2010 (12) TMI 1100 - HC - VAT and Sales Tax

Court quashes unjustified reassessment notices under Trade Tax Act, citing change of opinion without new material

Dabur India Limited Versus State of UP. and Another

The court found that the reassessment notices issued under the U.P. Trade Tax Act for two assessment years were unjustified as they amounted to a change ... Legality and validity of the reassessment notices issued under section 21 of the U.P. Trade Tax Act, 1948 challenged Held that:- It is a case of change of opinion and there was no material for the assessing officer to initiate the reassessment proceedings. In the result, both the writ petitions succeed and are allowed and the impugned notices under section 21 of the Act are hereby quashed. The reassessment proceedings are set aside. Issues:Challenging legality and validity of reassessment notices under U.P. Trade Tax Act, 1948 for two assessment years. Whether reassessment proceedings were initiated on insufficient grounds or based on a change of opinion.Analysis:The petitions challenged reassessment notices issued under section 21 of the U.P. Trade Tax Act for the assessment years 2000-01 and 2001-02. The assessing officer relied on a survey report and issued show-cause notices based on discrepancies in goods passing through check-posts and purchase bills lacking necessary certificates. The assessing officer considered the petitioner's explanations satisfactory during initial assessments. However, subsequent reassessment notices raised concerns about fabricated sales and undue benefits claimed. The petitioner contended that the reassessment was based on insufficient grounds.The principal issue revolved around whether the reassessment was a case of change of opinion. The petitioner argued that the assessing officer had already considered all relevant material during initial assessments. The court examined the assessment orders and found that the assessing officer had thoroughly reviewed the issues, including the S.T.O. (S.I.B.) report, before issuing show-cause notices. The assessing officer was satisfied with the petitioner's explanations, which detailed the business operations and sales to the Canteen Store Department, Meerut. The court noted that the assessing officer had accepted the disclosed turnover and sales, finding them verifiable based on the evidence presented.The court referred to previous judgments and emphasized that reassessment cannot be initiated without fresh material if the turnover had been found not exigible to tax after due consideration. It was highlighted that the assessing officer, without new evidence, could not re-examine the matter under the guise of reassessment proceedings. The court agreed with the petitioner's argument that all aspects were already considered during the initial assessments, questioning the jurisdiction of the authority to initiate reassessment proceedings without valid grounds.After reviewing the record and submissions, the court concluded that there was no justification for the reassessment proceedings. Finding it to be a case of change of opinion without new material, the court quashed the impugned notices and set aside the reassessment proceedings. The writ petitions were allowed, and no costs were imposed.