9911796707
TMI Blog2010 (4) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 22, 1999 under the Central Sales Tax Act, 1956. The writ petitioners are the dealers in respect of petroleum products as granted by the Indian Oil Corporation. They purchased the lubricants and sold to the customers and they are regularly assessed to tax and have been paying the same. The respondent has issued a notice on October 27, 2009 stating that the petitioner in W.P. No. 625 of 2010 is in arrears of tax for the assessment years 2002-03 to 2004-05 and in respect of the petitioner in W.P. No. 626 of 2010 regarding the arrears for the assessment years 2000-01 to 2008-09 and proposed to cancel the registration certificate under the Puducherry Value Added Tax Act, 2007. It is stated that the petitioner in W.P. No. 625 of 2010 has called for certain clarification. However, it was insisted that the proceedings would be dropped if the petitioner gives a letter of undertaking. It is believing the said words, a communication was sent on November 5, 2009 also objecting the authority of the respondent. However, the objections were not considered and a mechanical order came to be passed on November 9, 2009 which is impugned in this writ petition. In respect of petitioner in W. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 and under similar circumstances, in the writ appeal filed against the similar orders, the First Bench of this court permitted the petitioners to approach the authority for furnishing security instead of payment of 25 per cent. The impugned order of cancellation is challenged on various grounds including that it is arbitrary and without jurisdiction and in violation of the principles of natural justice; that the respondent has travelled beyond the scope of notice, dated October 27, 2009; that the cancellation of registration can be done in the rarest of rare cases; that when the liability of taxes itself is questioned, cancellation of registration is unwarranted; that the copies of statements from oil corporation have not been furnished before passing such order; that the respondent being the registering authority cannot perform the function of the assessing authority; that the respondent has failed to take note of the fact that the entire admitted tax amount has been paid and there is no necessity to hastily cancel the registration; that the respondent has not followed any of the provisions of the Pondicherry General Sales Tax Act and Central Sales Tax Act; that it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the turnover and the petitioners wish to disclose in the returns by withholding the tax money collected from the customers which causes serious prejudice to public finance. It is not open to the petitioners to pay tax on turnover at their whims and fancies. It is not correct to state that the cancellation proceedings notice issued on October 27, 2009 was issued only on account of failure to pay tax. It was initiated to stop further loss to the Government and to stop the operation of economic system that results in concentration of wealth. It is stated that after notice was given on October 27, 2009, 10 days time was granted and therefore, the principles of natural justice have been followed. It is stated in respect of the petitioner in W.P. No. 625 of 2010, the petitioner's objection dated November 5, 2009 was considered before passing the impugned order. Likewise in respect of the petitioner in W.P. No. 626 of 2010, the petitioner by letter dated November 4, 2009 sought only details of the extract of M/s. Indian Oil Corporation and has not requested any time. However, the respondent has given five days time to file objection on November 5, 2009 and therefore, the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the repealed Pondicherry General Sales Tax Act, 1967. Under section 44 of the repealed Pondicherry General Sales Tax Act, 1967 and section 53 of the Puducherry Value Added Tax Act there is a responsibility on every registered dealer to maintain true and correct accounts and records and are required to discharge the liability in the manner prescribed and a person who is a dealer making inter-State purchase has to maintain a separate accounts as per the Pondicherry General Sales Tax Rules, 1967 and the Puducherry Value Added Tax Rules, 2007. While it is admitted that the registering authority cannot perform the function of the appellate authority, the impugned order of the cancellation is well within its powers. Against the cancellation proceedings, the petitioners have approached the revisional authority on November 19, 2009 by filing the revision petition under section 45 of the Pondicherry Value Added Tax Act, 2007 and on direction given by the revisional authority to supply certain omissions like proof of payment of admitted tax and 50 per cent of the disputed tax vide notice dated November 26, 2009 without complying the same, the petitioners have withdrawn the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to furnish the same. It is his submission that under the impugned order of cancellation some other reasons have been assigned. He would also bring to the notice of this court that similar notices came to be quashed by this court. It is also his submission that the entire admitted tax has been paid and 25 per cent of the tax will be paid at the time of filing of appeal. It is his submission that the very contents of the counter-affidavit show the turbulent attitude of the respondent-Department. It is his submission that the impugned order of cancellation is opposed to the principles of natural justice