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2017 DIGILAW 1066 (GUJ)

Jainex Metal and Alloys v. State of Gujarat

2017-06-09

B.N.KARIA, M.R.SHAH

body2017
JUDGMENT : M.R. Shah, J. 1. Draft amendment is allowed. 2. Feeling aggrieved and dissatisfied with the common impugned judgment and order passed by the learned Gujarat Value Added Tax Tribunal, Ahmedabad dated 29.03.2016 passed in Second Appeal Nos. 1099 of 2016 and 1100 of 2016, by which, the learned Tribunal has dismissed the said appeal preferred by the appellant herein and has confirmed the orders passed by the authorities below cancelling the registration of the appellant dealer, the appellant dealer has preferred the present Tax Appeals with the following proposed questions of law: "A. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in conforming the cancellation of the registration certificates of the appellant under both the Acts for non-filing of the returns for three consecutive periods ? B. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in cancelling the registration certificates of the appellant under both the Acts despite the fact that appellant had filed its returns upto 30.06.2013 ? C. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in upholding the orders passed by the lower authorities cancelling the registration certificates under Section 27(5) of the GVAT Act? D. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law and on facts in holding that the appellant was not entitled to get Input Tax Credit u/s. 11 of the GVAT Act on the ground that the appellant had merely obtained tax invoices from the vendors without any transactions? E. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal is perverse in as much as: (a). it fails to take into consideration and take proper cognizance of the various documentary evidences placed before it; (b). it fails in not considering, adjudicating and dealing with the arguments and submissions made by the appellant; (c). it fails to consider and adjudicate upon the grounds challenging the gross violation of principles of natural justice which includes failure of the lower authorities to pass a speaking order on merits by the Commercial Tax Officer which has been merely upheld by the First Appellate Authority. it fails to consider and adjudicate upon the grounds challenging the gross violation of principles of natural justice which includes failure of the lower authorities to pass a speaking order on merits by the Commercial Tax Officer which has been merely upheld by the First Appellate Authority. On the contrary, the First Appellate and the Hon'ble GVAT Tribunal dismissed the appeal without appreciating and examining the evidences placed on record. The said action of the lower authorities is in gross violation of principles of natural justice. F. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in widening the scope of the appeal inasmuch as the original order cancelling the registration of the appellant was on account of non-filing of three consecutive quarterly returns whereas Tribunal, after having held that those returns were regularized, upheld the order of cancellation on entire new and fresh grounds investigated at the instance of the Tribunal? G. Whether in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in exceeding its appellate jurisdiction by enhancing the scope of the appeal and deciding the issues which were not considered by the lower authorities?" 3. The facts leading to the present appeals in nutshell are as under: 3.1. That the appellant is a proprietary concern, engaged in the business of Re-selling non-ferrous metals as well as iron and steel commodities. That the appellant was registered as a dealer under the Gujarat Value Added Tax Act, 2003 as well as Central Sales Tax Act, 1956 w.e.f. 9.4.2007. That the appellant dealer failed to file the return from 1.10.2011 to 30.06.2013. That thereafter, the appellant had also made an application in form No. 103 on 5.4.2014 seeking cancellation of the registration certificate. It appears that prior thereto, by order dated 11.03.2013 Commercial Tax Department passed order of cancellation of the registration certificate of the appellant on failure to furnish to file the return for the period from 1.10.2011 to 30.06.2013. That thereafter, the appellant filed return manually upto 30.06.2013 on payment of Rs. 2000/- by way of penalty. It appears that thereafter the appellant preferred appeal before the learned Deputy Commissioner of Commercial Tax, Ahmedabad challenging the order passed by the appropriate authority cancelling the registration certificate. That thereafter, the appellant filed return manually upto 30.06.2013 on payment of Rs. 2000/- by way of penalty. It appears that thereafter the appellant preferred appeal before the learned Deputy Commissioner of Commercial Tax, Ahmedabad challenging the order passed by the appropriate authority cancelling the registration certificate. That thereafter, by order dated 22.08.2014 the Deputy Commissioner dismissed the said appeal by observing that nobody has remained present on behalf of the appellant and even notice sent by Registered Post AD has been returned with the postal endorsement left on 2.5.2014. 