Retrospective cancellation of seller registration does not defeat deduction when purchaser bought from a registered dealer.

Deduction from taxable turnover under section 2(r)(ii) of the Madhya Pradesh General Sales Tax Act, 1958 depended on whether the goods were purchased from a registered dealer at the time of sale and whether the sale was otherwise taxable. The court noted that the seller was registered when the bardana was purchased, and there was no finding of fraud, bogus registration, or collusion by the purchaser. Retrospective cancellation of the seller's registration did not undo satisfaction of the statutory condition at the time of purchase. The purchaser therefore remained entitled to the deduction.

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Issues: Whether deduction from taxable turnover under section 2(r)(ii) of the Madhya Pradesh General Sales Tax Act, 1958 could be denied merely because the selling dealer's registration certificate was later cancelled retrospectively from the date of issue.

Analysis: The allowance under section 2(r)(ii) depended on the purchaser showing that the goods were bought otherwise than in the course of inter-State trade or commerce from a registered dealer and that the sale by such dealer was taxable. The material fact was the status of the seller as a registered dealer at the time of purchase. The record showed that the dealer purchased the bardana from a dealer who was registered when the sale took place, and there was no finding of fraud, bogus registration, or collusion on the purchaser's part. The later cancellation of the seller's registration, even with retrospective effect, did not erase the fact that the statutory condition stood satisfied when the purchase was made.

Conclusion: The claim for deduction was rightly allowed, and retrospective cancellation of the selling dealer's registration did not deprive the purchaser of the benefit of section 2(r)(ii) of the Act.

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