Retrospective cancellation of seller registration cannot defeat purchaser input-tax credit on valid pre-cancellation purchases.

Retrospective cancellation of a seller's registration certificate does not, by itself, defeat a purchaser's input-tax credit for transactions completed while the registration was valid. Where purchases are supported by valid invoices and tax has been paid, the purchaser's entitlement under Section 19 of the Tamil Nadu Value Added Tax Act, 2006 cannot be denied merely because the selling dealer's registration was later cancelled with retrospective effect. The impugned proceedings were therefore set aside in favour of the purchaser.

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Issues: Whether cancellation of the selling dealer's registration certificate with retrospective effect can be a ground to reverse or deny the purchaser's input-tax credit when the purchases were made while the registration certificate was valid.

Analysis: The impugned action cancelled the registration certificate retrospectively. The Court applied the earlier view that transactions entered into when the selling dealer held a valid registration certificate cannot be invalidated merely because the certificate was cancelled later with retrospective effect. Where the purchase is supported by valid invoices and tax has already been paid, the purchaser's entitlement to input-tax credit under Section 19 of the Tamil Nadu Value Added Tax Act, 2006 cannot be defeated by a subsequent retrospective cancellation in respect of the selling dealer.

Conclusion: The retrospective cancellation could not be used to deny the petitioner's input-tax credit, and the impugned proceedings were liable to be set aside in favour of the petitioner.

Ratio Decidendi: Retrospective cancellation of a seller's registration does not nullify the purchaser's input-tax credit for transactions completed while the registration was valid.

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