2006 (12) TMI 466 - HC - VAT and Sales Tax

Summary

Issues involved: Challenge to order u/s 21(2) of U.P. Trade Tax Act, 1948 for reassessment for the year 1989-90 without issuance of show cause notice.

Summary:
The petitioners challenged the order passed by the Additional Commissioner, Trade Tax, U.P., Lucknow, u/s 21(2) of the U.P. Trade Tax Act, 1948 for reassessment for the year 1989-90. The petitioners contended that no opportunity or show cause notice was provided before granting permission for reassessment. The Additional Commissioner had granted permission for reassessment on September 20, 1997, after the expiry of the four-year limitation period. The petitioners argued that the principles of natural justice required a show cause notice before granting permission for reassessment. The respondents argued that no notice was required before granting permission u/s 21(2) of the Act. The court considered the submissions and relevant legal provisions.

The court noted that the assessment order for the year 1989-90 was passed on March 25, 1994, and the period for reassessment had expired on March 31, 1994. The assessing authority sought permission from the Commissioner for reassessment. The court emphasized that a valuable right accrued to the petitioners after the expiry of four years, necessitating the Commissioner to provide an opportunity or issue a show cause notice before granting permission for reassessment. In this case, no notice was given to the petitioners before the impugned order was passed on February 20, 1997.

The court referred to previous decisions and held that even though section 21(2) did not explicitly require providing an opportunity to the dealer before granting sanction, the principle of natural justice mandated such an opportunity to be given unless expressly excluded by the statute. The court distinguished the case laws relied upon by the respondents and found the present case aligned with the decision in Manaktala Chemicals Pvt. Limited. Consequently, the writ petition was allowed, and the impugned order was quashed, with the option for the Commissioner/Additional Commissioner to pass a fresh order after affording an opportunity to the petitioners. No costs were awarded in this case.