2016 (12) TMI 132 - HC - VAT and Sales Tax

Cancellation of the registration certificate - TNVAT Act, 2006 - belated filing of returns - principles of natural justice - Held that - it is seen that the impugned order of cancellation has been passed in violation of the principles of natural justice without taking into consideration the objections dated 21.10.2016 to the show cause notice dated 20.10.2016. Further in the show cause notice, the petitioner was granted 15 days time to give their objections and the objections given by the petitioner are well within the 15 days time. Therefore, it is not known as to how the respondent could have passed a cancellation order on the very same day - the date on which the show case notice was issued i.e 20.10.2016. Further, there is no plausible explanation as to why the official has signed the order only on 15.11.2016. In any event, the reason for cancellation of the petitioner s registration is for non filing of the returns for the months of July, August and September 2016 and this defect does not exist any longer, since the petitioner filed the returns and paid taxes and the copies in proof of the same have been filed in the typed set of papers. For all the above reasons, the impugned order is held to be illegal. Registration restored to petitioner - appeal allowed - decided in favor of petitioner-assessee.

Summary

Issues:
Cancellation of registration certificate under the Tamil Nadu Value Added Tax Act, 2006 due to non-filing of returns for consecutive months; Violation of principles of natural justice in passing the cancellation order without considering objections and within the granted time frame.

Analysis:
The petitioner was aggrieved by the cancellation of their registration certificate under the Tamil Nadu Value Added Tax Act, 2006, due to non-filing of returns for the months of July, August, and September 2016. The respondent issued a show cause notice on 20.10.2016, proposing cancellation for non-filing of returns and also made a best judgment assessment for those months. The petitioner replied to the notice on 21.10.2016, explaining the reasons for the delayed filing, including technical difficulties in accessing the website to upload details.

The impugned order of cancellation, dated 20.10.2016, was digitally signed on 15.11.2016, despite the petitioner's objections on 21.10.2016 not being considered. The petitioner subsequently filed returns for the three months and paid taxes, which were accepted by the respondent. The petitioner, upon trying to file returns for October 2016, discovered that their registration had been cancelled, leading to a representation highlighting the procedural irregularities and lack of consideration of objections.

The High Court found that the cancellation order was passed in violation of the principles of natural justice as the objections were not taken into account before cancellation. The order was deemed illegal as the petitioner had rectified the non-compliance by filing returns and paying taxes promptly. The Court allowed the writ petition, set aside the impugned order, and directed the respondent to restore the petitioner's registration to enable them to file returns for October 2016. The Court concluded by closing the case without imposing any costs on the parties involved.