Retrospective Cancellation of Registration of Purchasing Dealer does not Affect Right of Selling Dealer for Deduction: HC

The Honorable Rajasthan High Court has held that the Retrospective cancellation of registration of purchasing dealer does not affect the right of the selling dealer for the deduction.

The Court quoted its views as:

11. It would be appropriate to quote para 5 of the judgment rendered by the apex court in the case of Suresh Trading Company (supra) :-

“In our view, the High Court was right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behalf of the department that it was the duty of persons dealing with registered dealers to find our whether a state of facts exists which would justify the cancellation of registration must be rejected. To accept it would be to nullify the provisions of the statute which entitle persons dealing with registered dealers to act upon the strength of registration certificates.”

12. This court in the case of M/s Vardhman Mills (supra) also took into consideration identical facts and held that retrospective cancellation of registration of purchasing dealer does not affect the right of selling dealer for deduction.

13. The judgment in the case of Infinity Wholesale Limited (supra) of the Madras High Court, is also on the same lines and supports the claim of respondent assessee.”

Therefore, we are of the considered view that the issue raised in this petition has already been settled by this Court in more than one decision

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