2009 (9) TMI 888 - HC - VAT and Sales Tax

Reassessment proceedings - Held that - As find from the record that to the show-cause notice issued by respondent No. 2 the petitioner had filed its detailed objection. But the Additional Commissioner, respondent No. 2, had not given any reason whatsoever nor has dealt any of the objections raised by the petitioner in his reply, thus the said order passed by the Additional Commissioner cannot be sustained and is liable to be set aside The impugned order dated December 18, 2007 (annexure 5) passed by the Additional Commissioner, Grade 1, Trade Tax, Kanpur Zone, Kanpur and the consequential notice dated January 4, 2008 (annexure 6) issued by the assessing authority for initiating reassessment proceedings for the assessment year 2002-03 are set aside. Appeal allowed.

Summary

Issues:
1. Validity of notice under section 21(2) of the U.P. Trade Tax Act, 1948 for the assessment year 2002-03.
2. Legality of granting permission for reassessment proceedings.
3. Requirement of recording reasons for granting permission under section 21 of the Act.

Issue 1: Validity of notice under section 21(2) of the U.P. Trade Tax Act, 1948 for the assessment year 2002-03:
The petitioner, a registered dealer under the U.P. Trade Tax Act, disclosed nontaxable sales and consignment sales for the assessment year 2002-03. The Additional Commissioner issued a notice under section 21(2) regarding consignment sales not disclosed by another dealer. The petitioner responded, stating the validity of the consignment sale and lack of adverse material during the original assessment. The Additional Commissioner rejected the reply and permitted the assessing authority to initiate reassessment proceedings. The court found the Additional Commissioner's order lacking reasons and not addressing the petitioner's objections, leading to the order being set aside.

Issue 2: Legality of granting permission for reassessment proceedings:
The court emphasized the necessity of recording reasons for granting permission under section 21 of the Act, citing a previous judgment. The Additional Commissioner's failure to provide reasons for granting permission was deemed unsustainable, leading to the setting aside of the impugned order and consequential notice for reassessment proceedings for the assessment year 2002-03.

Issue 3: Requirement of recording reasons for granting permission under section 21 of the Act:
The court reiterated the importance of giving every assessee an opportunity for hearing and recording reasons while granting sanction for reassessment proceedings. Quoting a previous judgment, the court held that the absence of reasons for granting permission/sanction rendered the order unsustainable. Consequently, the impugned order and the consequential notice for reassessment proceedings were set aside.

In conclusion, the court allowed the writ petition, setting aside the impugned order and the notice for reassessment proceedings. The Additional Commissioner was directed to pass a fresh order within three months, ensuring compliance with the law and providing the petitioners with an opportunity for hearing.