2018 (2) TMI 312 - HC - VAT and Sales Tax

Validity of impugned notice - cancellation of registration of the firm - conversion from proprietorship to partnership without informing the Department in time - TNVAT Act - Form D - Held that - the counter affidavit is full of contradictious and the third respondent feigns ignorance and states that she does not know that the proprietorship has been converted as a partnership when she herself admitted that Form D application was filed in February, 1986 giving names of four persons as partners including the petitioner s father. Therefore, the impugned notice is illegal, unenforceable and deserves to be set aside - The proceedings initiated by the Commercial Taxes Department especially in the light of the allegations of fraud and collusion made against the officers of the Department themselves can hardly have any impact on the civil proceedings in which the Department is not a party. The third respondent is directed to restore the registration of Tvl.Kali Chettiar & Sons as a partnership concern in terms of the application in Form D submitted during February, 1986, when the petitioner s father was alive - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to notice issued by the third respondent regarding registration status under TNGST Act and TNVAT Act, Allegations of conversion of proprietorship concern to partnership concern without informing the Department, Contradictions in the counter affidavit filed by the Commercial Tax Officer, Compliance with directives from Commissioner of Commercial Taxes.

Analysis:

1. The petitioner challenged a notice issued by the third respondent regarding the registration status under the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) and the Tamil Nadu Value Added Tax Act (TNVAT Act). The notice alleged that the petitioner's father had registered as a dealer and proprietorship concern, which was later converted to a partnership concern without timely notification to the Department. The third respondent proposed to cancel the registration of the concern, prompting the petitioner to file a writ petition.

2. The petitioner argued that the impugned notice contradicted a previous order and letter from the third respondent, stating that during the lifetime of the petitioner's father, the concern was registered as a partnership and not as a proprietorship. The petitioner also alleged collusion and fabrication of documents by certain officers, raising concerns about the legitimacy of the notice.

3. Upon reviewing the counter affidavit filed by the Commercial Tax Officer, the court found contradictions that raised doubts about the validity of the notice. The affidavit admitted the filing of an application in Form D in 1986, listing partners including the petitioner's father. Despite this, the third respondent attempted to claim that the application was incomplete, casting doubt on the Department's actions.

4. The court noted that the Commissioner of Commercial Taxes had instructed the restoration of the partnership status of the concern, but the third respondent failed to comply. The court directed the Assistant Commissioner to take action against the erring registering authority for disregarding the Commissioner's directive and for accepting fresh applications despite the existence of the 1986 Form D application.

5. Considering the contradictions in the counter affidavit and the failure to follow directives, the court deemed the impugned notice illegal and unenforceable. The court allowed the writ petition, setting aside the notice and declaring the concern as a partnership in accordance with the 1986 Form D application. The third respondent was directed to restore the registration within two weeks, emphasizing compliance with the Commissioner's directive.

This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented, contradictions in the counter affidavit, and the court's decision to set aside the notice and enforce compliance with the Commissioner's directives.