2013 (11) TMI 1516 - HC - VAT and Sales Tax

Reassessment of proceedings - Change of opinion - Wrong applicability of rate of tax - Held that - Assessing authority has not recorded any finding or had taken view either way as to whether VCD and DVD players, would attract tax at the rate of 12 per cent. under entry 75(i)(a) or at the rate of eight per cent. in the residual entry 75(ii), (iii). The assessing authority simply accepted the return filed by the assessee, and agreed that there was an error in respect of some of the consignments in which tax was erroneously charged at the rate of 12 per cent. He did not express any opinion with regard to taxability of the items so as to accept the argument that the proceedings of reassessment were based on change of opinion. - The order of the Commissioner under section 35 of the Act would form the material, the basis on which the reassessments proceedings have been initiated is the wrong application of rate of tax by the assessing authority. The order of the Commissioner may not be conclusive in that regard but would definitely be a material to initiate proceedings under section 21(2) of the Act. It will be open to the petitioner to establish by producing all such material, which may be relevant that VCD and DVD players are based on different technology and would not fall within the category of entry 75(i)(a), for the purpose of rate of tax, in the proceedings for reassessment. - Decided against assessee.

Summary

Issues:
Reassessment notice under section 21(2) of the U. P. Trade Tax Act, 1948 for DVD and VCD players tax rate discrepancy.

Analysis:
The petitioner challenged a notice for reassessment issued by the Additional Commissioner, Trade Tax, Ghaziabad, regarding the tax rate applied to DVD and VCD players. The petitioner contended that the turnover was wrongly taxed at 8% under a residuary entry, whereas it should have been taxed at 12% under a specific entry. The petitioner argued that the technology differences between VCD/DVD players and VCP/VCR warranted a lower tax rate. The Additional Commissioner relied on a circular stating that VCD and DVD players should be taxed at the same rate as VCP/VCR. The petitioner objected to the reassessment based on a change of opinion, citing a Supreme Court judgment differentiating between the power to review and reassess.

The respondent, representing the Department, argued that the assessing authority did not express an opinion on the taxability of VCD and DVD players in previous assessments. The respondent cited a Supreme Court judgment emphasizing the requirement of a rational basis for believing that turnover had escaped assessment. Additionally, previous court judgments were referenced to support the Department's authority to reassess based on existing records if there was concealment or negligence.

The court analyzed the submissions and orders, finding that the assessing authority did not express a clear opinion on the tax rate for VCD and DVD players. The court rejected the petitioner's argument of reassessment based on a change of opinion and concluded that the reassessment was initiated due to the incorrect application of the tax rate. The court acknowledged the relevance of the Commissioner's order but emphasized that it was not conclusive. The petitioner was given the opportunity to present relevant material to support their claim during the reassessment proceedings.

Ultimately, the court dismissed the writ petition, upholding the reassessment notice for DVD and VCD players' tax rate discrepancy under the U. P. Trade Tax Act, 1948.