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TMI Blog2010 (4) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... d November 10, 2009, respectively, by which the respondent cancelled the registration of the petitioners as dealer in respect of petitioner in W.P. No. 625 of 2010 for resale of petrol and diesel in RC. No. 101385/87-88 for the business under the repealed Pondicherry General Sales Tax Act, 1967 and TIN No. 34310000147 under Puducherry Value Added Tax Act, 2007 and CST No. 34310000147, dated February 28, 1977 under the Central Sales Tax Act, 1956 and in respect of the petitioner in W.P. No. 626 of 2010 as dealer for resale of petrol and diesel and granted Distinct RC No. 105047/1999-2000 for the said business under the repealed Pondicherry General Sales Tax Act, 1967 and TIN No. 34900001132 under the Puducherry Value Added Tax Act, 2007 and CST No. 34900001132, dated September 22, 1999 under the Central Sales Tax Act, 1956. The writ petitioners are the dealers in respect of petroleum products as granted by the Indian Oil Corporation. They purchased the lubricants and sold to the customers and they are regularly assessed to tax and have been paying the same. The respondent has issued a notice on October 27, 2009 stating that the petitioner in W.P. No. 625 of 2010 is in arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal as against the assessment orders the said claim is unreasonable and opposed to principles of natural justice. It is also stated that similar orders have been quashed by this court in W.P. No. 23940 of 2009 (S. Kathiresan v. Deputy Commercial Tax Officer, (Registration Cell), Commercial Taxes Department, Puducherry [2011] 40 VST 399 (Mad)). The petitioner in W.P. No. 626 of 2010 also stated that the petitioner has also filed a writ petition in W.P. No. 43881 of 2006 (R. Thirumalai v. Commercial Tax Officer II) challenging the validity of the amended proviso to section 34 of the Pondicherry General Sales Tax Act and the order of the appellate authority directing the petitioner to pay 25 per cent based on the amended provision and the same was disposed of on April 30, 2009 and under similar circumstances, in the writ appeal filed against the similar orders, the First Bench of this court permitted the petitioners to approach the authority for furnishing security instead of payment of 25 per cent. The impugned order of cancellation is challenged on various grounds including that it is arbitrary and without jurisdiction and in violation of the principles of natural justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation either in the assessment proceedings or in the proceedings initiated by the respondent. It is stated that the storage capacity alleged by the oil company in the retail outlet owned by the petitioners is minimal when compared to the quantity of petrol and diesel procured by the petitioners along with others from the said oil company as seen in the respective assessment orders. Such a huge quantity of commodity, i.e., petroleum products, it was found that cannot be sold in stock with low storage capacity as stated by the petitioner but it might have been sold by them. Therefore, the petitioners have not at all shown the real turnover and paid tax due thereon in returns which is unjustified. It is stated that it is the practice of the petitioners to conceal and secret a part of the turnover and the petitioners wish to disclose in the returns by withholding the tax money collected from the customers which causes serious prejudice to public finance. It is not open to the petitioners to pay tax on turnover at their whims and fancies. It is not correct to state that the cancellation proceedings notice issued on October 27, 2009 was issued only on account of failure to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the question of furnishing such materials does not arise and the same is against the provisions of the Pondicherry General Sales Tax Act and section 11 read with section 81 of the Puducherry Value Added Tax Act, 2007 and section 106 of the Indian Evidence Act, 1872 and it is for the petitioner who has to furnish details. Since the issue is other than the assessment proceedings, the modification of the assessment order is barred under section 55 of the Pondicherry General Sales Tax Act, 1967 and in case the petitioner wants to question the validity of the assessment order, he has to only approach the appellate authority and the petitioners having not challenged the order of assessment, the Department has filed the recovery proceedings before the judicial magistrate court as per the provisions of the repealed Pondicherry General Sales Tax Act, 1967. Under section 44 of the repealed Pondicherry General Sales Tax Act, 1967 and section 53 of the Puducherry Value Added Tax Act there is a responsibility on every registered dealer to maintain true and correct accounts and records and are required to discharge the liability in the manner prescribed and a person who is a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petition. It is also stated that in respect of petitioner in W.P. No. 626 of 2010, even though the petitioner is the sole proprietor on record, the business is operated by another person Thiru Saravanan, S/o. Thirumal as a beneficial owner and enjoyed the fruits of the business and yet another person Thiru. Ganesan, S/o. S.P. Manickasamy stood as a surety for and on behalf of the business and the respondent-Department has filed complaint and the judicial magistrate court proceeds for trial as per the provisions of the Benami Transactions (Prohibition) Act, 1988. Mr. R. Mahadevan, learned