Retrospective cancellation of seller registration cannot defeat genuine purchases made on a valid certificate or justify coercive tax recovery.

A purchaser who relies on a valid and current registration certificate of the selling dealer is not treated as dealing with an unregistered dealer merely because the seller's registration is later cancelled retrospectively. The Gujarat HC held that such retrospective cancellation does not, by itself, disturb genuine purchases already accepted in assessment or justify provisional attachment and security measures under the Gujarat Sales Tax Act, 1969. Because the petitioner's assessment had already been framed after scrutiny, the subsequent coercive steps based only on later cancellation of the suppliers' registrations could not be sustained, and the impugned orders were quashed.

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Issues: Whether retrospective cancellation of the selling dealers' registration certificates could justify treating the petitioner's purchases as purchases from unregistered dealers and sustain the orders of provisional attachment and security under the Gujarat Sales Tax Act, 1969.

Analysis: A purchasing dealer is entitled to act on a valid registration certificate of the selling dealer while the certificate remains current. Retrospective cancellation may affect the selling dealer, but it does not by itself defeat the position of a purchaser who has acted on the strength of the then-existing certificate. The governing principle, as reflected in the earlier stand of the State in connected proceedings, is that genuine transactions are not displaced merely because registration is later cancelled retrospectively. Here, the petitioner's assessment had already been framed after scrutiny, and the impugned steps under sections 48A and 30B were taken only on the basis of subsequent retrospective cancellation of the suppliers' registrations.

Conclusion: The retrospective cancellation could not lawfully be used to disturb genuine purchases already accepted in assessment or to support the impugned attachment and security orders. The orders were liable to be quashed, in favour of the assessee.

Final Conclusion: The petitioner was entitled to relief, and the coercive measures directed against its stock and security obligation could not be sustained.

Ratio Decidendi: A purchaser who has acted on a valid and current registration certificate of the selling dealer is not prejudiced by the subsequent retrospective cancellation of that certificate, and genuine transactions cannot be treated as transactions with unregistered dealers solely on that basis.

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