VAT registration cancellation requires reasons and personal hearing; retrospective cancellation without lawful authority cannot stand.

Cancellation of VAT registration under the Tamil Nadu Value Added Tax Act, 2006 is invalid unless the order records sufficient reasons and the dealer is given a personal hearing; an order issued without these statutory safeguards breaches natural justice and is liable to be set aside. Retrospective cancellation is also impermissible where the authority lacks lawful power to alter registration retrospectively or fails to follow the prescribed procedure. The impugned cancellation order was quashed, while the authority was left free to proceed afresh in accordance with law after notice and hearing.

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Issues: (i) Whether cancellation of VAT registration without recording reasons and without affording personal hearing was valid; (ii) whether cancellation of registration with retrospective effect was permissible.

Issue (i): Cancellation of registration under Section 39 of the Tamil Nadu Value Added Tax Act, 2006 requires sufficient reasons under clause 14 and an opportunity of personal hearing under clause 15. An order passed without reasons and without hearing offends the statutory safeguards and is contrary to the principles of natural justice.

Conclusion: The cancellation was invalid and liable to be set aside.

Issue (ii): The cancellation was made with retrospective effect, though the authority had no power to do so on the facts disclosed. An order altering registration retrospectively, without lawful authority and without following the prescribed procedure, cannot be sustained.

Conclusion: The retrospective cancellation was impermissible and unsustainable.

Final Conclusion: The cancellation order was quashed, while leaving it open to the authority to proceed afresh in accordance with law after notice and personal hearing.

Ratio Decidendi: A registration under the Tamil Nadu Value Added Tax Act, 2006 cannot be cancelled unless the order records sufficient reasons and the dealer is afforded a personal hearing, and such cancellation cannot be given retrospective effect without lawful authority.

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