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2015 (4) TMI 778 - GUJARAT HIGH COURT

2015 (4) TMI 778 - GUJARAT HIGH COURT - [2015] 82 VST 410 (Guj) - Cancellation of registration - exercise of the powers under section 27 - no show cause notice had been issued - held that:- Even, section 27(5)(i) of the Act provides that before cancelling the registration certificate ab initio, an opportunity of hearing is required to be given to the concerned person whose registration certificate is sought to be cancelled ab initio. Under the circumstances, the order passed by the first authori .....

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FOR THE OPPONENTS : MR CHINTAN DAVE, AGP JUDGMENT : (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. As common questions of law and facts arise in both the tax appeals, both these appeals are decided and disposed of by this common judgment and order. 2. Feeling aggrieved by and dissatisfied with the impugned common judgment and order dated 25.7.2013 passed by the learned Gujarat Value Added Tax Tribunal, Ahmedabad (hereafter referred to as the learned Tribunal ) passed in Second Appeal Nos.500 of 201 .....

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th the rules of interpretation which specifically states that a taxing statute has to be strictly and literally construed? (iii) Whether the Hon'ble Tribunal has erred in not finding that the Authority or DCCT has no power or jurisdiction to cancel the registration of the purchaser (dealer) u/s 27(5)(i) of the Act? (iv) Whether the Hon'ble Tribunal has erred in not finding that the provisions of section 27(5) of the Act are not applicable to the dealer who purchases the goods? (v) Whethe .....

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oks, purchase and sales registers, purchase and sales bills, stock registers, weighbridge receipts, lorry receipts and vouchers? (vii)Whether the Hon'ble Tribunal without appreciating the material on record has erred in finding that the appellant has failed to prove the genuineness of the documentary evidence in spite of there not being any challenge to the authenticity or veracity of the documentary evidence and whether the burden of proof for proving the genuineness of the documentary evid .....

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red to as the VAT Act ) bearing registration No.24160600679. That the appellant was also registered under the Central Sales Tax Act bearing registration No.24660600679. That during the course of the business, the petitioner carried out business with one Sheth Metal Private Limited. That the appellant filed returns under the provisions of the VAT Act as well as CST Act. 3.2 That the Deputy Commissioner of Commercial Tax, Nadiad issued a show cause notice dated 6.1.2010 in form No.401 under the pr .....

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at the appellant vide communication dated 22.2.2010 submitted pointwise clarification as asked for by the Deputy Commissioner of Commercial Tax. That thereafter, straightway, the Deputy Commissioner of Commercial Tax vide order dated 26.2.2010 had cancelled the registration certification of the appellant ab initio under the provisions of the Gujarat Sales Tax Act (GST Act) and Central Sales Tax (CST Act) 3.3 Feeling aggrieved by and dissatisfied with the order of the Deputy Commissioner of Comme .....

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by the said Sheth Metal Private Limited and the registration of the said Sheth Metal Private Limited has been cancelled ab initio. It appears that the first appellate authority also found some other discrepancies and came to the conclusion that the appellant had issued only bills without entering into the transaction of sale to defraud the Government revenue. By observing above, the first appellate authority confirmed the order of cancellation of registration of certificate. 3.4 Feeling aggrieve .....

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ate of the appellant ab initio, the common appellant has preferred the present tax appeals with the aforesaid substantial questions of law. 4. Shri Pathak, learned advocate for Shri Shah, learned advocate appearing on behalf of the appellant has vehemently submitted that the learned Tribunal has materially erred in dismissing the appeals preferred by the appellant and confirming the order of cancelling the registration certificate of the appellant ab initio. 4.1. It is further submitted by learn .....

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arned advocate appearing on behalf of the appellant that as such, the first authority passed an order cancelling the registration of the appellant ab initio in purported exercise of the powers under section 27 of the VAT Act, for which no previous show cause notice was issued. Learned advocate appearing on behalf of the appellant has drawn our attention to the communications annexed at Annexure A collectively and has contended that the aforesaid communications were merely in the nature of requir .....

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n of the appellant has been taken without any show cause notice as required under section 27(5)(i) of the VAT Act. It is submitted that therefore, as such, the order passed by the Deputy Commissioner of Commercial Tax - first authority cancelling the registration certificate of the appellant ab initio is absolutely illegal against the principles of natural justice and contrary to the provisions of the VAT Act, more particularly, section 27(5)(i) of the VAT Act. It is submitted that the aforesaid .....

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be cancelled ab initio, we do not propose to further enter into the merits of the case. 5. Learned AGP Mr. Dave has tried to support the order passed by the first authority, first appellate authority and the impugned judgment and order passed by the learned Tribunal. He has submitted that when it was found that the appellant had entered into the billing activities only and when it was observed that the appellant had shown purchases from one Sheth Metal Private Limited whose registration certifi .....

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disputing that as such, before cancelling the registration certificate ab initio in exercise of powers under section 27 of the VAT Act, no show cause notice had been issued upon the appellant to show cause why the registration certificate of the appellant be not cancelled ab initio. 6. Heard learned advocates appearing for the respective parties at length. We haver perused the order passed by the first authority cancelling the registration certificate of the appellant ab initio passed in purport .....

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ertificate ab initio, no show cause notice had been issued and served upon the appellant calling upon the appellant to show cause why the registration certificate of the appellant be not cancelled ab initio. Considering the provisions of section 27(5)(i) of the VAT Act and even it is cardinal principles of law that before passing any adverse order having civil consequences, opportunity of hearing is required to be given. From the earlier notice, it appears that the appellant was simply called up .....

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ion certificate is sought to be cancelled ab initio. Under the circumstances, the order passed by the first authority cancelling the registration certificate ab initio can be said to be in breach of principles of natural justice and even in breach of section 27(5)(i) of the VAT Act. The aforesaid has not been considered and/or dealt with by the learned Tribunal while passing the impugned order and dismissing the appeals. From the impugned judgment and order passed by the learned Tribunal, it app .....

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the Government revenue. However, it is required to be noted that even for that, the appellant was required to be confronted with the returns filed by the said Sheth Metal Private Limited, so that the alleged transaction by the appellant with said Sheth Metal Private Limited can be tallied and an opportunity is required to be given to the appellant on the aforesaid entries/purchase bills and/or its alleged purchases from the said Sheth Metal Private Limited. All these aforesaid aspects have not b .....

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