Hearing requirement under Tamil Nadu VAT registration cancellation safeguards dealer rights and invalidates action taken without objections being heard

Section 39 of the Tamil Nadu Value Added Tax Act requires an opportunity of being heard before a dealer is compelled to furnish additional security and before registration is cancelled. The Madras HC noted that the dealer had sought time to file objections, yet no personal hearing was granted and the statutory safeguards were not followed. On that basis, the cancellation of the registration certificate was held invalid and set aside, and the matter was remanded for fresh consideration after giving the dealer an opportunity to object and be heard.

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Issues: Whether the cancellation of registration and demand for additional security under section 39 of the Tamil Nadu Value Added Tax Act, 2006 was valid when the dealer was not given an opportunity of being heard.

Analysis: Section 39(5) requires that no dealer be asked to furnish security or additional security without an opportunity of being heard, and section 39(15) similarly mandates a hearing before an order cancelling a registration is made. The impugned action was taken after the dealer sought time to file objections, but without granting the requested opportunity or conducting a personal hearing. The statutory safeguards embedded in section 39 were therefore not followed before cancelling the registration certificate.

Conclusion: The cancellation order was invalid for violation of the statutory hearing requirement and was set aside, with the matter remanded to the respondent for fresh consideration after affording the petitioner an opportunity to file objections and be heard.

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