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2016 (12) TMI 1897 - HC - VAT and Sales TaxRe-assessment/deemed assessment - power of re-assessment - change of opinion or not - reasons to believe - Classification of goods - composite pack of mobile phone along with mobile charger and other accessories - taxable at the rate specified for Entry 68 of Part 1 of Schedule-III read with Entry 14 of Part-II of the said Schedule or not - HELD THAT - It is evident from the provisions of Section 31 of the Bihar VAT Act that sub-section (1) of Section 31 although not very happily worded, but is on the same lines as the earlier provisions of the Income-tax Act, 1961 prior to its amendment in 1987. Taking into account the said Section as a whole including sub-section (2), it is evident that two types of cases are envisaged therein; in both type of cases the prescribed authority must be satisfied that reasonable grounds exist to believe that there has been under assessment or escaped assessment or assessment to tax at a lower rate or any deduction has been wrongly made therein or an input tax credit has been wrongly claimed, in which cases within the statutory period of four years it can make an assessment or reassessment of the tax payable by such dealer - In the first category, such reassessment can be made irrespective of whether the dealer has concealed, omitted or failed to disclose full and correct particulars of such sale or purchase or input tax credit, whereas in the second category there has been such a failure to disclose on the part of the dealer. The same would flow from the harmonious reading of the provisions of sub-section (1) with sub-section (2) of Section 31 of the Act, which obliges the prescribed authority in the second category of cases to impose by way of penalty the sum equal to three times of the amount of tax which is or may be assessed on the turnover of sale or purchase which escaped assessment, whereas in the first category there would be a mere reassessment of the under-assessed or escaped tax, etc. In the present matter, it is not in dispute at all that there has been no concealment, omission or failure to disclose full and correct particulars by the petitioners. Thus, the only issue is as to whether the assessing officer was justified in making reassessment under Section 31 of the Act with regard to the periods in issue - the provisions of the Act are on similar lines as the unamended provisions of Section 147 of the Income Tax Act and that they provide for two categories of cases; but even the provisions of Section 147 of the Income-tax Act amended in the year 1989 make it clear that there must be reason to believe that there has been under-assessment or escaped assessment, etc. and as has been held in the case of COMMISSIONER OF INCOME TAX, DELHI VERSUS M/S. KELVINATOR OF INDIA LIMITED 2010 (1) TMI 11 - SUPREME COURT by the Apex Court, it should not be a mere change of opinion, otherwise it would amount to arbitrary exercise of power by the assessing officer to reopen the assessment - The said law emphatically laid down by the Supreme Court in Kelvinator's case is squarely applicable in the present matter also and it has to be held that reassessment cannot be made on a mere change of opinion. Whether the decision of the Supreme Court subsequent to the assessments can be considered a mere change of opinion? - HELD THAT - The law on this point is also very much clear, as held in the several decisions cited including that of DY. COMMISSIONER OF INCOME TAX ORS. VERSUS M/S. SIMPLEX CONCRETE PILES (INDIA) LIMITED 2012 (9) TMI 516 - SC ORDER , a subsequent reversal of legal position by the judgment of the Supreme Court does not authorize the Department to reopen the assessment which stood closed on the basis of law at the relevant time. It is evident that in the first category of 8 writ petitions assessment/reassessment had been made earlier under the provisions of Section 31 and/or Section 33 of the Act. It is also evident from the notice issued under Section 31 of the Act that the sole reason for initiation of proceedings under Section 31 of the Act is the decision of the Supreme Court in the case of STATE OF PUNJAB OTHERS VERSUS NOKIA INDIA PVT. LTD. 2014 (12) TMI 836 - SUPREME COURT - There was no other material which has come into the possession of the Department which was already not known to it. The fact that there had been earlier assessment/reassessment under Section 31 or Section 33 of the Act goes to show that any further issuance of notice under Section 31 of the Act in such matters without anything more, except the decision of the Supreme Court in Nokia's case would, on the same materials, amount to a mere change of opinion by the prescribed authority in the matter. Thus, any action on the said basis would clearly be without jurisdiction and therefore without authority of law. So far as the remaining eight matters are concerned, admittedly they are cases of deemed assessments on the basis of the provisions of Section 26 of the Act or assessment under Section 27. No doubt under Section 25 of the Act, the prescribed authority is required to look into and scrutinize the return filed under Section 24 (1) and (3) of the Act but that is not the same thing as making a proper assessment. If the assessing authority had no occasion to form an opinion during the course of such deemed assessment of the returns filed by the petitioner, and subsequently a notice was issued under Section 31 (1) of the Act, or assessment made under Section 27, albeit on the ground of decision rendered by the Supreme Court, it could not be said that there has been any change of opinion - so far as the remaining eight cases are concerned, the plea of the petitioners regarding change of opinion is not applicable. That being the position, considering the fact that various issues of facts, etc. will have to be dealt with before the question of liability can be decided, the writ jurisdiction does not appear to be a proper one to deal with such issues of fact which must be thrashed before the statutory authorities up to the Tribunal - no interference is called for in such cases where that has been no previous assessment/reassessment under Section 31 or Section 33 of the Act - Application allowed.
Issues Involved:
1. Validity of reassessment orders under Section 31 of the Bihar Value Added Tax Act, 2005. 2. Applicability of the Supreme Court's decision in the Nokia India Ltd. case. 3. Principle of change of opinion in reassessment. 4. Availability of alternative statutory remedy. Issue-wise Detailed Analysis: 1. Validity of Reassessment Orders under Section 31 of the Bihar Value Added Tax Act, 2005: All writ applications sought to quash orders passed by the assessing officer under Section 31 of the Bihar Value Added Tax Act, 2005, along with demand notices and orders initiating proceedings. The cases were divided into two categories: those with prior assessments under Section 31 or 33, and those deemed assessed under Section 26. The Court emphasized that reassessment cannot be based solely on a subsequent Supreme Court decision, as it would amount to a mere change of opinion, which is not permissible. 2. Applicability of the Supreme Court's Decision in the Nokia India Ltd. Case: The Supreme Court had ruled that a mobile phone charger is an accessory and not a part of the mobile phone, thus subject to a different tax rate. The assessing officers issued notices based on this decision, prompting reassessment proceedings. However, the Court noted that the decision in Nokia India Ltd. cannot be blindly applied to all cases without considering specific facts and circumstances. The petitioners argued that their case did not fall under the purview of the Nokia decision, as there was no admission that the charger is an accessory. 3. Principle of Change of Opinion in Reassessment: The Court reiterated that reassessment based on a mere change of opinion is not permissible. Citing the Supreme Court's ruling in Kelvinator of India Limited, the Court emphasized that reassessment must be based on tangible material indicating under-assessment or escaped assessment. The Court held that reassessment initiated solely on the basis of the Nokia decision, without any new material, constitutes a mere change of opinion and is therefore invalid. 4. Availability of Alternative Statutory Remedy: For cases where there had been no prior assessment or reassessment under Section 31 or 33, the Court dismissed the writ petitions on the ground of availability of alternative statutory remedy. The petitioners were directed to pursue statutory appeals, with the assurance that no coercive action would be taken until the disposal of stay petitions if filed within four weeks. Conclusion: The Court allowed the writ petitions for cases with prior assessments or reassessments, quashing the impugned orders and demand notices. For cases without prior assessments, the petitions were dismissed, directing the petitioners to pursue alternative statutory remedies. The Court underscored that reassessment cannot be based on a mere change of opinion and must be supported by tangible material. The Nokia decision cannot be applied universally without considering the specific facts of each case.
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