Retrospective cancellation of seller registration cannot defeat bona fide purchases made while registration was valid.

Retrospective cancellation of a seller's registration does not, by itself, convert bona fide purchases made while the registration remained effective into purchases from unregistered dealers. Where the purchasing dealer relied on a valid registration certificate and the transactions were genuine and without intent to defraud revenue, those purchases must be assessed on their own merits rather than being displaced by later cancellation under section 30AA and related provisos. The assessment order and consequential attachment orders were quashed, and the matter was directed to be reconsidered in accordance with law.

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Issues: Whether retrospective cancellation of the selling dealers' registration could justify treating the petitioner's bona fide purchases as purchases from unregistered dealers and sustain the assessment and provisional attachment orders.

Analysis: The governing principle is that a purchasing dealer is entitled to rely on the seller's registration certificate while it remains effective, and a later retrospective cancellation does not, by itself, prejudice transactions already entered into on that basis. The protection continues where the purchases are genuine and without intent to defraud revenue. On the facts, the assessment had to be re-examined in light of this principle and the State's own stand as recorded in the earlier decision, which recognised that genuine transactions are not affected by retrospective cancellation under section 30AA and the connected provisos.

Conclusion: The petitioner succeeded. The assessment order and the consequential attachment orders were quashed, and the matter was directed to be reconsidered in accordance with law.

Ratio Decidendi: Retrospective cancellation of a seller's registration does not invalidate bona fide and genuine purchases made while the registration was current, and such transactions must be assessed on their own genuineness rather than on the later cancellation alone.

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