2008 (7) TMI 923 - HC - VAT and Sales Tax

Reassessment of the escaped turnover under section 21 of the U.P. Trade Tax Act, 1948 set aside - Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal was legally justified to hold that is was a matter of change of opinion and not that non-application of mind ? - Held that - As noticed and as also not disputed by the learned counsel for the dealer, there is total lack of discussion with regard to the taxability of bone-meal in the original assessment order. This being so, it cannot be said that it is a case of change of opinion. Viewed as above, it is held that the revision is on terra firma and the impugned order is indefensible. The revision succeeds and is allowed and the order of the Tribunal is set aside and the question of law is answered in favour of the Department and against the dealer-opposite party. The matter is restored back to the Tribunal to hear and decide the appeal afresh as the question of quantum of turnover was not gone into therein. By way of clarification it is added that the plea that the reopening of the assessment is not valid will not be open for adjudication.

Summary

Issues involved:
Assessment under U.P. Trade Tax Act, 1948 for the year 1992-93 (Central); Reassessment of escaped turnover under section 21; Validity of the initiation of reassessment proceedings; Change of opinion versus non-application of mind.

Analysis:
The case involved a revision against the Trade Tax Tribunal's order setting aside the proceedings for reassessment of the dealer's escaped turnover under section 21 of the U.P. Trade Tax Act, 1948 for the year 1992-93 (Central). The Tribunal had ruled that it was a case of change of opinion rather than non-application of mind. The dealer dealt in bone products and was initially found exempt from tax as the bone meal was sold as fertilizer. However, proceedings were initiated as it was alleged that the bone meal was sold to ceramic manufacturers. The assessing officer levied a tax of Rs. 1,95,000, which was later set aside by the Deputy Commissioner (Appeal) and further challenged by the Department in the second appeal.

The main question raised in the revision was whether the Tribunal was justified in considering it a change of opinion. The Department argued that the initiation of proceedings based on new information was valid, while the dealer's counsel supported the Tribunal's decision. Upon examination, it was found that the original assessment order was a non-speaking order passed without proper consideration of the dealer's reply. The Tribunal's view that reassessment cannot be initiated without new facts was deemed incorrect. The High Court clarified that if material on record was not considered, reassessment could be initiated, distinguishing it from a previous case where all material was considered in the original assessment.

The High Court concluded that the lack of discussion on the taxability of bone-meal in the original assessment order indicated non-application of mind rather than a change of opinion. The revision was allowed, the Tribunal's order was set aside, and the matter was remanded for fresh consideration on the quantum of turnover. The High Court emphasized that the validity of reassessment would not be open for adjudication. The revision was allowed with no order as to costs.