1. These are two petitions under Article 226 of the Constitution in which orders passed by the Excise and Taxation Commissioner cancelling the registration certificates of the petitioners are being challenged. The registration certificates were cancelled under the provisions of Section 7(4) of the East Punjab General Sales Tax Act, East Punjab Act No. XLVI of 1948.
2. The facts in the two matters before me are not identical but the principle involved is the same. In both these petitions it has been alleged that no notice was given to the petitioners before their registration certificates were cancelled and therefore they were not given an opportunity to show cause against the order of cancellation. It is admitted in the petition of Arjan Singh that no opportunity for showing cause was given to the petitioner! With regard to the other case of Messrs Madan Lal Arora it is not denied that no opportunity was given. In both cases it is alleged on behalf of the State that the law does not make it incumbent upon the Excise and Taxation Commissioner to give opportunity for showing cause before he cancels the registration certificate under Section 7(4) of the Act. Therefore the first point which arises in both the cases is whether an opportunity should have been given to the petitioners before their certificates were cancelled.
3. The second point relates to the order passed by the Financial Commissioner on appeal. Both the petitioners appealed to the Financial Commissioner and with their appeals they attached a copy of the order of the Commissioner dated the 3rd of February, 1955. This order is not complete in itself. It apparently dealt with a large number of cases and was in continuation of a previous order passed by him on the 4th of January, 1955. The order merely said-
In continuation of my order dated the 4th January, 1955, the registration certificates of the following firms are hereby cancelled with immediate effect under Section 7(4) of the Punjab General Sales Tax Act, 1948.
4. Then follows a list in which the two petitioner firms are mentioned. When the appeals came up before the Financial Commissioner he had not before him either the original order of the 4th January, 1955, or a copy of it and on this short ground he dismissed the appeals.
5. In this Court it has been contended that the petitioners tried to get copies of the previous order of the 4th January, 1955, but were unable to do so. They have placed on record a copy of the memorandum recorded by the Excise and Taxation Commissioner on the application for copies. The memorandum is to the effect that as the file has been forwarded to the Legal Remembrancer to Government of Punjab copies cannot be prepared. The learned Advocate-General was unable to trace the original order in one of the two cases.
6. In the circumstances it seems to me that the petitioners were not given a fair hearing either by the Excise and Taxation Commissioner or by the Financial Commissioner to whom they appealed. Section 7 does not make mention of any opportunity for showing cause which must, be furnished to any dealer before his certificate is cancelled but it is a principle of natural justice that no order to the detriment of a subject should be passed before he has been heard. The learned Advocate-General has drawn my attention to Section 21(4) of the Act which makes a provision for giving an assessee a reasonable opportunity of being heard before an order adversely affecting his rights is passed. From this he concludes that the omission of such a provision from Section 7 indicates that the Legislature did not intend to provide such an opportunity to a dealer before an order under Section 7(4) could be passed. I find myself unable to accept this argument. There is nothing in the Act to show that the. Legislature intended to withhold the right of being heard from a dealer whose registration certificate is to be cancelled. The cancellation reacts grossly to the disadvantage of the dealer because he cannot carry on his business after the cancellation of the certificate. He is therefore deprived of his means of livelihood and it is only just and fair that he should be heard before orders are passed to his detriment.
7. It also seems to me that the Financial Commissioner could have given an opportunity to the petitioners to produce copies of the previous order of the 4th January, 1955, or he could have sent for the departmental files and looked at the orders to satisfy himself whether there was any force in the appeals or not. He seems to have taken too technical a view of the matter in rejecting the appeals simply because the reasons for cancellation were not placed before him.
8. For these reasons, I allow these petitions and quash the orders of the Financial Commissioner and of the Excise and Taxation Commissioner by which the latter cancelled the registration certificates of the two petitioners. The Commissioner is of course at liberty to proceed afresh in the matter and deal with the question of cancellation after hearing the petitioners and taking into consideration such factors as have a bearing on the matter.
9. The petitioners will recover costs of these proceedings.