2012 (10) TMI 921 - HC - VAT and Sales Tax

Registration as dealer in Trading in live chicken - denial as one rented room for doing business is not enough to stock the commodity dealt with - Held that - In Ext.P5, the order rejecting his application for registration there is no mention about the allegation regarding the inadequacy of the storage space mentioned in Ext.P3 moreover, the petitioner s contention that he proposes to sell live chicken to dealers in Mahi, is also not dealt with in Ext.P5. On the other hand Ext.P5 stated that since sale is proposed to be effected to dealers in Karnataka and Tamil Nadu where live chicken is a non-taxable item, first respondent again says that registration is unnecessary. Also a fresh allegation is made that the application made by the petitioner is only under Section 7(1) and not under Section 7 (1) & (2) of the CST Act. Not only there is non-consideration of the contentions, but also an allegation which was not put to the petitioner is relied on. These reasons render Ext.P5 vitiated and need to be set aside - first respondent directed to reconsider the matter with notice to the petitioner and pass orders on Ext.P3 - in favour of assessee.

Summary

Issues:
1. Rejection of dealer registration applications under KVAT and CST Acts for trading in live chicken.
2. Grounds for rejection including inadequate premises for stocking goods and potential tax evasion.
3. Discrepancies in the notice of rejection and the order rejecting the application.
4. Failure to address petitioner's contentions in the rejection order.
5. Allegation of application under Section 7(1) only not addressed in the notice of rejection.

Analysis:

1. The petitioner applied for dealer registration under the KVAT and CST Acts for trading live chicken. The first respondent issued a notice proposing rejection of the applications citing reasons such as inadequate premises for stocking goods and potential tax evasion due to non-taxable status of live chicken in neighboring states like Tamil Nadu and Karnataka.

2. The petitioner responded to the notice by clarifying that they do not intend to store the goods and will directly transship them. They also highlighted their intention to sell to dealers in Mahi, where live chicken is a taxable item. However, the first respondent rejected the application citing intentional filing for CST registration under Section 7(1) only, indicating a willful attempt at high evasion-prone business.

3. Discrepancies arose between the notice of rejection (Ext.P3) and the rejection order (Ext.P5). Ext.P3 mentioned inadequate storage space and sales to non-taxable states, while Ext.P5 did not address these points. The petitioner's contentions were not dealt with in Ext.P5, and a new ground of application under Section 7(1) only was introduced, not mentioned in the original notice.

4. The court found the rejection order (Ext.P5) flawed due to the failure to address the petitioner's contentions and the introduction of a new ground not previously raised. As a result, Ext.P5 was set aside, and the first respondent was directed to reconsider the matter with notice to the petitioner and provide a decision within four weeks.

5. The judgment highlighted the importance of addressing all raised points and ensuring consistency between notices and rejection orders in administrative decisions. The court emphasized the need for a fair and thorough consideration of all aspects before rejecting an application for dealer registration.