2009 (12) TMI 895 - HC - VAT and Sales Tax

Cancelling the TNGST Certificate challenged - Held that - In the present case also the certificate is valid for only two days 30th and 31st March, 1999 as per the provision of law. There is no specific indication as to when the renewal has to be effected. Furthermore, the cancellation of the certificate has been done without proper notice and without opportunity to the petitioner and that fact is not seriously disputed. There is, therefore, clear violation of principles of natural justice. The proceedings initiated by the respondent cancelling the TNGST Certificate No. 1521561/98-99 dated March 31, 1999 is bad and consequently such order is set aside. The respondent is, however, at liberty to initiate proper proceedings after issuance of a show-cause notice to the assessee before proceeding further in the matter. The writ petition is allowed

Summary

Issues:
Challenge to cancellation of registration certificate without prior notice or opportunity; Interpretation of validity period of registration certificate.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act, challenged the cancellation of their registration certificate without prior notice or opportunity. The petitioner contended that the certificate issued on March 31, 1999, was valid until cancelled, and the Department's argument that it was valid for only one year was untenable. The court noted that the certificate did not specify an expiry date and was valid until cancelled, similar to a previous Division Bench judgment. The court emphasized that the cancellation without proper notice and opportunity constituted a violation of natural justice.

Regarding the interpretation of the validity period of the registration certificate, the court referred to a Division Bench judgment that highlighted the importance of providing reasonable notice before cancellation. The court noted that the certificate in question was valid for only two days, as per the law, and did not specify when renewal was required. The court concluded that the cancellation without proper notice and opportunity was impermissible, emphasizing the need for the Department to inform the dealer correctly about renewal requirements.

In light of the above analysis, the court set aside the order cancelling the registration certificate and directed the respondent to initiate proper proceedings after issuing a show-cause notice to the petitioner. The court allowed the writ petition, emphasizing the importance of adhering to principles of natural justice and providing dealers with adequate notice and opportunity before taking such actions.