9911796707
TMI Blog2014 (11) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... s the 'CST' Act). On the premise that the petitioner was involved in dubious sale transactions, the Deputy Sales Tax Commissioner, Mehsana issued a showcause notice on 31.03.2012 calling upon the petitioner to show cause why in exercise of powers under Section 75 read with Section 100 of the Gujarat Value Added Tax Act, 2003 (hereinafter to be referred to as the 'VAT' Act) the registration be not cancelled ab initio. In such showcause notice, it was alleged inter alia that during the inquiry at the business premises of the petitioner on 06.01.2011, several doubtful transactions by the petitioner were noticed. Certain documents were seized. From the documents, it was reveled that the petitioner had made purchases and sales with M/s. Parth Trading Company and M/s. Hari Traders both of Mehsana District. Bulk of the petitioner's trading for the year 200708 of oil seeds was with these two traders. M/s. Parth Trading Company had manipulated its accounts and evaded sales tax liability. Similar circuitous transactions were also carried out by M/s. Hari Traders. The registration of M/s. Vishal Traders was cancelled ab initio and therefore, the tax credit for the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , upheld the order of the Deputy Commissioner of cancellation of registration. However, the effect of such cancellation was given from the year 2006 presumably from the date of implementation of the VAT Act. Before the Tribunal, the petitioner had raised many contentions. One of them was that the Deputy Commissioner had no power under Section 75 read with Section 100 under the VAT Act to take the registration under revision. The Tribunal came to the conclusion that the Deputy Commissioner had power under Section 27(5) of the VAT Act to cancel such a registration and that mere mentioning of a wrong statutory provision would not vitiate the order. The petitioner's several contentions with respect to the breach of natural justice were also turned down. It is this order of the Tribunal which the petitioner has challenged in this petition. With minor differences, facts in all petitions are similar. 6.Learned counsel Mr. Hemani for the petitioners raised following contentions: (i) The Deputy Commissioner had no power to revise the order granting registration in exercise of power under Section 75 read with Section 100 of the VAT Act. (ii)In any case, Section 75 provided for a limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a section would not be fatal to the action itself. (iii) The Deputy Commissioner had passed the order cancelling the registration after coming to conclusion that the petitioner had engaged in bogus billing activities. Such findings were confirmed by the Tribunal and would not be open to reappreciation in exercise of writ jurisdiction by this Court. (iv) In support of his contention, learned AGP relied on the decision of the Supreme Court in case of Deepak Agro Foods vs. State of Rajasthan and ors. reported in (2008) 7 SCC 748. 8. Whether the Deputy Commissioner had power under Section 75 read with Section 100 of the VAT Act to cancel registration for the acts of the trader subsequent to the registration and whether such registration could be cancelled when it was initially granted under the GST Act, are some of the interesting questions which we would have examined. However, the learned AGP took a firm stand that the Deputy Commissioner did not exercise power under Section 75 read with Section 100 of the VAT Act but under Section 27(5) of the said Act. In view of this unequivocal stand of the learned AGP which is also otherwise borne out from the affidavitinreply filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate of registration from such date as may be specified by him." 10. Section 75 of the VAT Act pertains to revision. It empowers the Commissioner on his own motion or on application made to him to call for and examine the record of any order passed by an officer appointed under Section 16 to assist him and pass such order as he thinks fit and proper. This exercise of power for calling of the record and passing final order, however, come with time frames. Section 75 reads as under: "75.Revision (1) Subject to the provisions, of section 74 and to nay rules made there under: (a) the Commissioner of his own motion within three years or on an application made to him within one year from the date of any order passed by any officer appointed under Section 16 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks just and proper [within five years from the date of the said order of the officer appointed under section 16 to assist him.] (b) The Tribunal, on application made to it against an order of the Commissioner (not being an order passed under sub section (2) of section 73 in second appeal or under clause (a) in revision on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation where a dealer knowingly furnishes incomplete or incorrect particulars in his return with a view to evade tax. Clause (e) would apply in cases where a dealer holds or accepts or furnishes or causes to be furnished a declaration, which he knows or has reason to believe to be false. Clause (i) would apply where a dealer without entering into a transaction of sale issues to another dealer tax invoice, retail invoice etc. with intention to defraud the Government revenue. Under such circumstances, the Commissioner may, at any time, for reasons to be recorded in writing and after giving a dealer an opportunity of being heard cancel his certificate of registration from said date as he may specify. Few things thus clearly emerge. Under Section 27(5) of the VAT Act, the Commissioner has power if the grounds specified in Clauses (a) to (j) thereof are established, to cancel registration of a dealer at any time. He must, however, grant opportunity of hearing to the dealer and record his reasons for passing the order. Such order would carry the effective date from which the registration would be cancelled. 13. Merely because, the petitioner enjoyed registration granted under GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f mere billing entries without actual sale and purchase of goods the petitioner's registration was liable to be cancelled under Section 75 read with Section 100 of the VAT Act. The Deputy Commissioner eventually passed his order in original directing ab initio cancellation of such registration referring to Section 75 read with Section 100 of the VAT Act. As noted, in view of the firm stand of the respondents that the order was, in fact, one under Section 27(5) of the VAT Act and not under Section 75 thereof, the very question of permissibility of passing such an order under Section 75 of the Act would become one of academic interest. Nevertheless, we would have to briefly touch on the contour of the Commissioner's powers under Section 75 to be able to judge whether the impugned order passed by the Deputy Commissioner can be saved by reference to the statutory provisions entirely different from one referred to in the impugned order. 16. As noted, Section 75 of the VAT Act is a revisional power of the Commissioner and the Tribunal. In particular, it authorizes the Commissioner on his own motion or on an application made to him within the time specified, to call for the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assume powers under Section 75. At no point of time he resorted to his powers under Section 25 of the VAT Act. Right from the issuance of show cause notice till the very last word in his order of cancelling the registration, he addressed the entire issue as one being under Section 75 of the VAT Act. In the show cause notice itself he referred to Section 75 read with Section 100. In the impugned order, he made detailed reference to what according to him were the petitioner's acts and omissions in sale and purchase of different commodities. He eventually concluded that on account of such acts and omissions, the petitioner's registration was liable to be cancelled ab initio. Here again, he exercised power under Section 75 and cancel the registration from the inception as if he was revising the order of granting registration to the petitioner. In our opinion, this order cannot be saved by referring to another statutory provision. Our reasons are as under: (i) From the beginning i.e. from issuance of the show cause notice till the final order of adjudication, the Deputy Commissioner referred to and relied upon only Section 75 read with Section 100 of the VAT Act. (ii)There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngwith the proposal to cancel such registration under Section 27 of the VAT Act, the same may be taken as substantial compliance of the rule and mere omission to adhere to the printed format of the form may not be fatal. However, before any action could be taken under Section 27(5), the dealer was entitled to a notice detailing reasons why the registration would be liable to be cancelled and that the same would be as provided under Section 27 of the VAT Act. Form 104 itself comes to a title "Notice for Suspension/ Cancellation of Certificate of Registration under subsection (5) of Section 27 of the Gujarat Value Added Tax Act, 2003." 19. Principles of natural justice are not empty formalities. They are required to put a person likely to be visited with adverse order to notice why a proposed action not be taken for prima facie grounds indicated in the notice. When the very notice suggested exercise of powers under Section 75 which was for taking the order of subordinate officer under revision for appropriate reasons to be recorded, it would be in gross violation of principle of natural justice then to permit the authority to pass final order under entirely different provision which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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