Smt. Setha Sankla vs Commercial Tax Officer, M.J. Market Circle, Abids Division, Hyderabad and Others

N. Ravi Shankar, J.—The point raised in this writ petition filed under article 226 of the Constitution is whether the order dated March 10, 2010 passed by the first respondent, Commercial Tax Officer, in form VAT-124 cancelling the registration of the firm, M/s. Santosh Dhaba Exclusive, under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (for short, "the Act"), is illegal on the ground that it was passed without notice to the petitioner. The first and third respondents filed counter-affidavits opposing the writ petition. The impugned order dated March 10, 2010 is an appealable order under the Act. However, as it is the grievance of the petitioner that statutory provisions and rules have been violated in passing the impugned order inasmuch as no notice was given to her and therefore the order is void, we proceed to dispose of the matter on the merits.

The circumstances under which the point arises and the respective contentions of the parties are these. The petitioner Smt. Setha Sankla is the wife of the third respondent Sri Satyaprakash Sankla. Both of them are partners of the partnership firm M/s. Santosh Dhaba Exclusive located in the premises No. 4-1-364/1, situated at Hanuman Tekdi, Abids, Hyderabad. According to the partnership deed dated May 12, 2004 by which the above firm was constituted the petitioner and the third respondent have/ had 15 per cent and 85 per cent shares, respectively, in the said firm. The said firm was registered under the Act with the first respondent. The third respondent according to the above partnership deed was the managing partner of the firm vide clause (8) thereof and this, as will be presently seen, assumes importance in the circumstances of this case.

Admittedly matrimonial disputes broke out between the, petitioner and the third respondent. It is seen that the petitioner filed a criminal case alleging an offence of dowry harassment and other offences against the third respondent, his parents and others and she also filed against them a case under the Protection of Women from Domestic, Violence Act 2005 against her husband and his relatives. Both the cases are pending in the court of Judicial First Class Magistrate at Shadnagar, Mahabubnagar. The other details are not necessary but it would be sufficient to note that the third respondent also filed a divorce OP, i.e., O.P. No. 1129 of 2008 in the Family Court at Hyderabad and that is also reported to be pending.

While matters stood thus, the third respondent made an application in form VAT-121 dated March 2, 2010, before the first respondent seeking cancellation of the registration on the, ground that the firm was closed with effect from March 1, 2010. The first respondent thereupon issued a notice dated March 3, 2010, for compulsory cancellation in form VAT-125 requesting the dealer-firm to file objections but this notice was served on the third respondent but not on the petitioner as she was, according to the first respondent not available at the address mentioned in the registration certificate of the firm. The third respondent again filed a letter dated March 6, 2010 informing the first respondent that the business was closed due to his health problems and loss of business and therefore registration be cancelled. Accordingly the first respondent issued the impugned order dated March 10, 2010 cancelling the registration in form VAT-124.

Smt. Anjali Agarwal, the learned counsel for the petitioner, basing upon the pleadings of the petitioner contended that the impugned order was issued without notice to the petitioner and that affects her business interests in the firm and consequently it should be set aside. In this connection the petitioner''s counsel also pointed out that earlier petitioner got issued a legal notice dated October 23, 2008 to the first respondent requesting him not to cancel the registration of the firm without notice to her. Her plea is that ignoring the same the first respondent issued the impugned order without notice to her though she is entitled to notice under the Act and the Rules framed thereunder and therefore it is illegal.

The learned Government Pleader for Commercial Taxes argued that the third respondent was the managing partner of the firm and he himself filed the application in the prescribed pro forma for cancellation of the registration of the firm giving out his own health problems and loss of business as the reasons for the closure of the business and the first respondent after issuing the compulsory notice cancelled the registration and there is nothing illegal in it. He argued that the notice to the petitioner could not be given as she was not available at the given address and consequently the cancellation cannot be held to be bad as business is already closed.

Sri Sharad Sanghi the learned counsel appearing for the third respondent/husband pointed out that the business has been closed due to the health problems of the third respondent and the business losses and the petitioner cannot have any grievance about the cancellation of the VAT registration as she never looked after the business even according to the terms of the partnership. He also pointed out that as the third respondent was the managing partner he rightly applied for cancellation of the registration which was acted upon. Additionally Sri Sanghi pointed out that if the petitioner has any grievance about her alleged rights in the partnership assets she can workout her remedies in a proper suit brought under the provisions of the Partnership Act and the civil law and she cannot complain any prejudice to her rights in this writ petition for the cancellation of the registration of the firm, In the light of the above contention the point is now taken up.

