TMI Blog2007 (3) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... -2005 Accompanied the C.C.T., Orissa to Sambalpur III Circle, Jharsuguda. In course of scrutiny of returns of the instant dealer, it is found that since April, 2005 to October, 2005 the purchases and sales do not commensurate with each other and as such the input tax credit is always more than the output tax. As per the direction of the C.C.T., Orissa, the A.C.C.T. (Intelligence) Range, Sambalpur and S.T.O. inspected the business premises of the dealer at about 11.30 a. m. In course of inspection the officials detected some of the approval slips where goods were delivered to different parties since April, 2005 onwards and tax and retail invoices were not issued as per the statutory provision. Section 11(4)(a) of the VAT Act stipulates that notwithstanding anything contained in the Sale of Goods Act, 1930 but subject to clause (b)(c), the sale of goods shall, for the purpose of this Act, be deemed to have taken place where title or possession of the goods are transferred or in case of works contract where goods are incorporated in the course of execution of the works contract whether or not there is receipt of payment of such sale. As per the finding of A.C.C.T. (Int.), the customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led hazira and submitted the cash credit accounts of Allahabad Bank, Jharsuguda branch with respect to loan account from April 1, 2005 to September 30, 2005. Examined the case. I am otherwise busy. Put up later on for order. 16-12-2005. Seen the preliminary report of Addl. C.T.O., Investigation Unit, Sambalpur, forwarded by the Asst. Commissioner of Commercial Taxes, Sambalpur Range, Sambalpur (Int.) vide confidential letter No. 21/16-12-2005. Gone through the report and the findings thereof. There is substantial evasion of taxes. Order is passed separately today cancelling the certificate of registration under section 31(5) of the VAT Act. Details are discussed in the order. Issue order of cancellation accordingly. In this respect it is important to take note of the provisions of sections 30 and 31(5) of the VAT Act which are quoted below: 30. Suspension of registration certificate. (1) If a dealer, (a) fails to file the returns under this Act within the time prescribed; or (b) knowingly furnishes incomplete or incorrect particulars in his returns; or (c) fails to pay any tax including penalty or interest, if any, due from him under the provisions of this Act; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the dealer, cancel the certificate of registration held by him and the cancellation shall take effect from the date of order of cancellation. Learned counsel for the petitioner submits that the record of the present case would indicate that while the registration certificate was suspended on November 23, 2005, pursuant to notice thereof, the petitioner appeared before the learned Assistant Commissioner of Sales Tax, Sambalpur, on November 29, 2005 and produced his purchase register, sale register, stock valuation statement, purchase vouchers, sale bills and approval slips. On the very same day the petitioner also filed an application before the said authority under section 30(3) of the OVAT Act praying for restoration of his registration certificate. Sri Paikray submits that this application of the petitioner has not yet been disposed of by the ACST. He further submits that without disposing of the petitioner's application for restoration under section 30(3) of the OVAT Act, no order of cancellation under section 31(5) of the said Act can be legally passed. From the records of the proceedings, it would be clear that though the petitioner has filed an application on N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date and time and place specified in the notice, which in no case shall be later than thirty days from the date of such suspension. In the present case the assessee produced the necessary records within six days from the date of order of suspension. Section 30(3) vests any dealer with a right to seek restoration of his registration certificate and in terms of the said provision and it is the duty and obligation of the registering authority to deal with same and to pass orders thereon. Without dealing with the dealer's application for restoration (if such an application is filed) the statutory authority has no authority to resort to wielding the power of cancellation and pass order of cancellation under section 31(5) of the VAT Act. On a reading of section 31(5) of the VAT Act, it is clear that a cancellation order can be passed on a dealer whose registration certificate has been suspended under sub-section (1) of section 30 and who fails to produce the evidence within the time specified under sub-section (3) of the said section. The registering authority shall, after causing such inquiry as he may consider necessary and after giving an opportunity of hearing to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have been carried out on December 8, 2005, i.e., fifteen days after the order of suspension. Even then, the minimum requirement of the principles of natural justice, i.e., providing a copy of the same to the petitioner was not complied with. This is clear from the order sheet itself, which indicates that the report was received by the assessing officer on December 16, 2005, i.e., the same day the order of cancellation was passed. This fact is clearly by itself adequate reason/justification for the purpose of quashing/setting aside the order of cancellation of registration. In the aforesaid circumstances, we allow the writ application and quash the order of cancellation dated December 16, 2005 under annexure 7 and declare the same to be illegal and unlawful. The opposite party is directed to deal with the petitioner's application for restoration under section 30(3) of the OVAT Act filed by the petitioner on November 28, 2005 and to dispose of the same expeditiously within a period of two weeks from the date of receipt of this order. The writ petition is allowed to the extent indicated above. B.P. DAS J. I agree. - - TaxTMI - TMITax - CST, VAT & Sales Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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