2012 (7) TMI 865 - HC - VAT and Sales Tax

Application for sales tax registration rejected - Held that - the second respondent without considering the scope of relevant provision relating to form A rejected the registration stating that the objections raised in the letter dated May 16 2012 were not satisfactory and the place of business is not sufficient to do business. How ever the learned Government Advocate (Taxes) is unable to point out any specific provision under the Act and Rules regarding the requirement of space for carrying on the business. There is no such condition prescribed under the Act specifying such required area for conducting business. It is pertinent to note that there is no dispute with regard to genuinity of the business that is going to be carried on at the place of business. Further it is not for the Revenue to suggest the extent of land that is necessary to carry on the business. It is for the businessman to decide the same. The Revenue should not obstruct the assessee from carrying on the business at every stage with the tax collectors point of view but would deal with the matter at the point of view of assessee. In such circumstances the reason given by the respondent is not in accordance with law and against the provisions of the Act and Rules. W.P. allowed. This court directs the petitioner to re-submit the application for registration as contemplated under the Act within one week from toda

Summary

Issues:
1. Rejection of sales tax registration application based on the size of the business premises.
2. Compliance with the provisions of the Tamil Nadu Value Added Tax Act, 2006.
3. Interpretation of relevant provisions of the Act and Rules regarding registration requirements.
4. Consideration of guidelines and circulars issued by the Commissioner of Commercial Taxes.

Analysis:
1. The petitioner applied for sales tax registration under the Tamil Nadu Value Added Tax Act, 2006, but the application was rejected by the second respondent citing the small size of the business premises (80 sq.ft.) as inadequate for conducting business in stainless steel pipes and metals. The petitioner challenged this rejection through a writ petition.

2. The petitioner contended that all provisions of the Act and Rules were complied with, and no defects were found in the application form. The rejection was argued to be unjustified as the petitioner fulfilled all requirements for registration. The Government Advocate (Taxes) defended the rejection based on the enforcement wing's verification of the premises.

3. The Court examined Section 39 of the Act dealing with registration procedures and Rule 5 of the Rules regarding the issuance of a certificate of registration. It was noted that the petitioner followed the prescribed procedure by submitting Form A for registration. The rejection order highlighted the small size of the business premises as the reason for refusal, despite the absence of any specific space requirement in the Act or Rules for conducting business.

4. The Court analyzed a circular issued by the Commissioner of Commercial Taxes, which stated that prior inspection was not necessary except for specific commodities prone to tax evasion. However, this guideline did not empower authorities to determine the space needed for conducting business. The Court emphasized that the decision on the required business space should be left to the businessman, and the Revenue should not impede business operations based on arbitrary space considerations.

Conclusion:
The Court set aside the rejection order, directing the respondents to issue the registration certificate in accordance with the Act. The Court instructed the petitioner to resubmit the application if not received earlier, with the second respondent directed to process the application promptly. The judgment highlighted the importance of not obstructing legitimate business activities based on irrelevant criteria and emphasized adherence to the provisions of the Act and Rules in registration processes.