Supreme Court grants appeal, emphasizes limits on Article 226, allows respondents to challenge assessment order.

The Supreme Court allowed the appeal, set aside the High Court's decision, and granted the respondents the opportunity to challenge the assessment order by filing an appeal within four weeks. The Court emphasized that Article 226 should not be used to challenge show cause notices unless no offense is disclosed or they are without jurisdiction. The High Court should not have interfered and should have allowed the respondents to appeal under section 9 of the Act against the assessment order.

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Issues:
Challenge to show cause notices under the Uttar Pradesh Trade Tax Act, 1948; Validity of eligibility certificate cancellation; Jurisdiction of High Court in interfering with show cause notices.

Analysis:

1. The appeal before the Supreme Court stemmed from the High Court's decision regarding eight show cause notices issued under the Uttar Pradesh Trade Tax Act, 1948. These notices were issued to determine the liability of the respondents for sales tax on sales made during the period of 1982-83 to 1984-85.

2. The respondents, engaged in the manufacturing of glass bangles, had been collecting sales tax from customers until they obtained an eligibility certificate under section 4A of the Act in October 1984. The High Court confirmed this fact, establishing the timeline of events related to the respondents' tax obligations.

3. Following the issuance of show cause notices, the respondents replied in December 1985, and subsequently, an assessment order was passed against them. The respondents then challenged these notices by filing a writ petition in January 1986.

4. During the pendency of the writ petition, the Commissioner of Sales Tax attempted to cancel the eligibility certificate granted to the respondents in February 1988. The respondents contested this cancellation before the Sales Tax Tribunal, which was upheld. Subsequently, the High Court, in a revision petition, ruled in favor of the respondents, stating that the certificate could not be cancelled.

5. The High Court also allowed the writ petition challenging the show cause notices in February 2000. However, the Supreme Court observed that the High Court's decision was based on an incorrect premise, as the notices were issued for the period before the eligibility certificate was obtained, not on the basis of its validity.

6. The Supreme Court emphasized that Article 226 should not be used to challenge show cause notices unless no offense is disclosed or they are without jurisdiction. In this case, the High Court should not have interfered and should have allowed the respondents to appeal under section 9 of the Act against the assessment order.

7. Consequently, the Supreme Court allowed the appeal, set aside the High Court's decision, and granted the respondents the opportunity to challenge the assessment order by filing an appeal within four weeks. The Court also directed that no costs be awarded in this matter.

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