VAT registration cancellation requires statutory grounds, prior hearing, and recorded reasons; defective order quashed.

Cancellation of VAT registration could be made only on the grounds specified in section 27 of the Gujarat Value Added Tax Act, 2003, once the registration had moved beyond a provisional stage. Even where a permissible ground existed, the Commissioner was required to give the dealer a hearing and record reasons before cancelling the registration, including any cancellation ab initio. An order passed without communicating the proposed grounds and without hearing the dealer was procedurally defective, and reliance on the rules could not cure that non-compliance. The cancellation order was quashed, while the authority was left free to pass a fresh order in accordance with law after following the mandatory procedure.

---

---

Issues: Whether cancellation of VAT registration granted to the dealer could be sustained when the authority passed the order without hearing the dealer and without communicating the grounds for proposed cancellation, and whether such registration could be cancelled otherwise than in accordance with section 27 of the Act.

Analysis: The registration was treated as having moved from a provisional stage to a final registration. In that situation, cancellation could be made only on the grounds contemplated by section 27 of the Gujarat Value Added Tax Act, 2003. Even where cancellation is sought on a permissible ground, including conviction of the dealer for an offence under the Act or the earlier law, the Commissioner must give an opportunity of hearing and record reasons in support of the decision. The impugned order was passed without hearing the petitioner and without disclosing the basis on which cancellation ab initio was proposed. The alternative reliance on the rules did not cure the absence of compliance with these mandatory requirements.

Conclusion: The cancellation order could not be sustained and was quashed. The respondents were, however, left free to pass a fresh order in accordance with law after following the required procedure.

---