Gujarat High Court

Jhalak Exports vs State Of Gujarat on 12 January, 2024

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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     C/SCA/19340/2023                                JUDGMENT DATED: 12/01/2024

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 19340 of 2023


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE BHARGAV D. KARIA

and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
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1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?                                                No

2     To be referred to the Reporter or not ?                              No

3     Whether their Lordships wish to see the fair copy
      of the judgment ?                                                    No

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution                  No
      of India or any order made thereunder ?

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                              JHALAK EXPORTS
                                   Versus
                             STATE OF GUJARAT
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Appearance:
MR UCHIT N SHETH(7336) for the Petitioner(s) No. 1
MR CHINTAN DAVE, AGP for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1
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    CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
          and
          HONOURABLE MR. JUSTICE NIRAL R. MEHTA

                   Date : 12/01/2024
                     ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr.Uchit Sheth for the petitioner and learned Assistant Government Pleader Mr.Chintan Dave for the respondent.

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1.1 Rule, returnable forthwith. Learned Assistant Government Pleader Mr.Dave waives service of notice of Rule for the respondent.

1.2 Having regard to the controversy in narrow compass, with the consent of the respective parties, the petition is taken up for final hearing.

2. By this petition under Article 226 of the Constitution of India, the petitioner has challenged order dated 16th June, 2023 passed by the Gujarat Value Added Tax Tribunal, Ahmedabad (for short 'the Tribunal') in Revision Application No.59 of 2021, whereby the Tribunal dismissed the Revision Application as not maintainable before the Tribunal.

3. Brief facts of the case are as under.

3.1 The petitioner is a partnership firm engaged in the business of trading of cotton, cotton yarn etc duly registered under the provisions of the Gujarat Value Added Tax Act, 2003 (for short 'the VAT Act').

3.2 It is the case of the petitioner that it has a manufacturing unit in the State of Maharashtra and it is also duly registered under

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the Maharashtra Value Added Tax Act, 2005.

3.3 Registration of the petitioner under the VAT Act was cancelled with effect from 01st March, 2017 on the ground of non-filing of Returns under the VAT Act vide order dated 26th February, 2018 prospectively cancelling the registration certificate of the petitioner.

3.4 Thereafter, notice was issued in Form 503 on 15th March, 2021 proposing to change the date of cancellation of registration from prospective to retrospective date, which was accompanied by notice in Form 104 of the same date issued for the purpose of retrospective cancellation.

3.5 The petitioner filed its reply dated 30th March, 2021 pointing out that notice was vague and was not disallowing any reason for cancellation of the registration retrospectively. It was also submitted by the petitioner that it was assessed to tax on sales and purchases and therefore, its transaction being in the nature of only billing would not arise.

3.6 The Deputy Commissioner of State Tax passed an order dated 30th March, 2021 on the very date on which reply was submitted by the

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petitioner cancelling the registration certificate with retrospective effect by changing the effective date from 01st March, 2017 to 28th August, 2015 under Section 27(5)(i) read with Section 75(1)(a) of the VAT Act.

3.7 The petitioner, therefore, preferred Revision Application No.59 of 2021 before the Tribunal under Section 75(1)(b) of the VAT Act as the order passed by the Deputy Commissioner clearly mentions that the said order was passed under Section 27(5)(i) read with Section 75 of the VAT Act.

3.8 However, the Tribunal by the impugned order dated 16th June, 2023 rejected the Revision Application on the ground that Appeal would be maintainable under the provision of Section 73 against the order passed by the Deputy Commissioner cancelling the registration of the petitioner with retrospective effect from 28th August, 2015 and Revision Application before the Tribunal would not be maintainable.

4. Learned advocate Mr.Uchit Sheth for the petitioner submitted that petitioner has preferred the Revision Application under Section 75(1)(b) as the Deputy Commissioner has exercised suo motu powers as delegatee of Commissioner

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under Section 75(1)(a) of the VAT Act while invoking Section 27(5) for cancellation of the registration with retrospective effect. It was, therefore, submitted that the petitioner has rightly preferred Revision Application under Section 75(1)(b) of the VAT Act. It was also pointed out by learned advocate Mr.Sheth for the petitioner that the show-cause notice was also issued in Form 503 which pertains to powers of suo motu revision exercised by the Deputy Commissioner under Section 75 of the VAT Act. It was, therefore, submitted that the Tribunal has committed a jurisdictional error in not entertaining the Revision Application preferred by the petitioner under Section 75(1)(b) of the VAT Act.

