2007 (10) TMI 582 - HC - VAT and Sales Tax

Sales tax registration cancelled - Held that - When there is a mandatory provision in the Act providing opportunity of being heard the respondent ought to have followed the procedure before cancelling the registration. Right to practice any profession, or to carry on any occupation, trade or commerce is a fundamental right guaranteed under the Constitution and keeping that in mind, the Legislature has provided a right of personal hearing before cancellation of the registration. The impugned order, which is passed in violation of the principles of natural justice, as well as nonconsideration of the explanation offered by the petitioner in the proper perspective, is liable to be set aside. Accordingly, the impugned order of the respondent dated September 19, 2007 is set aside and the respondent is directed to scrupulously follow the provisions contemplated under the Act, providing adequate opportunity to the petitioner and to pass a speaking order.

Summary

Issues:
Challenge to cancellation of sales tax registration based on oral instructions without proper consideration of explanation and violation of principles of natural justice.

Analysis:
The petitioner, a dealer of Honda motorcycles and scooters, challenged the cancellation of the sales tax registration of the petitioner-firm by the respondent. The petitioner explained that the showroom was authorized by competent authorities and objected to the cancellation based on oral instructions from the Commissioner under the Right to Information Act. The respondent failed to consider the petitioner's explanation properly and acted solely on oral instructions, contrary to the procedure outlined in the Tamil Nadu Value Added Tax Act, 2006.

The court noted that under section 39(14) of the TNVAT Act, the authority granting registration can cancel it for valid reasons, but the dealer must be given an opportunity to be heard, as mandated by section 39(15). The court emphasized that the right to practice any profession or trade is a fundamental right, and the legislature provided for a personal hearing before cancellation of registration. The impugned order lacked consideration of the petitioner's explanation and violated principles of natural justice, leading to its setting aside.

In conclusion, the court directed the respondent to adhere to the Act's provisions, provide adequate opportunity for the petitioner, and issue a detailed order. The writ petition was disposed of with these directions, and the connected miscellaneous petition was closed.