2018 (7) TMI 2119 - HC - VAT and Sales Tax

Uttarakhand High Court Orders Revenue Authority to Reassess VAT on Telecommunication Component

The High Court of Uttarakhand directed the revenue authority to consider the petitioner's submissions within three weeks and issue a reasoned order ... Reassessment Order - rate of tax - instrument cooling fan - case of the petitioner is that the instrument which is called “instrument cooling fan” is only used for the purposes of coolant in telecommunication equipments - Change of Opinion - HELD THAT:- An order for reassessment was passed by the Additional Commissioner on 07.02.2017 for re-opening the assessment which was probably not been served upon the petitioner. In any case, when the petitioner had this information, he gave a detail reply on 27.02.2017 explaining as to why the reassessment being initiated is not proper etc., and stressed that he was liable to be assessed at the rate of 4.5% as the equipment which is being manufactured by the petitioner is a necessary component of telecommunication equipment, for which duty of 4.5% and not of 13.5% has to be given, which is in any case aresiduary clause - It appears that the reply given by the petitioner assigning reasons as to why the reassessment is not proper and it is merely a change of opinion has not been considered by the revenue authorities. The writ petition stands disposed with a direction that in case the petitioner moves a representation in this regard within a period of three weeks from the date of production of a certified copy of this order, the same shall be considered by the authority concerned by passing a speaking order therein in accordance with law after considering the reply of the petitioner. Issues:1. Assessment under Uttarakhand Value Added Tax Act, 2005 for the sale of 'instrument cooling fan' by a registered trader.2. Re-assessment proceedings initiated by the Department after the closure of the manufacturing unit.3. Consideration of petitioner's reply and reasons for challenging the reassessment.Analysis:The High Court of Uttarakhand addressed the issue of assessment under the Uttarakhand Value Added Tax Act, 2005 concerning the sale of an 'instrument cooling fan' by a registered trader. The petitioner, a company manufacturing this component, contended that it should be taxed at 4.5% under Schedule II (B) Entry 3 as it is a necessary component of telecommunication equipment. Initially, the petitioner was assessed at the rate of 4.5%, but re-assessment proceedings were initiated by the Department. The petitioner had informed about the closure of its manufacturing unit before the re-assessment, and despite providing detailed replies explaining the necessity of being taxed at 4.5%, the revenue authorities did not consider the reasons provided.Regarding the re-assessment proceedings initiated after the closure of the manufacturing unit in 2013-2014, the Court noted that the order for reassessment was passed by the Additional Commissioner. The petitioner had submitted a detailed reply emphasizing the duty rate of 4.5% applicable as the component manufactured was essential for telecommunication equipment. The Court observed that the petitioner's reasons for challenging the reassessment, citing it as a mere change of opinion, were not considered by the revenue authorities.In conclusion, the High Court disposed of the writ petition with a direction for the authority concerned to consider any representation submitted by the petitioner within three weeks from the date of the order. The authority was instructed to pass a speaking order after evaluating the petitioner's reply in accordance with the law. This decision aimed to ensure a fair consideration of the petitioner's contentions regarding the assessment and reassessment proceedings under the Uttarakhand Value Added Tax Act, 2005.