2010 (4) TMI 974 - HC - VAT and Sales Tax

Whether the proceedings have been initiated on account of change of opinion? Held that - In none of the aforesaid cases, it has been held that the case can be reopened on account of change of opinion. The two decisions cited by the learned counsel for the Revenue, namely, Commissioner of Income-tax v. Dinesh Chandra H. Shah reported in 1971 (8) TMI 11 - SUPREME Court and in Diamond Sugar Mills Ltd. v. Income-tax Officer reported in 1972 (7) TMI 4 - CALCUTTA High Court wherein the view has been taken that the proceedings cannot be re-opened merely on the ground of change of opinion have been distinguished on the ground that in the said case the precise aspect of law on which the proceedings were sought to be re-opened was neither canvassed nor was any opinion held or expressed by the authority at the time of the original assessment and thus, there was no change of opinion. The writ petition is allowed in part. The notices under section 21 of the Act for the assessment years 1997-98 and 1998-99 are hereby quashed and notices issued under section 21 of the Act for the assessment years 1999-2000 and 2000-01 are held valid.

Summary

Issues Involved:
1. Quashing of reassessment proceedings under Section 21 of the U.P. Trade Tax Act for assessment years 1997-98 to 2000-01.
2. Quashing of the circular dated September 30, 2003, directing the imposition of tax on poly pouches used for packing country liquor.
3. Restraining the respondent from imposing tax on poly pouches for the assessment years 1997-98 to 2000-01.
4. Awarding costs of the petition to the petitioner.

Detailed Analysis:

1. Quashing of Reassessment Proceedings:
The petitioner challenged the reassessment notices issued under Section 21 of the U.P. Trade Tax Act for the assessment years 1997-98 to 2000-01. The petitioner argued that the original assessment orders for 1997-98 and 1998-99 had already examined and exempted the value of poly pouches from tax under Section 3AB of the Act. The court agreed that reopening the proceedings for these years was merely a change of opinion and thus invalid. However, for the assessment years 1999-2000 and 2000-01, the court held that the issue had not been considered in the original assessments, making the reassessment notices valid.

2. Quashing of Circular Dated September 30, 2003:
The petitioner sought to quash the circular dated September 30, 2003, which directed the imposition of tax on poly pouches when the prices of country liquor and packing materials were separately charged. The court referred to the Division Bench decision in Majhola Distillery & Chemical Works Majhola, District Pilibhit v. State of U.P., which held that Section 3AB applies only when a composite price is charged. The court found the circular legally correct and in accordance with the Act, thus rejecting the petitioner's challenge.

3. Restraining the Respondent from Imposing Tax:
The petitioner requested a writ to restrain the respondent from taking any proceedings for imposing tax on poly pouches for the assessment years 1997-98 to 2000-01. The court ruled that for the years 1997-98 and 1998-99, the reassessment proceedings were invalid due to a change of opinion. However, for the years 1999-2000 and 2000-01, the court upheld the validity of the reassessment notices, allowing the respondent to proceed with tax imposition for these years.

4. Awarding Costs of the Petition:
The petitioner sought the costs of the petition. The court did not specifically address the awarding of costs, focusing instead on the validity of the reassessment notices and the circular.

Conclusion:
The court allowed the writ petition in part, quashing the reassessment notices for the years 1997-98 and 1998-99, while upholding the notices for 1999-2000 and 2000-01. The challenge to the circular dated September 30, 2003, was rejected, affirming its legality. The court's decision was based on the legal principle that reassessment cannot be initiated merely due to a change of opinion and must be based on new, relevant material.