2021 (8) TMI 44 - HC - VAT and Sales Tax

High Court directs timely appeal filing for VAT license cancellation, stresses fair scrutiny and legal principles

The High Court of Madras directed a petitioner, an assessee under the Tamil Nadu Value Added Tax Act, to file an appeal with the appellate authority ... Cancellation of petitioner's license - input tax credit - grievance of the petitioner in nutshell is that the licence was cancelled with retrospective effect and further, the licence of the second dealer was also cancelled and such a retrospective cancellation of licences is bad in law - HELD THAT:- This Court is of the considered opinion that the Hon'ble Division Bench placing reliance on the decision in the case of JINSASAN DISTRIBUTORS VERSUS THE COMMERCIAL TAX OFFICER (CT) [2013 (4) TMI 615 - MADRAS HIGH COURT], and by observing that the said decision is squarely applicable to the facts, held that the Writ Court, has set aside the order passed by the Assessing Officer, cancelling the Registration Certificate of the seller with retrospective effect. The Hon'ble Division Bench in clear terms held that the decision is applicable to the facts of the case before it. Such a factual adjudication requires verification and scrutinisation or original records, documents and evidences - in the interest of justice, it would be appropriate that the petitioner must be given an opportunity to adjudicate the facts and circumstances as well as to place the judgment of the Hon'ble Division Bench before the appellate authority concerned for the purpose of redressal of their grievances. These being the principles to be followed, this Court is of the considered opinion that adjudication of facts, application of principles laid down shall be done by the appellate authority by following the procedures contemplated and by affording opportunity to the petitioner. The petitioner is permitted to file appeal to the jurisdictional appellate authority within a period of six weeks from the date of receipt of a copy of this order in a prescribed format and by complying with the provisions of the TNVAT Act - Petition disposed off. Issues involved:1. Retrospective cancellation of licenses under the Tamil Nadu Value Added Tax Act, 2006.2. Applicability of previous judgments on similar cases.3. Adjudication of facts and principles by the appellate authority for complete justice.Analysis:Issue 1: Retrospective cancellation of licenses under the Tamil Nadu Value Added Tax Act, 2006The petitioner, an assessee under the TNVAT Act, filed monthly returns for the assessment years 2009-10 and 2010-11, claiming input tax credit for tax paid at the time of purchase. The petitioner's grievance was that their license was retrospectively canceled, which they argued was unlawful. The court referred to a previous judgment where the cancellation of a registration certificate with retrospective effect was set aside, emphasizing that such decisions are to be scrutinized by the appellate authority for complete justice. The court directed the petitioner to file an appeal with the appellate authority within six weeks, providing necessary documents and the judgment relied upon, for a thorough adjudication of facts and circumstances.Issue 2: Applicability of previous judgments on similar casesThe court acknowledged the petitioner's reliance on a previous decision by a Division Bench and emphasized the importance of following the principles laid down in such judgments. However, the court clarified that a detailed examination of facts and their applicability to the principles is crucial for rendering complete justice. The court highlighted the need for the appellate authority to review original records, documents, and evidence to ensure a fair assessment. The petitioner was granted the opportunity to present the judgment of the Division Bench to the appellate authority for redressal of their grievances.Issue 3: Adjudication of facts and principles by the appellate authority for complete justiceThe court stressed the significance of the appellate authority conducting a thorough examination of facts and applying the principles established in previous judgments. It was deemed essential for the appellate authority to afford the petitioner a fair opportunity to present their case and address any shortcomings in the original authority's consideration of the matter. The court directed the petitioner to file an appeal within a specified timeframe, ensuring compliance with the TNVAT Act and providing all relevant documents. The appellate authority was instructed to adjudicate the issues promptly, ideally within three months, after receiving the appeal to uphold the principles of justice and fairness.In conclusion, the High Court of Madras emphasized the need for a meticulous review of facts and adherence to legal principles by the appellate authority to ensure a just resolution in cases involving retrospective cancellation of licenses under the TNVAT Act.