Punjab & Haryana High Court in an older case namely Arjan Radio House vs Assessing Authority had held that a person’s registration certificate shall be deemed to have been cancelled w.e.f date of publication of the factum of cancellation in the official Gazette as a busy seller cannot be supposed to know whether the registration certificate of a purchasing dealer has been cancelled or not unless he can be fixed with the knowledge of this fact.
This judgement is very important even in the current scenario of VAT regime, where ITC is ussualy disallowed on the ground that the registration certificate of selling dealer has been cancelled. Rule 13(6) of Punjab VAT Rules, 2005 also makes it mandatory for the State Government to give public notice of cancellation of registration in press through leading newspaper or in the official Gazette.
It is generally seen that the Department does not publish the cancellation of registration as per Rule 13(6) in such case the abovesaid judgement becomes very much important.The facts, verdict and the full judgement is as follows:
Facts:
The petitioner, a registered dealer under the Punjab General Sales Tax Act, 1948, was originally assessed to sales tax allowing deductions of certain sales to registered dealers under section 5(2)(a)(ii) of the Act.
Subsequently, the Assessing Authority served on the petitioner a notice in form S.T. XIX calling upon it to show cause why the exemption granted to it under section 5(2)(a)(ii) of the Act be withdrawn, as being sales to ungenuine dealers, and, subsequently, passed an order of reassessment against the petitioner under section 11-A disregarding the written prayer of the petitioner to summon an officer to appear as a witness. The assessee contended (1) that as the entire material, including the returns, had already been placed on the record, the Assessing Authority could not be deemed to have come into possession of any new information so as to entitle him to frame a reassessment under section 11-A; (2) that when the registration certificate of a dealer was cancelled, the particulars regarding the cancellation order had to be notified in the official Gazette as soon as possible as laid down under rule 12(2) and failure to comply with this requirement could not entail penal consequences upon the selling dealer;
Held:
(1) that the assessments are usually framed by the Assessing Authorities in a hurried manner and at that stage the Assessing Authorities are not called upon to view every certificate given by the purchasing dealer in form S.T. XXII with suspicion as a lot of public time would be wasted and even the assessee would be made to suffer great inconvenience. If at some subsequent stage it comes to the notice of the Assessing Authority that the forms had either not been furnished by a registered dealer or the same had been furnished by a dealer whose registration certificate stood cancelled in accordance with law at a time earlier than the one when he signed the declaration form, it could not be said that the receipt of this information would not entitle the Assessing Authority to frame the reassessment in order to prevent loss of revenue. The information entitling the Assessing Authority to frame reassessment includes information on points of fact and on points of law:
(2) that a busy dealer is not supposed to know whether the registration certificate of a purchasing dealer has been cancelled or not unless he can be fixed with the knowledge of this fact. As soon as the particulars regarding the cancellation of a registration certificate of a purchasing dealer are published in the official Gazette, the selling dealer cannot be allowed to say that he has no knowledge about such cancellation. Where the revenue is itself negligent and does not perform its statutory duties of publishing the requisite information in the official Gazette, it cannot turn round and demand tax from the selling dealer on the ground that the certificates produced for getting exemption under section 5(2)(a)(ii) of the Act were signed by non-genuine dealers;
(3) that the Assessing Authority exercise quasi-judicial functions and when a dispute about the genuineness or otherwise of a purchasing dealer is raised before him, he has to decide the dispute in accordance with the known principles of fair play and natural justice. The elementary requirement of such principles is that when a dealer wants to adduce evidence in support of his claim, then that evidence should be allowed to be produced and weighed on its merits.
Download Full text of the Case- Arjan Radio House vs Assessing Authority (Punjab & Haryana High Court),[1973] 31 STC 49 (P&H) , C.W. No. 541 of 1972 decided on October 06, 1972
(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)
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