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of <h1>Court sets aside trading company registration cancellation due to lack of evidence, emphasizes importance of valid grounds</h1> The Court set aside the cancellation of the registration certificate for a trading company due to insufficient grounds of suppressed turnover and ... Cancellation of the registration certificate - the petitioner has suppressed its turnover amounting to ₹ 75,00,000/- during the Assessment Year 2009-10 thus a tax of ₹ 3,00,000/- has been imposed - Held that:- The grounds are not sufficient for cancelling the registration certificate for the reasons that in respect of the alleged suppressed turnover of ₹ 75,00,000/-assessed during the Assessment Year 2009-10 , it is not in dispute that the appeal is pending before the Tribunal which is empowered to go into both the questions of fact and law. Thus, the order for the Assessment Year 2009-10 has not yet attained finality and cannot be taken as adverse for cancellation of registration certificate. Three loose papers have been found at the time of survey made on 15th July, 2011 by the Special Investigation Branch which indicates that the petitioner is indulging in suppression of turnover - Held that:- As the proceedings before the Special Investigation Branch, Unit-II, Varanasi had not been concluded and no finding have been returned by the Special Investigation Branch to the effect that three loose papers denote suppressed turnover when the impugned order was passed. Thus, both the grounds taken for cancellation of registration certificate are not sufficient for cancelling the same. Issues:1. Challenge to the order cancelling registration certificate based on suppressed turnover and non-cooperation.2. Grounds for cancellation of registration certificate.3. Prima facie assessment of cancellation grounds.4. Consideration of suppressed turnover and loose papers as grounds for cancellation.5. Appeal pending before the Tribunal.6. Finality of assessment order.7. Conclusion on the cancellation of registration certificate.Analysis:The petitioner, engaged in trading iron products, challenged the cancellation of their registration certificate due to suppressed turnover and alleged non-cooperation. The petitioner contended that the cancellation lacked cogent reasons and impeded their business activities. The Court observed that the cancellation was premature as the proceedings regarding the suppressed turnover were pending before the Tribunal, which had not reached a final decision. Additionally, the loose papers seized during a survey did not conclusively indicate suppressed turnover. The Court held that the grounds for cancellation were insufficient, especially when no final findings were provided by the investigating branch. Consequently, the cancellation of the registration certificate was deemed unjustified and set aside, allowing the writ petition.The Court considered the petitioner's right to appeal under the Act and found that the cancellation impeded the petitioner's business without substantial justification. The non-cooperation before the Special Investigation Branch and the absence of proper account books were not deemed adequate grounds for cancellation. The Court emphasized that the cancellation should be based on concrete reasons supported by evidence, which was lacking in this case. The Court stayed the effect of the cancellation order until further notice, pending a final decision on the matter.The Court scrutinized the impugned order, highlighting the petitioner's compliance with the Tribunal's interim order and the ongoing appeal process. It was noted that the grounds cited for cancellation did not align with the statutory provisions empowering cancellation. The Court emphasized the importance of a reasoned decision supported by valid grounds for such drastic actions as canceling a registration certificate. The lack of finality in the assessment order and inconclusive findings from the investigation branch further weakened the basis for cancellation.In conclusion, the Court found that the reasons provided for canceling the registration certificate were insufficient and premature. The ongoing appeal process and lack of conclusive evidence regarding suppressed turnover undermined the basis for cancellation. Therefore, the Court set aside the cancellation order, allowing the petitioner to continue their business activities unhindered. The writ petition was allowed in favor of the petitioner.
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