2018 (8) TMI 770 - HC - VAT and Sales Tax

Cancellation of registration of the respondent dealer - demand of security from the dealer - Whether in the facts and circumstances of the case, the Hon ble Tribunal was right in law in directing the respondent authorities to restore the registration number of respondent? - Held that - The learned Tribunal is justified in observing that the first appellate authority in Appeals against the order cancelling the registration had no authority to direct the dealer to furnish the security. Reliance placed upon Sub Section (4) of Section 73 of the Gujarat VAT Act, 2003 by the learned Assistant Government Pleader is absolutely misconceived - Sub Section (4) of Section 73 of the Gujarat VAT Act shall be applicable in a case where the Appeal before the first appellate authority was against the order of assessment. The power to furnish the security by the dealer in a case of cancellation of the registration would be with the registering authority as per Section 28 of the Gujarat Value Added Tax Act, 2003. Restoration of registration - reduction of quantum of penalty per default - Held that - The same cannot be said to be question of law as on facts the learned Tribunal found and observed that it was the case on behalf of the dealer that he had already filed all the returns and the tax and interest has been paid - Having been satisfied with the explanation given by the dealer, when such an order is passed, the same cannot be said to be erroneous. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Cancellation of registration for non-filing of VAT returns.
2. Authority of the first appellate authority to direct dealer to furnish security.
3. Imposition of penalty under Section 29(5) of GVAT Act, 2003.
4. Reduction of penalty to ?2000 per default contrary to provisions of the Act.
5. Restoration of registration number by the Tribunal.

Analysis:

1. The High Court addressed the issue of cancellation of registration due to non-filing of VAT returns. The Tribunal had initially quashed the order of cancellation and imposed a penalty of ?2000 per default. The Court noted that the dealer had filed all returns and paid taxes and interest. The Tribunal directed the registering authority to verify compliance and restore the registration, reserving the right to initiate proceedings under Section 28 of the Gujarat VAT Act if necessary.

2. The Court examined the authority of the first appellate authority to direct the dealer to furnish security for registration restoration. It was observed that the power to demand security in case of registration cancellation lies with the registering authority under Section 28 of the Act, not the first appellate authority. The Court agreed with the Tribunal's decision in this regard, dismissing the revenue's appeal.

3. Regarding the imposition of penalty under Section 29(5) of the GVAT Act, 2003, the Court found that the Tribunal's decision to reduce the penalty to ?2000 per default was based on the dealer's compliance with filing returns and paying dues. The Court held that this reduction was not erroneous as the Tribunal had considered the dealer's explanation and reserved the Department's right to initiate further proceedings if required.

4. The Court addressed the issue of reducing the penalty contrary to the Act's provisions. It was clarified that the Tribunal's decision to reduce the penalty was not a question of law but a factual determination based on the dealer's compliance with tax obligations. The Court upheld the Tribunal's decision in this regard.

5. The Court considered the restoration of the registration number by the Tribunal as a consequential action based on the dealer's compliance with filing returns and payment of taxes and interest. The Tribunal's direction to restore the registration was upheld, with the Court finding no substantial question of law to warrant interference. Consequently, the Court dismissed the appeals filed by the revenue.

In conclusion, the High Court upheld the Tribunal's decision regarding the cancellation of registration, authority to demand security, imposition of penalty, reduction of penalty, and restoration of registration number, finding no substantial question of law to support the revenue's appeals.