and outside the purview of the tax law. On the other hand, Mr. T.P. Manoharan, learned Special Government Pleader, submitted that the petitioners having filed revision papers before the revisional authority and have withdrawn the revision without complying the condition of payment of 50 per cent disputed tax amount and therefore, the petitioners having resorted to the revisional remedy which is alternative remedy available under the Act cannot be permitted to approach this court by filing the writ petition. It is stated that the writ petition has been filed after having resorted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the arrears of tax as per the assessment order for the year 2007-08 have been noted in the show-cause notice as if it is for the assessment year 2008-09 and that demand has been raised even before the assessment is completed. As a reply to this letter, the respondent in the letter dated November 5, 2009 has refused to furnish particulars stating that the details are available with the petitioners themselves stating that "the details which the dealer now called for are available with them and as such it cannot be furnished" and thereafter, the impugned orders came to be passed cancelling the registration. A reference to the impugned order shows that the main basis for the order of rejection was that there has been tax evasion and the fraud causing loss to the exchequer and also the impugned order proceeds on the basis that the Government has responsibility under article 39(c) of the Constitution of India to frame policy to ensure that the operation of economic system does not result in concentration of wealth and means of production to the common detriment. The main contention of the learned counsel for the petitioners is that while the show-cause notice gives for one reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A reading of the order thus reveals that more than one reason had resulted in persuading the officer to pass order of cancellation. Considering the fact that the status as a registered dealer confer certain rights and privilege on the dealer under the Act, in fairness to the rights of the petitioner, the respondent should have intimated about not only the rejection of the request seeking time but also the grounds on which the proposal is made, so that the petitioner has the opportunity to rebut the same. 4. As rightly contended by the learned counsel for the petitioner, if the order proceeds on the reasons other than those stated in the notice, in fairness to the claim of the petitioner, the respondent should have indicated the same too in the notice. In the circumstances, I have no hesitation in accepting the plea of the petitioner that the order is passed without observing the principles of natural justice and the same has to be set aside. 5. The learned Special Government Pleader appearing for the respondent pointed out that the petitioner is in arrears as stated in the notice. Per contra, the learned counsel for the petitioner however pointed out that as per audit statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawal of revision wherein the statutory condition is onerous in directing to pay 50 per cent of the amount cannot stand as a stumbling block for enforcing the right of principles of natural justice as held by the learned judge in the said case stated supra. It is not as if the respondent-Department left with no powers and no means to proceed in accordance with law. It is always open to them to proceed in accordance with law and pass appropriate orders. Such view does not mean that it supports the conduct of the petitioners in making tax evasion. If really such serious conduct has been committed by the petitioners, certainly, the petitioners are liable for such action. But such action should be on the basis of sound legal principles taken cautiously by following the principles of natural justice and giving full opportunity to the petitioners. Such celebrated concept having not been followed on the facts of the present case, there is no difficulty to conclude that as directed by the learned judge as stated above that the impugned orders suffer from want of following the principles of natural justice. The reliance placed on by the learned counsel for the petitioners on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the assessment order when there was an alternative remedy of appeal, the writ petition came to be filed and in those circumstances, the writ petition was dismissed.
Law is well-settled that alternative remedy is a rule of discretion. In any event, in cases where there has been violation of principles of natural justice writ would lie. The facts of the present case does not relate to assessment order but it is on cancellation of registration which affects the right of the petitioners to carry on business lawfully as guaranteed under article 19(1)(g) of the Constitution of India. In my considered view, the judgment relied upon by the learned counsel for the respondent is of no help to the respondent-Department at all.
In such view of the matter, following the abovesaid order stated supra, I have no hesitation to hold that the impugned orders are in violation of principles of natural justice and accordingly, the impugned orders stand set aside and the writ petitions are allowed. Needless to state that it is always open to the respondent-Department to proceed in the manner known to law. No costs. Consequently, connected miscellaneous petitions are closed. X X X X Extracts X X X X X X X X Extracts X X X X
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