Natural justice in sales tax registration cancellation: hearing and speaking order are mandatory before cancellation is upheld.

Cancellation of sales tax registration under the Tamil Nadu Value Added Tax Act, 2006 requires compliance with Section 39(14) and the mandatory hearing requirement in Section 39(15). The Madras HC noted that the registering authority may cancel registration only for good and sufficient reasons, but an order passed on oral instructions without properly considering the dealer's explanation and without affording an effective opportunity of being heard is contrary to the statute and natural justice. The cancellation order was therefore held invalid and set aside, and the authority was directed to follow the statutory procedure, hear the dealer, and pass a speaking order.

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Issues: Whether the cancellation of sales tax registration was valid when made without considering the dealer's explanation and without affording the mandatory opportunity of being heard.

Analysis: The statutory scheme under Section 39(14) of the Tamil Nadu Value Added Tax Act, 2006 empowers the registering authority to cancel a certificate of registration for good and sufficient reasons. Section 39(15) makes it mandatory that no order under sub-section (14) be passed unless the dealer is given an opportunity of being heard. The impugned cancellation was made on the basis of oral instructions and without proper consideration of the explanation submitted by the petitioner. Such action was inconsistent with the statutory procedure and offended the principles of natural justice.

Conclusion: The cancellation order was invalid and was set aside. The respondent was required to follow the statutory procedure, afford adequate opportunity to the petitioner, and pass a speaking order.

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