Reasoned tax sanction and remand limitation: mechanical approval fails, but fresh action may follow within a reasonable time.

Sanction under section 21(2) of the U.P. Trade Tax Act, 1948 must reflect consideration of the assessee's reply and real application of mind; a mechanical approval granted merely in the interest of Revenue is unsustainable, and such non-speaking orders were set aside. Where proceedings are quashed in writ jurisdiction, limitation does not automatically bar fresh action on remand, although the authority must proceed within a reasonable time. The impugned sanction orders were annulled and the matter was remitted for fresh decision after due consideration of the reply, while the limitation objection was rejected as an absolute bar to further proceedings.

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Issues: (i) whether sanction/orders passed under section 21(2) of the U.P. Trade Tax Act, 1948 were vitiated for non-consideration of the assessee's reply and for being granted mechanically in the interest of Revenue; (ii) whether, after the orders were set aside, limitation would bar the authority from passing fresh orders on remand.

Issue (i): whether sanction/orders passed under section 21(2) of the U.P. Trade Tax Act, 1948 were vitiated for non-consideration of the assessee's reply and for being granted mechanically in the interest of Revenue.

Analysis: The orders were found to disclose no consideration of the objections raised in reply and no application of mind by the authority. The approval was recorded mechanically and only in the interest of Revenue. Relying on earlier Division Bench authority, the Court treated such non-speaking and unreasoned sanction as unsustainable in law.

Conclusion: The impugned orders under section 21(2) of the U.P. Trade Tax Act, 1948 were invalid and were set aside.

Issue (ii): whether, after the orders were set aside, limitation would bar the authority from passing fresh orders on remand.

Analysis: The Court applied the Division Bench view that, where proceedings are set aside in writ jurisdiction, the statutory limitation for initiating fresh action does not operate as an absolute bar to a fresh order of sanction or reassessment. At the same time, such fresh action must still be taken within a reasonable period.

Conclusion: Limitation was held not to bar the passing of fresh orders on remand, though the authority was expected to act within a reasonable time.

Final Conclusion: The writ petition succeeded to the extent that the impugned sanction/orders were annulled and the matter was sent back for fresh decision after consideration of the reply, while the limitation objection was rejected as a complete bar to further proceedings.

Ratio Decidendi: An approval or sanction for initiating tax proceedings must be a reasoned order reflecting consideration of the assessee's reply, and once such proceedings are quashed in writ jurisdiction, limitation does not automatically prevent fresh action, provided it is taken within a reasonable period.

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