VAT – Registration – Scope of Inquiry – Only for Purposes of Act and on the Basis of Relevant Materials – Failure To Produce Irrelevant Documents – Not Grounds To Refuse Registration.
Introducer Who Signed on Application For Registration – Later Withdrawing – Duty of Department – To Inform Dealer – Failure to Inform – Refusal of Registration- Not Improper—S/s. 2(18), 18(1), 19(3) of The Tripura Value Added Tax Act, 2004 – R. 11(VII) of The Tripura Value Added Tax Rules, 2005.
Facts
The dealer company applied for registration under The Tripura Value Added Tax Act and CST Act. The Superintendent of Taxes rejected the applications for registration on the ground that the company failed to produce requisite Pollution Clearance Certificate, registered deed of lease and certificate of incorporation of change in address of the company and that the introducer of the dealer, in it’s application in form 1, had withdrawn on 31st December, 2010. The dealer company filed writ petition before the Gauhati High Court against the said order refusing to grant registration under the VAT and CST Act.
Held
The basic object behind the enactment of the Tripura Value Added Tax Act, 2004 and the Central Sales Tax Act, 1956 is to levy and collect tax. Registration of dealers enables the State authorities to keep track of assessable transactions and also of persons who indulge in such assessable transactions so that levy and collection of tax can be effectively ensured. If a dealer is not registered, it may be difficult for the State to know about, and/or keep track of, each of the assessable transactions, which the dealer may have entered into, and the value of the taxable goods, which the dealer sells. A dealer is not required to be compulsorily registered unless he becomes liable to pay tax.
A careful reading of section 19(3) of the 2004 Act shows that the enquiry which may be conducted by the authorities concerned, is such as is required to satisfy the authorities concerned that the application for registration is in order, meaning thereby that by such an enquiry, the authority concerned has to ascertain as to whether the particulars required to be furnished in an application for registration have or have not been furnished by the applicant. The enquiry cannot, however, be in the nature of a judicial enquiry. The enquiry, thus, must be confined to the ascertainment of the fact as to whether the information given, and/or particulars furnished, by a dealer, seeking registration are correct or not. The satisfaction, to be arrived at by the authorities concerned, has to be relevant to the objects sought to be achieved by means of such registration.
The satisfaction to be reached by the authority concerned has to be, therefore, based on such materials, which are required under the relevant Acts and the Rules framed thereunder, and only those materials can be regarded as relevant, which have nexus with the objects sought to be achieved by way of registration of dealer. Material which has no nexus whatsoever with the objects sought to be achieved by way of registration would be irrelevant and the dealer applying for registration cannot be refused registration on the ground of failure on the part of the dealer, to furnish such irrelevant information/particulars. If the authority seeks to obtain any information which is not relevant within the ambit of the 2004 Act read with the 2005 Rules, and/or the 1956 Act, read with the 1957 Rules, the refusal to grant registration to the petitioner, as a dealer, would not be sustainable in law.
The failure to produce the pollution clearance certificate was a totally irrelevant consideration and ought not to have been taken into account by the Superintendent of Taxes for the purpose of reaching his satisfaction as contemplated by section 19(3). Rejection of the petitioner’s application for registration, on such a ground, was not sustainable.
The sales tax authorities had nothing to do with whether a lease deed was or was not registered, when the place of the business of the petitioner had been disclosed and the petitioner, being a company, had its principal place of business at its registered office. The Superintendent of Taxes could not have rejected the application seeking registration for the purpose of trading in coal in as much as the petitioner had submitted a registered lease deed of its stockyard enabling it to trade in coal.
The rejection of the petitioner’s applications seeking certificate of registration under the 2004 Act and the 1956 Act, on the ground of failure to furnish the certificate of incorporation of change of address of the petitioner-company was bad in law in as much as there was, admittedly, only one Registrar of Companies at Shillong for the North Eastern States, therefore section 17A of the Companies Act, 1956, had no application.
Form A of the Rules of 1957 relating to the grant of registration under the 1956 Act does not require any introducer for obtaining registration as a dealer and, hence, the application seeking registration under the 1956 Act, could not have been rejected on the ground that its introducer had withdrawn.
As far as the VAT Rules were concerned, form 1 thereof requires signature of a registered dealer or a responsible person as an introducer. This requirement was complied with by the petitionercompany on 27th November, 2010, at the time of submission of the application seeking registration. The application having been acted upon by the authorities, the need of the introducer’s signature became irrelevant. This apart, even if the signature of the introducer ought to have remained present all through it was the bounden duty of the authorities to inform the petitioner-company about the withdrawal of the signature by the introducer so that the petitioner could remove the defect.
In any case, the certificate of incorporation ought to have been treated as a conclusive evidence of all the requirements of the Companies Act, 1956, having been complied with by the petitionercompany. The requirement, therefore, of an introducer, in the case of an incorporated body does not arise at all. The requirement of a registered dealer or a responsible person introducing a person for being registered under the 2004 Act is a requirement meant for persons other than an incorporated body.
It would, thus, be transparent that the Superintendent of Taxes had taken into account an extraneous and irrelevant factor into consideration for rejecting the petitioner’s application for registration. The action disclosed malice in law. This was a fit case for a direction for payment of reasonable costs to the petitioner. Accordingly the High Court allowed the writ petition filed by the company with cost of Rs. 10,000. The Department was directed to grant registration certificate in accordance with law without any further delay.
