted to invoke theprovisions which are repealed, or when an order hasbeen passed in total violation of the principles ofnatural justice, the proposition laid down inThansinghNathmal case, Titaghur Paper Mills case andother similar judgments that the High Court will notentertain a petition Under Article 226 of theConstitution if an effective alternative remedy isavailable to the aggrieved person or the statute underwhich the action complained of has been taken itselfcontains a mechanism for redressal of grievance stillholds the field. Therefore, when a statutory forum iscreated by law for redressal of grievances, a writpetition should not be entertained ignoring thestatutory dispensation. 4. Authorized Officer, State Bank of Travancore andOrs. vs. Mathew K.C. (30.01.2018 - SC) :MANU/SC/0054/2018 The petitioner argued that the SARFAESI Act is acomplete code by itself, providing for expeditiousrecovery of dues arising out of loans granted by financial institutions, the remedy of appeal by theaggrieved under Section 17 before the Debt RecoveryTribunal, followed by a right to appeal before theAppellate Tribunal under Section 18. The High Courtought not to have entertained the writ petition in viewof the adequate alternate statutory remedies availableto the Respondent. The interim order was passed on thevery first date, without an opportunity to theAppellant to file a reply. Reliance was placedon United Bank of India vs. Satyawati Tandon andothers, 2010 (8) SCC 110, and General Manager, SriSiddeshwara Cooperative Bank Limited and another vs.Ikbal and others, 2013 (10) SCC 83. The writ petitionought to have been dismissed at the threshold on theground of maintainability. The Division Bench erred indeclining to interfere with the same. The Supreme Courtagreed to the arguments and held the same also notedthat the writ petition ought not to have beenentertained and the interim order granted for the mereasking without assigning special reasons, and that toowithout even granting opportunity to the Appellant tocontest the maintainability of the writ petition andfailure to notice the subsequent developments in theinterregnum. 5. State of Himachal Pradesh v. Gujarat Ambuja CementLtd. reported at AIR 2005 SC 3856, the Supreme Courtexplained the rule of 'alternate remedy' in thefollowing terms Considering the plea regarding alternative remedy asraised by the appellant-State. Except for a period whenArticle 226 was amended by the Constitution (42ndAmendment) Act, 1976, the power relating to alternativeremedy has been considered to be a rule of self imposedlimitation. It is essentially a rule of policy,convenience and discretion and never a rule of law.Despite the existence of an alternative remedy itis within the jurisdiction of discretion of the HighCourt to grant relief under Article 226 of theConstitution. At the same time, it cannot be lost sightof that though the matter relating to an alternativeremedy has nothing to do with the jurisdiction of thecase, normally the High Court should not interfere ifthere is an adequate efficacious alternative remedy. Ifsomebody approaches the High Court without availing thealternative remedy provided the High Court shouldensure that he has made out a strong case or that thereexist good grounds to invoke the extraordinaryjurisdiction. 6. K.S. Rashid and Sons v. Income Tax InvestigationCommission and Ors., AIR (1954) SC 207; Sangram Singhv. Election Tribunal, Kotah and Ors., AIR (1955) SC425; Union of India v. T.R. Varma, AIR (1957) SC 882;State of U.P. and Ors. v. Mohammad Nooh, AIR (1958) SC86 and M/s K.S. Venkataraman and Co. (P) Ltd. v. Stateof Madras, AIR (1966) SC 1089, Constitution Benches of the Supreme Court held thatArticle 226 of the Constitution confers on all the HighCourts a very wide power in the matter of issuingwrits. However, the remedy of writ is an absolutelydiscretionary remedy and the High Court has always thediscretion to refuse to grant any writ if it issatisfied that the aggrieved party can have an adequateor suitable relief elsewhere. The Court, inextraordinary circumstances, may exercise the power ifit comes to the conclusion that there has been a breachof principles of natural justice or procedure requiredfor decision has not been adopted. 7. First Income-Tax Officer, Salem v. M/s. ShortBrothers (P) Ltd., [1966] 3 SCR 84 and State of U.P.and Ors. v. M/s. Indian Hume Pipe Co. Ltd., [1977] 2SCC 724. There are two well recognized exceptions to thedoctrine of exhaustion of statutory remedies. First iswhen the proceedings are taken before the forum undera provision of law which is ultra vires, it is open toa party aggrieved thereby to move the High Court forquashing the proceedings on the ground that they areincompetent without a party being obliged to waituntil those proceedings run their full course.Secondly, the doctrine has no application when theimpugned order has been made in violation of theprinciples of natural justice. We may add that wherethe proceedings itself are an abuse of process of lawthe High Court in an appropriate case can entertain awrit petition. 23.Considering the above judgments of the Apex Court, thisCourt is of an opinion that the writ petitioner has notestablished that there is a violation of principles of naturaljustice nor there is an error apparent on record. No exceptionalcircumstances have been established in the present writpetition. If at all, the writ petitioner is aggrieved in respectof the fixing of average rate of royalty payment, then it isleft open to them to approach the Disputes Resolution Panel andthereafter, if they are further aggrieved in respect of thefixing of average rate of royalty payment, then they are libertyto approach “the ITAT” constituted for the purpose of 23.Considering the above judgments of the Apex Court, thisCourt is of an opinion that the writ petitioner has notestablished that there is a violation of principles of naturaljustice nor there is an error apparent on record. No exceptionalcircumstances have been established in the present writpetition. If at all, the writ petitioner is aggrieved in respectof the fixing of average rate of royalty payment, then it isleft open to them to approach the Disputes Resolution Panel andthereafter, if they are further aggrieved in respect of thefixing of average rate of royalty payment, then they are libertyto approach “the ITAT” constituted for the purpose of adjudicating the issues. This being the efficacious remedyavailable under the statute for the writ petitioner, there is noreason to entertain a writ petition under Article 226 of theConstitution of India, so as to adjudicate the merits and thedemerits now raised before this Court in the present writpetition in respect of fixing of average rate of royaltypayment. 24.Under these circumstances, this Court is of an undoubtedopinion that the writ petitioner has not made out any case forthe purpose of waiving the efficacious alternate remedyavailable to the writ petitioner under the provisions of the Actand therefore, this Court is not inclined to entertain the writpetition on merits and adjudicate the issues involved in respectof fixing of average rate of royalty payment. 25.Accordingly, the writ petition stands dismissed. However,there shall be no order as to costs. Consequently, connectedmiscellaneous petition is closed. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant Registrar kakTo 1.The Deputy Commissioner of Income Tax, Transfer Pricing Officer – 2(1), Room No.506, 5[th] Floor, Tower-I, BSNL Building, No.16, Greams Road, Chennai – 600 006. 2.The Deputy Commissioner of Income-tax(LTU), Jawaharlal Nehru Inner Ring Road, Anna Nagar West Extension, Chennai – 600 101.+ 1 cc to Mr. S.P.Chidambaram, Advocate Sr.46798 + 1 cc to Mrs. Hema Muralikrishnan, Advocate Sr.46407 W.P.No.22508 of 2017 (CCC)EU(27/07/2018)