R. JAYASIMHA BABU, J.
The Tribunal has held that no personal hearing is required when a certificate of registration is cancelled on the ground that the renewal had not been sought. That view is correct, having regard to what has been set out in section 21(3) of the Tamil Nadu General Sales Tax Act, 1959. That provision reads as under :
"21. Procedure for registration. -
(3) The certificate issued under sub-section (2) shall be valid for one year or five years, as the case may be, and shall be renewed in such manner and within such period as may be prescribed on payment of the fee specified in sub-section (1). The certificate shall be deemed to have been cancelled unless it has been renewed."
Rule 24 of the Rules framed under the deals with various details regarding registration. In sub-rule (9) of that rule it is provided thus :
"Every registered dealer shall, until his registration is cancelled, submit an application in form D and pay the fee of rupees two hundred only specified in sub-rule (7) for every year subsequent to that in which he applied for registration, within thirty days of the commencement of the year for which the registration has to be renewed, and in addition a further fee of rupees twenty only in respect of each of his place of business other than the principal place of business.
...... The registering authority, on receipt of application for renewal along with proof of payment of the renewal fee, shall make such enquiry or cause such enquiry to be made, as it may consider necessary and renew, modify or cancel the registration certificate. Where the renewal is made, the registering authority shall inform the dealer that his registration has been renewed and the dealer shall have such intimation filed along with his registration certificate. Where the renewal of registration is proposed to be modified or rejected, the registering authority shall do so after giving a reasonable opportunity to the dealer to show cause against such modification or rejection.If such intimation of renewal is not received by the applicant within thirty days from the date of his application or if no notice giving him an opportunity of being heard is received by him within the said period, the applicant shall be deemed to have been duly registered."
The applications for renewal can be made even 30 days after the commencement of the year, provided such application is made on or before the 30th June of that year on payment of penalty as provided in rule 24(9-A) of the Rules.
The certificate of registration is required to be in form D-1. That certificate, in clause 4, is required to set out the period of validity of the certificate and the fact that it is renewable from year to year on payment of the fee prescribed. Clause 7 of that certificate provides that it is liable for cancellation, modification or amendment for good and sufficient reasons.
In this case, the certificate of registration was given to the assessee only on March 27, 1998. It did not set out the exact period for which the certificate of registration was issued. That form in which the certificate was issued does not correspond to the form which is prescribed. However, the form in which the certificate was given indicates that it was printed in the year 1989. In that certificate, in clause 4, it is stated thus :
"This certificate is valid from March 2, 1998 until cancelled and shall be exhibited at a conspicuous place, at the principal place of business of the dealer."
Having regard to the fact that the year as defined in the in section 2(t) is the financial year and having regard to the contents of rule 24(9), the certificate given is to be regarded as having been given, for one year. That year being the financial year, its validity would be limited at the end of the financial year in which the certificate came to be issued. Renewal would then become necessary after the 1st April, 1998, even though the certificate was issued only two days earlier, i.e., on March 27, 1998, and the certificate is to be valid from March 2, 1998. That certificate came to be cancelled by the authorities on October 27, 1998 on the ground of non-renewal,The certificate, which is required to be renewed, but has not been renewed, is deemed by section 21(3) of theto have been cancelled. A certificate which is deemed to have been cancelled does not require an order being made to that effect. The need for a hearing is only in relation to persons who apply for renewal and not to those who do not seek such renewal. A learned single Judge of this Court in the case of P. K. S. Threads v. Commercial Tax Officer 1993 (4) MTCR 440, has held that personal hearing is required to be given even in cases where no application is made for renewal. That judgment cannot be regarded as having correctly set out the law. There is no obligation on the authorities to provide a personal hearing to dealers who do not seek renewal of the certificates of registration in accordance with law.
On the special facts of this case, however, it must be held that the authorities themselves being responsible for having misled the assessee, they were required to give him a show cause notice and hearing before proceeding to cancel the certificate.
The certificate, which was issued to the dealer and which he was required to exhibit at a conspicuous place in his principal place of business, did not state as to when that certificate would expire. It merely said that it is valid from March 2, 1998 until cancelled. The assessee by reading the certificate would have no clue whatever that he was required to seek renewal within two days after receiving the certificate. The order of cancellation was passed within about seven months from the date of issue of the certificate. The statutory provision provides that a certificate of registration is valid for a year and the renewal is required to be at the end of the period of one year or five years, as the case may be. The period of five years apparently is only in the case of companies and those who have carried on business continuously for a period of five years and wish to pay the registration fee for five years in a lump sum as provided in the second proviso to rule 24(9) of the Rules. The assessee here had commenced business newly. The assessee was given a certificate which led him to believe that it was valid until it was cancelled. The assessee, in the circumstances, was entitled to reasonable notice as to why the registration was being cancelled.The Revenue, when it commits errors of this nature which leads to the deprivation of a right in the assessee to seek renewal in time by misleading him about the need for such renewal, must at the minimum put him on notice about the correct state of the law and give him an opportunity to seek renewal. The abrupt cancellation as done in this case was wholly impermissible.
We make it clear that the relief we are granting to the assessee herein is purely on account of the misleading form, which the Revenue chose to use to grant the certificate of registration to the assessee.
In the result, the impugned order of the Tribunal is set aside. The order of cancellation cancelling the certificate of registration of the assessee is also set aside. Liberty is reserved to the Revenue to issue a show cause notice to the assessee and give him time to seek renewal and thereafter make an appropriate order. The writ petition is ordered accordingly. The connected W.M.P. is closed.
Petition ordered accordingly.
