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2014 (8) TMI 918 - HC - VAT and Sales TaxCancellation of registration - in the survey made at the Head Office of the petitioner at Lucknow neither books of account nor stock of Menthal Oil were found - Held that - Impugned order is absolutely cryptic and does not even refer to the facts of the case nor to the case laws referred to by the petitioner. It has failed to consider that the case of the petitioner throughout was that he had only applied for permission for transfer of his Head Office from Mausali, Barabanki to Kanchanpur Matiyari Chauraha, Faizabad Road, Lucknow whereas the business continued to function from Masauli, Barabanki. The Member, Tribunal while passing the impugned order has also failed to take into account whether the cancellation of the registration of the petitioner would result in loss of revenue to the State or otherwise that if registration was not cancelled it would result in financial loss to the State. Considering the matter in the totality of the facts and circumstances of the case and in the light of the observations made herein above and the case law referred to, this writ petition is finally disposed of with a direction that the impugned order of cancellation of registration dated 8.7.2014 shall remain stayed during the pendency of the appeal of the petitioner before the Tribunal and shall be subject to the outcome of the final decision of the Tribunal - Stay granted.
Issues Involved:
1. Change of Head Office and Business Operations. 2. Grounds for Cancellation of Registration under U.P. VAT Act. 3. Legality of the Cancellation Order. 4. Consideration of Case Laws in Tribunal's Decision. 5. Impact of Cancellation on Revenue and Business Operations. Detailed Analysis: 1. Change of Head Office and Business Operations: The petitioner, engaged in the purchase and sale of Mentha Oil, requested to change the Head Office from Masauli, Barabanki to Kanchanpur Matiyari Chauraha, Faizabad Road, Lucknow due to the proprietor's health issues. The Addl. Commissioner (Law) Commercial Tax, Lucknow approved this change on 19.11.2013. However, a survey on 27.6.2014 at the Masauli, Barabanki premises revealed the presence of stock and books of account, while none were found at the new Head Office in Lucknow. 2. Grounds for Cancellation of Registration under U.P. VAT Act: A show cause notice was issued on 4.7.2014 under section 17(11) of the U.P. VAT Act, questioning why the petitioner's registration should not be canceled since no business activity or stock was found at the new Head Office. The petitioner responded on 7.7.2014, stating that no business was conducted from the Head Office and all operations were from Masauli, Barabanki. The grounds for cancellation under section 17(11) include cessation of tax liability, business discontinuation, fraud, failure to furnish security, unauthorized business transfer, issuing tax invoices without actual sales, contravention of Section 43, non-payment of dues, and other sufficient causes. 3. Legality of the Cancellation Order: On 8.7.2014, the Dy. Commissioner, Commercial Tax, Lucknow canceled the petitioner's registration, citing the absence of business activities and stock at the new Head Office. The petitioner's appeal against this order was rejected, and a second appeal was filed along with a stay application under section 57(9) of the U.P. VAT Act, which was also rejected by the Commercial Tax Tribunal, Lucknow on 28.7.2014. 4. Consideration of Case Laws in Tribunal's Decision: The Tribunal's rejection of the stay application did not consider the case laws cited by the petitioner. The petitioner referenced several judgments, including: - Sai Traders Vs. Commissioner, Commercial Tax U.P. Lucknow (2011): Held that non-transacting of business does not constitute sufficient cause for registration cancellation. - M/s Honda Siel Cars India Ltd. Vs. The Commissioner, Commercial Taxes, U.P. Lucknow (2010): Emphasized that during the pendency of an appeal, the operation of the impugned order should be suspended to avoid undue hardship. - I.T.C. Ltd. V. Commissioner (Appeals), Cus. and C. Ex., Meerut-I (2005): Highlighted that stay should be granted if a strong prima facie case is made or if the appeal's purpose would be frustrated without it. 5. Impact of Cancellation on Revenue and Business Operations: The Tribunal failed to consider whether the cancellation would result in revenue loss to the State or if maintaining the registration would harm the State's financial interests. The petitioner argued that the business continued from Masauli, Barabanki, and the cancellation would unjustly affect the business operations without any revenue loss to the State. Final Judgment: The High Court observed that the Tribunal's order was cryptic and did not address the petitioner's arguments or the cited case laws. The Court directed that the cancellation order dated 8.7.2014 be stayed during the pendency of the appeal before the Tribunal, ensuring that the petitioner's business operations could continue without interruption. The writ petition was disposed of with these observations, emphasizing the need for a balanced approach considering both individual rights and state interests.
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