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2019 (2) TMI 1882 - HC - VAT and Sales TaxValidity of reassessment proceeding - Reopening of completed assessment - Harpic and Mortein Coil - rate of tax - UPVAT Act - HELD THAT - The record reveals that the assessing authority while passing the original assessment order have considered all relevant material and rightly imposed tax at the rate of 4 %, therefore, there is no fresh or tangible material to form a reasonable belief that the turnover has escaped assessment, which could legally be permitted for initiating the reassessment proceeding under Section 29(7) of the Act. At the best it can be said that there is only a change of opinion, which is not permissible under the Act. This Hon'ble Court, time and again has taken the view that in absence of no new material brought on record, the completed assessment cannot be re-opened merely on the basis of change of opinion. There is no new material on record to be put forward by the respondents that the goods in question i.e. Harpic and Mortein Coil will be classifiable under Schedule-V of UP VAT Act so as to justify the higher rate of tax, at the rate of 12 % - the goods in question i.e. Harpic and Mortein are squarely covered under Entry 20, Part-A of Schedule-II of UPVAT Act. Petition allowed.
Issues Involved:
1. Legality of the reassessment proceeding under Section 29(7) of the UPVAT Act. 2. Classification and taxability of Harpic and Mortein Coil under the UPVAT Act. 3. Application of judicial precedents and expert reports in determining tax classification. Detailed Analysis: 1. Legality of the Reassessment Proceeding under Section 29(7) of the UPVAT Act: The petitioner challenged the reassessment proceeding initiated by the respondent, arguing that there was no new material to justify the reassessment under Section 29(7) of the UPVAT Act. The petitioner contended that the original assessment was correctly made, and the reassessment was merely a change of opinion, which is not permissible under the law. The court examined the principles laid down in CIT Vs. Kelvinator India Limited and other relevant cases, concluding that the reassessment was unjustified as it was based on a mere change of opinion without any fresh or tangible material. 2. Classification and Taxability of Harpic and Mortein Coil under the UPVAT Act: The petitioner argued that Harpic and Mortein Coil should be taxed at the rate of 4%-5% under Schedule-II, Part A, Entry 20 of the UPVAT Act, as they are classified as pesticides and insecticides. The petitioner supported this classification by referencing various judgments from different High Courts, including Andhra Pradesh, Guwahati, and Rajasthan, which had held that similar products fall under the category of pesticides and are subject to lower tax rates. The court also considered expert reports and government certifications that classified Harpic as a disinfectant and Mortein Coil as an insecticide. The court concluded that these products should indeed be classified under Schedule-II, Part A, Entry 20, and not under the residual category in Schedule-V, which attracts a higher tax rate of 12.5%. 3. Application of Judicial Precedents and Expert Reports in Determining Tax Classification: The court relied heavily on judicial precedents and expert reports to determine the correct classification of the products. It referred to several judgments, including those from the Supreme Court and various High Courts, which had consistently classified similar products as pesticides or insecticides. The court also considered expert reports from the Indian Institute of Chemical Technology and other government laboratories, which certified that Harpic and Mortein Coil possess disinfectant and insecticidal properties, respectively. These reports were deemed sufficient evidence to support the classification under the lower tax rate category. Conclusion: The court quashed the reassessment proceeding, holding that it was based on a mere change of opinion without any new material. It reaffirmed the classification of Harpic and Mortein Coil under Schedule-II, Part A, Entry 20 of the UPVAT Act, subjecting them to a tax rate of 4%-5%. The court also emphasized the importance of judicial precedents and expert reports in determining tax classifications, thereby providing a comprehensive legal basis for its decision.
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