3.2. Feeling aggrieved and dissatisfied with the order passed by the First Appellate Authority dismissing the appeals and confirming the orders cancelling the registration certificate under the GST as well as CST Act w.e.f. 1.10.2011, the appellant preferred appeals before the learned Tribunal being Second Appeal Nos. 1099 and 1100 of 2016. That during the course of appeal, the learned Tribunal thought it fit to call report from the Commercial Tax Officer. From the report, it was found that a huge sum of tax is due and payable by the appellant for the year under consideration. That thereafter, the learned Tribunal has dismissed the aforesaid appeals and has confirmed the orders passed by the authority below cancelling the registration certificate of the appellant dealer under the GST and CST Act. Hence, feeling aggrieved and dissatisfied with the common impugned judgment and order passed by the learned Tribunal in Second Appeal Nos. 1099 and 1100 of 2016, the appellant dealer has preferred present Tax Appeal Nos. 87 and 88 of 2017. 4. Shri Tushar Hemani, learned advocate for the appellant-dealer has vehemently submitted that in the facts and circumstances of the case the learned Tribunal has materially erred in rejecting the appeals preferred by the dealer and in confirming the orders cancelling the registration certificates. 4.1. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that the learned Tribunal ought to have appreciated that the Commercial Tax Officer passed order under Section 27(5) of the Gujarat VAT Act without granting any opportunity of hearing to the present appellant. It is submitted that as per Section 27(5) of the Act, the Commissioner has to pass order recording the reasons for cancellation of the registration certificates in writing. 4.2. It is submitted that as per Section 27(5) of the Act, the Commissioner has to pass order recording the reasons for cancellation of the registration certificates in writing. 4.2. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that learned Tribunal ought to have appreciated that appellant had filed its return regularly upto the period 30.09.2011. However, thereafter due to ill health of the parents of the appellant who were staying at Mumbai, the appellant has closed its business activities and vacated its residential premises in Ahmedabad and had shifted to Mumbai. It is submitted that the learned Tribunal ought to have appreciated that even the Accountant of the appellant had also left the job and therefore, due to this, appellant could not file returns from 1.10.2011 to 30.06.2013. 4.3. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that the learned Tribunal ought to have appreciated that even thereafter the appellant had also made an application in the form No. 103 on 5.4.2013 seeking cancellation of its registration certificates. 4.4. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that the learned Tribunal ought to have appreciated that appellant thereafter filed all the returns manually upto 30.06.2013 and has also discharged its liabilities as per the returns filed. 4.5. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that the learned Tribunal has materially erred in dismissing the appeals on the ground that the appellant has not paid demand of tax of Rs. 77,18,367/- for assessment period 2009-10, as against the order passed by the Commercial Tax Officer for AY 2009-10, the appellant has already preferred an appeal. 4.6. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that the learned Tribunal has grossly erred in widening the scope of the appeal inasmuch as the original order cancelling the registration of the appellant was on account of non filing of three consecutive quarterly returns. 4.7. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that after having held that non filing of the returns of three consecutive quarterly returns were regularized on payment of penalty, thereafter the learned Tribunal has erred in confirming the order of cancellation on entire new and fresh ground investigated at his own instance. 4.7. It is further submitted by Shri Tushar Hemani, learned advocate for the appellant- dealer that after having held that non filing of the returns of three consecutive quarterly returns were regularized on payment of penalty, thereafter the learned Tribunal has erred in confirming the order of cancellation on entire new and fresh ground investigated at his own instance. Making above submissions, it is requested to admit/allow the present Appeals. 5. Both these appeals are vehemently opposed by Shri Hardik Vora, learned AGP appearing on behalf of State. It is submitted by Shri Hardik Vora, learned AGP that in the facts and circumstances of the case and more particularly, when dealer failed to file the returns for the period between 1.10.2011 to 30.06.2013, the Commercial Tax Officer rightly canceled the registration certificates, in exercise of power under Section 27(5) of the Act and same has rightly been confirmed by the learned Tribunal. 5.1. It is further submitted by Shri Vora, learned AGP that merely because, subsequently the dealer submitted the returns on payment of penalty, the powers of the Commercial Tax Officer to cancel the registration certificates in exercise of powers under Section 27(5) of the Act are not taken away. It is submitted that still it will always be open for the Commercial Tax Officer to cancel the registration if the case is made out under Section 27 of the Act, more particularly, Section 27(5) of the Act. 5.2. It is further submitted by Shri Vora, learned AGP that it appears that the assessee did not file return and same came to be filed subsequently, the order passed by the Commercial Tax Officer is not required to be set aside on the ground that the same is not speaking order, as contended on behalf of appellant. 