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2014 (3) TMI 948 - HC - VAT and Sales TaxInitiation of proceeding and issuance of notice u/s 21 (2) of the U.P. Trade Tax Act, 1948 Re-opening of assessment order Whether a complete assessment under the Act could be reopened and any case for reopening the assessment u/s 21(1) is made out after prescribed period when that period has been enlarged by amending the law - whether it is a case of change of opinion binding force of per incurium judgment - Held that - Decisions in Binani Industries Limited Versus Assistant Commissioner Of Commercial Taxes, Vi Circle, Bangalore 2007 (4) TMI 353 - SUPREME COURT OF INDIA and Additional Commissioner (Legal) and another Versus Jyoti Traders and another 1998 (11) TMI 531 - SUPREME COURT OF INDIA followed By virtue of Section 21(2) and the proviso added to it, it is clear that the CST could authorize making of assessment or reassessment after the expiration of 6 years from such year, i.e upto 31.03.1999 or March 31,2002 whichever is later - It is immaterial if a period for assessment or reassessment u/s 21(2) before the addition of the said proviso had expired - Notice to the assessee follows the authorisation by the CST - A fiscal statute can have retrospective operation - If we accept the interpretation given by the respondents, the proviso added to Section 21(2) providing limitation up to 31.03.2002 becomes redundant - Proviso now added to Section 21(2) does not put any embargo on the CST not to reopen the assessment if period had expired before the proviso came into operation - To reassure oneself, one may go into the intention of the legislature in enacting such provision thus, the impugned notice issued is well within time. While delivering the judgment the DB in M/s Prag Ice and Oil Mills and others Vs. Additional Commissioner of Trade Tax, Aligarh Zone and another; 2008 have not noticed the retrospectivity of the provisions contained in the proviso added to section 21(2) and the amended Ist proviso added on 5.3.2001 as a whole as interpreted by Apex Court in M/s Binani Industries Limited case(Supra) and Jyoti Traders case (Supra) as such the judgment in Prag Ice and Oil Mills case (Supra) being per incuriam have no binding force and are not binding precedent - Decided against assessee. The notice under section 21 has been issued without any fresh material but not on account of change of opinion - Initial opinion while passing the original assessment order was to grant exemption on such sale of scooters has not been changed while issuing the notice but on the same principles it was found that exemption has wrongly allowed to the extent of ₹ 97,02,050.65 which ought to be taxed - So far as this calculation of total amount of 270 certificates are concerned, the correctness of the same has not been disputed by the petitioner - In view of the factual matrix of this case the AC was having well founded reason to believe for issuing impugned notice and fall within the ambit of section 21(1), in limb-IV Decided against assessee.
Issues Involved:
1. Whether a complete assessment under the U.P. Trade Tax Act, 1948 can be reopened after the prescribed period when that period has been enlarged by amending the law. 2. Whether the case for reopening the assessment under Section 21(1) of the Act is made out and whether it is a case of change of opinion. Issue-wise Detailed Analysis: Issue 1: Reopening of Assessment After Prescribed Period The primary issue was whether the assessment for the year 1990-91, completed on 25.03.1995, could be reopened after the prescribed period had expired, given the amendments to Section 21(2) of the U.P. Trade Tax Act, 1948. The petitioner argued that the proceedings were time-barred as the limitation period had expired on 31.03.1997. The proviso to Section 21(2) stated that reassessment could be made within six years from the end of the assessment year or by March 31, 2002, whichever was later. The petitioner contended that the amendment could not revive a limitation period that had already expired. The court referred to various precedents, including the Apex Court's judgment in *Addl. Commissioner (Legal) Vs. Jyoti Traders and Anr.* (1999) 2 SCC 77, which held that if the language of the provision is clear, it must be given full effect, even if it means retrospective application. The court concluded that the amended provision allowed reassessment up to March 31, 2002, and thus, the notice issued on 13.03.2002 was within the permissible time frame. The court also discussed the retrospective operation of fiscal statutes, citing cases like *The Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S. G. Mehta, Income-tax Officer* (1963) 48 ITR 154 (SC) and *Biswanath Jhunjhunwalla* (1996 AIR SCW 3721). It was held that the amended proviso to Section 21(2) of the Act, effective from 05.03.2001, allowed reopening of assessments within six years from the end of the assessment year or by March 31, 2002, whichever was later. Therefore, the court found that the notice was issued within the extended limitation period, making the reopening of the assessment valid. Issue 2: Change of Opinion and Validity of Reopening The second issue was whether the reopening of the assessment was based on a change of opinion. The petitioner argued that the original assessment had already considered the material, and the notice for reassessment was issued without any new material, which constituted a change of opinion. The court examined the notice issued under Section 21 of the Act and found that it was based on the discrepancy in the total amount of 270 certificates submitted by the petitioner. The original assessment granted exemption on the sale of scooters amounting to Rs.5,23,93,337.57, but it was later found that the total of these certificates was only Rs.4,26,94,276.59, indicating an excess exemption of Rs.97,02,050.65. The court referred to precedents like *Commissioner of Sales Tax Versus Bhagwan Industries (P) Ltd.* (1973) 31 STC 293 and *Income Tax Officer Versus Lakhani Mewal Dutt* (1976) 103 ITR 437 (SC), which emphasized that the belief of escaped assessment must be based on relevant and rational grounds. The court held that the initiation of proceedings was not due to a change of opinion but due to the discovery of an error in the original assessment. The court also discussed the distinction between an inadvertent mistake and a change of opinion, citing *Commissioner of Sales Tax, U.P. v. Madhu Chemical Works* (1998 UPTC 230). It concluded that the reassessment was justified as it was based on the correct calculation of the total amount of certificates, which was not disputed by the petitioner. Conclusion: The court dismissed the writ petition, affirming the validity of the notice issued under Section 21(2) of the Act and the subsequent reassessment proceedings. The court held that the reopening of the assessment was within the extended limitation period and was not based on a change of opinion but on a legitimate discovery of an error in the original assessment.
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