Forfeiture of entry tax set aside where passing on of tax burden required fresh factual examination by the assessing authority.

Where a dealer disputed passing on the entry tax burden to customers and asserted payment from its own resources, forfeiture under Section 29(3) of the U.P. Trade Tax Act could not be sustained without examining the material facts. The counter affidavit failed to meet the material pleadings and proceeded on an incorrect understanding of the challenge. As the question whether the tax incidence had in fact been passed on required factual verification, the assessing authority was directed to reconsider the matter afresh and assess any material produced by the dealer. The earlier observation on forfeiture was not to prejudice the fresh proceedings, and the forfeiture order was set aside.

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Issues: Whether the forfeiture of the amount deposited as entry tax under Section 29(3) of the U.P. Trade Tax Act was sustainable when the petitioner asserted that no tax had been realised from customers and the writ petition had not been specifically answered in the counter affidavit.

Analysis: The pleadings showed that the petitioner disputed any passing on of the tax burden and asserted payment of tax from its own resources. The counter affidavit did not deal with these material averments and proceeded on an incorrect understanding of the challenge. In these circumstances, the question whether the incidence of tax had in fact been passed on required a factual examination by the assessing authority. The authority was therefore directed to reconsider the matter afresh and to examine the material that may be produced by the petitioner. The observation made in the assessment order under Section 9(4) regarding forfeiture was also not to prejudice the fresh proceedings.

Conclusion: The order of forfeiture under Section 29(3) of the U.P. Trade Tax Act was set aside and the matter was remitted for fresh consideration by the assessing authority.

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