1994 (11) TMI 419 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the cancellation of certificate of eligibility for deferment of payment of sales tax.
2. Violation of principles of natural justice in cancelling the certificate without a hearing.

Analysis:
The judgment pertains to a petition challenging the cancellation of a certificate of eligibility for deferment of payment of sales tax. The petitioner, a private limited company engaged in the manufacture and sale of industrial tools and machineries, had obtained the eligibility certificate allowing deferment of sales tax payment. However, the certificate was cancelled by the respondent without providing an opportunity of hearing to the petitioners. The counsel for the petitioners argued that the cancellation was arbitrary and deprived them of the benefit of deferment without due process. The Government Advocate for the respondents acknowledged the lack of a hearing and suggested that the matter be remanded for a fresh decision after affording the petitioners an opportunity to be heard.

The court considered the importance of principles of natural justice in administrative decisions affecting individual rights or interests. Citing relevant case law, the court emphasized that once eligibility is earned, it cannot be lost by subsequent events. Referring to previous judgments, the court highlighted that the principle of natural justice must be invoked when a decision affects individual rights, and fairness demands an opportunity to be heard. In light of these principles, the court found the cancellation of the certificate without a hearing to be unjust and untenable.

Consequently, the court quashed the order cancelling the certificate but granted liberty to the respondent to hear the petitioner if further action was deemed necessary. The petition was allowed without costs, and any security amount deposited was to be refunded to the petitioners after verification. The judgment underscores the significance of procedural fairness and upholding individual rights in administrative decisions, ensuring that due process is followed before depriving parties of their entitlements.