5.3. Now, so far as submission on behalf of the appellant that the learned Tribunal has widening the scope of appeal before it and has confirmed the order altogether on other ground is concerned, it is submitted that what is observed by the learned Tribunal on remand report is in furtherance of the reasoning given by the learned Tribunal while confirming the order cancelling the registration of the appellant. It is submitted that therefore, the aforesaid can be said to be additional ground over and above and the ground on which the original and earlier registration of the certificates were cancelled. It is submitted that therefore, the aforesaid can be said to be additional ground over and above and the ground on which the original and earlier registration of the certificates were cancelled. Making above submission, it is requested to dismiss the present Appeals. 6. Heard the learned advocates for the respective parties at length. 6.1. At the outset, it is required to be noted that the Commercial Tax Officer cancelled the registration certificates of the appellant herein - dealer in exercise of powers under Section 27(5) of the Gujarat VAT Act and on the ground that for three consecutive period i.e. for the period between 1.10.2011 to 30.06.2013, the dealer failed to file the returns. Section 27(5) of the Gujarat VAT Act reads as under: "27. (5) If a dealer - (a) has failed to file three consecutive returns within the time prescribed under this Act; (b) knowingly furnishes incomplete or incorrect particulars in his returns; (c) has failed to pay tax due from him under the provisions of this Act; (d) having issued tax invoice or retail invoices, has failed to account for the said invoices in his books of account; (e) holds or accepts or furnishes or causes to be furnished a declaration, which he knows or has reason to believe to be false; (f) who has been required to furnish security under section 28, but has failed to furnish such security; (g) has been convicted of an offence under this Act, or under the earlier law; (h) discontinues his business and has failed to furnish information regarding such discontinuation, or (i) without entering into a transaction of sale issues to another dealer tax invoice, retail invoice, bill or cash memorandum with the intention to defraud the Government revenue, the Commissioner may at any time, for reasons to be recorded in writing and after giving the dealer an opportunity of being heard, cancel his certificate of registration from such date as may be specified by him." The aforesaid has been confirmed by the First Appellate Authority as well as learned Tribunal. 6.2. It is the case on behalf of the appellant that as the subsequently the dealer submitted returns on payment of penalty and therefore, the order under Section 27(5) could not have been passed. 6.2. It is the case on behalf of the appellant that as the subsequently the dealer submitted returns on payment of penalty and therefore, the order under Section 27(5) could not have been passed. It is also the case on behalf of the appellant - dealer that while passing the impugned judgment and order, learned Tribunal has erred in widening the scope of the appeal by considering the remand report and considering the fact that for AY 2009-10, the dealer has not paid the demand of tax. However, on considering the impugned judgment and order passed by the learned Tribunal, it appears that the aforesaid is additional ground which has been considered by the learned Tribunal. The fact remains that dealer did not file the returns for the period between 1.10.2011 to 30.06.2013. The ground which was given by the appellant - dealer for not filing returns for the aforesaid period was due to his father ill health he was required to go to Mumbai and he was required to shift to Mumbai and therefore, he closed the office at the premises, for which, intimation was given. However, it appears that same seems to be an afterthought. Firstly, the dealer did not intimate the department with respect to change of address. Even notice which was sent through RPAD, was returned. There are number of transactions during the period for which, the dealer did not file the returns and more particularly, to the extent of Rs. 1,54,48,577/-. Therefore, the dealer suppressed the aforesaid transactions, more particularly, by not filing the returns. Merely because, subsequently the dealer submitted the returns which were accepted with penalty, it will not affect the powers of the authority to cancel the registration certificate under Section 27 of the Act, more particularly, Section 27(5) of the Act. Therefore, in the facts and circumstances of the case, we see no reason to interfere with the impugned judgment and order passed by the learned Tribunal. Under the circumstances, both these appeals deserve to be dismissed and are accordingly dismissed. No substantial question of law arise as contended on behalf of the appellant. 7. Under the circumstances, both these appeals are deserve to be dismissed and are accordingly dismissed. No costs.