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2017 Supreme(Guj) 1456
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Akil Kureshi, Biren Vaishnav, JJ.
Dhruv Jewels through Proprietor Shivkumar Bapulal Totla – Petitioner
Versus
State of Gujarat & Others – Respondents
Special Civil Application No. 13253 of 2017
Decided On : 09-08-2017
For the Petitioner:Hiren J. Trivedi, Advocate, Mr. S.P Majmudar, Advocate
For the Respondent: Mr. Pranav Trivedi, AGP
Headnote:
Taxation – Gujarat Value Added Tax Act 2003 – Section 67 – Central Sales Tax Act –Assessment – Canceling of the petitioners registration – Challenged an order canceling petitioners registration and on the grounds of no notice, no hearing and retrospective cancellation without any material on record – Petitioner is a proprietary concern and is a dealer of jewelry – Petitioner firm has been registered under Act 2003 as well as under Central Sales Tax Act – Business premises of petitioner firm were subjected to search operation by VAT authorities – Petitioner challenged this order on ground that authorities have no power under VAT Act to seal business premises – Held, It becomes clear that the petitioner was not served with any notice of proposed cancellation of registration before such action was taken by the authority under order – If the notice was not served and the notice of the hearing was served after the date had passed, clearly the petitioner had no opportunity to appear before authority and to defend its position – Non service of notice, even otherwise, the order of cancellation of registration suffers from legal errors – As per the show cause notice authorities believed that the petitioner had discontinued the business during the assessment year 2016-17. If that be so, nothing would justify cancellation of registration with effect There was no material with the authorities to believe that the petitioners business had stopped since the said date – No indication in the notice also that if the petitioner failed to produce the document, it would be presumed that the business had been discontinued since such date – Cancellation of registration with back date was thus wholly arbitrarily picked up. Be that as it may, we would allow the authority to issue a fresh show cause notice to the petitioner for proposed cancellation of the registration and after giving opportunity to the petitioner to produce documents and be heard by the competent authority, pass a fresh order in accordance with law as may be justified on the basis of materials on record – Petition is disposed of. (Paras 9 to 12)
AKIL KURESHI, J.
Petitioner is a proprietary concern and is a dealer of jewelry. The petitioner firm has been registered under the Gujarat Value Added Tax Act 2003 (‘the VAT Act’ for short) as well as under the Central Sales Tax Act (‘the CST Act’ for short). The business premises of the petitioner firm were subjected to search operation by the VAT authorities on 27.06.2017, pursuant to which the petitioner's shop was sealed on the same day. The order of the authority of the said date sealing the premises is produced at Annexure: A. The petitioner has challenged this order on the ground that the authorities have no power under the VAT Act to seal the business premises.
2. The petitioner has also challenged an order dated 27.06.2017 canceling the petitioner's registration under the VAT Act and the CST Act with effect from 22.06.2010 This order the petitioner has challenged, inter alia, on the grounds of no notice, no hearing and retrospective cancellation without any material on record.
3. We may consider the petitioner's two challenges on the basis of materials on record. With respect to the order dated 27.06.2017 sealing the business premises of the petitioner firm, counsel for the petitioner submitted that under the VAT Act, there is no power for sealing the premises. Before its amendment, vide Amending Act 6 of 2006, section 67 of the VAT Act contained such powers, however, legislature by the said amendment, has consciously removed such powers. If the authorities desired to inspect or even seize the accounts and other documents, they could have taken appropriate steps but in any case sealing of the premises was not within their power.
4. On the other hand, learned AGP submitted that there is strictly speaking no sealing of the premises and the seals were placed on the shop of the petitioner as part of an ongoing search operation. Section 67 of the VAT Act, prior to its amendment by the Amending Act 6 of 2006, contained detailed provisions authorizing the Commissioner to seal the premises including the office, shop, godown, box, locker, safe, almirah or other receptacle under certain circumstances. In particular, clause (vi) of sub-section(3) of section 67 provided that;
“(3) Where the Commissioner, has reason to believe that—
…
…
(c) books of account, registers or documents of any dealer may be destroyed, mutilated, altered, falsified or any sale or purchase by that dealer have been or may be suppressed, or any goods have not been or may not be accounted for in the books of account, registers or other documents required to be maintained under this Act, with a view to evade or attempt to evade payment of tax due under the earlier law or under this Act,—
… …
(vi) seal the premises including the office, shop, godown, box, locker, safe, almirah or other receptacle leaves the place or is not available or fails or refuses to open it when called upon to do so, or causes or attempts to cause obstruction to the Commissioner or the authorized officer in the discharge of his duties under this section.”
5. However, by Amending Act 6 of 2006, section 67 was substituted from the original, in which, these powers are completely missing. Thus the legislature while reenacting section 67 consciously omitted the powers of the Commissioner for sealing such premises. The action of the authority to do so under its order dated 27.06.2017 was therefore illegal. We are unable to see from the order or even otherwise that the said action was taken as a part of an ongoing search. There is nothing in this order suggesting that the seal was put temporarily so that the search can be resumed after the brief break. Even otherwise, according to the respondents, the business premises do not have too many documents or articles. It is therefore not possible to appreciate why the search would have continued more than a month after it was initiated.
6. For such reasons, the said order dated 27.06.2017 is required to be set aside.
7. Coming to the question of cancell
