2015 (4) TMI 1002 - HC - VAT and Sales Tax

Refusal to grant registration certificate - Held that - Registering authority cancelled/withdrawn the provisional registration certificate under the VAT Act to the respondent - dealer mainly on the ground that commodity in which the respondent - dealer is to deal is a sensitive item, and in a particular area where the respondent - dealer is carrying on business, there are large number of bogus billing activities and therefore, apprehending that the respondent - dealer may also indulge into such bogus billing activities, the registering authority has refused the registration certificate. - On the basis of some other dealers indulging into the bogus billing activities, the dealer, who has applied for the registration certificate cannot be branded or labeled with the dealer indulging into the bogus billing activities. After granting registration certificate, if it is found that a particular dealer is indulging into the bogus billing activities and/or has indulged into the bogus billing activities, in that case after following due procedure as required, its registration certificate can be cancelled. However, on apprehension and that too on the basis of some other dealers indulging into the bogus billing activities, registration certificate cannot be denied to the respondent - dealer. - No substantial question of law arises in the present tax appeal - Decided against Revenue.

Summary

Issues:
Challenge to the order refusing registration certificate under the VAT Act based on apprehension of bogus billing activities.

Analysis:
The judgment pertains to an appeal against the Gujarat Value Added Tax Tribunal's decision allowing the respondent-dealer's appeal and directing the registration authority to grant registration under the VAT Act. The registering authority had withdrawn the provisional registration certificate citing the sensitive nature of the commodity dealt with and the prevalence of bogus billing activities in the area. The High Court noted that mere apprehension of the dealer engaging in such activities based on the actions of other dealers is insufficient grounds for refusal. The Court emphasized that a registration certificate cannot be denied solely on apprehension; instead, if a dealer is found to be involved in bogus billing activities, the certificate can be canceled after due process. Upholding the Tribunal's decision, the Court found no substantial question of law in the appeal, leading to its dismissal.

The Court concurred with the Tribunal's reasoning that the refusal of the registration certificate solely based on apprehension of potential fraudulent activities was unjustified. The judgment underscores the importance of following due process and not penalizing a dealer based on the actions of others. It clarifies that registration can only be canceled after concrete evidence of fraudulent activities by the dealer seeking registration, rather than preemptive measures based on suspicions. Consequently, the Court dismissed the tax appeal, leading to the disposal of the connected application as well.