2011 (5) TMI 878 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against order cancelling registration under VAT Act and CST Act based on non-submission of returns and non-business activity at declared place.

Analysis:
The judgment pertains to an application under Article 226 of the Constitution of India filed by a dealer under the West Bengal Value Added Tax Act, 2003, challenging the order dated July 30, 2010, passed by the West Bengal Taxation Tribunal. The order rejected an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, which was filed by the writ petitioner against the cancellation of registration under both the VAT Act and the Central Sales Tax Act, 1956. Initially, the appropriate authority issued a show-cause notice alleging non-submission of returns and non-business activity at the declared place. The writ petitioner responded to the notice by asserting that business was being carried out at the stated place and returns were being submitted as required by the law.

The appropriate authority, however, concluded that the dealer was not existent at the declared place and did not have bona fide business activity there, despite the writ petitioner's denial of the allegations. The authority relied on earlier reports and the return of the show-cause notice by the postal authority as grounds for cancellation. The High Court observed that the formalities required for cancellation of registration were not complied with, especially in terms of providing the writ petitioner with copies of earlier inspection reports and allowing an opportunity to effectively respond to them.

The Court held that the authority failed to consider crucial aspects of the matter and set aside the order cancelling the registration. It granted liberty to the respondent-authority to start afresh from the stage of the show-cause notice if it wished to proceed. The Court clarified that it did not delve into the merits of the case but restored the registration of the writ petitioner from the date of cancellation. The application was disposed of with these observations, and the Court directed the provision of a certified copy of the order to the respective counsels within a week of the application.

This judgment underscores the importance of procedural fairness and the duty of the authority to provide the dealer with an opportunity to respond adequately to the grounds for cancellation. It highlights the need for authorities to follow due process and ensure that all relevant information is shared with the concerned party before making a decision on such matters.