2019 (11) TMI 827 - HC - VAT and Sales Tax

Cancellation of registration of petitioner - extension of lease agreement - Before expiry of lease period, the second respondent issued the impugned notice dated 11.06.2019 and called upon the petitioner to produce fresh lease agreement also by indicating that failure to produce such lease agreement would result in taking action to initiate cancellation of registration - legality of notice issued by the second respondent calling upon the petitioner to produce fresh lease agreement to continue the business. HELD THAT - There is no dispute to the fact that the lease obtained by the third respondent from the owners viz., the respondents 4 5 expired on 23.06.2019. However, it is an admitted fact that even before expiry of the lease period, the Indian Oil Corporation has filed the suit in O.S.No.1434 of 2019 on the file of the Principal District Munsif Court, Pondicherry on 15.06.2019 seeking mandatory injunction and permanent injunction as stated supra. It is stated that the said suit is still pending, wherein, the petitioner has also been arrayed as third defendant. Whether the lease granted in favour of the third respondent and got expired on 23.06.2019, is liable to be renewed or not, is a matter, now seized of by the Civil Court and thus, the said issue has to be considered and decided by such forum after considering the respective pleadings of the parties and the evidence let in by them. The third respondent shall file implead petition to implead the second respondent/Commercial Tax Department, as a party/defendant in the said suit along with appropriate interim application seeking interim relief against the said respondent, within a period of four weeks from the date of receipt of a copy of this order - On filing of such interim application, the learned Principal District Munsif, Puducherry, shall consider the said application and pass orders on the same on merits and in accordance with law - petition disposed off.

Summary

Issues:
Challenge to notice requiring fresh lease agreement for business continuation.

Analysis:
The writ petition challenges a notice from the second respondent dated 11.06.2019, requesting the petitioner to provide a fresh lease agreement to continue their business. The property in question, located in Pondicherry, was leased to the Indian Oil Corporation, who then granted distributorship to the petitioner to operate a petroleum outlet. The lease expired on 23.06.2019, and the second respondent demanded a new lease agreement, threatening cancellation of registration if not provided. The petitioner argued that the Commercial Tax Department erred in directing the Indian Oil Corporation not to renew the lease due to tax attachment on the property. The Indian Oil Corporation had filed a civil suit seeking lease extension, which is pending. The High Court noted that the issue of lease renewal is before the Civil Court and refrained from expressing any opinion on the matter. It directed the Indian Oil Corporation to include the Commercial Tax Department as a party in the pending suit and seek appropriate relief. The High Court ordered the maintenance of status quo on the petitioner's registration until the Civil Court decides on the matter. The Commercial Tax Department was allowed to continue tax recovery proceedings against the property owners.

In summary, the High Court refrained from deciding on the lease renewal issue, as it is pending before the Civil Court. The petitioner was directed to include the Commercial Tax Department in the ongoing suit and seek relief. The status quo on the petitioner's registration was maintained until the Civil Court's decision. The Commercial Tax Department was permitted to proceed with tax recovery actions against the property owners.