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TMI Blog1987 (8) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... onth for the period, June to September, 1983. This resulted in the assessing authority completing the assessments for August, September and October, 1983 on a turnover of Rs. 90,400, Rs. 1,12,250 and Rs. 50,000 respectively for the above months. Thereafter the Sales Tax Officer served a notice on the respondent-assessee, as to why a demand for furnishing additional security for Rs. 20,000 should not be made. The notice was returned with the postal endorsement that the addressee (assessee) refused to receive the communication. Thereafter the Sales Tax Officer passed an order on 13th December, 1983 and required the assessee to furnish security under rule 6(2)(a) of the Kerala General Sales Tax Rules for Rs. 20,000. The assessee filed an objection for the said proceedings. He also stated that no additional security can be demanded from him. The Sales Tax Officer served a notice dated 31st December, 1983, on the assessee proposing to cancel the registration certificate for failing to furnish the security ordered by proceedings dated 13th December, 1983. The assessee filed his reply dated 4th January, 1984. Thereafter the Sales Tax Officer passed an order dated 12th January, 1984 cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther stated that the appellant was in arrears of sales tax amounting to Rs. 27,320.06 which was pending collection under the Revenue Recovery Act. Therefore, the Sales Tax Officer held that for proper realisation of the legitimate revenue due to the Government the dealer should furnish security as laid down in clause (a) of sub-rule (2) of rule 6 of the Kerala General Sales Tax Rules for an amount of Rs. 20,000. In the order it is stated that the appellant was given an opportunity of being heard and of filing his objections with supporting evidences, by a notice issued by the Sales Tax Officer and that the said notice was returned unserved with a postal endorsement to the effect that the addressee had refused to receive the communication. The Sales Tax Officer, therefore concluded that the appellant was evading his tax liability and that the circumstances justified insistence on furnishing a security for an amount of Rs. 20,000. Accordingly, an order to this effect was passed on 13th December, 1983." The assessee applied for time. He also questioned the basis for demanding additional security. Even so, the Sales Tax Officer issued a notice dated 31st December, 1983 to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractice of submitting the monthly returns in form 9 and paying the legitimate tax due therein. At the latest he has not submitted the monthly returns of June to November, 1983, even though the said returns together with the proof for payment of legitimate tax due thereon was due in this office on or before the 20th of each succeeding months. At the same time it was evident from the check post declaration received from the sales tax check post, Anakkatty, that the dealer was having inter-State sales of groundnut in large volume during the months of August, September, October and November, 1983. Tax due involved on these sales works out huge. In addition he is in arrears of sales tax relating to previous years. In the circumstances it was found highly necessary that the dealer should furnish adequate security for the purpose of proper realisation of the revenue due to Government. Accordingly the dealer was, as per this office proceedings in 31180181/83-84 dated 13th December, 1983 (read as 1st paper above) required to furnish security as laid down under clause (a) of sub-rule (2) of rule 6 of the Kerala General Sales Tax Rules, 1963 for Rs. 20,000 (rupees twenty thousand only). But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emittance of the tax for a few years cannot form "good and sufficient reasons" for cancellation of certificate of registration under section 14(7) of the Act. Section 14(7) of the Act is as follows "14. Procedure for registration.- * * * (7) The prescribed authority shall have power, for good and sufficient reasons, to cancel, modify or amend any registration certificate issued by it. " According to the Appellate Tribunal, the assessing authority has got sufficient powers to finalise an assessment to the best of his judgment, where failure to file returns is noticed. It is also stated that coercive recovery proceedings can be taken for non-remittance of tax arrears. In this perspective, the Appellate Tribunal was of the view that there was no sufficient reason to cancel the certificate of registration under section 14(7) of the Act. We are unable to appreciate the reasoning and conclusion of the Appellate Tribunal in this regard. The meaning of the words "good and sufficient reasons" depends upon the context. In the context of the Sales Tax Act, the words "good and sufficient reasons" occurring in section 14(7) should receive a reasonable interpretation, which will effectuate and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly the certificate of registration, which will enable the dealer to collect or pass on to the customer sales tax due on the turnover. On the above facts, we are satisfied that in this case, prima facie, there were "good" and "sufficient" reasons for the prescribed authority to invoke section 14(7) of the Act by initiating proceedings to cancel the registration certificate issued to the dealer (assessee). The fact that the assessing authority has got power to finalise the assessment to the best of his judgment in cases where the returns were not filed or that he has got the power to resort to coercive recovery proceedings for realising tax arrears cannot, in any way, deter the assessing authority to invoke the powers vested in him under section 14(7) of the Act in appropriate cases. The power vested in the officer under section 14(7) is prima facie an enabling one. But the discretion is vested in a statutory authority who is bound to see that the objects of the provisions of the statute read as a whole, are properly effectuated and implemented. Since the power is vested in the assessing authority under section 14(7) of the Act for public good, we are of the view that the power vest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, dated 12th January, 1984, also falls to the ground. 7.. We are satisfied that the grounds on which the Appellate Tribunal cancelled the order of the Sales Tax Officer, dated 12th January, 1984, are unsustainable. Ordinarily, we would have set aside the order of the Appellate Tribunal and restored the order of the Assistant Commissioner of Sales Tax dated 31st July, 1984 confirming the order of the Sales Tax Officer, dated 12th January, 1984. But we find from the final order passed by the assessing authority dated 12th January, 1984, that the objections filed by the assessee to the cancellation of registration certificate, dated 4th January, 1984 have not been adverted to nor disposed of in accordance with law. The dealer has stated that he failed to submit the returns from June, 1983 to October, 1983 due to "illiteracy" and "illness". He prayed for time to file the returns and pay the tax. With regard to the arrears of sales tax, amounting to Rs. 27,320, advised for revenue recovery, the dealer has stated in his objections dated 4th January, 1984 that the Honourable Minister for Revenue has passed an order for payment of the dues in instalments. Whether the instalments wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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