news round up - Taxmann

2010] Shanthi Poultry Farm (P.) Ltd. v. Commercial Tax Inspector (Ker.) 183
A
B
C
D
E
F
G
cancelling registration of petitioner - Held, yes [Section 16 of the Kerala
Value Added Tax Act, 2003, read with rule 17 and rule 28 of the Kerala
Value Added Tax Rules, 2005]
FACTS
The petitioner was a registered dealer dealing in live chicken, hatching
chicks, equipments, poultry feeds and poultry medicines, etc. The
Dy. Commissioner found that the bank instruments furnished by the
dealer towards advance tax, between the period from 3-8-2000 to 3-9-
2000, worth Rs. 50,000 had been dishonoured for insufficiency of funds in
the bank account. On the basis of said report, the Commissioner of
Commercial Taxes had instructed to invoke provisions of the Act to cancel
registration of the dealer. It was further alleged that tendering of invalid
bank instruments and dishonouring of same when presented for
encashment was a ‘good and sufficient reason’ provided under section
16(10). The proceedings further said that the instruments tendered by the
dealer were accepted by the officials of the check post, on the presumption
that those were ‘Pay order’ issued by the bank, and the description of the
signature in the instrument was printed in order to mislead the check post
authorities that those were ‘Pay orders’, but, in fact, those instruments
were cheques issued by ‘Farmers Development Society’ in favour of
Commercial Tax Inspector, therefore, the nature of offence committed by
the dealer was grave and was liable to be dealt with under the provisions
of section 16(10), read with rule 17(18)(vii) and section 7(4)(b). The
proceedings further said that the dealer had failed in filing reply and only
sought 7 days time on the ground of pendency of the writ petition. But
since the matter related to proposal for cancellation of registration in a
case of fraud perpetrated on the State revenue and forgery committed,
the request could not be acceded to, because sustaining the registration
alive was against interest of revenue. Therefore, the registration was
cancelled.
On writ :
HELD
The prime question to be considered in the instant case was as to whether
the ingredients of section 16(10), read with rule 17(18)(vii) were established,
justifying cancellation of registration. The crux of the allegation was
about dishonour of the cheques issued towards payment of advance tax.
But dishonour of cheques as such could not be considered as ‘good and
sufficient reason’ contemplated under section 16(10) or as an ‘act or
omission of a like nature’ enumerated in rule 17(18)(vii). This was especially
because of the specific procedure provided with respect to dishonour
of cheques in rule 28. When consequential actions are specified in the said
rule, mere dishonour of cheque cannot be taken as reason under section
16(10) or as an ‘act or omission’ coming under rule 17(18)(vii), and such a
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 59