It may be noted that section 2(10) of the Act defines "dealer" and a partnership firm would also fall within that definition. Then section 17(2) of the Act provides for registration of a dealer and in this case the Commercial Tax Officer, M.J. Market Circle, Abids Division, has issued the VAT certificate and it is dated February 8, 2006 for the firm in question. Section 19(1) of the Act provides for cancellation or amendment of that registration and of course the said provision says that any VAT dealer can apply for cancellation of the registration in such circumstances as may be prescribed, i.e., by Rules. Now rule 14 of the Rules framed under the Act provides for procedure for cancellation of VAT registration. The substance of this rule is that where a VAT dealer ceases to carry on his business that dealer or his legal representative can apply to the prescribed authority for cancellation of registration within 14 days of the closure of the business and of course rule 14(5) says that if the authority prescribed is satisfied that there are valid reasons for cancellation he may cancel it and intimate the same in form VAT-124 and that has been done in this case by serving it on the third respondent.

It should be noted that rule 14(12) of the Rules says that whenever any order of cancellation is made the VAT dealer shall be given an opportunity of being heard. Further rule 63 of the Rules deals with nomination of responsible person by a VAT dealer in form 560 authorising him/her to sign any returns or any documents or to sign any statements and also to receive any notices and rule 63(2) says that every VAT dealer being a partnership firm, among other entities, shall nominate a person for the purposes of receiving orders and notices. The first respondent or the third respondent are not able to file any document to show that the firm in question nominated the managing partner as person responsible to receive notices on behalf of it. The petitioner''s plea is that in the absence of any nominated person, this rule 14(12) must be held to have been violated in her case by the first respondent in not giving notice to her before issuing the impugned order of cancellation and therefore it should be set aside.

It is true that rule 14(12) does not in so many words indicate anywhere that in the case of a firm, with which we are now concerned, notice to the managing partner of the firm in question is sufficient notice even in the absence of himself being nominated as the person responsible under rule 63(2). It is the contention of Smt. Anjali Agarwal that in view of the above situation non-issuance of notice to her vitiates the impugned order. The jurisdiction of this court under article 226 of the Constitution is a discretionary one and in a given case the court can refuse to interfere if interference is not warranted even if there is violation of rules of natural justice. In view of this having regard to the circumstances of this case we are unable to accept the above contention of the petitioner''s counsel for the following reasons.

It may be noticed that petitioner and third respondent who are wife and husband alone are partners of the firm and of them the third respondent was managing partner. We have specifically asked Smt. Anjali Agarwal as to whether she has got any material to show that petitioner continued the business of the firm or ever participated in it after estrangement broke out between her and the third respondent and after she filed the cases in a JFCM court at Mahaboobnagar. The petitioner has also filed a reply affidavit but she could not place any material to show that she has been running the business. On the other hand the plea of the first respondent/ CTO is that she was not available at the address shown in the VAT registration certificate, i.e., D. No. 4-1-364/1, Hanuman Tekdi, Abids, Hyderabad, of the firm. According to the partnership deed the third respondent was admittedly the managing partner of the firm. He applied for cancellation and also filed the application in form VAT-121 dated March 2, 2010 seeking cancellation of the registration of the firm with effect from March 1, 2010 and the first respondent also issued notice of compulsory cancellation on March 3, 2010 in form VAT-125 and the third respondent filed a further letter dated March 6, 2010, requesting the first respondent to cancel the registration of the firm on the ground of his health problems and loss of business following which the impugned order was issued.

It would be pertinent to note here that the legal notice dated October 23, 2008 said to have been issued by the petitioner to the first respondent/ CTO purports to have been issued on behalf of the petitioner by an advocate of Jadcherla town in Mahaboobnagar District and the first respondent did not admit the receipt of this notice. This becomes a disputed question of fact. Copies of the private complaint in the criminal case filed by the petitioner in the JFCM court at Shadnagar would show the petitioner was residing in Shadnagar town in 2008 and so is the case with her petition filed under the Protection of Women from Domestic Violence Act, 2005. To repeat the petitioner did not come forward with any material to show that she has been running the business of the firm at Hyderabad as on March 2, 2010 or March 3, 2010 or March 10, 2010 which are the dates pertaining to the application and notice and also the impugned order of the first respondent and ever since sometime prior thereto. It is the plea of the first respondent that notice dated March 3, 2010 proposing cancellation of the firm''s registration could not be served on the petitioner as she was not available at the place of business of the firm shown in the VAT registration certificate. Thus this is simply a case of wife and husband dispute and the petitioner is unable to show, to repeat, that she is running the business of the firm or the business has been prospering and is a going concern and the third respondent mischievously got the registration certificate cancelled to bring about a forcible closure of the business of the firm or to transfer the firm''s business to some third parties to harm her interests.

We are, in the circumstances of this case, of the opinion that non-issuance of notice dated March 3, 2010 to the petitioner or failure of the first respondent to issue any other notice to her does not vitiate the impugned order. Accordingly the writ petition is dismissed. No costs. It goes without saying that it shall be open for the petitioner to workout her remedies in respect of her claims if any in the partnership assets under the ordinary civil law or pursue any of the appropriate alternative remedies available to her. In this view of the matter we are also not inclined to go into the question relating to formation of new partnerships by the third respondent''s brother and their father as they are irrelevant for the present purpose.