2004 (7) TMI 626 - HC - VAT and Sales Tax

Court quashes registration certificate, orders fresh decision. Emphasis on natural justice and fairness.

Guwahati Neurological Research Centre Limited Versus Commissioner of Taxes, Assam and others (and another case)

The court set aside and quashed the certificate of registration issued to the petitioner in W.P. (C) No. 2392 of 2000, directing a fresh decision by the ... - Issues Involved:1. Legality of compulsory registration as a 'dealer' under Section 12 of the Assam General Sales Tax Act, 1993.2. Validity of the show cause notice issued to the petitioner.Detailed Analysis:1. Legality of Compulsory Registration:The primary issue in W.P. (C) No. 2392 of 2000 concerns whether the petitioner could have been registered as a 'dealer' under Section 12 of the Assam General Sales Tax Act, 1993 without assigning any reason. The petitioner received a notice under Section 12(1) from the Superintendent of Taxes, Guwahati, which expressed the opinion that the petitioner was liable for registration under Section 8(1)(e), Schedule VI, entry serial No. 24, but had not applied for it. The petitioner responded, arguing that its activities (X-ray, CT scan, MRI) did not constitute a works contract and thus did not warrant registration.Despite the petitioner's detailed show cause reply and further communication to the Commissioner of Taxes, the petitioner was compulsorily registered as a dealer on May 6, 2000, effective from April 1, 1999, for dealing in 'X-ray and Scanning (job work).' The petitioner challenged the legality and validity of this registration, arguing that it violated principles of natural justice as no reasons were assigned.The court observed that while the petitioner was issued a show cause notice and responded, the respondent authority did not address the grounds raised by the petitioner before issuing the registration certificate. The court emphasized that the principle of natural justice is inbuilt in Section 12(1) of the Act, which requires giving notice and a reasonable opportunity to be heard. The court found that the issuance of the registration certificate was an empty formality and did not fulfill the requirement of natural justice, as the Superintendent of Taxes did not deal with the petitioner's contentions.2. Validity of the Show Cause Notice:In W.P. (C) No. 4843 of 2000, the petitioner challenged the show cause notice issued on July 18, 2000, which directed the petitioner to show cause why it should not be assessed summarily for the periods mentioned. The petitioner approached the court instead of responding to the notice, arguing various grounds similar to the first writ petition.The court noted that the petitioner should have responded to the show cause notice by submitting its reply, allowing the statutory authority to decide the matter. The court referenced the Supreme Court's observation in Special Director v. Mohd. Ghulam Ghouse, which discouraged High Courts from entertaining writ petitions against show cause notices unless the notice was entirely without jurisdiction. The court held that the petitioner should respond to the show cause notice, and the authority should decide the issue based on the provisions of the Act and the petitioner's contentions.Conclusion:The court set aside and quashed the impugned certificate of registration dated May 6, 2000, in W.P. (C) No. 2392 of 2000, remanding the matter to the competent authority for a fresh decision. The petitioner in the second writ petition was directed to respond to the show cause notice, and the respondents were instructed to decide the issue with assigned reasons and a speaking order. The court emphasized that the respondents should take an independent decision based on the Act's provisions and the materials on record, ensuring fairness and adherence to the principles of natural justice.Disposition:- W.P. (C) No. 2392 of 2000: Allowed.- W.P. (C) No. 4843 of 2000: Disposed of.