Reasonable time for cancellation of exemption certificates requires prompt action; inordinate delay makes proceedings unsustainable.

Even where Section 4A(3) of the U.P. Trade Tax Act, 1948 prescribes no express limitation period, cancellation of an eligibility certificate affecting exemption benefits must be initiated within a reasonable time, especially where alleged breach depends on disputed facts. The Court treated the date when the revenue discovered the alleged breach as the relevant starting point and used the limitation structure in Section 21(2) as a guide to reasonableness. A delay of about 13 years from the survey and about 9 years after expiry of the exemption period was held unexplained and excessive, so the cancellation proceedings were time-barred and unsustainable.

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Issues: Whether proceedings for cancellation of the eligibility certificate under Section 4A(3) of the U.P. Trade Tax Act, 1948, initiated long after the revenue acquired knowledge of the alleged breach, were barred for being beyond a reasonable period.

Analysis: The power under Section 4A(3) contains no express limitation period, but such absence does not permit initiation after an indefinite lapse of time. Where cancellation depends upon disputed facts and alleged breach of exemption conditions, the power must be exercised within a reasonable period. The Court treated the date of discovery of the alleged breach by the revenue as the relevant starting point and also regarded the limitation structure under Section 21(2) of the Act as a useful guide for determining what would be reasonable. A delay of about 13 years from the survey and about 9 years after expiry of the exemption period was found unexplained and excessive. The pendency of assessment proceedings was held to be irrelevant to the Commissioner's power to commence cancellation proceedings.

Conclusion: The proceedings were initiated beyond a reasonable period and were therefore time-barred and legally unsustainable. The question of law was answered in favour of the assessee and against the revenue.

Final Conclusion: The revision succeeded and the cancellation order could not be sustained because the power under Section 4A(3) had been exercised after inordinate and unexplained delay.

Ratio Decidendi: Even where no express limitation period is prescribed, a statutory power that affects vested exemption benefits and depends on adjudication of disputed facts must be exercised within a reasonable time, failing which the proceedings are invalid.

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