1996 (2) TMI 451 - SUPREME COURT

Whether the sales tax authorities were justified in treating the purchases of the applicants made from Sulekha Enterprises as from an unregistered dealer on the ground that even though the registration certificate of Sulekha Enterprises was cancelled on August 25, 1967, the cancellation thereof was operative with effect from January, 1967 in so far as the purchases of the applicants effected from the said party prior to August 25, 1967 were concerned?

Held that:- Appeal dismissed. The High Court was right in answering the question in favour of the respondents. 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. Also the learned Advocate-General, appearing for the department before the High Court, stated that the genuineness of the transactions between the registered dealer and the respondents was not in doubt and not disputed. This being so, it is difficult to see how there could have been a cancellation of registration with effect from a date that preceded the dates of the transactions and how, accordingly, the respondents could be made liable to pay tax.