In the High Court of Judicature at Madras Date :: 25..03..2013 Coram :: The Hon'ble Mr. Justice V. Dhanapalan Writ Petition No.7092 of 2013 M/s. Sukhi Iron & Steel Company No: 1, 2nd Main Road Thiruvallurvar Nagar Thiruvanmiyur Chennai 600 041. ... Petitioner -vs- The Assistant Commissioner (CT) Thiruvanmiyur Assessment Circle Chennai 600 041. ... Respondent .. .. .. Writ petition under Article 226 of the Constitution of India praying for issuance of a writ of certiorarified mandamus calling for the proceedings of the respondent in RC. 1556/2012/A2 dated 22.01.2013 and quash the same and direct the respondent to restore the Sales Tax registration under TNVAT and CST Act. For petitioner :: M/s. C. Baktha Siromani For respondent :: Mr. Manoharan Sundaram Government Advocate (Taxes) .. .. .. O R D E R
With the consent of the learned counsel on either side, the writ petition itself is taken up for disposal.
2. What is challenged in this writ petition is an order of the respondent herein passed in the proceedings in RC. No: 1556/2012-A2 dated 22.01.2013, seeking to quash the same as illegal and contrary to the provisions of the Tamil Nadu Value Added Tax Act, 2006 and for further direction to the respondent to restore the Sales Tax Registration under the Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act.
3. According to the petitioner, they are the registered dealer under the Tamil Nadu Value Added Tax Act, 2006, hereinafter referred to as the Act, on the files of the Assistant Commissioner (CT), Thiruvanmiyur Assessment Circle, having TIN No: 33370922552 and C.S.T. No: 721878 dated 13.07.2000. Petitioner is a dealer in Iron and Steel. They are purchasing the said materials in this State from the registered dealers only against specific orders and effect sales within the State against orders received earlier. They also avail INPUT Tax Credit as per the provisions of the Act and they file monthly returns promptly every month. While so, the respondent has cancelled the Sales Tax Registration of the petitioner on 31.05.2010 which has resulted in much hardship and legal problems not only for the petitioner but also to those persons who have genuinely purchased the materials from the petitioner. Against the cancellation of registration, the petitioner has filed a revision before the Joint Commissioner (CT), Chennai South Division. The revisional authority, after hearing the case in detail, has remanded the issue of cancellation of Registration to the Assistant Commissioner (CT), Thiruvanmiyur Assessment Circle, for further action. The said authority, without affording an opportunity to the petitioner to represent the case which was remanded by the Joint Commissioner (CT), Chennai South Division, has cancelled the registration of the petitioner on the ground that there was no business activity noticed in the given address while the petitioner claims to be doing business in the same place. This has affected petitioner's right to do business and hence, the present writ petition.
4. The learned Government Advocate, on instructions, submit that the place of business was verified by the Commercial Tax Officer on 13.08.2012 and finding that the place is not sufficient for storing the goods viz. Iron and steel, it being evasion prone commodity, a reference was sent to the Deputy Commissioner (CT), Enforcement (South), for verification as per the guidelines issued by the Commissioner of Commercial Taxes. On verification, Deputy Commissioner Enforcement, in the proceedings dated 09.01.2013 recorded that the place of business is part of the residence of the proprietor and it is not suitable for trading of iron and steel and therefore, the registration of the petitioner was cancelled.
5. On the above stated position, I have heard the learned counsel for the parties and perused the materials documents annexed in the typed set of papers. The main plea of the petitioner is that before cancelling the certificate of registration, an opportunity of hearing must have been given to the petitioner to explain the position about the nature and place of business and as long as the said exercise has not been done, the order impugned is clearly in violation of the principles of natural justice. The learned Government Advocate, in principle, would submit that Section 39 of the Act provides for "Procedure for registration" and under such provisions of the Act, the authority granting the certificate of registration may order cancellation, modification or amendment of any certificate granted by it. However, he fairly submits that before taking such a decision, the authority has to give an opportunity of hearing to the dealer.
