2009 (3) TMI 922 - HC - VAT and Sales Tax

Whether the application filed by the petitioner pursuant to the tender notice dated June 9, 2008 is a valid application? Whether after the death of the proprietor of proprietorship concern, the registration certificate issued to the proprietorship concern remains in force? Whether under the provisions of the OVAT Act, the legal heir of a deceased proprietor has any right to ask for amendment for registration certificate granted to the deceased proprietor and the same can be amended? Whether opposite party No. 1 is legally justified to cancel the agreement/contract entered into with the petitioner because of nonfulfilment of the tender condition and is justified to enter into a fresh contact with opposite party No. 3? Held that - The petitioner Sri Koushal Kumar Agarwal is not registered dealer under the OVAT Act having any TIN number and the Commercial Tax Department has not issued any tax clearance certificate to the petitioner, Koushal Kumar Agarwal. This amounts to a fraud. Law is well-settled that fraud vitiates everything. Therefore, the application submitted by the petitioner in response to the tender call notice is not a valid application. The registering authority itself has cancelled the certificate of registration granted to late Dewaram Agarwal under annexure 11 and rejected the amendment application of the petitioner under annexure 12. Unless these orders are reversed by the competent authority in the hierarchy, the said orders will govern the field. Thus, it can safely be concluded that on the date when the application was filed in response to the tender, call notice, the petitioner had no certificate of registration under the OVAT Act and the tax clearance certificate issued by the STO in the name of M/s. Deepak Trading Co. the proprietorship concern of late Dewaram Agarwal, has no legal force. No valid tax clearance certificate was furnished along with the application for tender. The petitioner was not a registered dealer under the OVAT Act during the relevant time. He has misrepresented himself as a registered dealer under the OVAT Act bearing TIN No. 21101800603 which in fact was allotted to the late father of the petitioner. In that situation, opposite party No. 1 is further justified to enter into a fresh contract with opposite party No. 3 for supply of soya chunks at the rate quoted by the petitioner keeping in view the immediate necessity of MDM for supply of soya chunks to the school-going children. Appeal dismissed.

Issues Involved:
1. Validity of the application filed by the petitioner pursuant to the tender notice dated June 9, 2008.
2. Continuation of the registration certificate issued to a proprietorship concern after the death of the proprietor.
3. Rights of the legal heir to amend the registration certificate granted to the deceased proprietor under the OVAT Act.
4. Legality of the cancellation of the agreement with the petitioner and entering into a fresh contract with the opposite party No. 3.

Issue-wise Detailed Analysis:

1. Validity of the Application Filed by the Petitioner:
The court noted that the petitioner submitted a bid for supplying soya chunks under the MidDay Meal Programme, accompanied by a VAT clearance certificate showing TIN No. 21101800603, which was originally issued to the petitioner's deceased father, Dewaram Agarwal. The court emphasized that "Law is well-settled that in absence of a valid application accompanied by valid/genuine documents as required in the tender call notice, no contract can be awarded in favour of such person." Since the petitioner was not a registered dealer under the OVAT Act and the tax clearance certificate was issued in the name of the deceased, the court concluded that the application submitted by the petitioner was not valid and amounted to fraud, stating, "Law is well-settled that fraud vitiates everything."

2. Continuation of the Registration Certificate After the Death of the Proprietor:
The court clarified that in the case of a proprietorship concern, the registration certificate is issued to the proprietor, and upon the proprietor's death, the certificate ceases to operate. The court cited sub-rule (3) of rule 30 of the OVAT Rules which mandates the cancellation of the registration certificate upon the proprietor's death. The court stated, "On the death of the said Dewaram Agarwal, there was a civil death of the registration certificate granted to late Dewaram Agarwal as the proprietor of M/s. Deepak Trading Co. and the same cannot be transferred in the name of any of the legal heirs of late Dewaram Agarwal."

3. Rights of the Legal Heir to Amend the Registration Certificate:
The court held that the legal heir of a deceased proprietor does not have the right to amend the registration certificate granted to the deceased under the OVAT Act. The petitioner, Koushal Kumar Agarwal, was not a registered dealer under the OVAT Act and thus not entitled to seek amendment of the registration certificate. The court noted, "Section 32 of the OVAT Act deals with the amendment of certificate of registration. Sub-section (1) of section 32 of the Act makes it clear that only a dealer registered under the Act can make an application for amendment." The court further emphasized that the orders cancelling the registration certificate and rejecting the amendment application were valid and governed the field unless reversed by a competent authority.

4. Legality of Cancellation of the Agreement and Entering into a Fresh Contract:
The court found that the petitioner had misrepresented himself as a registered dealer under the OVAT Act, using a TIN number that was actually allotted to his deceased father. Given the immediate necessity for the supply of soya chunks for the MidDay Meal Programme, the court held that opposite party No. 1 was justified in canceling the agreement with the petitioner and entering into a fresh contract with opposite party No. 3. The court concluded, "opposite party No. 1 is further justified to enter into a fresh contract with opposite party No. 3 for supply of soya chunks at the rate quoted by the petitioner keeping in view the immediate necessity of MDM for supply of soya chunks to the school-going children."

Conclusion:
The writ petition was dismissed, with the court upholding the cancellation of the agreement with the petitioner and the subsequent contract with opposite party No. 3. The court emphasized that the petitioner's application was invalid due to the submission of a void VAT clearance certificate and misrepresentation of facts. The court's decision was concurred by both judges, resulting in the dismissal of the petition without any order as to cost.

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