Madras High Court in Sri Sundha Metals vs. Commissioner of Commercial Taxes, Ezhilagam, Chepauk,
Chennai and another; (2013) 57 VST 73(Madras) has held that registration under VAT Act cannot be denied on the ground that place of business is not sufficient for conducting specified business in the absense of any provision under the Act specifying required area for conducting business.
Facts: In this case an application was made by the petitioner for registration under the Tamil Nadu Value Added Tax Act, 2006 for doing business in stainless steel pipes, ferrous and non-ferrous metals, but it was rejected on the ground that it was not possible to do business in a place consisting of 80 sq feet.
Issue
• Can an application for VAT registration be rejected on the ground that place of business is not sufficient for conducting specified business?
Held:
"There is no such condition prescribed under the Act specifying such required area for conducting business. Due to technological development in the present time, business can be carried on in less space and the dealers can supply materials against the purchase orders directly to the customers and there is no neccessity for enormus space."
"Reading of circular No. 11/2011 dated March 25, 2011 by the Commissioner made it clear that prior inspection was not necessary except for the evasion-prone commodities. It was pertinent to note that there was no dispute with regard to genuinity of the business that was going to be carried on at the place of business. However, such guidelines or instruction issued to the registering authorities was only for the purpose of inspection and it did not enable the authorities to determine the extent of land for carrying on business. It was for the businessman to decide the same. The Revenue should not obstruct the assessee from carrying on the business at every stage with the tax collectors point of view, but would deal with the matter from the point of view of the assessee. In such circumstances, the reason given by the respondent was against the provisions of the Act and Rules. Accordingly, the order rejecting the petitioner's application for registration was set aside.
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