Natural justice in VAT registration cancellation requires disclosure of adverse material and a meaningful chance to respond before final action.

Cancellation of VAT and CST registration cannot be sustained where the authority relies on earlier inspection reports or other adverse material without supplying that material to the dealer and giving a real opportunity to respond. If the dealer disputes the allegations in reply, procedural fairness requires disclosure of the material proposed to be used and a meaningful chance of explanation before any final adverse order is made. The Tribunal's failure to address this defect was material, and the cancellation was set aside, with liberty to restart proceedings from the show-cause stage if the authority so chooses.

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Issues: Whether the cancellation of VAT and CST registration could be sustained when the authority relied on earlier inspection reports and adverse material without furnishing them to the dealer or giving an effective opportunity to respond.

Analysis: The cancellation order was founded on earlier visit reports and other adverse material, but after the dealer disputed the allegations in reply to the notice, those reports were not supplied and no further opportunity was given to meet them. In such a situation, the authority was required to confront the dealer with the material proposed to be used against it and proceed only after affording a real opportunity of explanation. The Tribunal below failed to consider this procedural defect.

Conclusion: The cancellation of registration could not be sustained and was set aside. The authority was left free to recommence proceedings from the stage of show-cause notice if it chose to proceed again.

Ratio Decidendi: Where adverse material is relied upon for cancellation of registration, the affected dealer must be furnished that material and given a meaningful opportunity to answer it before any final adverse order is passed.

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