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TMI Blog2014 (11) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 27(5) of the VAT Act and not be revised under Section 75 thereof. the order cannot be viewed as mere reference to a wrong statutory provision tracing the power of cancellation. It was rather a situation where the authority passed an order assuming jurisdiction under a wrong provision exercising powers of entirely different nature which powers were not available to him for revising the order of registration. Such order cannot be saved or cured by an affidavit suggesting that he intended to pass the order under Section 27(5) and there was a mere wrong reference to Section 75 read with Section 100 of the VAT Act. - all petitions allowed - Decided in favor of assessee. - Special Civil Application No. 3541 of 2014, Special Civil Application No. 3546 of 2014, Special Civil Application No. 4264 of 2014, Special Civil Application No. 4265 of 2014 - - - Dated:- 13-10-2014 - Akil Kureshi And Vipul M. Pancholi,JJ. For the Appellants : Mr Tushar P Hemani, Adv. and Ms Vaibhavi K Parikh, Adv. For the Respondent : Mr Jaimin Gandhi, AGP JUDGMENT ( Per : Honourable Mr. Justice Akil Kureshi ) 1.These petitions arise out of common background. They have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions entered into by the petitioner were genuine. The petitioner urged that, if M/s. Parth Trading Corporation has, for some reason, not paid taxes to the Government, the petitioner cannot be made liable for the same. Inter alia on such grounds the petitioner opposed the show cause notice. 4. Unconvinced by the petitioner's reply, the Deputy Commissioner passed his order in original on 18.05.2012 and, once again, quoting Sections 75 and 100 of the VAT Act, ordered to cancel the registration of the petitioner ab initio. He relied on Section 9(2) of the CST Act to likewise cancel the petitioner's registration from the inception granted under the CST Act. In such order, he noted that the registration of M/s. Vishal Traders has been cancelled ab initio. On all purchases made from M/s. Vishal Traders therefore, tax credit would be liable to be disallowed. On the purchases made by the petitioner from said M/s. Vishal Traders, the seller, has not deposited the tax with the Government. The petitioner had relied on an affidavit by the Proprietor of M/s. Hari Traders. However, the authority noticed that for the sales made by M/s. Hari Traders to the petitioner during the year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een cancelled in exercise of any power under the VAT Act and particularly, under Section 75 thereof. In this respect, the counsel would draw our attention to Section 100 of the VAT Act providing for repeal and savings. (iv) Counsel further submitted that the order passed by the Deputy Commissioner clearly referred to Section 75 read with Section 100 of the VAT Act. Such order could not have been saved with reference to Section 27(5) of the Act as was done by the Tribunal. (v) It was next contended that the petitioner had not indulged in any bogus billing activity. Merely because the registration of M/s. Vishal Traders was cancelled would not by itself mean that the petitioner's transactions with such trader were bogus. If the trader has availed of tax credit erroneously, the same can be denied. However, cancellation of registration of a trader has far reaching consequences and can be resorted to only in extreme situation envisaged under the statutory provisions. (vi) It was contended that the order passed by the Deputy Commissioner suffered from gross violation of principle of natural justice. Without disclosing any material adverse to the petitioner the same was relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We may recall that the registrations were granted to the petitioner when the GST Act was operative. With effect from 01.04.2006 the VAT Act was introduced repealing the GST Act. Section 21 thereof pertains to registration by a dealer. Sub section (1) thereof provides that no dealer shall, while being liable to pay tax under the said Act, carry on business as a dealer unless he possesses the valid certificate of registration, as provided under the Act. Section 23 of the VAT Act pertains to deemed registration and provides that every dealer registered as on the appointed day under any of the earlier laws or under the Central Act shall be deemed to be registered under Section 21. Section 27 of the VAT Act pertains to suspension or cancellation of registration and provides various situations where a registration of a dealer either be cancelled or suspended. We are concerned with subsection (5) thereof. Relevant portion of which reads as under: (5) If a dealer(a) xxx xxx xxx (b) Knowingly furnishes incomplete or incorrect particulars in his returns [with a view to evade tax] (c) xxx xxx xxx (d) xxx xxx xxx (e) holds or accepts or furnishes or causes to be furnished a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made. (3) No order shall be passed under this section which adversely affects any person, unless such person has been given reasonable opportunity of being heard. (4) Where the Commissioner or the Tribunal rejects any application for revision under this Section, the Commissioner or, as the case may be, the Tribunal shall the reasons for such rejection. 