2020 (11) TMI 924 - HC - VAT and Sales Tax

Cancellation of Registration Certificate - legal heirs - deemed dealer on the death of dealer - TNVAT Act - CST Act - The petitioner is the wife of deceased. The other legal heirs of the deceased have given no objection for amendment of the registration certificate, in favour of the petitioner and her son - The petitioner has also made a request for amendment of the registration certificate in favour of herself and her son to the respondent. Despite the same, the respondent has passed the impugned orders cancelling the registration certificate on the ground that the petitioner will have to apply for fresh registration under the Tamil Nadu Value Added Tax Act, 2006 Held that - When it is an admitted fact that the petitioner is a legal heir of the deceased dealer, this Court is of the considered view that the legal heirs are deemed to be dealers on the death of deceased, as per the provisions of Section 26 of the Tamil Nadu Value Added Tax Act, 2006. The amendment shall take effect retrospectively, from the date of death of deseased i.e., 09.06.2013. This exercise shall be done by the respondent, within a period of eight weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

Issues:
Challenge to cancellation of registration certificate under Tamil Nadu Value Added Tax Act and Central Sales Tax Act on the death of the dealer. Interpretation of Section 26 of the Tamil Nadu Value Added Tax Act regarding legal heirs becoming deemed dealers. Application of Section 38(4) of the Act in cases of death of registered dealer. Analysis of the power of the authority to cancel, modify, or amend registration certificates under Section 39(14) of the Act.

Interpretation of Section 26 - Legal Heirs as Deemed Dealers:
The petitioner challenged the cancellation of the registration certificate of the deceased dealer under the Tamil Nadu Value Added Tax Act and Central Sales Tax Act, claiming to be the legal heir entitled to be deemed dealer upon the death of the registered dealer. Section 26 of the Tamil Nadu Value Added Tax Act provides that the legal representatives of a deceased dealer shall be deemed to be the dealer for the Act's purposes. The petitioner relied on this provision to assert her right to continue the business as a deemed dealer after the death of her husband, the registered dealer.

Application of Section 38(4) - Succession by Legal Heirs:
The petitioner's counsel argued that Section 38(4) of the Tamil Nadu Value Added Tax Act, which deals with succession to the business of a registered dealer by other persons, does not apply to legal heirs. The legal heirs, according to the counsel, are automatically deemed dealers under Section 26 upon the death of the registered dealer. The Special Government Pleader contended that the petitioner needed to apply for a fresh registration certificate under Section 38(4) due to the death of the registered dealer.

Authority's Power under Section 39(14) - Amendment of Registration Certificate:
The authority granting the certificate of registration is empowered under Section 39(14) of the Tamil Nadu Value Added Tax Act to cancel, modify, or amend any certificate of registration for good and sufficient reasons. The petitioner requested the amendment of the registration certificate in favor of herself and her son, with no objection from other legal heirs. Despite this, the respondent cancelled the registration certificate, prompting the petitioner to challenge the decision through writ petitions.

Judicial Precedent and Decision:
The court referred to a previous Madras High Court judgment in a similar case, where it was held that in instances of a registered dealer's death, the appropriate course of action was to amend the certificate of registration to include the legal representative's name. The court emphasized that the legal heirs, in this case, the petitioner and her son, should be recognized as registered dealers in accordance with Section 26 of the Act. The court quashed the impugned orders and directed the respondent to amend the registration certificate retrospectively from the date of the dealer's death.

Conclusion:
The court, after analyzing the relevant provisions of the Tamil Nadu Value Added Tax Act and considering the legal position of the petitioner as the legal heir of the deceased dealer, ruled in favor of the petitioner. The court emphasized the automatic deemed dealer status of legal heirs under Section 26, rejecting the application of Section 38(4) for succession by third parties. The judgment highlighted the authority's power to amend registration certificates under Section 39(14) and directed the respondent to incorporate the names of the legal heirs as registered dealers, effectively transferring the business to them.