Justice Ashwani Kumar Mishra of Allahabad High Court held that, wrongful claim of Input Tax Credit (ITC) would not constitute sufficient ground for cancellation of registration of a dealer under UP Value Added Tax Act.
The assesse Ms/ Sevak Enterprises had wrongly claimed benefit of I.T.C., showing purchase of goods from M/s Shree Krishna Builders & Developers, Chandpur, Bijnor, whereas no such sale was made by the concerned developer.
Subsequently the benefit of Input Tax Credit was reversed and thereafter notice was issued for cancellation of registration certificate. After affording an opportunity of hearing, registration certificate has been cancelled and affirmed by the Tribunal.
Justice Mishra held that, “the Act does not contemplate that if claim of I.T.C. is reversed the registration of a dealer could be cancelled in addition to reversal of I.T.C. By virtue of proviso to Section 14 of the UP VAT Act, the assessee would only be liable to pay interest at a rate of 15% per annum”.
“Raising of an incorrect claim of I.T.C. is not one of the grounds contemplated under Section 17 (11) for cancellation of registration. Sub-Clause 9 which is pressed into service, enables the authorities to cancel registration for any other ‘sufficient cause’. The term ‘sufficient cause’ is a word of significance and has to be construed as being of same genus, as occurring in clause (i) to (viii) of Section 17 (11), following the principles of ejusdem generis”, the Judge also observed.
“Mere wrongful claim of I.T.C. would not be a sufficient cause to cancel the registration of dealer. Cancellation of dealer’s registration is a drastic step, which can be taken only for justifiable causes, as are permissible in law and not otherwise”, the Court also added.
Read the full text of the Judgment below.
