Bogus purchases and billing activity justified VAT registration cancellation; later tax payment did not restore the registration.

Registration under the Gujarat Value Added Tax Act could be cancelled where the dealer failed to prove genuine purchases or actual movement of goods, and the record indicated bogus billing activity. On those facts, the Tribunal held that the cancellation authority was empowered to act where incorrect particulars or transactions suggesting evasion or defrauding of revenue were shown, and the cancellation of registration was therefore justified. Payment of tax and interest did not undo the statutory ground for cancellation, because such payment was treated as consistent with the finding that the transactions were not genuine. The appeal failed and the cancellation orders were affirmed.

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Issues: (i) Whether registration under section 27(5)(i) of the Gujarat Value Added Tax Act, 2003 could be cancelled on the basis of alleged bogus purchases, billing activity and failure to establish genuine movement of goods. (ii) Whether payment of tax and interest could undo the cancellation where the dealer's transactions were found not to be genuine.

Issue (i): Whether registration under section 27(5)(i) of the Gujarat Value Added Tax Act, 2003 could be cancelled on the basis of alleged bogus purchases, billing activity and failure to establish genuine movement of goods.

Analysis: The material on record showed that the dealer could not produce adequate proof of transportation or physical movement of goods. The purchase documents did not establish the actual movement of the goods, and the authorities found that the transactions were doubtful and linked with billing activity. The cancellation authority was empowered to act under section 27(5) where the dealer furnished incorrect particulars or engaged in transactions indicating evasion or defrauding of revenue.

Conclusion: The cancellation of registration was justified and valid.

Issue (ii): Whether payment of tax and interest could undo the cancellation where the dealer's transactions were found not to be genuine.

Analysis: The payment of tax and interest was treated as an indirect acceptance that the purchases were not genuine. In light of the factual findings and the applicable legal principle relied upon by the Tribunal, such payment did not neutralise the statutory ground for cancellation.

Conclusion: The registration could not be restored on the basis of such payment.

Final Conclusion: The appeal failed and the orders cancelling the registration were affirmed.

Ratio Decidendi: Where a dealer fails to prove genuine transactions and the record supports billing activity or bogus purchases, registration may be cancelled under the statutory power notwithstanding subsequent payment of tax and interest.

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