High Court sets aside reassessment under U.P. VAT Act, ruling it unwarranted and beyond jurisdiction

The High Court, comprising Sudhir Agarwal and Dr. Kaushal Jayendra Thaker, JJ., allowed the writ petition challenging the order granting approval for reassessment under Section 29(7) of U.P. Value Added Tax Act, 2008. The Court held that since the petitioner had accepted the Compounding Scheme and paid the tax accordingly, the reassessment under Section 29(7) was unwarranted and beyond jurisdiction. The respondents' concession that Section 29 does not apply in such cases led to the conclusion that the reassessment lacked jurisdiction. Therefore, the impugned order was set aside.

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Issues:
Challenge to order granting approval for reassessment under Section 29(7) of U.P. Value Added Tax Act, 2008 for Assessment Year 2008-09.

Analysis:
The High Court, comprising Sudhir Agarwal and Dr. Kaushal Jayendra Thaker, JJ., heard arguments from both sides represented by respective counsels. The writ petition contested the order dated 30.12.2015 by the Additional Commissioner, Grade-II, Commercial Tax, Ghaziabad Zone-II, Ghaziabad, which approved reassessment under Section 29(7) of the U.P. Value Added Tax Act, 2008 against the petitioner. The petitioner had previously accepted the Compounding Scheme under the VAT Act, 2008, as evidenced by the filed copy. The petitioner argued that since they had accepted the Compounding Scheme and paid the tax accordingly, the reassessment under Section 29(7) was unwarranted and beyond jurisdiction. Specifically, the petitioner highlighted that under the Compounding Scheme, the tax payable was dependent on the percentage of import, with a clear distinction between tax rates for import up to 5% and above 5%. The respondents were accused of misinterpreting the Compounding Scheme by considering the total payment received by the contractor, leading to an erroneous reassessment. The Standing Counsel for respondents, Sri C.B. Tripathi, conceded that when an assessee accepts the Compounding Scheme and fulfills the tax obligations, Section 29 does not apply.

The Court, based on the respondents' acknowledgment that Section 29 does not apply when an assessee has availed the Compounding Scheme and paid the due tax, concluded that the reassessment conducted in this case lacked jurisdiction and was untenable. Consequently, the writ petition was allowed, and the impugned order dated 30.12.2015 was set aside.

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