Original Petition No.1544 of 2003 was filed before the Tamil Nadu Taxation Special Tribunal at Chennai praying to declare the proceedings of the respondent in RC.No.3574/91 A1 dated 2.12.1999 as illegal and contrary to the certificate of registration issued by the respondent dated 31.3.1999 and further direct the respondent to grant a reasonable opportunity to enable the petitioner to renew the registration in view of the decision of the High Court reported in 125 STC 496. The said O.P. was received by transfer and numbered as Writ Petition.
2. The petitioner is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu General Sales Tax Act 1959 (State Act). He is also registered under the provisions of the Central Sales Tax Act, 1956 (Central Act). Petitioner is a dealer in paper and paperboards carrying on business in the State of Kerala. In respect of the business operation in the State of Tamil Nadu, he applied for registration under the State Act. A Certificate of Registration in TNGST No.1521561/98-99 dated 31.3.1999 was issued by the Commercial Tax Officer under the Tamil Nadu General Sales Tax Act, 1959. Para 6 of the certificate reads as follows:-
"6. This certificate is valid from 30.3.99 until cancelled and shall be exhibited at a conspicuous place, at the principal place of business of the dealer."
There was no period fixed for the validity of the certificate. Subsequently, the Department based on investigation came to the conclusion that one Shree Sakthi Paper Mills, Cochin had received paper and paperboards from the petitioner during the years 1998-99 to 2000-2001 in the guise of transit sales. Several other discrepancies in transaction were noted and on 26.8.2003 an assessment order was passed by the Commercial Tax Officer demanding tax and penalty for three years. In the proceedings dated 26.8.2003, it was indicated by the respondent as follows:-
"You were a registered dealers in this office in Paper and Paper Boards at No.28, Gopalakrishna Road, Vee Key Manor, Chennai 17 and the registration number allotted to you were as under.
The registration was in force from 30.3.99.
TNGST No.1521561 CST No.772810 Subsequently, your registration certificate both under TNGST and CST Acts were cancelled with effect from 1.4.99, since, you have not renewed the registration for the year 1999-2000 (vide this office proceeding in RC.No.3574/91 dt.2.12.99)."
Petitioner coming to know that the certificate of registration has been cancelled with effect from 1.4.1999, has challenged the proceedings dated 2.12.1999 as indicated in the assessment order dated 26.8.2003.
3. The grievance of the petitioner is twofold as follows:-
(i) Before cancellation of the Registration Certificate, no show-cause notice or opportunity was given to the petitioner. Therefore, there is clear violation of principles of natural justice.
(ii) The Registration Certificate issued on 31.3.1999 is valid from 30.3.1999 until cancelled. The plea of the Department that the Certificate is valid for a period of one year is, therefore, untenable. He relied upon a Division Bench Judgment of this Court in Sun Gas Pvt. Ltd., - vs. - Registrar, Tamil Nadu Taxation Special Tribunal and another reported in 125 STC 496.
4. Respondent has been noticed and appeared through Mr.J.Ganesan, Special Government Pleader (Taxes) and counter-affidavit has been filed.
5. From the record, it is seen that the Registration Certificate is issued under the State Act and has been cancelled. There is no record that the Certificate that has been issued under the Central Act is cancelled. Further, as per records it is stated by the learned Special Government Pleader (Taxes) appearing for the respondent Department that cancellation of the certificate was intimated to the petitioner by common despatch. He also states that the Certificate should have been renewed on 1.4.1999 as the certificate is valid for only two days (i.e.) 30th and 31st of March, 1999.
6. Having considered the rival contentions and as per records produced, the stand of the Department cannot be accepted in the factual matrix of the present case. In this case, the wording in the certificate dated 31.3.1999 is "this Certificate is valid from 30.3.99 until cancelled". In effect the certificate does not state the date of expiry and when the renewal has to be made. The case that was decided by the Division Bench of this Court in Sun Gas Pvt. Ltd., (cited supra) is almost similar to the facts of the present case. The Division Bench passed the following order setting aside the proceedings of the respondent Commercial Tax Department and the order reads as hereunder:-
"9. The certificate, which was issued to the dealer and which he was required to exhibit at a conspicuous place in his principal place of business, did not state as to when that certificate would expire. It merely said that it is valid from March 2, 1998 until cancelled. The assessee by reading the certificate would have no clue whatever that he was required to seek renewal within two days after receiving the certificate. The order of cancellation was passed within about seven months from the date of issue of the certificate. The statutory provision provides that a certificate of registration is valid for a year and the renewal is required to be at the end of the period of one year or five years, as the case may be. The period of five years apparently is only in the case of companies and those who have carried on business continuously for a period of five years and wish to pay the registration fee for five years in a lumpsum as provided in the second proviso to rule 24(9) of the Rules. The assessee here had commenced business newly. The assessee was given a certificate which led him to believe that it was valid until it was cancelled. The assessee, in the circumstances, was entitled to reasonable notice as to why the registration was being cancelled.
10. The Revenue, when it commits errors of this nature which leads to the deprivation of a right in the assessee to seek renewal in time by misleading him about the need for such renewal, must at the minimum put him on notice about the correct state of the law and give him an opportunity to seek renewal. The abrupt cancellation as done in this case was wholly impermissible.
11. We make it clear that the relief we are granting to the assessee herein is purely on account of the misleading form, which the Revenue chose to use to grant the certificate of registration to the assessee.
12. In the result, the impugned order of the Tribunal is set aside. The order of cancellation cancelling the certificate of registration of the assess is also set aside. Liberty is reserved to the Revenue to issue a show cause notice to the assessee and give him time to seek renewal and thereafter make an appropriate order. The writ petition is ordered accordingly. The connected W.M.P. is closed."
Petition ordered accordingly."
7. In the present case also the certificate is valid for only two days 30th and 31st March, 1999 as per the provision of law. There is no specific indication as to when the renewal has to be effected. The Division Bench judgment squarely applies to the facts of the present case. Furthermore, the cancellation of the certificate has been done without proper notice and without opportunity to the petitioner and that fact is not seriously disputed. There is, therefore, clear violation of principles of natural justice.
8. In such view of the matter, the proceedings initiated by the respondent cancelling the TNGST Certificate No.1521561/98-99 dated 31.3.99 is bad and consequently such order is set aside. The respondent is, however, at liberty to initiate proper proceedings after issuance of a show-cause notice to the assessee before proceeding further in the matter. The Writ Petition is allowed in the above terms. No costs.