2002 (7) TMI 780 - HC - VAT and Sales Tax

Issues Involved:
1. Partial exemption from tax on inter-State sales of levy cement.
2. Jurisdiction of the Anti-evasion Wing to issue reassessment notices.
3. Applicability of Section 30 of the RST Act for reassessment based on change of opinion.
4. Mens rea requirement for invoking reassessment jurisdiction.
5. Finality and consistency in tax assessments and the principle of res judicata.

Detailed Analysis:

1. Partial Exemption from Tax on Inter-State Sales of Levy Cement:
The petitioner, a company involved in manufacturing and selling Portland cement, claimed partial exemption from tax payable on inter-State sales under a notification issued by the Government of Rajasthan on May 6, 1986. The petitioner argued that levy cement sales should be excluded from the tax computation. The Commercial Taxes Officer (C.T.O.) initially determined the percentages of inter-State sales, branch transfers, and intra-State sales of non-levy cement for the base year 1984-85. Appeals filed by the petitioner for the assessment years 1989-90, 1990-91, 1992-93, and 1993-94 were allowed, and the appellate authority directed the refund of the partial exemption amount. However, the assessing authority did not grant interest on the refunded amount, leading to further appeals.

2. Jurisdiction of the Anti-evasion Wing to Issue Reassessment Notices:
The petitioner challenged the reassessment notice issued by the Anti-evasion Wing on the grounds that the Anti-evasion Wing lacked jurisdiction as there was no case of evasion or concealment of tax. The petitioner argued that the Anti-evasion Wing could only issue notices in cases of tax evasion or concealment as per the notification dated October 23, 1967. The respondents contended that the notice was issued based on a survey conducted on February 16, 2001, which revealed that the petitioner had wrongly excluded levy cement sales while computing the base year percentage, thereby evading tax.

3. Applicability of Section 30 of the RST Act for Reassessment Based on Change of Opinion:
The petitioner argued that the reassessment notice was issued merely on a change of opinion, which is not permissible under Section 30 of the RST Act. The petitioner relied on the division Bench decision in "Black Stone Rubber Industries Pvt. Ltd. v. State of Rajasthan," which held that mere change of opinion cannot be the basis for reopening an assessment. The respondents countered that the reassessment was based on the detection of tax evasion during the survey and not merely a change of opinion. The court analyzed various judgments, including the Supreme Court's decision in Maharajadhiraj Sir Kameshwar Singh, which held that erroneous exemption of income could be considered as escaped assessment.

4. Mens Rea Requirement for Invoking Reassessment Jurisdiction:
The petitioner contended that the existence of mens rea (intention to evade tax) was necessary for the Anti-evasion Wing to invoke reassessment jurisdiction. The court rejected this argument, stating that mens rea is not required in fiscal statutes. The court referred to the Supreme Court's decisions in R.S. Joshi, Sales Tax Officer v. Ajit Mills Limited, and State of Rajasthan v. D.P. Metals, which held that mens rea has no role in fiscal statutes.

5. Finality and Consistency in Tax Assessments and the Principle of Res Judicata:
The petitioner argued that the department had consistently granted partial exemption in previous assessments, and the principle of res judicata should apply to prevent reopening of settled assessments. The court held that the principle of res judicata does not apply to tax matters, especially when there is inconsistency in the department's views on the applicability of the exemption notification. The court emphasized that each year's assessment is a separate proceeding, and the assessing authority is not bound by previous decisions.

Conclusion:
The court dismissed the writ petition, holding that the reassessment notice issued by the Anti-evasion Wing was valid and within jurisdiction. The petitioner was directed to appear before the departmental authority and contest the notice as per the law. The court clarified that the expressions "for any reason" and "in any way or under any circumstances" in Section 30 of the RST Act are broad enough to include reassessment based on change of opinion, and erroneous exemption can be considered as escaped assessment. The court also rejected the argument that mens rea is required for invoking reassessment jurisdiction in fiscal statutes.

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