Premature merits finding on tax liability cannot replace a fresh factual inquiry where assessment issues remain open.

Where an ex parte assessment has already been remitted for fresh factual examination, the Tribunal should not finally annul the tax demand on merits without a proper assessment-level inquiry. The Court held that the Tribunal moved prematurely by treating the construction activity as ancillary and by relying on decisions arising from different facts, instead of allowing verification of whether the assessee had acted through a contractor and whether the disputed purchases were properly established. The assessment issues remained open for examination, so the Tribunal's merits-based deletion of the demand was set aside and the matter was sent back for fresh assessment with all contentions left open.

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Issues: (i) Whether the Tribunal was justified in deleting the tax demand by treating the construction activity as ancillary and by holding the assessee not liable to tax without the assessment issues being fully examined by the Assessing Authority.

Analysis: The assessment order had been passed ex parte and the first appellate authority had already remitted the matter for fresh assessment, leaving factual questions open for verification. The Tribunal's reasoning did not rest on an independent finding that the assessee was not a dealer under Section 2(h) of the Uttar Pradesh Value Added Tax Act, 2008, but proceeded on the basis of earlier decisions dealing with materially different factual situations. The Court held that the Tribunal advanced to a merits determination prematurely, without allowing the assessment proceedings to examine the assessee's claim that construction had been executed through a contractor and without a proper factual inquiry into the disputed purchases.

Conclusion: The Tribunal was not justified in annulling the assessment on merits, and its order was liable to be set aside.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the matter was sent back for fresh assessment with all contentions left open.

Ratio Decidendi: Where an ex parte assessment has already been remitted for fresh factual examination, a second appellate forum should not finally decide disputed liability on merits without a proper assessment-level inquiry into the underlying facts.

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