2015 (12) TMI 311 - HC - VAT and Sales Tax

Court validates reassessment under U.P. Trade Tax Act for 2004-05 & 2005-06

Raghunath International Limited Versus State of U.P. And Others

The Court upheld the validity of the reassessment proceedings under Section 21 of the U.P. Trade Tax Act 1948 for the Assessment Years 2004-05 and ... Validity of reassessment proceedings - Section 21 - Evasion of duty - Held that:- Assessing Authority has in its possession certain informations on the basis on which he prima facie has reason to believe that certain turnover of the petitioner has escaped assessment. The grounds on which the proceedings have been initiated are neither irrational nor extraneous in character. - Division Bench of this Court in M/s. Parmarth Steel and Alloys Pvt. Ltd. (2013 (5) TMI 285 - ALLAHABAD HIGH COURT), considered the validity of proceedings under Section 21 of the Act and following the law laid down by the Hon'ble Supreme Court in the case of M/s. Bhagwan Industries(P) Ltd. (1972 (10) TMI 90 - SUPREME COURT OF INDIA) held the proceedings to be valid. - No illegality in the impugned notices/authorisation under Section 21 of the Act for the Assessment Years 2004-05 (U.P. and Central) and 2005-06 (U.P. and Central). So far as the submission of learned counsel for the petitioner that the goods are exempt, suffice is to say that this question along with all other points that may be raised by the petitioner shall be considered by the Assessing Authority in the reassessment proceedings while passing reassessment order. - Decided against assessee. Issues:1. Validity of orders of permission under Section 21(2) of the U.P. Trade Tax Act 1948 for Assessment Years 2004-05 and 2005-06.2. Jurisdiction of Assessing Authority to initiate reassessment proceedings.3. Grounds for initiation of proceedings under Section 21 of the Act.4. Legality of authorisation granted by the respondent no.3.5. Compliance with legal requirements for escaped assessment.Analysis:1. The petitioner sought to quash the permission orders issued by respondent no.3 under Section 21(2) of the U.P. Trade Tax Act 1948 for Assessment Years 2004-05 and 2005-06. The petitioner contended that as a manufacturer of Pan Masala containing tobacco, exempted from trade tax, reassessment proceedings should not have been initiated.2. The respondent-department argued that the turnover of the petitioner had escaped assessment based on information received, justifying the initiation of proceedings under Section 21. Referring to legal precedent, the department asserted that the Assessing Authority had the jurisdiction to act under the said section and that the grounds for initiation were relevant and connected to the belief of escaped assessment.3. The Court noted that searches conducted by the Directorate General of Central Excise Intelligence yielded incriminating materials, leading to the issuance of show cause notices and subsequent reassessment orders. The Assessing Authority had reason to believe that certain turnover had escaped assessment, and the grounds for initiating proceedings were found to be rational and not extraneous.4. Relying on a Division Bench judgment, the Court upheld the validity of the proceedings under Section 21, citing the requirement of a rational basis for the Assessing Authority to believe that turnover had escaped assessment. The Court emphasized that the sufficiency of grounds was not justiciable, and the belief must be held in good faith.5. Ultimately, the Court found no illegality in the notices/authorization under Section 21 for the relevant Assessment Years. The Assessing Authority was directed to consider all points raised by the petitioner, including the exemption status of goods, during the reassessment proceedings. The writ petition was dismissed, with no order as to costs.