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TMI Blog2021 (6) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... rospectively cancelling the registration certificate of the dealer. In the present case, even in the second round of litigation, the respondent no.2 authority has alleged non-genuineness only in respect of some transactions as is apparent from the table at page 3 of the impugned order. Thus, the retrospective cancellation is absolutely contrary to the binding decision of this Court in the first round of litigation. The stance of the respondents in the affidavit-in-reply that the judgement of this Court was only on the basis that the respondent - authority had travelled beyond the scope of the show-cause notice is completely misconceived - the respondent - authorities are not remediless in respect of the alleged non-genuine transactions. They can be dealt with in accordance with law in the assessment proceedings. The impugned order retrospectively cancelling the registration certificate of the writ-applicants thereby invalidating even the transactions which are not disputed by the respondents and, therefore, the impugned order deserves to be quashed and set aside - Application allowed. - R/SPECIAL CIVIL APPLICATION NO. 133 of 2021 - - - Dated:- 8-2-2021 - HONOURABLE MR. JU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal challenging the order passed in the first appeal. The disallowance of the input tax credit along with the interest and penalty were challenged in the second appeal. The writ-applicants were advised that it was a routine practice of the Tribunal to delete the penalty in the cases of disallowance of the input tax credit if the tax and interest were paid. To buy peace of mind, the writ-applicants chose to pay the tax and interest on the basis of which the Tribunal deleted the penalty amount. 6. In the meantime, the Commercial Tax Officer issued notice dated 17.12.2015 in the Form 104 proposing to cancel the registration certificate of the writ-applicants on the ground that the tax dues for the years 2010-11 and 2011-12 respectively were outstanding. Before the writ-applicants could respond to such notice, the officer proceeded to cancel the registration certificate of the writ-applicants under Section 27(5) of the VAT Act on the ground that some tax dues were outstanding and also that the transactions of the writ-applicants were suspicious. 7. The writ-applicants filed first appeal challenging such cancellation order. The first appellate authority, however, dismissed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively, it has the effect of invalidating valid transactions and the consequence thereof is that the persons who had entered into valid transactions with the dealer are penalized for no fault of their own on account of cancellation of the registration of the dealer with retrospective effect. Thus, retrospective cancellation has a cascading effect and innocent parties have to bear the brunt of such cancellation; and as experience shows, once the registration of a dealer is cancelled ab-initio, the Department treats even those transactions which were valid at the time when they were made, to be invalid and initiates proceedings against all those dealers who have made transactions in the past with such dealer whose registration is cancelled retrospectively. However, if the registration of such a dealer is cancelled prospectively, it affects only the dealer concerned, and in respect of those past transactions that are proved to be invalid they can be dealt with in the assessment and action can also be taken against those parties who have entered such invalid transactions. When the registration of a dealer is cancelled in accordance with law and such cancellation is published by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, submitted that the impugned order dated 19.10.2020 is wholly without jurisdiction, barred by the principle of res judicata, arbitrary and illegal. This Court, by a detailed judgement dated 11.12.2019, allowed the Tax Appeal filed by the writ-applicants, and after examining the materials available on record, it was held by this Court that the registration certificate of the writ-applicants ought not to have been retrospectively cancelled. Once such judgement is rendered by this Court and the registration certificate of the writ-applicants is ordered to be restored, thereafter passing the impugned order again retrospectively cancelling the registration certificate of the writ-applicants on the basis of same materials and on the same grounds is completely without jurisdiction, contemptuous and illegal. 15. It is further submitted that the authority has completely misunderstood the judgement of this Court. The authority has proceeded on the footing that the Tax Appeal was allowed only on the ground that the first appeal order confirming the registration cancellation was beyond the grounds mentioned in the show cause notice. The authority has failed to appreciate that this was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgement dated 11.12.2019 passed by this Court in the Tax Appeal No. 952 of 2017, i.e. the first round of litigation. This Court clearly ruled that the retrospective cancellation of registration certificate was not justified in a case wherein the allegations of non-genuineness was only in respect of some transactions and that the retrospective cancellation would also adversely impact the valid and genuine transactions. It was clearly observed that if some past transactions are proved to be invalid, then they can be dealt with in the assessment and action can also be taken against those parties who have entered such invalid transactions. However, all transactions cannot be invalidated by retrospectively cancelling the registration certificate of the dealer. 20. In the present case, even in the second round of litigation, the respondent no.2 authority has alleged non-genuineness only in respect of some transactions as is apparent from the table at page 3 of the impugned order. Thus, the retrospective cancellation is absolutely contrary to the binding decision of this Court in the first round of litigation. The stance of the respondents in the affidavit-in-reply that the judgeme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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