TARULATA TRADING PVT LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) These petitions are filed by the dealers whose registrations have been cancelled with retrospective effect by the competent authority under the Gujarat Value Added Tax Act ('the VAT Act' for short). Facts being identical, we may notice from Special Civil Application No.22129 of 2017.

(2.) Petitioner is a private limited company and is engaged in the business of trading of various commodities. The petitioner enjoys registration under the VAT Act and Central Sales Tax Act with effect from 27.06.2008. The department carried out a spot visit at the premises of the petitioner company, during which, certain material was collected, giving prima-facie impression to the authorities that the petitioner was engaged in bogus billing activities without sale and purchase of goods. The Deputy Commissioner of Value Added Tax issued notices for assessment and cancellation of registration. The petitioner replied under a letter dated 005.2017 stating that all the accounts and records have been furnished for the years 2012-13 to 2015-16. Such accounts are regularly audited. Majority of the transactions are local sales. C-forms are therefore not produced. To the authority's prima-facie opinion that the transactions were circular in nature and therefore bogus, the petitioner pointed out that he is open to assessment and payment of tax as may be found due. Till such assessment is completed, the petitioner has requested that no further action may be taken.

(3.) The authority passed an order dated 29.05.2017, cancelling the petitioner's registration from inception. He declared that such registration would be ab-initio cancelled. In the order, he referred to the petitioner's transactions with three other dealers viz. Shankh Impex, Adept Trading and Placid Tradelink. He compared the sales and purchase of these three entities and that of the petitioner to demonstrate that these transactions were circuitous in nature. He pointed out that number of sales and purchases were made internally between these four agencies which would establish that the sales and purchases were not genuine and the petitioner was merely engaged in bogus billing activities. He expressed an opinion that such bogus billing activities were carried out to defeat the interest of Revenue and to inflate the turnover for availing larger bank loans.