2013 (3) TMI 571 - HC - VAT and Sales Tax

Reassessment - Held that - There is no dispute that the appellate authority in Appeal No. 737 of 2006 by order dated November 30, 2006 has held that the parts manufactured and sold by the petitioner were components of electronic goods, and accordingly assessed the parts in the head of electronic goods . This order between the parties has become final. Since the issue of fact between the parties has been finally decided by the appellate authority, as such, the order was binding upon the assessing authority and it was not proper for him to reopen the assessment proceeding taking a contrary view. In the circumstances of the case, the impugned order dated March 9, 2007 passed by respondent No. 2 and notice dated March 14, 2007 issued by respondent No. 3 are illegal and are liable to be quashed.

Summary

Issues:
Challenge to reassessment order for the assessment year 2000-01 based on classification of goods under different tax rates.

Analysis:
The petitioner, a company involved in manufacturing loudspeaker parts, was initially assessed at four per cent trade tax for the assessment year 2000-01, treating the components as electronic goods. Subsequently, a reassessment was initiated to classify the parts under "other electronic goods" attracting an eight per cent tax rate. The petitioner argued that a previous appellate judgment had confirmed the components as electronic goods, making reassessment unnecessary. The petitioner relied on legal precedents to support their position.

The standing counsel contended that each assessment year is distinct in taxation law, and a judgment for one year does not bind assessments for other years. Legal precedents were cited to support this argument. The Supreme Court's decision in Bharat Sanchar Nigam Ltd. clarified that res judicata does not apply to tax matters across different assessment years due to the distinct nature of each year's cause of action.

The court acknowledged that the appellate authority had conclusively determined the parts manufactured by the petitioner as electronic goods for the assessment year in question. As the issue was settled between the parties through the appellate judgment, the assessing authority was not justified in reopening the assessment based on a different interpretation.

Consequently, the court deemed the impugned order and notice as illegal and quashed them. The writ petition was allowed, and the order and notice were set aside. Each party was directed to bear their own costs, concluding the judgment.