2016 (1) TMI 1226 - HC - VAT and Sales Tax

Principles of Natural Justice - Cancellation of TIN registration - single line order of cancellation passed, without assigning any reason - Held that - Though the learned Additional Government Pleader appearing for the respondent submitted that a show-cause notice was sent to the petitioner and the same was returned for want of sufficient address, the fact remains that those facts are not reflected in the impugned order and thus, it is evident that before passing such order, the petitioner was not at all heard. Therefore, this Court is fully satisfied that the impugned order of cancellation of registration passed is in violation of principles of natural justice, that too, without assigning any reason cannot be sustained - petition allowed - matter on remand.

Summary

Issues: Challenge to the cancellation of Value Added Tax registration based on violation of principles of natural justice.

Analysis:
1. Cancellation of VAT Registration: The petitioner, a manufacturer of paints and a registered dealer under the Tamil Value Added Tax-2006, challenged the cancellation of their registration by the respondent through a single-line order without providing any reasons for such action. The cancellation was deemed arbitrary and in violation of principles of natural justice as the petitioner was not given any prior notice or opportunity to be heard before the order was passed.

2. Violation of Natural Justice: The main contention raised in the writ petition was the violation of natural justice principles, as the respondent failed to issue a show-cause notice to the petitioner before canceling the registration. The impugned order did not reflect any issuance of a notice or any communication regarding the cancellation, leading to a lack of opportunity for the petitioner to present their case or address any concerns that might have led to the cancellation.

3. Judicial Findings: The Court, after considering the arguments presented, found that the respondent's claim of sending a show-cause notice that was returned due to an insufficient address was not reflected in the impugned order. The absence of such crucial information in the order indicated a clear violation of natural justice, emphasizing the necessity of providing a fair opportunity to be heard before taking such drastic actions like canceling a registration.

4. Judgment and Remedy: In light of the above findings, the High Court allowed the writ petition, setting aside the impugned order of cancellation of registration. The matter was remitted back to the respondent with directions to issue a show-cause notice to the petitioner, allowing them a fair opportunity to present their case before any further decision is made. The Court emphasized the importance of adhering to principles of natural justice and conducting proceedings in accordance with the law.