Security condition in registration cancellation appeals is beyond appellate power; factual restoration of registration raised no substantial question of law.

In an appeal against cancellation of registration under the Gujarat Value Added Tax Act, 2003, the High Court noted that the power to require security lies with the registering authority under Section 28, and not with the first appellate authority in an appeal arising from cancellation of registration. The Court also recorded that the Tribunal restored registration and reduced penalty on factual findings that returns were filed and tax and interest were paid, with liberty reserved to the Department to act under Section 28 if permissible. It therefore held that no substantial question of law arose from those factual and discretionary determinations.

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Issues: (i) Whether the first appellate authority had authority, in an appeal against cancellation of registration, to direct the dealer to furnish security under the Gujarat Value Added Tax Act, 2003. (ii) Whether the Tribunal was justified in restoring the registration and in reducing the quantum of penalty.

Issue (i): Whether the first appellate authority had authority, in an appeal against cancellation of registration, to direct the dealer to furnish security under the Gujarat Value Added Tax Act, 2003.

Analysis: The statutory scheme of Sections 21, 28 and 73(4) of the Gujarat Value Added Tax Act, 2003 showed that the power to require security in connection with cancellation of registration lay with the registering authority under Section 28. Section 73(4) governed appeals against assessment orders and could not be invoked to impose such a condition in an appeal arising from cancellation of registration.

Conclusion: The first appellate authority had no authority to direct furnishing of security in such an appeal, and the Tribunal's view was correct.

Issue (ii): Whether the Tribunal was justified in restoring the registration and in reducing the quantum of penalty.

Analysis: The Tribunal acted on the factual finding that the dealer had filed the returns and had paid tax and interest, while also directing verification of the record by the registering authority and reserving liberty to the Department to proceed under Section 28 if permissible. In those circumstances, the restoration of registration and modification of penalty were treated as factual and discretionary determinations, not giving rise to any substantial question of law.

Conclusion: The Tribunal was justified in restoring the registration and in reducing the penalty.

Final Conclusion: No substantial question of law arose, and the revenue appeals could not be entertained.

Ratio Decidendi: In an appeal against cancellation of registration, the appellate authority cannot impose a security condition that is statutorily referable to the registering authority, and factual restoration of registration based on compliance findings does not ordinarily raise a substantial question of law.

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