Court quashes tax approval orders, emphasizes need for reasons. Petitioner's liability argument unaddressed.

The court allowed the writ petition, quashed the impugned orders granting approval under section 21(2) of the Act for the assessment years 2000-01, 2001-02, and 2002-03, and remitted the matter for re-examination within a specified timeframe. The judgment emphasized the necessity for reasons to be recorded when granting such approval and highlighted the failure to address the petitioner's argument of not being liable for tax as a purchaser.

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Issues:
Challenge to approval granted under section 21(2) of the Act for assessment years 2000-01, 2001-02, and 2002-03. Dispute over tax liability on purchased copper wire. Allegations of tax evasion and lack of tax payment proof. Legal validity of permission accorded under section 21(2) of the Act.

Analysis:
The petitioner, a registered dealer under the U.P. Trade Tax Act, challenged the approval granted under section 21(2) of the Act for the assessment years 2000-01, 2001-02, and 2002-03. The petitioner contended that as a purchaser within the State of U.P., it should not bear tax liability on copper wire purchased from registered dealers who are manufacturers of the product. The petitioner maintained that since it was neither a manufacturer nor an importer, tax exemption should apply as per the single-point taxation scheme of the Act.

The counter-affidavit admitted that copper wire is taxable at the point of manufacturer or importer. It alleged that the petitioner failed to prove tax payment on goods purchased, leading to the recovery of untaxed copper wire from the petitioner's premises. The petitioner's rejoinder disputed these claims, asserting that the tax liability should not be imposed on them, and accused the permission accorded under section 21(2) of the Act as mechanical.

During the final hearing, the petitioner argued that the proceedings lacked consideration of the fact that they were not the manufacturer or importer, thus challenging the reopening of the case. On the other hand, the respondent contended that the burden of proof regarding tax payment on purchased goods lay with the petitioner, and since this burden was not met, the actions taken were justified.

The judgment cited the necessity for reasons to be recorded while granting sanction under section 21(2) of the Act, emphasizing the need for a thoughtful consideration of the issued notice and the reply submitted. It highlighted that the impugned orders failed to address the petitioner's contention of not being liable for tax as a purchaser. The court, referring to a relevant case law, allowed the writ petition, quashed the impugned orders, and remitted the matter back for re-examination in light of the legal principles outlined in the mentioned case, with a stipulated timeframe for reconsideration.

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