Allahabad High Court Quashes Tax Order Over Delay, Upholds Natural Justice Principles

The Allahabad High Court granted relief to Lakshya Medical Store in a dispute against the State of Uttar Pradesh regarding a tax demand.

Background of the case

The present appeal has been filed by Lakshya Medical Store against the State of U.P. in the Allahabad High Court, challenging an order dated August 13, 2024, passed by the tax authority.

This order was later upheld on appeal on January 22, 2026. The petitioner argued that the order was passed unfairly and violated legal provisions, especially because there was a long gap between the personal hearing and the final order.

According to the petitioner, a show cause notice was issued on May 16, 2024, followed by reminders. However, after the hearing, the authority took nearly three months to pass the final order. The petitioner also cited earlier High Court judgements, including Mahaveer Trading Company vs Deputy Commissioner and Shubham Steel Traders vs State of U.P., which state that such delays raise doubts about whether the authority properly considered the arguments.

The Court highlighted that delays without justification can violate principles of natural justice. It observed that if an authority does not pass an order on the hearing date or inform the next date, it may unfairly disadvantage the parties involved.

As a result, the High Court quashed the impugned orders and ruled in favour of Lakshya Medical Store. The matter has now been sent back to the assessing authority for reconsideration.

The high court directed the authority to pass a fresh order after giving the petitioner a proper opportunity for a hearing.