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of <h1>Reassessment proceedings solely for Input Tax Credit disallowance lack jurisdiction under Section 29</h1> <h3>Mentha And Allied Products Ltd Versus State of U.P. And 3 Others</h3> Mentha And Allied Products Ltd Versus State of U.P. And 3 Others - TMI Issues Involved:1. Jurisdiction to initiate reassessment proceedings u/s 29(7) of the Uttar Pradesh Value Added Tax Act, 2008.2. Validity of the reassessment proceedings conducted in haste.3. Eligibility and computation of Input Tax Credit (ITC).4. Violation of principles of natural justice.Summary:1. Jurisdiction to initiate reassessment proceedings u/s 29(7) of the Uttar Pradesh Value Added Tax Act, 2008:The petitioner challenged the reassessment order dated 28.03.2023 and the notice dated 22.03.2023 issued u/s 29(7) of the Act for A.Y. 2014-15. The court found that the reassessment proceedings were without jurisdiction as ITC is not part of the determination of turnover or tax liability but an allowance. The court clarified that Section 29(1) of the Act does not empower the assessing authority to initiate reassessment proceedings to recompute ITC or to Reverse Input Tax Credit (RITC). Therefore, the reassessment notice and proceedings were invalid.2. Validity of the reassessment proceedings conducted in haste:The court noted that the reassessment proceedings were conducted in great haste. The Additional Commissioner granted permission on 18.3.2023, the notice was issued on 22.3.2023, served on 24.3.2023, and the reassessment order was passed on 28.03.2023. The court held that such a procedure dilutes the trust in the rule of law and violates the principles of natural justice as reasonable opportunity to respond was not provided to the petitioner.3. Eligibility and computation of Input Tax Credit (ITC):The petitioner, a manufacturer of 'Mentha Oil', claimed ITC on raw materials purchased. The court held that ITC is an allowance arising upon fulfillment of statutory conditions and is distinct from the assessment of turnover. The court emphasized that ITC computation should be part of regular assessment proceedings and not reassessment proceedings. The court found no provision allowing the assessing officer to initiate fresh proceedings to redetermine ITC or to RITC after the regular assessment order.4. Violation of principles of natural justice:The court found that the reassessment order was passed in violation of principles of natural justice. The petitioner was not given a reasonable opportunity to respond to the reassessment notice. The court highlighted that the assessing authority should conduct proceedings in a manner that inspires confidence in the noticee, irrespective of their status as an honest taxpayer or a tax evader.Conclusion:The writ petition was allowed, and the impugned order dated 28.3.2023 was quashed. The court held that the reassessment proceedings were without jurisdiction and conducted in violation of principles of natural justice. No order as to cost.
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