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2019 (2) TMI 1016 - HC - VAT and Sales TaxTime limitation - cancellation of eligibility certificate dated 26.10.2002 which was valid from 30.03.2000 to 29.03.2008 - Section 4-A(3) of erstwhile U.P. Trade Tax Act, 1948 - Held that:- Undisputedly, the survey giving rise to the proceedings was conducted on 28.01.2004 whereas the proceedings were drawn up for the first time on 10.04.2017, i.e. 13 years after the revenue allegedly came into possession of information and material that the assessee may have committed breach of the terms and conditions of the eligibility certificate - No explanation was offered for the delay of 13 years. Merely because certain assessment proceedings may have remained pending, it could never be cited as a reason to justify the delay. Assuming, the delay of 11 years in the conclusion of assessment proceedings for A.Y. 2003-04 was attributable solely to the conduct of the assessee yet, it was wholly irrelevant for the purpose of initiation of proceedings under Section 4A(3) of the Act. While the assessment order was to be made by the assessing authority, the proceedings under Section 4A(3) of the Act were to be initiated by the Commissioner, Trade Tax. No legal or factual impediment has been shown to exist as may have prevented the Commissioner from initiating those proceedings. Scope and conduct of the two proceedings being completely independent of each other, mere pendency of the assessment proceedings could never be relevant for the purpose of initiation of proceedings under Section 4A(3) of the Act. The period of limitation prescribed under Section 21 of the Act is relevant. Though the initiation, conduct and scope of the two proceedings is independent of the other, the cancellation of eligibility certificate would directly impact the assessment proceedings and consequently on the penalty proceedings as well though the opposite may not be true. Normally, the assessing authority could not have made an assessment beyond a period of six years from the close of the assessment year in which the exemption came to an end. Therefore, normally, cancellation of the exemption certificate beyond that period would be a futile exercise. Thus, the proceedings under section 4A(3) of the Act were initiated outside reasonable period of time - even if the allegation of breach of terms and conditions of exemption made against the assessee were to be treated at par with fraud, in view of the law discussed above, the principle of limitation would still apply - The proceedings having been initiated belatedly, after the expiry of reasonable time, again as discussed above, the same were barred by limitation. The question of law is answered in the affirmative and against the revenue - revision allowed.
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