1987 (8) TMI 428 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Basis of the estimate for the estimated tax.
2. Denial of reasonable opportunity to the assessee before cancelling the certificate of registration.
3. Whether non-filing of returns or non-remittance of tax constitutes "good and sufficient reasons" for cancellation of the certificate of registration under section 14(7) of the Act.

Detailed Analysis:

1. Basis of the Estimate for the Estimated Tax:
The Appellate Tribunal initially held that the order cancelling the certificate of registration lacked a basis for the estimated tax. However, upon review, the court found that the Sales Tax Officer's order dated 13th December, 1983, clearly indicated the failure of the assessee to furnish returns and the arrears of sales tax amounting to Rs. 27,320.06. The taxable turnover for June to September, 1983, was determined by the assessing authority based on the declarations filed at the check post. The court concluded that the order provided a sufficient basis for the estimate, thus invalidating the Tribunal's first ground for cancellation.

2. Denial of Reasonable Opportunity:
The Appellate Tribunal's second ground for cancellation was based on the alleged denial of reasonable opportunity to the assessee. The court observed that after the order dated 13th December, 1983, requiring additional security, the assessing authority served a notice on 31st December, 1983, proposing to cancel the certificate of registration. The assessee filed a reply on 4th January, 1984, and the final order was passed on 12th January, 1984. The court concluded that the assessee was given an opportunity to present his case, and thus, there was no denial of reasonable opportunity. This ground for cancellation was also found to be unsustainable.

3. "Good and Sufficient Reasons" for Cancellation:
The Tribunal held that non-filing of returns or non-remittance of tax could not form "good and sufficient reasons" for cancellation under section 14(7) of the Act. The court disagreed, emphasizing that the words "good and sufficient reasons" should be interpreted in a manner that effectuates the levy, assessment, and recovery of tax. The court noted that the dealer's failure to submit returns and pay taxes, coupled with arrears, justified the assessing authority's actions. The court stressed that the assessing authority has a duty to safeguard revenue and take appropriate measures, including cancellation of registration, in cases of non-compliance. The Tribunal's reasoning was found to be erroneous, and this ground for cancellation was dismissed.

Final Observations:
While the court found the grounds for the Tribunal's cancellation of the Sales Tax Officer's order to be unsustainable, it identified a fundamental flaw in the final order dated 12th January, 1984. The objections raised by the assessee, citing illiteracy, illness, and an installment order from the Revenue Minister, were not considered. The court held that the assessing authority should have addressed these objections before canceling the registration. As a result, the final order was deemed invalid, and the proceedings were remanded to the Sales Tax Officer for reconsideration in accordance with the law.

Conclusion:
The tax revision case was disposed of with directions to the Sales Tax Officer to restore the proceedings to his file and address the objections raised by the assessee. There was no order as to costs.