Judgment:
1. This is an application Under Section 8 of the West Bengal Taxation Tribunal Act, 1987 praying for setting aside the order dated July 10, 2002 passed by the Assistant Commissioner of Commercial Taxes, Posta Bazar Charge, cancelling the registration certificate Under Section 26(10) of the West Bengal Sales Tax Act, 1994 also a direction upon the respondents not to take any steps on the basis of the impugned order.
2. The petitioner is carrying on business at 7 Bysack Street, Kolkata-700 007 and filed returns up to the period four quarters ending 31st March, 2002 and on the basis of such return assessment has also been completed. At the same address and in the same room other concerns, namely, Rajesh Processing Corporation and Maheswari Commercial Corporation are also maintaining their offices. The room belongs to Hari Krishna Mantri, the father of the petitioner.
3. The respondent No. 1 issued way bill last on January 11, 2000 and the petitioner using those way bills imported goods from outside the West Bengal and duly paid taxes. Since the way bills were stopped the petitioner failed to make any transaction and filed nil returns under the provisions of the West Bengal Sales Tax Act, 1994 (hereinafter referred to as "the Act, 1994"). On February 5, 2002 the petitioner again applied for way bills. By an order dated February 7, 2000 the respondent No. 1, all on a sudden, cancelled the registration certificate of the petitioner on the ground that he discontinued his business. Such inference was drawn on the basis of a report dated February 1, 2000 of the Inspector of Commercial Taxes. However, by an order dated January 17, 2002, the impugned order of cancellation of registration certificate was set aside by this Tribunal.
4. The petitioner thereafter, was informed that a fresh proceeding for cancellation of the registration certificate had been initiated and the application for way bill dated February 5, 2002 had been kept pending.
The petitioner had also been asked to show cause against the proceeding for cancellation of registration certificate.
5. The petitioner thereafter gave reply against the notice to show cause stating the fact that no inter-State sale or purchase could be made due to non-availability of way bills. It was further stated that the business records of the petitioner were not found by the Commercial Tax Officer who visited the business place since the records up to January 12, 2000 were seized by the bureau of investigation including computers on January 18, 2000. It is also alleged that Mr. Chand Ghotia is no way connected with the business of saree embroidery and packing as was found by the Inspecting Officer at the place of business of the petitioner.
6. After hearing the petitioner on such show cause notice the respondent No. 1 passed an order dated July 10, 2002 cancelling the registration certificate under the Act, 1994 without giving any opportunity to cross-examine Shri Chand Ghotia on whose statement much reliance was given and the registration certificate was cancelled. The impugned order dated July 10, 2002 passed by the respondent No. 1 is, therefore, bad, illegal, erroneous and without jurisdiction.
7. It is submitted on behalf of the petitioner that the Respondent No.l failed to consider the principles of law enunciated by different High Courts and Supreme Court. The registration certificate was rejected only on the ground that the room in which the petitioner was carrying on the business was being used for saree business. Simply relying on the statement of Chand Ghotia the respondent No. 1 came to the conclusion that the petitioner discontinued his business. Before putting such reliance, according to the learned lawyer for the petitioner, opportunity should have been given to the petitioner to cross-examine Mr. Chand Ghotia. That the petitioner never discontinued his business would be clear from the facts that all the orders and notices are being received by the petitioner regularly at his office address. The rule 215 of the West Bengal Sales Tax Rules, 1995 also does not authorise the respondent to withhold the way bill. The order of cancellation of registration certificate passed by the respondent No. 1 is thus illegal, arbitrary and mala fide.
8. The learned State Representative submits that on repeated occasion during visit the respondent failed to contact the petitioner at his office address. Moreover, the books of accounts and other relevant documents of the business required to be kept at the place of business were not found at the time of inspection. The documents for the period after the seizure might have been maintained by the petitioner and such document would have been made available at the place of business of the petitioner but even no such document was found. The Respondent No. 1 therefore, has no other alternative but to draw inference that the business of the petitioner was discontinued and the steps rightly were taken Under Section 26(10) of the West Bengal Sales Tax Act, 1994 by cancelling the Registration Certificate. The petitioner, therefore, has no relief and the application is liable to be dismissed.
9. The only point for consideration, therefore, is if the registration certificate was cancelled in accordance with law by an impugned order dated July 10, 2002.
10. The Sub-section (10) of Section 26 of the West Bengal Sales Tax Act, 1994 states as follows :- (a) any business in respect of which a certificate of registration has been granted to a dealer on an application made, has been discontinued, or (b) a dealer has ceased to be liable to pay tax Under Section 9, Section 10, Section 12 and Section 15, the prescribed authority shall cancel the registration of such dealer." 11. In the instant case we are concerned with the sub-clause (a) of Sub-section (10) of Section 26 inasmuch as, discontinuation is the only ground for cancellation of the registration certificate.
