2014 (7) TMI 820 - HC - VAT and Sales Tax

Reassessment - Input Tax Credit (ITC) - sale of material to 100% EOU and SEZ units - Assessee claims that once the petitioner s Company purchases raw material for manufacture of craft paper and sells the same to 100% export oriented unit as well as dealers in the special economic zone it is squarely covered under Section 13(1)(a) of the Act and it had rightly claimed the ITC to the extent of tax paid by it in purchase of raw materials - Held that - The Section 29(7) relates to assessment of tax of turnover which has escaped from assessment. Sub-clause 7 of Section 29 provides that the Commissioner on his own or on the basis of reasons recorded by the Assessing Authority can authorize the Assessing Authority for reassessment within a period of 8 years after expiry of assessment year. The provision requires recording of reasons by the Commissioner. The reason has been recorded by the Commissioner in the impugned order which is already quoted herein above. Therefore to argue that the impugned order suffers from illegality of having no reasons therein cannot be accepted. From the perusal of the orders passed by the Assessing Authority, First Appellate Authority and the Second Appellate Authority it is quite apparent that the reason given in the impugned order for reassessment have not been considered in any of those orders to the effect that sale was to units established in the special economic zone and could not be given any ITC under Section 13(7) of the Act whereas the petitioner has claimed it. The provisions of Section 29(7) of the Act squarely applied to the facts and circumstances of the present case since assessment of tax of turnover had escaped assessment in the orders passed by the Assessing Authority the First Appellate Authority as also the Second Appellate Authority. Therefore, the fact that the order of the Second Appellate Authority was not challenged by the department or the petitioner and that it attained finality would not be a bar for the Authority to exercise its jurisdiction under Section 29(7) of the Act. - Decided against assessee.

Summary

Issues:
Challenge against order granting permission for reassessment under Section 29(7) of the U.P. Value Added Tax Act, 2008.

Analysis:
The petitioner challenged an order granting permission for reassessment under Section 29(7) of the U.P. Value Added Tax Act, 2008. The petitioner contended that the assessment of the Company for the year 2008-09 had been finalized, and the issue of Input Tax Credit (ITC) had been addressed in previous appeals. However, a notice under Section 29(7) was issued alleging that ITC was not applicable on raw materials used for manufacturing goods sold to export units and dealers in special economic zones. The petitioner argued that as per Section 13(1)(a) of the Act, they were entitled to claim ITC on the tax paid for raw materials used in manufacturing. The petitioner also raised concerns about the lack of challenge to previous appellate orders and the authority's conclusion that tax assessment had escaped, invoking Section 29(7).

The Respondent countered by emphasizing the provisions of Section 29(7) related to escaped assessment of turnover. They argued that the impugned order clearly indicated the escaped assessment, specifically related to sales made to units in special economic zones, making the petitioner ineligible for ITC under Section 13(7) of the Act. The Respondent also highlighted that Section 13(2) of the Act pertained to developers, co-developers, and units in special economic zones, which did not apply to the petitioner.

The Court analyzed the submissions and provisions of the Act. It noted that Section 13(1) allowed for ITC, while Section 13(7) restricted ITC claims for goods exported out of India. The Court upheld the authority's decision for reassessment under Section 29(7), citing the escaped assessment due to the sale to units in special economic zones. The Court dismissed the writ petition, stating that the impugned order was lawful and provided the petitioner the opportunity to present their case before the Assessing Authority.

In conclusion, the Court found no error in the impugned order, dismissing the writ petition without costs and granting the petitioner the chance to present all legal grounds before the Assessing Authority for consideration.