Tribunal Tried To Blow Hot And Cold At The Same Time: Allahabad High Court Upholds Levy Of Entry Tax

The Allahabad High Court recently set aside an order of the Commercial Tax Tribunal, Ghaziabad on the ground that it had made contradictory observations in its order regarding purchases made by the assesee.

“The Tribunal, by the impugned order, has tried to blow hot & cold at the same time. It may further be observed that the Tribunal, while recording the finding under the Entry Tax Act that the purchases have not been made from unregistered dealer by the respondent, has neither made any discussion, nor any material was brought on record to justify the said observation. Once it has been held that under the UP VAT Act purchases from unregistered dealer have been made, the Tribunal's observation that no purchase has been made and in the absence of any material and evidence, the entry tax cannot be levied, is perverse and cannot be justified in the eyes of law,” held Justice Piyush Agrawal.

Assessing Authority levied entry tax amounting to Rs. 5,00,000/- under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 on purchase turnover of Rs.1,00,00,000/- on the assesee. This was subsequently set aside by the Commercial Tax Tribunal.

Department, the Revisionist, contended that under the best judgment assessment, it was discovered that the assessee had made purchases from unregistered dealers. Thus, the tax was imposed under the UP VAT Act as well as the Entry Tax Act. In proceedings under the VAT Act, the assessee had admitted to purchases being made from outside the State of UP as well as from foreign traders and the levy of VAT was upheld. Therefore, the Tribunal was not justified in holding that the levy of entry tax was without any evidence.

Counsel for the Assessee contended that though purchases had been made from outside the State of U.P., they were not made from unregistered dealers. Hence, the order of the Tribunal setting aside tax under the Entry Tax Act was valid.

The Court held that the fact of purchases from unregistered dealers remains undisputed since, in parallel proceedings under the VAT Act, the assessee did not challenge the Tribunal order upholding the levy of VAT on purchases made from unregistered dealers.

“Once the said finding is not assailed by the respondent, the Tribunal was not correct in holding that the respondent has not made the purchase of iron & steel from unregistered dealer.”

Accordingly, the revision filed by the Department was allowed and the levy of entry tax was upheld.

Case Title: The Commissioner, Commercial Tax vs. M/S Tirupati Construction Co. [SALES/TRADE TAX REVISION No. - 45 of 2023]

Case Citation: 2023 LiveLaw (AB) 293

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