2016 (11) TMI 1579 - HC - VAT and Sales Tax

Cancellation of registration of petitioner - reason assigned by the respondent in the impugned notice is that the petitioner has not filed their monthly returns from April 2016 till the date of cancellation - TNVAT Act, 2006 - Held that - The cancellation is bad in law for more than one reason. Firstly, the impugned order cancels the registration with retrospective effect. Secondly, the petitioner was not given any notice before such cancellation. Thirdly, the reason assigned in the impugned order appears to be factually incorrect, since copies of the e-returns filed on 15.4.2015 upto May 2016 have been produced before this Court. Fourthly, before cancellation of the registration, Section 39(15) of the said Act mandates an opportunity of personal hearing - the impugned assessment order is held to be illegal - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to cancellation of registration under the Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956 without prior notice or opportunity of personal hearing.

Analysis:
The petitioner, a registered dealer, challenged the cancellation of their registration by the respondent. The respondent's reason for cancellation was the petitioner's alleged failure to file monthly returns from April 2016 onwards. However, the petitioner's counsel presented evidence of e-returns filed until May 2016 and explained difficulties faced in uploading returns due to a new portal. The petitioner had sought assistance from the Commercial Taxes Department but was informed of the cancellation without prior notice.

The High Court found multiple flaws in the cancellation order. Firstly, the retrospective effect of the cancellation was deemed improper. Secondly, the lack of a prior notice to the petitioner was highlighted. Thirdly, factual inaccuracies in the reason provided were noted, as evidence of filed e-returns was produced. Lastly, Section 39(15) of the Act required a personal hearing before cancellation, which was not provided in this case. Consequently, the Court declared the cancellation illegal and set aside the impugned order.

As a result of the judgment, the writ petition was allowed, the cancellation order was quashed, and the petitioner's registration was directed to be reinstated immediately. The Court emphasized that if the respondent believed there were contraventions warranting cancellation, a show cause notice and a proper hearing should be conducted in accordance with the law. No costs were awarded, and the related Writ Miscellaneous Petitions were closed.