Allahabad High Court: India-Made Foreign Liquor Not Taxable Under UP Entry Of Goods In Local Areas Act

Allahabad High Court: India-Made Foreign Liquor Not Taxable Under UP Entry Of Goods In Local Areas Act

Directs the concerned authority to provide an opportunity of hearing to the petitioner and pass a reasoned order

The Allahabad High Court has nullified the appellate authority’s assessment order taxing India-made foreign liquor (IMFL) under the Uttar Pradesh (UP) Entry of Goods into Local Areas Act, 2007.

On 19 April 2006, a provisional assessment order was passed against the petitioner under Section 4-A (Realization Of Tax Through Manufacturer) of the UP Entry of Goods into Local Area Tax Act, 2000 read with Rule 41(5) of the UP Sales Tax Rule 2000. The final assessment order was passed on 30 March 2008 under the 2007 Act.

The petitioner’s counsel submitted that the 2000 Act was declared ultra vires by the high court against which appeal was pending before the Supreme Court. He argued that Section 1(3) of the 2007 Act provided that it would be in force from 01 November 1999.

He added that it was to be noted that the petitioner’s assessment was done under the 2007 Act. Therefore, no tax was leviable on the IMFL, as it did not fall under the taxable item’s purview.

The bench comprising Justice Shekhar B. Saraf held, “If the goods are not in the schedule of the new Act, the authorities had no jurisdiction to impose entry tax on it. The question is going to the very root of the matter and the authority should have considered and answered the same.”

The court thus set aside the order passed by the appellate authority. It directed the concerned authority to provide an opportunity for a hearing to the petitioner and pass a reasoned order.