2011 (9) TMI 530 - HC - VAT and Sales Tax

Principle of Natural Justice - Appellant registered under VAT and CST act failed to file returns from March, 2010 - Show cause issued canceling his registration certificate - Held That - Issuing authority is competent to cancel certificate, however sub-section (15) of section 39 of the Act, what is contemplated is a personal hearing. Personal hearing is totally different from show-cause notice. Consequently, though the Department has issued a show-cause notice, that will not amount to granting an opportunity of being heard. Thus matter referred back.

Summary

Issues:
Challenge to cancellation of registration certificate based on non-filing of returns under the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, 1956.

Analysis:
The petitioner challenged the cancellation of their registration certificate due to non-filing of returns. The petitioner, a dealer manufacturing rolling shutter parts, iron gates, and grills, both locally and outside the state, did not file returns from March 2010. A notice was issued on February 25, 2011, directing the petitioner to show cause for not filing returns, which the petitioner failed to respond to, leading to the cancellation of the registration certificate on March 31, 2011.

The petitioner contended that cancellation of the registration certificate is akin to a capital punishment and cannot be imposed for non-filing of returns, citing sections 71(3)(e), 72(b), and subsections (14) and (15) of section 39 of the Act. The Special Government Pleader argued that under subsections (14) and (15) of section 39, the authority granting the certificate has the power to cancel it for good reasons, emphasizing the authority's discretion in such matters.

Regarding the opportunity of being heard, the petitioner claimed that they were not given a chance to present their case, while the Special Government Pleader argued that the show-cause notice served fulfilled the requirement of providing an opportunity to be heard. However, the court held that a show-cause notice is different from a personal hearing as mandated by subsection (15) of section 39, leading to the conclusion that the cancellation order lacked compliance with the Act's requirements.

The court set aside the cancellation order and remitted the matter back to the Assistant Commissioner for proper procedure compliance. The petitioner was directed to file returns from March 2010 within ten days and the respondent to pass orders within four weeks. Additionally, the petitioner was ordered to pay costs of Rs. 2,000 to the Chief Justice Relief Fund within a week. Failure to pay costs would allow the respondent to proceed based on the original cancellation order. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.