11. Section 100 of the VAT Act pertains to repeal and savings. In addition to repealing the GST Act and other connected statutes it is provided that such repeal shall not affect the previous operation of the said Acts or any right, title, obligation or liability already acquired, accrued or incurred thereunder. Sub section (2) of Section 100 provides for special savings. Clause(b) thereof pertains to registration certificate issued under the GST Act and in force immediately before the appointed day. Relevant portion of Section 100 (2)(b) reads as under: 100. Repeal and savings. 2(b). all rules, regulations, orders, notifications, forms and notices issued under the said Act and in force immediately before the appointed day shall continue to have effect for the purposes of the levy, assessment, reassessment, collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the VAT Act. Insofar as Section 27(5) of the VAT Act is concerned, it makes no distinction when it comes to cancellation of a registration whether it is granted under the VAT Act under Section 21 or is deemed to have been so registered under Section 21 read with Section 23 of the VAT Act. 14. For added force the legislature has provided in Clause (b) of subsection (2) of Section 100 any registration certificate under the GST Act and in force immediately before the appointed day shall be deemed to be the registration certificate issued under the VAT Act and accordingly, such registration certificate shall be valid and effectual under the new Act VAT Act until such certificate is issued substituted, suspended or cancelled under the provisions of the said Act. Whatever doubtful if at all, therefore, there may have been with respect to the power of the Commissioner to cancel such registration by virtue of combined effect of Section 21, 23 and 27(5) of the VAT Act, would simply evaporate by virtue of the provisions contained in Clause (b) of subsection (2) of Section 100 of the VAT Act. In unequivocal terms it provides that the registration under the GST Act would be registration u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that no order shall be passed under said section unless a person who is likely to be adversely affected has been granted reasonable opportunity of being heard. 17. In essence, therefore, Section 75 clothes the Commissioner with revisional powers. Such power could be exercised either suo motu within three years or on an application made by any party within one year from the date of order under revision. The revision is not to be permitted on a missed opportunity of filing appeal. It is hugely doubtful whether such powers could be exercised to revise an order of registration granted to a dealer for his acts and omissions post the date of registration. An order passed by an authority below could be revised for wellknown grounds and parameters such as impropriety, illegality or procedural defects or the likes. Such order could not be revised because of subsequent acts or omissions of the dealer which had no connection with the competent authority granting registration. 18. On the other hand, powers under Section 27(5) of the VAT Act are very wide. They could be exercised upon any of the grounds mentioned in the different clauses under the said subsection being established for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judicial pronouncements that an order passed by an authority would not be vitiated on mere reference to a wrong statutory provision. If the power can be traced to a provision under the statute, mere wrong reference of a section would not be fatal. However, in the present case, the Deputy Commissioner exercised powers under a provision which was simply not available to him. He put the petitioner to notice why the order of registration not be cancelled under the revisional powers. He turned down the petitioner's opposition and proceeded to cancel the registration by exercising revisional powers. As already recorded, the order of registration could not have been revised for subsequent misconduct of the dealer and, if at all it could be cancelled. The Deputy Commissioner thus put the petitioner to notice on completely wrong track. He, thereafter, passed the order also exercising the power which was not available to him. He now cannot defend the action by arguing that he was mistaken about the source of the powers but the powers, in fact, exist and that therefore, his order be left intact. As noted, the nature of powers enjoyed by the Deputy Commissioner under Section 75 was of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the power of cancellation. It was rather a situation where the authority passed an order assuming jurisdiction under a wrong provision exercising powers of entirely different nature which powers were not available to him for revising the order of registration. Such order cannot be saved or cured by an affidavit suggesting that he intended to pass the order under Section 27(5) and there was a mere wrong reference to Section 75 read with Section 100 of the VAT Act. 21. In view of such conclusion, we need not make any declaration of the third and the last question viz. whether there was any breach of natural justice in the conclusion arrived by the Deputy Commissioner. If there was any material which he relied upon without sharing with the petitioner surely it would amount to denying the petitioner a reasonable opportunity of hearing. We, however, see no reason to conclude this issue. 22. We would be striking down the order of the Deputy Commissioner as partially confirmed by the Tribunal on the ground of exercise of jurisdiction not permissible to him which also resulted into violation of principle of natural justice. It is by now well settled that, if an administrative acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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