2017 (7) TMI 1287 - HC - Customs

Cancellation of registration of petitioner-Assessee, the dealer - cancellation on the ground that being a body Corporate, it did not obtain separate Registration for its two Units of business from the Respondent Commissioner himself - Section 38 (6) of the Karnataka Value Added Tax Act, 2003 - HELD THAT - The cancellation of the registration of the petitioner assessee has suddenly rendered it as unregistered Dealer, depriving it of the several benefits which enure or are available to a Registered Dealerunder the provisions of the KVAT Act, 2003. An adverse order passed without prior opportunity of hearing is otherwise also unsustainable. Petition allowed.

Summary

Issues:
Cancellation of registration under Section 38(6) of the Karnataka Value Added Tax Act, 2003 without prior opportunity of hearing.

Analysis:
The judgment pertains to a case where the petitioner, a corporate dealer, had its registration cancelled by the Commissioner of Commercial Taxes due to not obtaining separate registrations for its two business units as required under Section 38(6) of the KVAT Act, 2003. The petitioner had obtained two separate Taxpayer Identification Numbers (TINs) from different authorities within the same department, which were subsequently cancelled by the Commissioner. The petitioner contended that the cancellation was done without providing a prior opportunity of hearing, and hence, was not permissible under the law.

The court examined Section 38(6) of the KVAT Act, which allows the Commissioner to treat each place of business of a corporate dealer as a separate unit for tax purposes. The court observed that while the petitioner had obtained the additional TIN from a lower authority instead of the Commissioner, the Commissioner could have regularized this irregularity post-facto and approved the registrations. The cancellation of registration without a prior hearing deprived the petitioner of the benefits available to a registered dealer under the KVAT Act, rendering the decision unsustainable.

Consequently, the court allowed the writ petitions, quashed the impugned endorsement cancelling the registration, and set aside the consequential orders passed by the Assessing Authority for the tax period from 2008-09 to 2013-14. The Commissioner was directed to provide a fresh opportunity of hearing to the petitioner and pass appropriate orders in accordance with the law. No costs were awarded in the matter.