6. A circumspection of the fact would reveal that the petitioner is a dealer registered with the respondent Department in Thiruvanmiyur Assessment Circle, having TIN No: 33370922552 and C.S.T. No: 721878 dated 13.07.2000. Petitioner is a dealer in iron and steel, who purchases iron and steel from the dealers within the State and effect sale, again within the State and it has availed INPUT Tax Credit as per the provisions of the Act. While so, the respondent has cancelled the Sales Tax Registration of the petitioner on 31.05.2010.
7. It is seen that petitioner's registration had been cancelled with effect from 01.04.2009 stating that there is no business activity noticed in the said place of business. This is as per proceedings in RC. 1156/2010/A2 dated 31.05.2010 as against which, the dealer has filed the revision petition before the Joint Commissioner, Commercial Taxes, Chennai South Division. The said revision petition has been disposed of by remanding the matter back to the respondent herein for proper verification of the facts and then pass orders in accordance with law. The proceedings of the Joint Commissioner was passed in proceedings No: RP/92/2011 dated 02.03.2012. Thereafter, finding that the said place of business was verified by the Commercial Tax Officer on 13.08.2012 and that place is not sufficient for the goods involved in the business namely iron and steel and those goods being evasion prone commodity, a reference was sent to the Deputy Commercial Tax Officer (CT), Enforcement ( South ), for verification with the guidelines issued by the Commissioner of Commercial Taxes. Thereafter, the Deputy Commissioner, Enforcement South, Chennai, in his verification report dated 9.1.2013, stated that the place of business is part of the residence of the proprietor in the above mentioned address and that the said place is not suitable for carrying out the trading of iron and steel and even the dealer does not have any branch or godown. The extent of the business place is an area of 9 ft. x 4 ft. and, therefore, the certificate of registration was cancelled with effect from 01.04.2009 vide proceedings of the Assistant Commissioner (CT), Thiruvanmiyur Assessment Circle, in reference Rc. No: 1556/2012/A2 dated 22.01.2013. Such a cancellation has been challenged in this writ petition for the reason that the procedure contemplated under Section 39 of the Act has not been followed before cancelling the registration.
" 39. Procedure for Registration. .... .... ....
(14) The authority granting the certificate of registration may, by order, for good and sufficient reasons to cancel, modify or amend any certificate of registration granted by it.
(15) No application for registration or for a copy or duplicate of the certificate under this Section shall be refused and no order sub-section (14) shall be made, unless the dealer concerned has been given an opportunity of being heard. "
9. From a reading of the above provisions, it is clear that before cancelling the certificate of registration, the procedure contemplated under the Act shall be strictly adhered to. Otherwise, it should be presumed that the authority had failed in his duty to follow the procedure for cancellation of the registration. When the provision contemplates that an opportunity of being heard must be given to the dealer before taking a decision to cancel, modify or amend the certificate of registration issued, it is incumbent on the respondent to follow such a procedure. In this case, it is conspicuously clear that the authority has not at all followed the procedure prescribed under Sub Sections 14 and 15 of Section 39 of the Act in giving an opportunity of hearing to the dealer before cancelling the certificate of registration. It is the cardinal principle that any authority, who is vested with quasi judicial function, should mandatorily comply with the procedure contemplated under the relevant Act and any violation against such procedure can be termed as violation of the principles of natural justice. The impugned order, being one passed in violation of the principles of natural justice, is unsustainable and is accordingly quashed. The matter is remanded back to the respondent with liberty to the respondent to proceed afresh by affording an opportunity of hearing to the petitioner and then proceed further to pass appropriate orders in accordance with law within a period of four weeks from the date of receipt of a copy of this order. The writ petition stands allowed with the above directions. Connected miscellaneous petition is closed. There shall be no orders as to the costs.
gp To The Assistant Commissioner (CT) Thiruvanmiyur Assessment Circle Chennai 600 041