1974 (2) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order cancelling the registration certificate.
2. Requirement of a second notice before cancellation of the registration certificate.
3. Application of principles of natural justice in the cancellation process.

Analysis:
1. Validity of the order cancelling the registration certificate:
The respondent, a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, received a notice from the Commercial Tax Officer stating that the business had been discontinued. The Commercial Tax Officer found evidence supporting the discontinuation, leading to the cancellation of the registration certificate under section 7(6)(a) of the Act. The trial court quashed the cancellation order citing lack of notification to the respondent. However, the High Court held that the Commercial Tax Officer had sufficient grounds to cancel the registration based on the respondent's conduct and past records. The cancellation was deemed valid under the Act.

2. Requirement of a second notice before cancellation of the registration certificate:
The question arose whether a second notice was necessary for the respondent to show cause against the cancellation after being given an opportunity to prove ongoing business activity. The High Court held that a second notice was not required as section 7(6)(a) of the Act mandates cancellation upon discontinuation of business. The initial notice to prove ongoing business served as notification of the potential cancellation. The court cited precedents and emphasized the mandatory nature of the cancellation provision.

3. Application of principles of natural justice in the cancellation process:
The High Court addressed the application of natural justice principles in the cancellation process. It highlighted that the duty to ascertain business discontinuation is an administrative act, and the dealer's opportunity to present evidence fulfills the requirement of being heard. The court stressed that after establishing business discontinuation, there is no further cause the dealer can show against cancellation. The ruling emphasized that natural justice aims to prevent miscarriage of justice, and in this case, the cancellation was deemed justifiable without a second notice.