2015 (3) TMI 1216 - HC - VAT and Sales Tax

Cancellation of registration certificate with retrospective effect - Held that - the decision in the case of Jinasan Distributors vs. Commercial Tax Officer (CT), Chintadripet Assessment Circle, Chennai 2013 (4) TMI 615 - MADRAS HIGH COURT relied upon. Direction to activate the registration certificate within a week - writ petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to cancellation of registration certificate with retrospective effect.

Analysis:
The petitioner filed a writ petition challenging the proceedings issued by the respondent, which canceled the petitioner's registration certificate with retrospective effect. The petitioner contended that the cancellation was improper, and this fact was admitted by the respondent. The petitioner relied on a judgment of the court in a similar case where it was held that retrospective cancellation of registration certificates cannot affect the rights of the taxpayers who have already paid taxes based on valid documents. The court found the judgment applicable to the present case and set aside the impugned proceedings of the respondent, directing them to activate the registration certificate within a week from the date of the order.

In the judgment cited by the petitioner, it was emphasized that taxpayers who have paid taxes based on valid documents and input-tax credit cannot be penalized due to the retrospective cancellation of registration certificates of the selling dealers. The court reiterated that benefits accrued to taxpayers based on valid documents during the sale and purchase of goods should not be declined due to subsequent cancellations. The court further highlighted that transactions conducted when the registration certificates were valid should not be denied to taxpayers on the grounds of retrospective cancellations, in line with the law laid down by the Supreme Court in a previous case.

The court found the judgment referred to by the petitioner directly applicable to the circumstances of the present case. Consequently, the impugned proceedings of the respondent canceling the petitioner's registration certificate with retrospective effect were set aside. The court disposed of the writ petition with a direction to the respondent to activate the registration certificate within a week from the date of receipt of the court's order, without imposing any costs. The connected miscellaneous petitions were closed as well.