Bona fide tax rate dispute cannot justify insisting on the higher disputed rate before hearing a Section 30 application.

Where a bona fide dispute exists over tax classification and the applicable rate, the tax authority cannot insist on payment at the higher disputed rate as a condition for entertaining an application to set aside an ex parte assessment under Section 30 of the U.P. Trade Tax Act, 1948. The dealer's obligation is to accompany the application with proof of payment of the tax admitted to be due, and tax already being paid at the admitted rate satisfies that requirement. In such a situation, the application must be examined on merits rather than rejected for non-payment at the contested higher rate.

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Issues: Whether, in the presence of a bona fide dispute regarding the tax classification and rate applicable to the product, the authority could insist on payment of tax at the higher disputed rate as a condition for entertaining the application to set aside the ex parte assessment under Section 30.

Analysis: The application under Section 30 of the U.P. Trade Tax Act, 1948 required the dealer to accompany it with satisfactory proof of payment of the tax admitted by him to be due. The dispute between the parties was whether the product was taxable at 8% or 16%. The petitioner was already paying tax at 8% and undertook to continue doing so until the matter was decided. In these circumstances, the amount admitted by the dealer could not be treated as the higher disputed rate, and the authority was required to decide the application on merits.

Conclusion: The show cause notice was set aside and the officer was directed to decide the application under Section 30 on merits.

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