2015 (8) TMI 950 - HC - VAT and Sales Tax

Cancellation of Registration certificates Billing activities After giving opportunity to petitioner, concerned authority cancelled registrations, both under VAT Act and CST Act By impugned judgement tribunal confirmed orders cancelling registration certificates Held that - registration certificates of petitioner under VAT Act as well as CST Act was cancelled ab-initio, as it was found that they had indulged into billing activities only Petitioner had disclosed / declared only one Bank Account however, on inquiry it was found that all transactions by petitioner were from account, which was not declared / disclosed Upon considering entire records alleged purchases by petitioner were not genuine and/or same were billing activities only Therefore, it cannot be said that tribunal has committed any error in confirming order passed by authority cancelling registration certificates of petitioner dealer under VAT Act and CST Act ab-initio No reason to interfere with impugned orders passed of tribunal Decided against Assesse.

Issues Involved:
1. Legality of the cancellation of registration certificates under VAT Act and CST Act ab-initio.
2. Principles of natural justice in the cancellation process.
3. Validity of transactions with entities whose registrations were cancelled ab-initio.
4. Adequacy of opportunities provided to the petitioner to present their case.
5. Applicability of precedents cited by the petitioner.

Issue-wise Detailed Analysis:

1. Legality of the cancellation of registration certificates under VAT Act and CST Act ab-initio:
The petitioner's registration certificates under the VAT Act and CST Act were cancelled ab-initio due to alleged involvement in billing activities rather than genuine business transactions. The authorities found that the petitioner had made substantial purchases from M/s. Vishal Traders and M/s. Shiv Enterprise, whose registrations were cancelled ab-initio for engaging in billing activities only. The tribunal confirmed the cancellation, noting that the petitioner was aware of the cancellation of these entities' registrations and still proceeded with transactions, which were found to be bogus and not genuine.

2. Principles of natural justice in the cancellation process:
The petitioner argued that the cancellation was in breach of the principles of natural justice as the statements of the proprietors of M/s. Vishal Traders and M/s. Shiv Enterprise were not provided to them. However, the court observed that the cancellation was not based on these statements. Despite multiple opportunities, the petitioner failed to appear before the authority or produce relevant materials to prove the genuineness of the transactions. Therefore, the court concluded that the cancellation was not in breach of natural justice.

3. Validity of transactions with entities whose registrations were cancelled ab-initio:
The petitioner contended that at the time of transactions, M/s. Vishal Traders and M/s. Shiv Enterprise were registered dealers, and their subsequent cancellation should not affect the validity of the purchases. The court, however, noted that the petitioner continued transactions even after the cancellation of these entities' registrations was known. The tribunal found that the transactions were not genuine and were part of billing activities only, justifying the cancellation of the petitioner's registration certificates.

4. Adequacy of opportunities provided to the petitioner to present their case:
The authorities provided multiple opportunities to the petitioner to present their case and produce relevant documents. The petitioner did not utilize these opportunities effectively. The court noted that the petitioner had shifted their place of business and failed to disclose the bank account used for transactions, which further supported the authorities' decision to cancel the registrations.

5. Applicability of precedents cited by the petitioner:
The petitioner relied on the Supreme Court decision in State of Maharashtra Vs. Suresh Trading Company and the Division Bench decision in Giriraj Sales Corporation Vs. State of Gujarat. The court found these precedents inapplicable to the present case as the facts differed significantly. The petitioner's knowledge of the cancellation of the registration certificates of M/s. Vishal Traders and M/s. Shiv Enterprise and their continued transactions despite this knowledge distinguished the present case from the cited precedents.

Conclusion:
The court upheld the tribunal's decision to cancel the petitioner's registration certificates under the VAT Act and CST Act ab-initio. It found no breach of natural justice, adequate opportunities were provided to the petitioner, and the transactions in question were not genuine. The precedents cited by the petitioner were deemed inapplicable. Consequently, both petitions were dismissed.

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