Commissioner Of State Tax, Assam And Anr. vs. Sambhu Das
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The petitioner, Sambhu Das, proprietor of M/s Vaishno Trading, challenged the cancellation of his GST registration by an order dated 11.10.2019, passed by the Commercial Tax Officer (Superintendent of Taxes). The cancellation followed a show-cause notice dated 27.08.2019, alleging the petitioner was involved in bogus transactions with fictitious entities. The High Court, by an interim order dated 14.02.2020, stayed the cancellation, noting that proper opportunity might not have been given. The Commissioner of State Tax, Assam, filed an interlocutory application (I.A.) in March 2021 seeking vacation of this interim order. The petitioner's counsel stated that no instructions were forthcoming from his client.
Held
The Court decided to vacate the interim order dated 14.02.2020. The reasoning was based on the fact that the petitioner's counsel could not offer any resistance to the application for vacation due to a lack of instructions from the petitioner. The Court was prima facie satisfied that the impugned order of cancellation was preceded by a show-cause notice dated 27.08.2019, which provided an opportunity to the petitioner. The Court also considered the aspects of public interest and public revenue in its decision. The ratio decidendi is that if a party fails to provide instructions to their counsel to resist an application, and the revenue demonstrates that due process (like issuing a show-cause notice) was followed, an interim order protecting the petitioner's business can be vacated. The interim order dated 14.02.2020 was vacated, and the I.A. was disposed of.
Key Issues
1. Whether the interim order dated 14.02.2020, which stayed the cancellation of the petitioner's GST registration, should be vacated? Petitioner's Arguments: The petitioner, through his counsel, was unable to provide instructions or resist the application for vacation of the interim order, despite best efforts. Revenue's Arguments: The Revenue, through the Commissioner of State Tax, argued that the interim order should be vacated. They contended that a show-cause notice dated 27.08.2019 was issued, indicating that an opportunity to be heard was indeed granted to the petitioner before the impugned order of cancellation was passed. The Revenue also highlighted that the petitioner was continuing business on the strength of the interim order and emphasized the aspect of public interest and public revenue.
Sections Cited
Section 11(2)(b)
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Before: HONOURABLE MR. JUSTICE SANJAY KUMAR MEDHI
2022 Heard Shri B. Gogoi, learned Standing Counsel for the applicants (Finance Department), who have preferred this application for vacation of the interim order dated 14.02.2020. Also heard Shri A. Kakati, learned counsel for the opposite party (writ petitioner).
This Court has noticed that though this I.A. was filed in March, 2021, till date, no objection has been filed to the said I.A. Rather, Shri Kakati, the learned counsel for the opposite party (writ petitioner) submits that in spite of his best efforts, no instructions were forthcoming from the opposite party.
The subject matter of the connected writ petition is cancellation of the GST Registration of the petitioner, vide an order dated 11.10.2019. The records reveal that the said order was preceded by a show-cause-notice dated 27.08.2019. The case of the Department is that the petitioner, which is a proprietorship firm, was found to be indulged in bogus transaction with fictitious entities, which were not found even after enquiry and therefore the initiation of the process for cancellation of the license was done, pursuant to which an impugned order dated 11.10.2019 was passed cancelling the said registration.
This Court while issuing notice, vide an order dated 14.02.2020 had considered the fact that proper opportunity was not given to the petitioner before cancelling and therefore, the impugned action was stayed.
Shri B. Gogoi, learned Standing Counsel for the Department submits that on the strength of the interim order, the opposite party (writ petitioner) is continuing its business. He further submits that prima facie the records would show that opportunity was indeed granted to the opposite party (writ petitioner) by issuing a show-cause-notice dated 27.08.2019. 6. Be that as it may and in view of the fact that no resistance has been made on behalf of the opposite party (writ petitioner), due to lack of instructions and being prima facie satisfied that the impugned order was preceded by a stage when an opportunity was granted to the opposite party (writ petitioner), this Court is of the view that a case for vacation of the interim order dated 14.02.2020 is made out. This Court has also considered the aspect of the public interest and public revenue.
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In view of the above, the interim order dated 14.02.2020 stands vacated.
The I.A. stands disposed of.
JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.