Amendment to RCs to disallow inter-state HSD purchase without issuing SCN to be set aside: HC

Case Details: Sunil Kumar Agrawal v. State of Chhattisgarh - [2022] 143 taxmann.com 300 (Chhattisgarh)

Judiciary and Counsel Details

• • Parth Prateem Sahu, J.
  • Ramit Mehta & Akash Shrivastava, Advs. for the Petitioner.
  • Sandeep Dubey & Ms Richa Shukla, Advs. for the Respondent.

Facts of the Case

The petitioner submitted amendment application seeking incorporation of High Speed Diesel (HSD) in their registration certificate for mining activities and granting permission to petitioners for inter-state purchase of HSD at concessional tax rates against C-Forms. The registration certificate (RC) was amended and later on order was passed amending the RCs under VAT Act for disallowing inter-state purchase of HSD at concessional Sales Tax rates. It challenged the order contending that the department had not issued proper notice under Section 49 (3) and filed writ petition against the same.

High Court Held

The Honorable High Court observed that the registration was amended on basis of application submitted by petitioner. The Rule 9(1) of the VAT Rules, 1957 specifically provides for giving of an opportunity of being heard to a dealer in the matter by the notified authority before amending or cancelling certificate of registration. Also, the provision under Section 49 (3) of VAT Act, 2005 also provides that if Commissioner considers that any order is erroneous or prejudicial to interest of revenue, he may after giving opportunity of being heard and after causing such enquiry as he deems necessary, pass order.

However, in the instant case, the department had suo motu decided revision without issuing notice and without giving opportunity of being heard to petitioner. Therefore, the revision orders deserved to be quashed and resulting tax demands and penalties were also liable to be quashed.