2019 (2) TMI 430 - HC - VAT and Sales Tax

Reopening of completed assessment - change of opinion - section 29(7) of the U.P. Value Added Tax Act, 2008 - Held that - The Hon ble Supreme Court in the case of State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog and others 2014 (11) TMI 1095 - SUPREME COURT has held that mere change of opinion while perusing the same material cannot be a reason to believe that a case of escaped assessment exists requiring assessment proceedings to be reopened. On perusal of record it reveals that reassessment proceedings have been initiated on the ground that broken rice (kana) amounting to ₹ 44,17,630/- has been given to the rice millers free of cost in lieu of hulling charges on which tax has escaped to assessment. On perusal of first appellate order as well as the tribunal s order the issue is squarely covered in favour of the petitioner wherein similar controversy was involved with regard of broken rice given to the rice millers free of cost in lieu of hulling charges. The order dated 14.11.2017 granting permission to reopen the completed assessment as well as consequential reassessment notice dated 26.12.2017 for the assessment year 2012-13 are liable to be set aside being tantamount to change of opinion which is not permissible under the law - petition allowed.

Summary

Issues:
Challenge to reassessment proceedings for Assessment Year 2012-13 under U.P. Value Added Tax Act, 2008.

Analysis:
The petitioner, a U.P. Cooperative Federation Ltd., challenged reassessment proceedings initiated against it for the Assessment Year 2012-13 under the U.P. Value Added Tax Act, 2008. The petitioner was nominated as a purchase agency for wheat and paddy from farmers at a minimum support price as per the scheme by U.P. Food and Supply Department. The petitioner purchased paddy from the central pool and delivered it to the Food Corporation of India (FCI) based on directions from the FCI Area Manager, with bills prepared according to government-issued cost sheets. The petitioner paid Mandi fee on behalf of FCI, reimbursed later by FCI, as per the prescribed procedure by the Government of India and Uttar Pradesh State. The petitioner provided broken rice/paddy (Kana) to millers in lieu of hulling charges, without paying labor charges for hulling.

The assessing authority, in the original assessment order for the year 2012-13, accepted that broken rice given to millers in lieu of hulling charges would not be part of the taxable turnover. However, a subsequent order permitted reopening of the assessment, alleging tax evasion on broken rice given to millers. The petitioner argued against the reassessment, citing that the original assessment authority had rightly excluded broken rice from taxable turnover, and reassessment was based on a change of opinion without fresh material. Previous appellate orders had also favored the petitioner's stance on broken rice not being taxable.

The respondent emphasized tax evasion on rice bran given to millers, arguing that previous appellate decisions were not applicable to the current case. The petitioner countered, highlighting that the reassessment notice focused solely on broken rice tax evasion. Referring to a Supreme Court case, the Court noted that reassessment based on a mere change of opinion without new material was impermissible. The issue of broken rice given to millers had been settled in favor of the petitioner in previous and subsequent years without any revisions filed against those decisions.

Considering the facts and legal precedents, the Court held that the reassessment proceedings were based on impermissible change of opinion and set aside the order granting permission to reopen the assessment and the consequential reassessment notice for the year 2012-13. The writ petition was allowed in favor of the petitioner.