TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 1114
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....in all the appeals, except W.A.No.753/2016, are the buying dealers, who have purchased goods from the selling dealers, whose Registration Certificates, have been cancelled by the Commercial Tax Department with retrospective effect. Consequently, input tax credits availed by the buying dealers for the purchases made, during the period, when the Registration Certificates of the selling dealers were in force, were reversed, which resulted in filing of the writ petitions, by the assessees for a writ of certiorari, to call for the proceedings of the Assessing Officers, contending inter alia that the said proceedings, are contrary to the principles of natural justice and the decision of the Hon'ble Apex Court in the case of State of Maharashtra vs. Suresh Trading Co. reported in 109 STC 439, decisions of this court in M/s.Jinsasan Distributors vs. Commercial Tax Officer (CT), Chintadripet Assessment Circle reported in 59 VST 256, M/s.Althaf Shoes (P) Ltd reported in 50 VST 179, M/s.Sri Vinayaga Agencies reported in 60 VST 283, Aassan Global Trade in W.P.Nos.25996 to 25998 of 2014 and also in the case of M/s.Infiniti Wholesale Limited in W.P.No.9265 of 2013 respectively. 3. Before th....
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....tices for reversal of input tax credit or the order revising the assessment is based on the cancellation of the registration certificates of the selling dealers, who sold the goods to the petitioners herein. It is also not in dispute that the registration certificates of the selling dealers have been cancelled with retrospective effect. That appears to be the one and only ground for initiating the action and therefore the challenge. 9. The question now to be considered is whether the cancellation of the registration certificates of the selling dealers with retrospective effect will entitle the Department to reverse the input-tax credit already availed of by the petitioners/assessees consequent to assessment orders passed by competent authority based on records.... An almost identical issue was considered by the Supreme Court in State of Maharashtra v. Suresh Trading Company (1998) 109 STC 439 (SC). ... The Supreme Court, while dismissing the appeals filed by the Revenue, held as follows:(page 441 in 109 STC): In our view, the High Court was right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. ....
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....the amount due, interest at the rate of two percent, per month, on the amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment. 7. On the powers of the competent authority to revoke the certificate of registration, attention was invited to Sections 39(14) and 39(15) of the Act, which reads thus: Sec.39(14). The authority granting the certificate of registration may, by order, for good sufficient reasons to cancel, modify or amend any certificate of registration granted by it. Sec. 39(15). No application for registration or for a copy or duplicate of the certificate under this section shall be refused and no order under sub-section 14 shall be made, unless the dealer concerned has been given an opportunity of being heard. 8. Inviting attention of this court to Section 17 of the VAT Act, 2006, learned Additional Government Pleader (Taxes) submitted that, for the purpose of assessment of tax under the Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax, shall lie on such dealer. In this context, Section 17 of the Act is extracted hereunder: Section 17. B....
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....at the time when the sellers Registration Certificate was alive, was disallowed. Although there is power to cancel the certificate of registration retrospectively, the Apex Court in State of Maharatshtra vs. Suresh Trading Co. reported in (1998) 109 STC 439 (SC) held that as long as the buyers have purchased the goods, when the Registration Certificates were in force, disallowance by the Assessing Officer has been held, as bad in law. He also relied on a judgment of the Kerala High Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. Debi Prasad Shyam Sunder & Sons reported in 82 STC 305. Heard the learned Additional Government Pleader (Taxes) and perused the material available on record. 12. In the light of the statutory provisions extracted supra, there cannot be any quarrel that input tax credit availed by any registered dealer is only provisional and that the Assessing Officers are empowered to revoke the same, if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. If Section 19(15) of the VAT Act, 2006, to be given effect, in letter and spirit, then, no sooner the Registration Certificate of the sel....
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....ha Enterprises was not a registered dealer. The Sales Tax Officer also imposed penalty upon the purchasing dealers/respondents. Being aggrieved, they filed an appeal to the Commissioner of Sales Tax, which was dismissed. Further appeal to the Maharashtra Sales Tax Tribunal, resulted in confirmation on disallowance, but the Tribunal ordered deletion of penalty. 15. Being aggrieved, respondent/buying dealer, moved the High Court, for an answer, as to, "whether, on the facts and in the circumstances of the said case, the Tribunal was correct in holding that the Sales Tax Authority was justified, in treating the purchase of the applicants made from Sulekha Enterprises, as purchasers from an unregistered dealer, on the ground that the Registration Certificate of Sulekha Enterprises was cancelled on August 25, 1967, and when the cancellation thereof, was operative with effect from January, 1967, insofar as the purchase of the applicants, effected from the said party, prior to August 25, 1967 were concerned?" 16. The High Court answered the question in favour of the respondent/buying dealer. The High Court noted that the effect of disallowing deductions claimed by the respondent was in ....
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....n have no effect upon any person, who has acted upon the strength of a registration certificate, when such certificate was alive. 19. In Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. Debi Prasad Shyam Sunder & Sons reported in 82 STC 305, the Hon'ble Division Bench of the Kerala High Court, has held as follows: "6. Admittedly, in this case, the purchasing dealers were having registration under the Kerala General Sales Tax Act, 1963, when the disputed transactions were effected; the subsequent cancellation of their registration, even if stated to be with retrospective effect, cannot in any manner visit the assessee with adverse consequences. The assessee is entitled to the exemption pleaded, on the basis of form 25 declarations, issued by the purchasing dealers, who had admittedly valid certificates, on the day when the declarations were issued." 20. We have already considered, what the Hon'ble Apex Court in Suresh Trading Company's case , has held. Revenue has not placed any contrary judgments, nor pleaded that the judgements, stated supra, are inappropriate to the facts on hand. In the light of the above, all the writ appeals deali....