2017 (6) TMI 501 - HC - VAT and Sales Tax

Natural justice - cancellation of registration without assigning any reasons for such cancellation - Held that - a perusal of the impugned order does not show as to on what reasons the cancellation was effected even though some reasons were stated in the SCN - Assuming that the petitioner has received such notice and has not responded to the same, still the respondent is duty bound to state the reasons and his independent finding, justifying the cancellation. In this case, it has not been done so - the matter has to go back to the respondent for passing a fresh order - petition allowed by way of remand.

Summary

Issues:
1. Cancellation of registration under the Tamil Nadu VAT Act, 2006 and Central Sales Tax Act, 1956 without following principles of natural justice and assigning reasons.

Analysis:
The petitioner challenged the order of the respondent cancelling their registration under the VAT Act and CST Act, alleging a lack of natural justice and absence of reasons for the cancellation. The petitioner contended that they were not served with a show cause notice, and the notice dated 30.01.2017 was only sent via e-notice. The petitioner had also submitted returns after the notice date. The Government Advocate argued that the petitioner was notified via email and failed to respond, justifying the cancellation. However, it was acknowledged that the impugned order did not provide reasons for the cancellation.

The court observed that while the notice contained some reasons for the proposed action, the impugned order did not specify the grounds for the cancellation, despite mentioning reasons in the show cause notice. The court emphasized that even if the petitioner received the notice and did not respond, the respondent should have stated clear reasons and independent findings justifying the cancellation, which was lacking in this case. Consequently, the court held that the matter should be sent back to the respondent for a fresh order after hearing the petitioner's objections.

Therefore, the writ petition was allowed, setting aside the impugned order and remitting the matter to the respondent for a fresh decision after considering the objections filed by the petitioner within seven days. The respondent was directed to conduct a hearing and pass a new order within two weeks from receiving the petitioner's explanation. No costs were awarded, and the connected miscellaneous petition was closed.