Preetam General Store vs Commissioner of Sales Tax and Others

P.K. Misra, J.—Petitioner has challenged the(error) of the order under Annexure -3 passed by the Sales-Tax Officer cancelling the registration of the petitioner and the order of the Commissioner of Sales Tax under Annexure-6 confirming such cancellation.

The petitioner was a dealer registered under the Orissa Sales Tax Act as well as the Central Sales Tax Act. Under Annexure-I, the Sales Tax. Officer issued notice to the petitioner requiring it to appear and explain as to why the registration certificate should not be cancelled. In the said notice it was indicated that the inspecting officer of the circle had visited the shop of the petitioner during the months of April and May, 1995, on different dates and found that the business premises remained closed and there was no business activity. It was further indicated that the business had been discontinued at the place for which the registration certificate had been granted. After receiving the said notice, the petitioner appeared through its lawyer and fled an application generally denying the allegations and stating that the exact dates and time when the Sales Tax Officer had visited should be indicated for enabling the petitioner to give a complete reply. It was further prayed in the said application that an opportunity of personal hearing should be afforded to the petitioner. After receipt of the said application, the Sales Tax Officer passed order under Annexure-3 cancelling the registration, in the said order it was indicated that the petitioner was illegally carrying on business at Malgodown, Cuttack.

Aggrieved by the said order of the Sales lax Officer, the petitioner filed a revision before the Commissioner of Sales Tax which was dismissed under Annexure-6. The reasonings given by the Sales Tax Officer were reiterated in the revisional order. The legality of the order of the Sales. Tax Officer and the revisional order is being challenged in this writ application.

Though several points have been raised in this writ application, the same can be disposed of on one point relating to non-compliance with the principles of natural justice. It has been contended on behalf of the petitioner that though the notice under Annexure-1 alleged about discontinuance of the business which is a ground for cancellation as indicated in Section 9(6)(a) of the Orissa Sales Tax Act. the order of cancellation under Annexure-3 is mainly based on the finding that the petitioner was carrying on business illegally at Malgodown. Cuttack. In Annexure-3. reference has been made to the alleged information that the petitioner was not a genuine firm and was carrying on business at Malgodown, Cuttack, instead of carrying on business at the registered place i.e. at Bhubaneswar. It is, therefore, contended that the petitioner was not afforded reasonable opportunity of being heard inasmuch as it was not put to notice about the allegations on the basis of which the order of cancellation was passed. The order, of cancellation is purported to have been passed u/s 9(6)(c) of the Orissa Sales Tax Act.

The relevant provisions of Section 9(6)(a) and (c) of the Orissa Sales Tax Act are extracted hereunder :

" 9. Registration of dealers -

(6) When -

(a) any business in respect of which a certificate has been granted under this section has been discontinued or has been entirely transferred by the owners of the business to other persons; or

(b) ...

(c) there is any other sufficient reason so to do, the Commissioner shall cancel the registration.

A bare perusal of the aforesaid provisions indicates that the registration can be cancelled u/s 9(6)(a) if the business has been discontinued, whereas it can be cancelled for any other sufficient reason u/s 9(6)(c). In the notice under Anncxure-1 itself, it was indicated as if the business had been discontinued. In other words, the notice was apparently u/s 9(6)(a).

However, as already indicated, the Sales Tax Officer has purported to pass the order of cancellation u/s 9(6)(c). The Commissioner in his order has also stated that the order of cancellation u/s 9(6)(c). In the counter affidavit same stand has been taken. A perusal of the provision in Section 9(6)(c) indicates that the competent authority is empowered to cancel the registration if there is any other sufficient reason to do so. Rule 16-A of the Orissa Sales Tax Rules empowers the Sales Tax Officer to cancel the registration u/s 9(6)(c) for any good and sufficient reason. The said rule envisages that if the Sales Tax Officer for any good and sufficient reason finds that registration of any dealer is required to be cancelled under Clause (c) of Sub-section (6) of Section 9, he may, after giving the dealer a reasonable opportunity of being heard, wherever practicable, order cancellation of the registration. The relevant rule itself envisages that reasonable opportunity of being heard is to be given wherever practicable. It is not the case of the opposite parties that it was not practicable to give a reasonable opportunity of being heard. On the other hand, it is the specific stand of the opposite, parties that, in fact, notices under Annexurc-1 was issued affording the petitioner an opportunity of being heard, in she notice itself there is no mention that cancellation of registration was contemplated on the ground that the place of business had been changed, nor is there any mention that the petitioner was carrying on business illegally at Cuttack. Annexure-1. the notice, related to alleged discontinuance of the business whereas Annexure-3, the order of cancellation, refers to business being allegedly carried at Cuttack. In other words, the order of cancellation is based upon grounds which are materially different from the allegations made in the notice. In such a situation it cannot be said that reasonable opportunity of being heard had been afforded to the petitioner as the petitioner was not called upon to answer the allegation that it was illegally carrying on business at Cuttack. On this point alone, the order of cancellation under Annexure-3 becomes vulnerable.

The Commissioner in his revisional order has merely reiterated the reasoning given by the Sales Tax Officer. The Commissioner has referred to the file and has indicated that from the very beginning, the Sales Tax Officer intended to proceed u/s 9(6)(c) and had so directed in the order for issuing notice. Be that as it may. the notice under Annexurc-1 merely refers to discontinuance of business, whereas the findings on the basis of which the cancellation had been made are unrelated to the notice. We are. therefore, constrained to hold that the orders passed under Annexures-3 and 6 are not sustainable in the eye of law.

In the result, the writ application is allowed. The impugned orders under Annexures-3 and 6 are quahsed. It is. however, made clear that quashing of Annexures-3 and 6 would not stand in the way of the authorities to initiate fresh proceeding for cancellation in accordance with law if the facts and circumstances so warrant.

There will be no order as to costs.

Susanta Chatterji, J.

I agree.