2014 (6) TMI 724 - HC - VAT and Sales Tax

Reopening of case u/s 21 - assessing authority allowed the benefit of exemption on the disclosed turnover of CDR - Revenue contends that during the year under consideration, the petitioner had sold recorded CD and claimed exemption while the exemption on the recorded CD was not available under the eligibility certificate - Change of opinion - Held that - there was sufficient material on the basis of which an opinion has been formed that there was an escaped assessment. Since turnover of the recorded CD had not been disclosed separately, the assessing authority had no occasion to examine whether such recorded CD would be eligible for exemption under the eligibility certificate. This aspect of the matter has neither been examined nor any opinion has been formed. Therefore, it cannot be said that it is a case of change of opinion. In writ jurisdiction, the Writ Court can only examine that whether there was any material on which belief of escape assessment can be formed or not. Sufficiency of material cannot be examined. On the facts stated above, we are of a considered opinion that there was material to form opinion that there was an escaped assessment and accordingly approval granted by the Additional Commissioner under Section 21(2) and notice under Section 21 are wholly justified and no interference is called for. - Decided against assessee.

Issues Involved:

1. Challenge to the order permitting reopening of the assessment.
2. Interpretation of the eligibility certificate for tax exemption.
3. Validity of the notice issued for reassessment under Section 21 of the U.P. Trade Tax Act.
4. Examination of whether the reassessment constitutes a change of opinion.

Issue-wise Detailed Analysis:

1. Challenge to the order permitting reopening of the assessment:

The petitioner challenged the order dated 8.11.2011 by the Additional Commissioner, Commercial Tax, which allowed reopening the assessment for the year 2006-07 under Section 21(2) of the U.P. Trade Tax Act. The petitioner argued that the exemption granted under the eligibility certificate covered both recorded and unrecorded CDs, and thus reopening the assessment on the ground that recorded CDs were not exempt was unjustified.

2. Interpretation of the eligibility certificate for tax exemption:

The petitioner contended that the eligibility certificate granted exemption on "Optical Media Recorder (CDR)," which includes both recorded and unrecorded CDs. The term CDR stands for Compact Disc Recorder, and the petitioner argued that this should encompass both types of CDs. The petitioner maintained that the exemption had been rightly claimed on the recorded CDs as well, based on the eligibility certificate.

3. Validity of the notice issued for reassessment under Section 21 of the U.P. Trade Tax Act:

The Additional Commissioner issued a notice for reassessment on the grounds that the petitioner sold recorded CDs, which were not disclosed separately in the return or during the assessment proceedings. The court examined whether there was material to justify the belief of escaped assessment. It was found that the petitioner admitted the sale of recorded CDs, but these were not disclosed separately. The court concluded that there was sufficient material to form a belief of escaped assessment, justifying the reassessment notice.

4. Examination of whether the reassessment constitutes a change of opinion:

The court analyzed whether the reassessment constituted a change of opinion. It was determined that the assessing authority did not specifically examine whether recorded CDs were covered under the eligibility certificate during the initial assessment. Since the turnover of recorded CDs was not separately disclosed, the assessing authority had no occasion to form an opinion on their exemption status. Therefore, the court held that it was not a case of change of opinion but rather a matter of escaped assessment that warranted investigation and adjudication in the reassessment proceedings.

Conclusion:

The court dismissed the writ petition, concluding that there was sufficient material to justify the belief of escaped assessment and the reopening of the case was warranted. The petitioner was directed to participate in the reassessment proceedings and present all available pleas on merit. The court emphasized that the sufficiency of the material for forming the belief of escaped assessment could not be examined in writ jurisdiction.

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