Gazette publication is necessary before cancellation of registration can defeat exemption for sales to a dealer.

Sales made to a purchasing dealer after cancellation of its registration certificate, but before publication of that cancellation in the official gazette, were treated as bona fide registered dealer sales. The Court held that knowledge of cancellation could not be imputed to the selling dealer until gazette publication, since publication is the public notice mechanism. As a result, the exemption for sales to registered dealers under Section 5(2)(a)(iii) remained available, and tax and penalty could not be sustained against the selling dealer on the basis of the unpublicised cancellation.

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Issues: Whether sales made to purchasing dealers after cancellation of their registration certificates but before publication of the cancellation in the official gazette could be treated as bona fide registered dealer sales entitled to exemption, and whether tax and penalty could be levied on the selling dealer for want of such publication.

Analysis: The operative principle applied was that knowledge of cancellation of a purchasing dealer's registration certificate cannot be imputed to the selling dealer until the cancellation is published in the official gazette. Publication was treated as the mode by which the status of the purchasing dealer is notified to the public at large. Sales effected after the cancellation order but before gazette publication were therefore regarded as bona fide. On that basis, the statutory exemption for registered dealer sales under Section 5(2)(a)(iii) was held applicable. The surrounding provisions concerning cancellation of registration and the sales tax rules were considered consistent with this requirement of public notification.

Conclusion: The question was answered in favour of the assessee. The sales made before gazette publication were eligible for exemption, and the levy of tax and penalty on that basis was not sustainable.

Final Conclusion: The references were answered against the revenue and in favour of the dealer-assessee on the point that gazette publication was necessary before cancellation of registration could be relied upon against the seller.

Ratio Decidendi: Cancellation of a purchasing dealer's registration certificate cannot be used to deny exemption to the selling dealer until the cancellation is published in the official gazette, because only such publication imputes notice to the public and renders the sale non-bona fide for the purpose of the exemption provision.

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