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TMI Blog2016 (7) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... s even the case of the appellant-revenue that the certificate has been cancelled and notice was given in Form VAT-11. Under these circumstances, if the certificate is not cancelled and order of reassessment has been made, in our view, the same would run counter to the scheme of composition of tax as provided and conceived under Section 15 read with and the relevant Rules referred to above. - Benefit of composition allowed. - WRIT APPEAL No. 15039/2011 & WRIT APPEAL Nos.18038-48/2011 (T-RES) - - - Dated:- 5-4-2016 - MR. JAYANT PATEL AND MRS. B.V.NAGARATHNA JJ. APPELLANTS (BY SRI: K.M. SHIVAYOGI SWAMY, ADDL. GOVT. ADVOCATE) RESPONDENT (BY SMT: VANI H., ADVOCATE) ORDER Jayant Patel, J. - These appeals are directed against order dated 03/02/2011 passed by the learned Single Judge in the respective writ petitions whereby, the learned Single Judge for the reasons recorded in the order, quashed the order passed by the first respondent - authority and issued further directions. 2. The brief facts of the case are that in the year 2006, respondent applied for composition of tax under Section 15 r/w Rule 137 of Rule 15 of the Karnataka Value Added Tax Act, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be sufficient to maintain the order of reassessment. It is submitted that respondent had opted for a scheme whereby, payment of tax was by way of composition as provided under Section 15 of the Act. The application was made for such purpose and the competent authority being satisfied about the availability of composition of tax had also issued certificate on 20/12/2006. As per learned counsel for respondent, unless and until the said certificate is cancelled, there was no question of reassessment to be made de hors the composition scheme. She also submitted that even if such certificate was to be cancelled, the opportunity of hearing was required to be given specifically on the aspect as to why the certificate should not be cancelled but no such notice has been given nor any opportunity whatsoever was given on such aspects. She therefore, submitted that the relief as prayed for in the petition for quashing of order of reassessment made by the authority ought to have been granted though it is a different matter that the learned Single Judge has granted relief on the other aspects and the aspect of cancellation of the certificate was not considered by the learned Single Judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cream parlour or bakery or any other class of dealers as may be notified by the Government; or (d) who is a mechanised crushing unit producing [granite or any other metals; may elect to pay in lieu of the net amount of tax payable by him under this Act by way of composition, an amount at such rate not exceeding five per cent on his total turnover or on the total consideration for the works contracts executed or not exceeding two lakh rupees for each crushing machine per annum as may be notified by the Government. (Emphasis Supplied) The aforesaid shows that if the conditions are satisfied as that of a dealer not having turnover exceeding ₹ 50 lakhs or who is a dealer executing the works contract or who is a hotelier, caterer or any other class of dealers as may be notified by the Government or mechanized crushing unit producing granite or any other metals, the option is available to such dealer to elect to pay in lieu of the net amount of tax payable on the basis of 5% of his total turnover or total consideration of the works contract. As in the present case, the other contingencies for the eligibility are not to be considered, they need not be discussed, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or on his own motion may cancel such dealer's certificate and may inform to the dealer in Form VAT-11. As such, it can hardly be disputed that the cancellation of the certificate would result into civil consequence on the taxable liability on the assessee because as per Section 15 of the Rules, the composition offered to the assessee at the rate of 5% on the turnover or total consideration is in lieu of all taxes. The moment the cancellation of the certificate is made, the consequence may arise for filing of regular return and payment of tax as per the respective entries of the schedule. Further, it may also attract the question of reassessment if the assessment is already made or otherwise. Under these circumstances, the power so provided for cancellation of certificate under Rule 145 has to be read with the observance of principles of natural justice inasmuch as it would be obligatory for the jurisdictional Local VAT Officer or the VAT Sub-Officer, to state the grounds and to call upon the assessee, who is holding certificate, as to why such certificate should not be cancelled. After the show-cause notice is issued and the opportunity is given to the dealer/assessee, the cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed so that they may be in a position to (a) to make representations on their own behalf; (b) or to appear at a hearing or enquiry, if one is held; and (c) effectively to prepare their own case and to answer the case, if any, they have to meet. 13. Thus, in the instant case, although the KVAT Act or Rules do not prescribe any provision for hearing a dealer prior to cancellation of the certificate issued by the authorities for payment of tax by way of composition under Section 15 of the Act, we are of the view that the principles of natural justice have to be read as part and parcel of Rule 145 of the Rules which deals with cancellation of certificate. 14. If the facts of the present case are further examined, it is not the case of the appellant - revenue that at any point of time, notice was issued under Rule 145 of the Rules, by the concerned officer for cancellation of certificate nor it is even the case of the appellant - revenue that the certificate has been cancelled and notice was given in Form VAT-11. 15. On the contrary, the record shows that it cannot be dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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