MERIDIAN STEELS Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) ALL these three applications involve identical dispute and this judgment shall govern each one of them. Petitioner in each case was registered as a dealer under the Orissa Sales Tax Act, 1947 (in short, "the Act" ). Sales Tax Officer, Rourkela II circle, panposh (opposite party No. 2 in each case) directed cancellation of the registration certificate granted in purported exercise of power conferred under section 9 (6) (c) of the Act read with rule 16-A of the Orissa Sales Tax Rules, 1947 (in short, "the Rules" ). The order of cancellation was challenged before the Commissioner of Sales Tax, Orissa. By order dated March 11, 1997 the Additional Commissioner of Sales Tax who heard the revision petition in each case, upheld the order directing cancellation of the certificate of registration. Grounds which weighed with the Sales Tax Officer to direct cancellation was the petitioner which was granted the certificate of registration as an S. S. I unit for manufacturing certain articles, was found not to be carrying on any activity whatsoever. No manufacturing activity by the so-called unit was even carried out and no machinery or raw material was noticed in the premises of the petitioners. Sales Tax Officer referred to observations during certain inspections made to conclude that no manufacturing activity was carried on. Notice was issued by the concerned Sales Tax Officer requiring the petitioner in each case to show cause as to why the certificate shall not be cancelled. Reliance was placed by the petitioner on the certificate issued by the General Manager, D. I. C. Sundargarh to further its claim of being a genuine unit engaged in manufacturing activity. Sales Tax Officer came to the conclusion that the certificate of registration had been taken with ulterior motives and articles purchased at concessional rates were being disposed of in unauthorised manner. The stand that absence of regular activities was on account of non-availability of raw materials from the Rourkala Steel Plant, and the machineries had been shifted to a room as the manufacturing activities were suspended for non-availability of raw materials was found to be without substance.

(2.) THE conclusions of the Sales Tax Officer were challenged before the revisional authority (the Additional Commissioner) who not only took note of the conclusions arrived at by the Sales Tax Officer, but also referred to certain reports submitted by two Sales Tax Officers, who were deputed by him to verify correctness of the petitioner's claim that even after cancellation of registration certificate, manufacturing activities were carried on. The reports submitted by the Sales Tax Officer reflected total lack of activity. Placing reliance on the reports also the revisional authority held that the cancellation was proper.

(3.) WHERE it is noticed by an officer that there has been misutilisation of the certificate of registration and/or the certificate has been obtained by suppressing material facts or it has been obtained with ulterior motives, the certificate of registration can be cancelled. Where there has been discontinuance once or entire transfer of business, section 9 (6) (c) can be applied. In the case at hand, action was taken under section 9 (6) (c) on the ground that during inspection of the unit no manufacturing activities were being carried on and machineries and raw materials required for the purpose were also not found there. Rule 16a (1) of the rules provides that if the Sales Tax Officer for any good and sufficient reason, finds that the registration of any dealer is required to be cancelled under clause (c) of sub-section (6) of section 9 he may, after giving the dealer a reasonable opportunity of being heard, wherever practicable, may order cancellation of the registration with effect from a date to be specified in the order. Reasons are the links between the materials on which certain conclusions are based and the actual conclusions. The word "sufficient" means "adequate", "enough", "as much as may be necessary to answer the purpose intended". It embraces no more that which provides a plentitude which, when done, suffices to accomplish the purpose intended in the light of existing circumstance, and when viewed from reasonable standard of practical and cautious men. The expression "sufficient reason" implies presence of legal and adequate reason. Obviously the Sales Tax Officer has power to direct cancellation where really no manufacturing activity in carried on, and/or the registration is obtained with oblique motive to evade tax resulting in loss to State exchequer. Whether there is any lack or total absence of activity has to be adjudicated on facts, when the petitioner asserts that it is carrying on the activities, and the sales tax authorities think otherwise. As the matter was before the revisional authority, it was required to give definite finding on that aspect.