JKNP & ASSOCIATES

7. Registration of dealers

(1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.

(2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act, to the authority referred to in sub-section(1), and every such application shall contain such particulars as may be prescribed.

Explanation:- For the purposes of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law of the appropriate State notwithstanding that under such law a sale or purchase made by him is exempt from tax or refund or rebate of tax is admissible in respect thereof.

(2-A) Where it appears necessary to the authority to whom an application is made under sub-section (1) or sub-section(2) so to do for the proper realization of the tax payable under this Act or for the proper custody and use of the forms referred to in clause (a) of the first proviso to sub-section(2) of Section 6 or sub-section (1) of Section 6-A or 2[***]

[clause (a)] of sub-section(4) of Section 8, he may, by an order in writing and for reasons to be recorded therein, impose as a condition for the issue of the Certificate of Registration a requirement that the dealer shall furnish in the prescribed manner and within such time as may be specified in the order such security as may be so specified, for all or any of the aforesaid purposes

(3) if the authority to whom an application under sub-section (1) or sub-section(2) is made is satisfied that the application is in conformity with the provisions of this Act and the rules made there under and the condition, if any, imposed under subsection

(2A), has been complied with, he shall register the applicant and grant to him a Certificate of registration in the prescribed form which shall specify the class or classes of goods for the purposes of sub-section (1) of section 8.

(3-A) Where it appears necessary to the authority granting a Certificate of registration under this section so to do for the proper realization of tax payable under this Act or for the proper custody and use of the forms referred to in sub-section (2-A), he may, at any time while such certificate is in force, by an order in writing and for reasons to be recorded therein, require the dealer, to whom the certificate has been granted, to furnish within such time as may be specified in the order and in the prescribed manner such security, or, if the dealer has already furnished any security in pursuance of an order under this sub-section or sub-section (2-A) , such additional security, as may be specified in the order, for all or any of the aforesaid purposes.

(3-B) No dealer shall be required to furnish any security under Sub-section(2A) or any security or additional security under sub-section (3A) unless he has been given an opportunity of being heard.

(3-BB) The amount of security which a dealer may be required to furnish under sub-section (2-A) or sub-section (3-A) or the aggregate of the amount of such security and the amount of additional security which he may be required to furnish under sub-section (3-A), by the authority referred to therein, shall not exceed--

(a) In the case of a dealer other than a dealer who has made an application, or who has been registered in pursuance of an application, under sub-section of (2), a sum equal to the tax payable under this Act, in accordance with the estimate of such authority, on the turnover of such dealer for the year in which such security or, as the case may be, additional security is required to be furnished; and

(b) In the case of a dealer who has made an application, or who has been registered in pursuance of an application, under subsection(2), a sum equal to the tax leviable under this Act, in accordance with the estimate of such authority on the sales to such dealer in the course of inter-State trade of commerce in the year in which such security or, as the

case may be additional security is required to be furnished, had such dealer been not registered under this Act.

[3-C] Where the security furnished by a dealer under sub-section (2-A) or sub-section (3-A) is in the form of a surety bond and the surety becomes insolvent or dies, the dealer shall, within thirty days of the occurrence of any of the afore said events, inform the authority granting the certificate of registration and shall within ninety days of such occurrence furnish a fresh surety bond or furnish in the prescribed manner other security for the amount of the bond. 

[3-D] The authority granting the certificate of registration may by order and for good and sufficient cause forfeit the whole or any part of the security furnished by a dealer,-

(a) for realizing any amount of tax or penalty payable by the dealer;

(b) if the dealer is found to have misused any of the form referred to in sub-section (2-A) or to have failed to keep them in proper custody.

Provided that no order shall be passed under this sub-section without giving the dealer an opportunity of being heard.

[3-E] where by reason of an order under sub-section [3-D], the security furnished by any dealer is rendered insufficient, he shall make up the deficiency in such manner and within such time as may be prescribed.

[3-F] The authority issuing the forms referred to in sub-section(2-A) may refuse to issue such forms to a dealer who has failed to comply with an order under that sub-section or sub-section (3-A), or with the provisions of sub-section (3-C) or sub-section (3-E), until the dealer has complied with such order or such provisions, as the case may be.

[3-G] The authority granting a Certificate of registration may, on application by the dealer to whom it has been granted, order the refund of any amount or part thereof deposited by the dealer by way of security under this section, if it is not required for the purposes of this Act.

[3-H] Any person aggrieved by an order passed under sub-section [2-A], sub-section [3-A], sub-section [3-D] or sub-section [3-G] may, within thirty days of the service of the order on him, but after furnishing the security, prefer, in such form and manner as may be prescribed, an appeal against such order to such authority (hereafter in this section referred to as the “appellate authority”) as may be prescribed:

Provided that the appellate authority may, for sufficient cause, permit such person to present the appeal,-

(a) after the expiry of the said period of thirty days; or

(b) without furnishing the whole or any part of such security

[3-I] The procedure to be followed in hearing any appeal under subsection (3-H), and the fees payable in respect of such appeals shall be such as may be prescribed.

[3-J] The order passed by the appellate authority in any appeal under sub-section (3-H) shall be final.

(4) A certificate of registration granted under this section may –

(a) either on the application of the dealer to whom it has been granted or, where no such application has been made, after due notice to the dealer, be amended by the authority granting it if he is satisfied that by reason of the registered dealer having changed the name, place or nature of his business or the class or classes of goods in which he carries on business or for any other reason the certificate of registration granted to him requires to be amended ; or

(b) be cancelled by the authority granting it where he is satisfied, after due notice to the dealer to whom it has been granted, that the has ceased to carry on business 1[or has ceased to exist or has failed without sufficient cause, to comply with an order under sub- section [3-A] or with the provisions of sub-section [3-C] or sub-section [3-E] or has failed to pay any tax or penalty payable under this Act], or in the case of a dealer registered under sub-section(2) has ceased to be liable to pay tax under the Sales Tax law of the appropriate State or for any other sufficient reason.

(5) A registered dealer may apply in the prescribed manner not later than six months before the end of a year to the authority which granted his certificate of registration for the cancellation of such registration, and the authority shall, unless the dealer is liable to pay tax under this Act, cancel the registration accordingly, and where he does so, the cancellation shall take effect from the end of the year.