Summary
The Supreme Court invalidated the Commissioner’s 2002 cancellation of a Section 12A registration because the statute then conferred no express cancellation power. Registration was a quasi-judicial act, and Section 21 of the General Clauses Act did not supply a general review or rescission power over it. The later cancellation provision effective from 1 October 2004 was prospective. The Tribunal’s order was restored, leaving the Commissioner free to exercise the subsequently conferred power lawfully.
Issues
- Whether the Commissioner had power in 2002 to cancel the previously granted Section 12A registration.
- Whether Section 21 of the General Clauses Act supplied that power.
- Whether the later statutory cancellation provision validated the earlier action.
Held
- Grant of registration under Section 12A was a quasi-judicial function. In the absence of express statutory authority then available, the Commissioner could not cancel or recall the registration as done in this case. (¶¶ 21, 22)
- Section 21’s general rescission provision concerns orders of the relevant executive or legislative character and does not authorize variation, amendment or review of a quasi-judicial order. Its application must be assessed in statutory context; the Court also recognized the general distinction concerning orders obtained by fraud. (¶¶ 23, 24, 25, 26)
- The express cancellation power introduced in Section 12AA(3), effective 1 October 2004, was prospective and could not sustain the earlier cancellation. The Court approved the corresponding reasoning of the Delhi, Uttaranchal and Allahabad High Courts. (¶¶ 27, 28, 29, 30)
- Setting aside the earlier cancellation did not prevent the Commissioner from exercising the power under Section 12AA(3) in accordance with law. The Court restored the Tribunal’s order rather than finally deciding exemption for particular returns. (¶¶ 5, 31, 32)
Result
Appeal allowed; High Court order set aside and ITAT order restored. Commissioner left free to exercise Section 12AA(3) cancellation power in accordance with law.