Natural justice and inconsistent inspection material defeated cancellation of dealer registration under sales tax law.

Cancellation of a dealer's registration under section 26(10) of the West Bengal Sales Tax Act, 1994 was unsustainable where the adverse inspection materials were mutually inconsistent and the dealer was not given a proper opportunity to meet them. The authority relied on inspection reports and an alleged statement from an occupant of the premises, but the record showed no effective examination of the crucial witness, while the dealer had asserted continued business, filed returns, and completed assessment. The resulting lack of adequate verification and denial of a fair hearing breached natural justice, so the Tribunal's order setting aside the cancellation was affirmed.

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Issues: Whether the cancellation of the dealer's registration certificate under section 26(10) of the West Bengal Sales Tax Act, 1994 on the alleged discontinuance of business from the declared place was sustainable when the materials were inconsistent and the dealer was denied a proper opportunity to meet the adverse material.

Analysis: The cancellation was founded on inspection reports and on an alleged statement of one person occupying the premises, but the reports were mutually inconsistent as to the nature of occupation and the arrangement regarding the premises. The dealer had asserted continued business from the same address, had filed returns, and assessment had been completed. The record also showed that no effective step was taken to examine the crucial witness whose statement formed part of the adverse basis. In these circumstances, the authority acted without adequate verification and without affording a fair opportunity of defence, which offended the principles of natural justice.

Conclusion: The cancellation of registration could not be sustained and the order of the Tribunal setting it aside was rightly affirmed, in favour of the assessee.

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