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2010 (3) TMI 1029 - HC - VAT and Sales TaxWhether no proceeding under section 21 of the Act can be initiated against assessee on the ground that the petitioner is liable to pay entry tax on the value after adding the freight? Held that - We are of the view that while granting the approval, the Additional Commissioner, Grade I, Kanpur Zone I, Kanpur, has not applied its mind to the reply given by the petitioner. The order is mechanical and therefore, vitiated and is liable to be set aside. We are also of the view that the Deputy Commissioner, Commercial Tax, Sector 10, Kanpur, has issued the notice under section 21 of the Act on March 2, 2010 prior to the date of the grant of approval, which is patently illegal and without jurisdiction and, therefore, the said notice is also liable to be set aside. W.P. allowed.
Issues:
Challenge to order of Additional Commissioner granting approval under section 21(2) of U.P. Trade Tax Act, 1948 for U.P. Tax on Entry of Goods Act, 2000. Analysis: The petitioner contested the order of the Additional Commissioner, Grade I, Commercial Tax, Kanpur Zone I, Kanpur, dated March 4, 2010, granting approval under the proviso to section 21(2) of the U.P. Trade Tax Act, 1948, applicable to the U.P. Tax on Entry of Goods Act, 2000. The petitioner argued that they had already paid entry tax on the market value for the relevant year, as accepted by the assessing authority in an order dated March 30, 2006. Therefore, the initiation of proceedings under section 21 of the Act for additional tax on freight value was unwarranted. The petitioner further contended that the notice issued by the assessing authority on March 2, 2010, before the approval was granted on March 4, 2010, was illegal and lacked jurisdiction. In examining the impugned order, the High Court found that the Additional Commissioner had not properly considered the petitioner's reply before granting approval. The court observed that the approval was mechanical and lacked proper reasoning, rendering it invalid. Additionally, the notice issued by the Deputy Commissioner before the approval was granted was deemed illegal and without jurisdiction, further justifying the setting aside of the order and notice. The High Court referred to previous legal precedents, including the Division Bench decision in the case of Ramayan Traders v. Assistant Commissioner (Assessment III), Trade Tax, Bareilly, which emphasized the necessity for the authority to provide reasons while granting approval for proceedings under section 21(2) of the Act. Lack of reasoning in such approvals was deemed unsustainable by the court, leading to their annulment. Regarding the issue of limitation, the High Court followed the Division Bench's ruling in the case of S.K. Traders v. Additional Commissioner, Grade I, Trade Tax, Zone, Ghaziabad, which held that the period of limitation would not apply when fresh orders are passed after the court sets aside proceedings under article 226 of the Constitution. The court emphasized that while the limitation period may not be a hindrance, authorities must still act within a reasonable timeframe based on the circumstances of each case. In conclusion, the High Court allowed the writ petition, setting aside the order and notice in question. The matter was remanded to the Additional Commissioner, Grade I, Commercial Tax, Kanpur Zone I, Kanpur, with directions to pass a fresh order after considering the petitioner's submissions within a specified timeframe, as per the court's instructions.
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