2012 (11) TMI 1075 - HC - VAT and Sales Tax

Court upholds re-assessment of inverters under U.P. Trade Tax Act, emphasizing need for specific classification.

The High Court dismissed the writ petition challenging a circular and order for re-assessment under the U.P. Trade Tax Act. The court emphasized that the ... Re-assessment Proceedings – Invertors whether electronic goods or not – Original assessment proceedings were framed and turnover of inverters were taxed as electronic goods – However, some doubt arose regarding taxability of inverters as competitive manufacturer, were charging tax @ 4% whereas others was charging tax @ 10% – Proceedings under Section 21(2) were initiated and necessary permission was sought by Assessing Officer, which was granted – Held that:- in re-assessment proceedings, vital questions will be gone into by Assessing Authority upon considering specification of inverters given by petitioner – Re-assessment proceedings therefore, cannot be faulted – In order/circular issued by Commissioner, he has not decided finally as to whether inverters are electronic goods or not – Commissioner had only given general direction to his subordinate authorities to examine this question – Decided against Appellant. Issues:Challenging circular dated 3.9.2003 and order dated 19.1.2006 for re-assessment under Section 21(2) of the U.P. Trade Tax Act, taxability of inverters as electronic goods, change of opinion in re-assessment proceedings.Analysis:The petitioner, engaged in manufacturing and selling inverters and dealing in electrical and electronic goods, challenged a circular and an order granting permission for re-assessment for the Assessment Years 1999-2000 and 2000-2001. The original assessment taxed inverters as electronic goods without a specific discussion on their classification. A doubt arose regarding the taxability of inverters compared to other manufacturers, leading to re-assessment proceedings initiated under Section 21(2) of the Act.During the hearing, the petitioner's counsel argued that inverters, working on Microprocessor Chips, should be considered electronic goods and were rightly taxed as such initially. The respondents countered, stating that the tax imposition as electronic goods was done without proper discussion, ruling out any change of opinion in the re-assessment. The petitioner's position was that since inverters are based on Microprocessor Chips, undisputedly electronic goods, the entire proceedings should be quashed.The High Court noted that the original assessment did not address whether inverters qualified as electronic goods. Referring to a previous decision, the court emphasized that without a specific finding by the Assessing Authority, the taxability of inverters as electronic goods could not be determined. Consequently, in the re-assessment proceedings, the Assessing Authority would examine the specifications of inverters provided by the petitioner to determine their classification.Additionally, the court highlighted that the circular issued by the Commissioner did not conclusively decide whether inverters were electronic goods, merely directing subordinate authorities to examine the matter. Based on these considerations, the court concluded that the re-assessment proceedings were valid, as the crucial questions regarding the taxability of inverters would be addressed during the assessment process. Therefore, the writ petition was dismissed with the above observations.