2014 (9) TMI 463 - HC - VAT and Sales Tax

Cancellation of registration - discrepancies found in the orders of assessment for the assessment years 2004-05 to 2006-07 - differences noted in the turnover reported in the petitioner s returns and in the supply vouchers provided by the Indian Oil Corporation - order passed without providing sufficient time to the petitioner to submit its objections - Held that - registration granted in favour of the petitioner ought not to have been cancelled by the respondent, either by his earlier, order dated February 23, 2010, or by the subsequent order, dated August 27, 2010. It is clear that the respondent had exceeded his jurisdiction by cancelling the registration granted in favour of the petitioner, without affording a reasonable opportunity of personal hearing to the petitioner. An alternative remedy is available to the petitioner, under section 45 of the Puducherry Value Added Tax Act, 2007, to challenge the order of the respondent cancelling the registration, in cases where the principles of natural justice are violated, this court can exercise its powers, under article 226 of the Constitution of India, to grant the relief to the petitioner, by setting aside the impugned order, especially, when a fundamental right of a person to carry on its trade, occupation or business is infringed. It is not open to the respondent to claim that his impugned order, dated August 27, 2010, is only a statement of the factual position, as it existed on the date of the passing of the said order. It is also noted that the petitioner had requested for the renewal of registration, for the year 2011-12, by paying the necessary fee. It is also seen that the petitioner had made a request for renewal of the registration by a representation, dated April 29, 2011, along with the fee payable for such registration, by way of a demand draft. However, the renewal of registration had not been granted to the petitioner, till date. By an order, dated September 16, 2010, the Deputy Commercial Tax Officer (Registration), Puducherry, had stated that the registration made in favour the petitioner is active. Therefore, the petitioner was permitted to file the return and to pay the tax. It had also been stated that there was no instruction or order for the deactivation of the registration certificate in the computer system and therefore, the petitioner can carry on its regular business, based on the interim stay granted by this court, in M.P. No. 1 of 2010, in W.P. No. 3904 of 2010. As such, the claim of the respondent on the request of the petitioner for the renewal of the petitioner, for the year 2011-12, cannot be countenanced - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Cancellation of the petitioner's registration.
2. Violation of principles of natural justice.
3. Jurisdiction of the respondent to cancel registration.
4. Maintainability of the writ petition despite alternative remedies.

Detailed Analysis:

Cancellation of the Petitioner's Registration:
The petitioner, a physically handicapped proprietor of a petroleum service station, had their registration certificate canceled by the respondent on February 23, 2010, due to alleged tax arrears. The petitioner contended that the cancellation was improper as the assessment orders had not attained finality and the appeals were still pending. Despite an interim stay granted by the court and subsequent renewal of registration for 2010-11, the respondent issued an order on August 27, 2010, reiterating the cancellation. The court found that the renewal of registration implied the revocation of the earlier cancellation order and that the respondent's actions were inconsistent.

Violation of Principles of Natural Justice:
The petitioner argued that the cancellation order was passed without notice or an opportunity for a personal hearing, violating the principles of natural justice. The court agreed, noting that rule 9(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957, mandates an opportunity for the dealer to be heard before canceling the registration. The respondent's failure to provide such an opportunity rendered the cancellation order invalid.

Jurisdiction of the Respondent to Cancel Registration:
The petitioner claimed that the respondent did not have the jurisdiction to cancel the registration based on alleged tax arrears, as it was the role of the assessing authority to determine tax dues. The court concurred, stating that any arrears should be addressed through appropriate recovery actions rather than canceling the registration, which infringes on the petitioner's right to conduct business.

Maintainability of the Writ Petition Despite Alternative Remedies:
The respondent argued that the writ petition was not maintainable due to the availability of an alternative remedy under section 45 of the Puducherry Value Added Tax Act, 2007. However, the court held that in cases where principles of natural justice are violated, it can exercise its powers under Article 226 of the Constitution to grant relief. The court emphasized that the impugned order infringed on the petitioner's fundamental right to carry on their trade, occupation, or business.

Conclusion:
The court set aside the impugned order dated August 27, 2010, and directed the respondent to consider the petitioner's representation for renewal of registration, ensuring an opportunity for a hearing. The writ petition was ordered accordingly, with no costs, and the connected miscellaneous petition was closed.