2017 (8) TMI 458 - HC - VAT and Sales Tax

Sealing of premises - Held that - by Amending Act 6 of 2006, section 67 was substituted from the original, in which, these powers are completely missing. Thus the legislature while reenacting section 67 consciously omitted the powers of the Commissioner for sealing such premises - There is nothing in this order suggesting that the seal was put temporarily so that the search can be resumed after the brief break. Even otherwise, according to the respondents, the business premises do not have too many documents or articles. It is therefore not possible to appreciate why the search would have continued more than a month after it was initiated - sealing the premises of the petitioner is set aside. Cancellation of petitioner s registration - case of petitioner is that no notice was served to the petitioner before this order was passed - Held that - the petitioner was not served with any notice of proposed cancellation of registration before such action was taken by the authority under order dated 27.06.2017. If the notice dated 23.03.2017 was not served and the notice dated 12.06.2017 of the hearing dated 19.06.2017 was served after the date had passed, clearly the petitioner had no opportunity to appear before the authority and to defend its position - even otherwise, the order of cancellation of registration suffers from legal errors. As per the show cause notice dated 23.03.2017, the authorities believed that the petitioner had discontinued the business during the assessment year 2016-17. If that be so, nothing would justify cancellation of registration with effect from 22.06.2010 - canceling the petitioner s registration is set aside. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Sealing of business premises under the VAT Act.
2. Cancellation of registration under the VAT Act and the CST Act.

Sealing of Business Premises:
The petitioner, a dealer of jewelry, challenged the order sealing their business premises on 27.06.2017 by VAT authorities, contending that such power is not granted under the VAT Act. The petitioner argued that the amendment to section 67 of the VAT Act removed the authority's power to seal premises. The respondent argued that the seals were placed as part of an ongoing search operation. However, the court noted that the amended section 67 no longer included provisions for sealing premises, making the action illegal. The court found no justification for the extended search period and set aside the order to seal the premises.

Cancellation of Registration:
The petitioner also challenged the cancellation of their registration under the VAT Act and the CST Act with retrospective effect from 22.06.2010. The petitioner claimed lack of notice, hearing, and material for the cancellation. The court observed that the petitioner was not served with the notice of proposed cancellation before the action was taken. The court found legal errors in the cancellation order, noting that the authorities arbitrarily chose a backdated cancellation date without sufficient evidence. The court directed the authorities to issue a fresh show cause notice, allowing the petitioner to defend their position before passing a new order based on the evidence presented.

Judgment:
The court set aside the order sealing the petitioner's premises and directed the authorities to remove the seals. Additionally, the court annulled the cancellation of the petitioner's registration, permitting the authorities to issue fresh orders following due procedure. The petition was disposed of with the aforementioned directions, ensuring a fair process for the petitioner in both matters.