4.1 On the other hand, learned Assistant Government Pleader Mr.Chintan Dave for the respondent authority supported the order of the Tribunal contending that as the order of cancellation of the registration under Section 27(5)(i) was passed by the Deputy Commissioner and not the Commissioner and therefore, as per the provision of Section 73 of the VAT Act, Appeal would lie before the Commissioner. It was, therefore, submitted that the Tribunal has rightly rejected the Revision Application as not

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maintainable under Section 75(1)(b) of the VAT Act.

5. Having considered the submissions made by both the sides, the short question which arises for consideration is as to whether the Revision Application filed by the petitioner under Section 75(1)(b) of the VAT Act would be maintainable before the Tribunal when the order for cancellation of registration is passed by the Deputy Commissioner under Section 27(5)(i) of the VAT Act.

6. It was, therefore, germane to refer to the relevant provisions of the VAT Act.

27. Cancellation of Registration.

(5) If a dealer-

(i) without entering into a transaction of sale issues to another dealer tax invoice, retail invoice, bill or cash memorandum with the intention to defraud the Government revenue.

73. Appeal

(1) An appeal from every original order, not being an order mentioned in section 74, passed under this Act or the rules, shall lie,-

(a) if the order is made by a an Assistant Commissioner or Commercial Tax Officer, or any other officer sub-ordinate thereto, to the Deputy Commissioner;

(b) if the order is made by a Deputy Commissioner, to the Joint Commissioner;

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(2) In the case of an order passed in appeal by a Deputy Commissioner or, as the case may be, by a Joint Commissioner, a second appeal shall lie to the Tribunal.

75. Revision

(1)Subject to the provisions, of section 74 and to any rules made there under,-

(a) the Commissioner of his own motion within three years or on an application made to him within one year from the date of any order passed by any officer appointed under section 16 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks just and proper within two years from the date of service of notice for revision;

(b) the Tribunal, on application made to it against an order of the Commissioner (not being an order passed under sub-section (2) of section 73 in second appeal or under clause (a) in revision on an application) within four months from the date of the communication of the order may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper.

6.1 On perusal of the above provisions of the VAT Act, it is clear that the Deputy Commissioner has exercised the powers delegated by the Commissioner in suo motu Revision which is evident from the order dated 30th March, 2021 passed by the Deputy Commissioner cancelling the registration under Section 27(5)(i) read with Section 75 of the VAT Act with retrospective date.

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6.2 The Deputy Commissioner could not have passed any order of cancellation of the registration with retrospective date suo motu without recourse to the provision of Section 75(1)(a) of the VAT Act which empowers the Commissioner who, of his own motion, within three years, to call for and examine the record of any order and pass such order thereon as he thinks just and proper within five years from the date of such order.

6.3 It is also not in dispute that the Deputy Commissioner passed the order under Section 75(1)(a) of the VAT Act under the delegated powers of the Commissioner. That means, the Deputy Commissioner has exercised the powers of Commissioner under Section 75(1)(a) of the VAT Act. Therefore, considering the provision of Section 75(1)(b) of the VAT Act, any application made to the Tribunal against an order of the Commissioner is to be treated as Revision and would be maintainable before the Tribunal only.

7. We are, therefore, of the opinion that the Tribunal was not justified in holding that the Revision Application filed by the petitioner against the order passed by the Deputy Commissioner under Section 27(5)(i) read with

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Section 75(1)(b) of the VAT Act is not maintainable in view of provision of Section 73 of the Act because, as per Section 73, an Appeal of every original order not being an order mentioned in Section 74 passed under the Act is maintainable.

7.1 In the facts of the case, the order passed by the Deputy Commissioner is not an original order but is a revisional order under Section 75(1)(a) of the VAT Act and therefore, Appeal under Section 73 would not be maintainable, but only Revision before the Tribunal under Section 75(1)(b) of the VAT Act would be maintainable.

8. In view of the foregoing reasons, the impugned order passed by the Tribunal is hereby quashed and set aside and the matter is remanded back to the Tribunal for considering the Revision Application No.59 of 2021 on merits.

Rule is made absolute to the aforesaid extent. No order as to costs.

(BHARGAV D. KARIA, J)

(NIRAL R. MEHTA,J) ANUP