counsel for the petitioners, would submit that in respect of the petitioner in W.P. No. 626 of 2006 after the notice was issued, the petitioner has called for certain particulars and the respondent has declined to furnish the same. It is his submission that under the impugned order of cancellation some other reasons have been assigned. He would also bring to the notice of this court that similar notices came to be quashed by this court. It is also his submission that the entire admitted tax has been paid and 25 per cent of the tax will be paid at the time of filing of appeal. It is his submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a total extent of Rs. 24,26,78,866. The said notices were given on October 27, 2009 calling for objections, if any, or to pay the tax and penalty on or before November 6, 2009. The petitioner in W.P. No. 625 of 2010 in a letter dated November 5, 2009 has given a reply stating that the Puducherry Value Added Tax Act, 2007 is in prospective nature which came into force from December 3, 2007 and therefore, the notice of cancellation is not attracted since proceedings have already been initiated under the existing Pondicherry General Sales Act, 1967 and therefore, the initiation of recovery proceedings and cancellation does not arise. In W.P. No. 626 of 2010 by his letter, dated November 4, 2009 addressed to the respondent, the petitioner has sought for certain clarification in respect of 2007-08 stating that the arrears of tax as per the assessment order for the year 2007-08 have been noted in the show-cause notice as if it is for the assessment year 2008-09 and that demand has been raised even before the assessment is completed. As a reply to this letter, the respondent in the letter dated November 5, 2009 has refused to furnish particulars stating that the details are availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders on the ground of violation of the principles of natural justice, however, directing the respondent to proceed in accordance with law. In one such order in W.P. No. 23940 of 2009 in S. Kathiresan v. Deputy Commercial Tax Officer (Registration Cell), Commercial Taxes Department, Office of the Commissioner (CT), Puducherry [2011] 40 VST 399 (Mad) in the order, dated November 23, 2009, under similar circumstance. The honourable Mrs. Justice Chitra Venkataraman has passed the following order (page 401 in 40 VST): 3. A perusal of the order passed further shows that quite apart from reasons given as a basis for issuance of a show-cause notice, the order further refers to yet another reason that the petitioner had failed to file extract as regards the declaration form C as prescribed under sub-rule (10) of rule 14. A reading of the order thus reveals that more than one reason had resulted in persuading the officer to pass order of cancellation. Considering the fact that the status as a registered dealer confer certain rights and privilege on the dealer under the Act, in fairness to the rights of the petitioner, the respondent should have intimated about not only the rejection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selves especially in the circumstance that a valid right, which is certainly a right conferred under article 19(1)(g) of the Constitution of India was sought to be taken away and therefore, it is in violation of the principles of natural justice. As I have stated earlier, there are apparent differences and discrepancies between the reasons given in the show-cause notice and the impugned order by which the registration stood cancelled. In such view of the matter, the compliance of natural justice would be completed only if the reasons which were the basis for the impugned orders were indicated in the show-cause notice so as to enable the petitioners to give effective reply, and that is the initial stage of the principles of natural justice. When in that stage itself there is a violation, I am of the considered view that mere withdrawal of revision wherein the statutory condition is onerous in directing to pay 50 per cent of the amount cannot stand as a stumbling block for enforcing the right of principles of natural justice as held by the learned judge in the said case stated supra. It is not as if the respondent-Department left with no powers and no means to proceed in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n none of the members of the family is gainfully employed. Clause 4 of the circular dated January 20, 1987 interdicts such an appointment on compassionate grounds. The appellant Corporation being a statutory Corporation is bound by the Life Insurance Corporation Act as well as the statutory regulations and instructions. They cannot be put aside and compassionate appointment be ordered. has absolutely no relevance to the facts of the present case. Here, it is a case of not following the principles of natural justice which means to hear the other side before passing of the adverse order against him. A reference to a judgment of this court reported in [2009] 23 VST 107 (Mad) (Sujana Universal Industries Ltd. v. Deputy Commercial Tax Officer, Valluvarkottam Assessment Circle, Chennai) again has no application. That was a case where in respect of the assessment order when there was an alternative remedy of appeal, the writ petition came to be filed and in those circumstances, the writ petition was dismissed. Law is well-settled that alternative remedy is a rule of discretion. In any event, in cases where there has been violation of principles of natural justice writ would li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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