12. Whether the business was continuing or not by the petitioner was verified by local inspection held by A.C.T.O., C.T.O and the Assistant Commissioner himself on February 5, 2002, February 19, 2002 and July 20, 2002 respectively. During inspection one Chand Ghotia was found at the place of business on two occasions, i.e., on February 5, 2002 and July 20, 2002. It was the statement of Chand Ghotia that he was running the business in the same room which was used by the petitioner as his business place on monthly rental of Rs.1,000 under the landlord Hari Krishna Mantri. Reliance was made upon the statement of Chand Ghotia for coming to a decision that no business was being carried on by the petitioner. At the time of inspection a sign board found to be displaced showing the names of three concerns, viz., (1) Rajesh Processing, (2) Maheswari Commercial Services and (3) Shri Balaji Commercial Services. The Registration Certificates for the first two organisations still stand valid whereas presumption was taken that there was no existence of the third concern, i.e., the business of the petitioner since the room was found to be occupied by some other who carry on Saree business. The xerox copies of the Registration Certificates issued in the name of first two organisations, i.e., Rajesh Processing and Maheshwari Commercial Services show that the certificates were valid with effect from September 9, 1990 and December 19, 1985 respectively. It is not on record as to whether any proceeding for cancellation of the registration certificate was initiated against these two organisations for finding no evidence to carry on business by them. However, as we find, the Statement of Chand Ghotia was given much importance for the purpose of taking presumption regarding non-existence of the business of the petitioner.
13. It is the contention of the learned lawyer for the petitioner that the petitioner in course of hearing of the proceeding for cancellation of registration certificate prayed for tendering the witness Chand Ghotia for his cross-examination to verify the veracity of his statement, but no such opportunity was given to the petitioner.
According to the learned lawyer for the petitioner, the whole proceeding is liable to be set aside for violation of principles of natural justice. In support of his contention the learned lawyer relied on the decisions reported in Premier Motors (P) Ltd. v. Commissioner, Sales Tax Uttar Pradesh [1970] 26 STC 402 (All.), State of Kerala v.K.T. Shaduli Yusuff, [1977] 39 STC 478 (SC); Pahar Chand & Sons v.State of Punjab [1970] 30 STC 211 (P&H) and the Abdulla Kunhi v. State of Kerala [20011 122 STC 461 (Ker). On going through all these decisions we find that an aggrieved party has got the right to cross-examine the witness if any material is supplied by such witness behind the back of such party. Failure to give such opportunity results in denial of natural justice and the proceeding based on such statement or materials are liable to be set aside. Relying on these principles we also hold that natural justice was denied to the petitioner by depriving him from the opportunity to cross-examine the witness Chand Ghotia on whose statement the substantial right of the petitioner to carry on business under law was taken away. The result, obviously in view of the principles of law, would be, to hold that the proceeding was illegal and unjustified. Moreover, it transpired from the averments made in the petition that no way bill was issued to the petitioner since after January 11, 2000. The registration certificate has been cancelled by an order dated July 10, 2002. It is very difficult to conceive as to how a businessman would be able to run his business without getting sufficient number of way bills. This fact as we find, was not taken into consideration by the concerned officer before taking a harsh step for cancellation of registration certificate of the petitioner.
14. It is the contention of the respondents that neither any business account nor relevant papers were found at the place of business of the petitioner at the time of inspection. So, there was violation of Section 65 of the West Bengal Sales Tax Act, 1994. Even if, it is believed that no document was found at the place of business, the concerned authority had got the right to call for those documents under Sub-section (1) of Section 65 of the West Bengal Sales Tax Act, 1994 (hereinafter referred to as "the Act, 1994"). Moreover, non-production of such account or non-availability of such document at the place of business cannot be a ground for cancellation of registration certificate though it might be one of the circumstances for taking into consideration along with other factors prevailing to support the allegation of discontinuance of the business in question. It further transpires from the record (annexure G at page 37) that the office of the Assistant Commissioner, Commercial Taxes, received accounts for the year ended on 31st March, 2000 and 31st March, 2002 on May 6, 2002.
Therefore, prima facie from these documents it cannot be held that the petitioner discontinued his business. Moreover, we are of opinion that relying merely upon oral testimony of Chand Ghotia, it would have been wise and proper to call for the relevant document from the petitioner before coming to a definite conclusion that the petitioner discontinued his business. The whole procedure adopted by the respondent for cancellation of registration certificate in our opinion is perfunctory.
It is bias and motivated.
15. Relying on the settled principles of law and for the reasons discussed above we are of opinion that the impugned order cancelling the registration certificate passed by the concerned authority is neither justified nor proper. The order, therefore, is liable to be set aside.
16. We accordingly set aside the order dated July 10, 2002 passed by the Assistant Commissioner, Commercial Taxes, Posta Bazar Charge and direct the respondent to restore the registration certificate with effect from July 10, 2002.
17. The application, thus, is allowed without costs. The way-bill pending for consideration may be disposed of according to the rules.
18. The learned State Representative prays for stay of the operation of the order. Serious objection was made on behalf of the petitioner. The prayer for stay is refused.