2014 (11) TMI 1074 - HC - VAT and Sales Tax

Cancellation of registration certificate - with retrospective effect - Violation of principles of natural justice - Cancellation is against Section 39(14) of the Tamil Nadu Value Added Tax Act, 2006, which deals with the procedure for Registration - Held that - the respondent has not assigned any reason much less sufficient reason for cancellation. Further more, no opportunity has been given to the petitioners in terms of Section 39 (15) of the Tamil Nadu Value Added Tax Act, 2006. Therefore, the impugned orders, cancelling the writ petitioners registration certificates with retrospective effect, are unsustainable and contrary to the provisions of the Act. - Decided in favour of petitioner

Summary

Issues:
Cancellation of registration certificates under the Tamil Nadu Value Added Tax Act, 2006 with retrospective effect challenged on grounds of violation of natural justice and Section 39(14) of the Act.

Analysis:
The judgment pertains to three writ petitions where the petitioners, registered dealers under the Tamil Nadu Value Added Tax Act, 2006, challenged the cancellation of their registration certificates with retrospective effect. The impugned orders were contested on the basis that they violated principles of natural justice and Section 39(14) of the Act, which outlines the procedure for registration. Section 39(14) empowers the authority to cancel, modify, or amend registration certificates for good and sufficient reasons, with the requirement that the dealer must be given an opportunity to be heard before any such action is taken.

Upon examining the impugned orders, it was noted that the respondent did not provide any reason, let alone a sufficient one, for the cancellation of the registration certificates. Furthermore, the petitioners were not afforded the opportunity to be heard as mandated by Section 39(15) of the Act. Consequently, the court deemed the cancellation orders as unsustainable and contrary to the provisions of the Act, warranting interference.

As a result, the writ petitions were allowed, and the impugned orders were quashed. The registration certificates were restored, and it was directed that appropriate entries be made in the respondent's records. The petitioners were granted liberty to proceed in accordance with Section 39 of the Act if they chose to do so. No costs were awarded, and the connected miscellaneous petitions were closed as a consequence of the judgment.