The subsequent cancellation of a registration certificate cannot affect the position of the registered dealer prior to the cancellation. The cancellation can only take effect from the date of the order of cancellation and not before.

The Judgment of the Court was delivered by

KOTVAL, J. - These are two petitions preferred by one Santumal Alamchand who has been assessed to sales tax under the Central Provinces and Berar Sales Tax Act, 1947 (No. XXI of 1947). The two petitions are in respect to two different assessment years. In S.C.A. No. 390 of 1961 the assessment year is 27th October, 1954, to 14th November, 1955, and in S.C.A. No. 389 of 1961 the assessment period involved is from 15th November, 1955, to 2nd November, 1956. The petitioner had made quarterly returns as required by law in each year but the return were in every case delayed. The delay was not condoned by the authorities and so they have assessed the petitioner in both the years upon a best judgment assessment and under section 11(4) of the Act, for the delay in making the returns, the petitioner has also been penalized. The penalty imposed is Rs. 3,500 in the year involved in S.C.A. No. 390 of 1961, namely, 27th October, 1954, to 14th November, 1955, and in S.C.A. No. 389 of 1961 which is for the period 15th November, 1955, to 2nd November, 1956, the penalty imposed is Rs. 650.

On behalf of the petitioner the imposition of these penalties has been challenged before us as also the best judgment assessments on the ground that the assessment is so utterly capricious and arbitrary that it cannot, even having regard to the provisions of section 11(4), be deemed to be a judgment under that section. Apart from this point the principal point argued in these petitions by Mr. Phadke on behalf of the petitioner is directed against the disallowance of exemption in regard to certain sales made to registered dealers. These were sales in respect of which the petitioner claimed exemption under section 2(j)(a)(ii) of the Act, that is to say, because they were made to registered dealers. These sales were all made to three persons, namely, (1) Mohanlal Asumal, (2) Deepchand Khatumal, and (3) Tarachand Gagandas. According to the petitioner, there three persons were registered dealers and they purchased goods from him and granted him the requisite declarations that they were registered dealers and relying upon those declarations he sold his goods and therefore he was entitled to claim exemption from sales tax. The revisional authority, namely, the Assistant Commissioner of Sales Tax (Appeals), Eastern Division, Nagpur, dealing with this aspect of the case however did not allow the exemption. It may incidentally be mentioned here that these sales formed the main bulk of the transactions which the petitioner entered into in the years under assessment. The reason why the Assistant Commissioner disallowed exemption for these transactions was that he held that these persons were not bona fide dealers at all, that they had been granted certain registration certificates upon utterly false representations made by them, and when such false or fraudulent representations were discovered, the department cancelled the certificates of these three dealers. Therefore the petitioner could not, having regard to the provisions of the law, take advantage of such fraudulent certificates obtained by bogus dealers nor could he claim exemption in regard to sales made to such dealers.

The facts to be culled from the order of the Assistant Commissioner as to the dates of issue and cancellation and the dates from which these certificates were cancelled are as follows :

Certificate -------------------------------------------

Name of the dealer : Issued on : Cancelled on : Cancelled from : (Effective according to rule 14)

1. Mohanlal Asumal 25-9-1953 21-2-1955 27-11-1954

2. Deepchand Khatumal 17-1-1955 7-1-1956 8-2-1955

3. Tarachand Gagandas 13-4-1955 25-8-1956 13-3-1955

It will be noticed that the registration certificate of each of these three dealers was in force during the currency of the ye