2016 (4) TMI 437 - HC - VAT and Sales Tax

High Court Upholds Natural Justice, Sets Aside Certificate Cancellation, Grants Relief

The High Court found that the cancellation of the registration certificate without following due process violated principles of natural justice. The Court ... Cancellation of registration certificate - without providing an opportunity of personal hearing - Provisions under section 39(15) was not complied - Held that:- without invoking the provisions under Section 39(14) as well as 39(15) of the Tamilnadu Value Added Tax Act, 2006, in one line order, the Registration certificate of the petitioner got cancelled by the 2nd respondent. The 1st respondent being the revisional authority also failed to look into the provision of the act and dismissed the revision. This Court in a number of cases, directed the departmental authorities to follow the principles of natural justice as well as the provisions of the Act with regard to the cancellation of registration of dealers but even then, such type of orders are being passed. Blatant violation of the provisions of the act. Therefore, the 2nd respondent is strictly directed to follow the provisions under sections 39(14) and 39(15) of Tamilnadu Value Added Tax Act, 2006 after affording due opportunity to the petitioner. Also the 2nd respondent is directed to restore the registration certificate or registration number of the petitioner forthwith, so as to enable the petitioner to have their on line operations. - Petition disposed of Issues: Challenge to cancellation of registration certificate without following due process under the Tamilnadu Value Added Tax Act, 2006.Analysis:The petitioner, engaged in trading activities in milk powder and Ghee, challenged the cancellation of their registration certificate by the 2nd respondent with retrospective effect from 1.4.2014. The petitioner contended that they were not informed about the cancellation proposal nor provided an opportunity for a personal hearing before the cancellation. The 1st respondent dismissed the revision petition on the grounds of lack of documentary evidence. The petitioner argued that the cancellation order did not comply with Section 39(15) of the Act and lacked reasons for the retrospective effect. The Additional Government Pleader supported the impugned orders.The High Court observed that the cancellation of the registration certificate without following the provisions of Section 39(14) and 39(15) of the Act was a violation of the principles of natural justice. Despite previous directions to adhere to procedural requirements, such orders were still being issued. The Court set aside the impugned orders and remanded the matters to the 2nd respondent for appropriate orders after providing the petitioner with a due opportunity. The 2nd respondent was strictly directed to follow the Act's provisions before any cancellation, and to restore the registration certificate promptly to enable the petitioner's operations.In conclusion, the High Court disposed of the Writ Petition with directions to restore the registration certificate and closed the connected miscellaneous petitions. No costs were awarded in this matter.