Rectification increasing tax liability requires notice and hearing; recognition certificate operates only from issue date.

A rectification under section 22 of the U.P. Sales Tax Act that increases tax liability falls within the proviso requiring notice and a reasonable opportunity of hearing before it is made. The discussion also states that a recognition certificate under rule 25-A becomes effective only from the date of issue, not from the date of application, because the statutory scheme limits the concession to a dealer holding an operative certificate. The article further notes that rule 25-A(5) was upheld against an article 14 challenge, as the procedure was treated as containing adequate safeguards against arbitrariness.

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Issues: (i) whether a rectification order made under section 22 of the U.P. Sales Tax Act, which had the effect of enhancing the petitioner's tax liability, could be passed without notice and an opportunity of hearing; (ii) whether the recognition certificate under rule 25-A was to be effective from the date of application or from the date of issue, and whether rule 25-A(5) was unconstitutional under article 14.

Issue (i): Whether a rectification order made under section 22 of the U.P. Sales Tax Act, which had the effect of enhancing the petitioner's tax liability, could be passed without notice and an opportunity of hearing.

Analysis: The proviso to section 22 bars rectification having the effect of enhancing assessment unless notice is given and a reasonable opportunity of hearing is afforded. The direct consequence of the impugned correction was to increase the petitioner's purchase tax liability from 2 per cent to 3 per cent. That consequence brought the case within the proviso, even though the correction was made before final assessment and related to the recognition certificate rather than to an assessment order in form.

Conclusion: Notice and hearing were required before the rectification order was passed, but the absence of notice did not by itself entitle the petitioner to relief in the facts of the case.

Issue (ii): Whether the recognition certificate under rule 25-A was to be effective from the date of application or from the date of issue, and whether rule 25-A(5) was unconstitutional under article 14.

Analysis: Rule 25-A(5) expressly provided that the recognition certificate would take effect from the date of its issue. The scheme of section 4-B and the rules showed that the concession was intended only for a dealer holding an effective recognition certificate. The court rejected the argument that the provision should be read as taking effect from the date of application, and also rejected the challenge based on article 14, holding that the procedure contained sufficient guidelines and supervision to prevent arbitrary discrimination.

Conclusion: The certificate was effective only from the date of issue, and rule 25-A(5) was not ultra vires article 14.

Final Conclusion: The impugned correction restored the legal position required by the Act and the Rules, and no interference under article 226 was warranted.

Ratio Decidendi: A rectification that increases tax liability falls within the proviso requiring notice and hearing, but writ relief will not be granted to preserve an incorrect legal position when the Act and Rules clearly mandate the opposite result.

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