2011 (12) TMI 483 - HC - VAT and Sales Tax

Whether the order dated March 10, 2010 passed by the first respondent, Commercial Tax Officer, in form VAT-124 cancelling the registration of the firm, M/s. Santosh Dhaba Exclusive, under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 is illegal on the ground that it was passed without notice to the petitioner? Held that - It should be noted that rule 14(12) of the Rules says that whenever any order of cancellation is made the VAT dealer shall be given an opportunity of being heard. Further rule 63 of the Rules deals with nomination of responsible person by a VAT dealer in form 560 authorising him/her to sign any returns or any documents or to sign any statements and also to receive any notices and rule 63(2) says that every VAT dealer being a partnership firm, among other entities, shall nominate a person for the purposes of receiving orders and notices. The first respondent or the third respondent are not able to file any document to show that the firm in question nominated the managing partner as person responsible to receive notices on behalf of it. It is true that rule 14(12) does not in so many words indicate anywhere that in the case of a firm, with which we are now concerned, notice to the managing partner of the firm in question is sufficient notice even in the absence of himself being nominated as the person responsible under rule 63(2). It is the contention of Smt Anjali Agarwal that in view of the above situation non-issuance of notice to her vitiates the impugned order. The jurisdiction of this court under article 226 of the Constitution is a discretionary one and in a given case the court can refuse to interfere if interference is not warranted even if there is violation of rules of natural justice.

Summary

Issues:
1. Whether the order cancelling the registration of a firm under the Andhra Pradesh Value Added Tax Act, 2005 without notice to the petitioner is illegal.

Detailed Analysis:
The writ petition under article 226 of the Constitution raised the issue of the legality of the order dated March 10, 2010, cancelling the registration of the firm without notice to the petitioner. The petitioner, a partner in the firm, argued that the order violated statutory provisions and rules by not providing her with notice. The court proceeded to examine the matter on its merits despite the order being appealable under the Act.

The circumstances leading to the dispute involved matrimonial issues between the petitioner and another partner in the firm. The managing partner filed for cancellation of registration citing business closure due to health problems and loss of business. The petitioner contended that the order was issued without notice to her, affecting her business interests. The petitioner had previously requested the tax officer not to cancel the registration without notice.

The legal arguments presented included the government pleader's defense that the cancellation was valid as the notice could not be served to the petitioner at the given address. The managing partner's counsel argued that the petitioner had no grounds for grievance as she did not actively participate in the business as per the partnership terms. It was suggested that any disputes over partnership assets should be resolved through proper legal channels under the Partnership Act and civil law.

The court analyzed the relevant provisions of the Act and Rules, highlighting the procedure for cancellation of VAT registration. Rule 14 outlined the process for cancellation when a dealer ceases business operations. It mandated that the dealer be given an opportunity to be heard before cancellation. Rule 63 required partnership firms to nominate a person to receive notices, a requirement not fulfilled in this case. The petitioner argued that the absence of a nominated person meant that the rule mandating notice before cancellation was violated.

The court considered whether notice to the managing partner was sufficient in the absence of a nominated person as required by the rules. The petitioner contended that the lack of notice to her invalidated the order. The court acknowledged its discretionary power under article 226 of the Constitution but emphasized the importance of upholding rules of natural justice even in cases where interference may not be warranted.