2019 (3) TMI 934 - HC - VAT and Sales Tax

Reopening of assessment proceedings - compounding of tax - U.P. Tax on Entry of Goods into Local Area Act, 2007 Act - ex-parte order - change of opinion - Held that - The observation made in the impugned orders for passing the reassessment order is nothing but change of opinion without any new material being brought on record, which has come to the knowledge of the respondents and the said action cannot be permitted under the law. The reassessment proceeding must be based on some material and not on mere suspicion. The Assessing Authority must have some material, on which it forms its opinion and the same should not be arbitrary, irrational, vague or irrelevant. In the absence of such material, the action taken by the respondents cannot be sustained - The case in hand, the reassessment proceedings and the consequential assessment order have been passed only on presumption and conjectures, which is not permissible under the law. The Hon ble Supreme Court in the case of State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog and others 2008 (5) TMI 621 - ALLAHABAD HIGH 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. This Court is of the opinion that the impugned order dated 07.09.2017 passed by the respondent no. 2, granting permission to reopen the completed assessment, as well as the consequential ex parte reassessment order dated 31.03.2018 for the Assessment Year 2009-10 passed by the respondent no. 3 are liable to be quashed being tantamount to change of opinion, which is not permissible under the law - Petition allowed.

Summary

Issues:
Challenging reassessment proceedings under U.P. Tax on Entry of Goods into Local Area Act, 2007 for Assessment Year 2009-10.

Analysis:
The petitioner, engaged in civil construction work, opted for compounding under U.P. Value Added Tax Act, 2008. Respondent no. 3 had accepted the compounding application, mentioning that the assessment order under Entry Tax Act would be passed separately. An assessment order was passed under Entry Tax Act, enhancing cement purchase and imposing entry tax. The petitioner appealed but did not challenge the first appellate order. Subsequently, respondent no. 2 granted permission for reassessment proceedings, which the petitioner objected to.

Analysis:
The petitioner argued that no new material justified the reassessment, claiming it was a change of opinion. The court noted the original best judgment assessment was confirmed by the first appellate authority. The reassessment order was based on a presumption without new material, contravening legal principles. Citing relevant case law, the court emphasized that a mere change of opinion without new material is impermissible in reassessment proceedings. The court found the reassessment to be based on conjecture and not sustainable under the law.

Analysis:
The court quashed the impugned orders, deeming them as a change of opinion, which is not permissible under the law. The court referred to the lack of nexus between the change of opinion and available material, emphasizing that inadvertent mistakes do not justify reopening assessment proceedings. Consequently, the writ petition was allowed, and the impugned orders were quashed, leading to a successful outcome for the petitioner.