The Allahabad High Court has set aside an Entry Tax assessment order after finding that the assessing authority failed to examine the crucial issue of limitation despite a specific judicial direction. The assessment order suffered from complete non-application of mind and remitted the matter back for a fresh decision, directing that the question of limitation must be decided before examining the merits of the tax demand.

A Division Bench of Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi has allowed the writ petition challenging the assessment order dated August 28, 2025 relating to the Assessment Year 2003-04 under the Entry Tax regime. 

The dispute traces its origin to an assessment order dated December 31, 2013 passed under the Uttar Pradesh Entry Tax law. The assessee had succeeded partly in the first appeal before the Additional Commissioner (Appeals), but its second appeal before the Commercial Tax Tribunal was dismissed.

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The assessee thereafter approached the Allahabad High Court by filing a Sales/Trade Tax Revision, where the principal legal issue was whether the assessment order had been passed beyond the prescribed limitation period. Recognising the significance of this question, the High Court remanded the matter to the assessing authority with specific directions to reconsider the issue of limitation while passing a fresh assessment order. 

The earlier judgment had specifically recorded the petitioner’s contention that the fresh assessment ought to have been completed within six months after communication of the High Court’s earlier order. The Court had also directed the assessing authority to explain the transfer of jurisdiction from the Deputy Commissioner at Hapur to the Deputy Commissioner at Ghaziabad and furnish supporting orders, if any. 

Despite these explicit directions, the fresh assessment order merely stated that since the High Court had remanded the matter, the proceedings were not barred by limitation, without assigning any reasons or examining the factual objections raised by the petitioner. 

The Division Bench noted that the impugned assessment order contained no discussion whatsoever explaining why the proceedings were considered to be within limitation.

Earlier during the proceedings, the High Court had even required the Deputy Commissioner concerned to file a personal affidavit explaining how the earlier judicial directions had been complied with. However, while a counter affidavit attempted to justify the proceedings on limitation, it did not explain why the assessment order itself was completely silent on the issue. 

The Court reiterated the settled principle that the validity of an administrative or quasi-judicial order must be tested on the reasons recorded in the order itself and cannot subsequently be supplemented through pleadings in a counter affidavit. 

The Bench also observed that the record did not clarify when jurisdiction over the assessee had been transferred from the Deputy Commissioner, Commercial Tax, Sector-1, Hapur to the Deputy Commissioner, Commercial Tax, Sector-18, Ghaziabad.

The Court further noted that official records indicated communication of the earlier High Court order had reached the Commercial Tax Department in February 2013, raising significant questions regarding the computation of limitation. However, the assessment order contained no discussion on these facts. 

The Bench held that there was clear non-application of mind by the assessing authority in failing to address the issues specifically identified by the High Court in its earlier remand order.

The Court also observed that there was no satisfactory explanation for the officer’s failure to comply with the judicial directions while exercising quasi-judicial powers. Although the Court noted that stronger observations could have been made regarding the officer’s conduct, it refrained from doing so after the State’s counsel assured that appropriate guidance would be provided to ensure proper compliance with the law and court directions in future. 

Allowing the writ petition, the Allahabad High Court set aside the assessment order dated August 28, 2025. Remitted the matter to the assessing authority for passing a fresh order. Directed that the issue of limitation must first be examined and decided before considering the merits of the assessment. Directed that both the limitation issue and the merits should be decided through a single reasoned order.

The court clarified that any claim for refund would depend upon the fresh assessment order to be passed.

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