2015 (4) TMI 359 - HC - VAT and Sales Tax

Cancellation of registration - involvement of the petitioner in bogus billing activities - Held that - Though the petitioner has filed replies before the Commissioner, the Commissioner proceeded to adjudicate the show cause notices and cancelled the registration of the petitioner on the incorrect premise that the petitioner never remained present nor filed replies. Even after the petitioner had not personally been present, if there were any written replies filed by the petitioner, the Commissioner was duty bound to take the same in consideration before coming to any final finding with respect to the allegations made in the showcause notices and passing any order adverse to the petitioner. In the present case, decision in the order in original passed by the Commissioner is rather brief, it only refers to nonparticipation of the petitioner in the proceedings and in the later portion proceeded to confirm the proposal of cancellation of registration on the premise that the petitioner had indulged in the bogus billing activities. There are fundamental flaws in the approach of the Commissioner. Firstly, as noted earlier, the petitioner had made representations in writing. Contentions raised in the petition were therefore required to be taken into account before the Commissioner could take any final decision. Secondly, without any discussion on material on record, even in an exparte proceeding, the Commissioner could not have jumped to the conclusion that the petitioner had indulged in bogus billing activities leading to revenue loss of ₹ 51 lakhs. At least a brief discussion on material on record was necessary. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to cancellation of registration under State and Central Sales Tax Acts based on allegations of bogus billing activities; Denial of opportunity of hearing before Commissioner and Tribunal; Failure to consider written replies and representations by the petitioner; Violation of principles of natural justice.

Analysis:
The petitioner, a proprietary concern with registrations under State and Central Sales Tax Acts, faced cancellation of registration due to alleged involvement in bogus billing activities. The Commissioner issued showcause notices and subsequently cancelled the registrations, citing non-participation and failure to respond, causing revenue loss. The petitioner challenged this before the Tribunal, emphasizing replies filed and presence at hearings, but the Tribunal dismissed the revision petitions without addressing these contentions, relying on a previous judgment. The High Court observed that the Commissioner erred by not considering the petitioner's written replies, violating principles of natural justice. The brief decision lacked discussion on the material, leading to flaws in the approach. The Tribunal's failure to address the petitioner's fundamental contention of procedural violations necessitated setting aside the orders for fresh consideration.

The High Court highlighted the need for proper consideration of the issues by the Commissioner, setting aside both the Commissioner's and Tribunal's orders. The petitioner was granted the opportunity to file additional replies, with a hearing scheduled to ensure procedural fairness. The Court emphasized the importance of addressing the petitioner's contentions regarding the violation of principles of natural justice and the necessity for a thorough examination of the material on record before reaching a decision. The judgment aimed to rectify the procedural lapses and ensure a fair and just determination by the Commissioner in accordance with the law.

In conclusion, the High Court directed the proceedings to be reconsidered by the Commissioner, emphasizing the importance of due process and the consideration of the petitioner's submissions. The judgment sought to rectify the errors in the previous decisions and uphold the principles of natural justice in the adjudication process.