2016 (10) TMI 11 - HC - VAT and Sales Tax

Reassessment under Section 29(7) of Act 2008 - change of opinion - Eligibility Certificate under Section 4-A of U.P. Trade Tax Act 1948 - tax exemption for a period of ten years from 15.04.1999 to 14.04.1999 for 107, 58, 99, 224/- - modification in Eligibility Certificate - U.P. Act 1948 was abolished on 31.12.2007 and U.P. Value Added Tax Act 2008 came into force with effect from 01.01.2008 - Rule 70(9) relied by respondent substituted on 28.02.2010 by U.P. Value Added Tax (Second Amendment) Rules 2010 published in the Notification dated 04.02.2010 - Whether here is a case of change of opinion so as to deny permission for reassessment under Section 29(7)? - Held that - the decision in the case of ALA Firm Versus Commissioner of Income-Tax 1991 (2) TMI 1 - SUPREME Court is relied upon where it was held that If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached it would tantamount to change of opinion . If an assessing authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for reassessment. Entire material which is now being taken into consideration for the purpose of impugned notice and approval granted was available before Assessing Authority and after having considered the same assessment was made. Now authorities taking a different view have issued impugned notice. Thus it is a clear case of change of opinion hence reassessment is not permissible. Writ petition allowed - decided in favor of petitioner - petitioner entitled to cost 5, 000/-.

Summary

Issues:
1. Challenge to notice issued under Section 29(7) of U.P. Value Added Tax Act, 2008 for reassessment.
2. Validity of change of opinion as a ground for reassessment under Section 29(7).
3. Interpretation of Rule 70(9) of U.P. Value Added Tax Rules, 2008.
4. Application of the principle of change of opinion in tax assessments.

Analysis:
1. The petitioner challenged a notice issued under Section 29(7) of the U.P. Value Added Tax Act, 2008, contending that it was not a case of escaped assessment but a change of opinion by the Assessing Authority. The petitioner, a company engaged in manufacturing beverages, had received tax exemption certificates under the U.P. Trade Tax Act, 1948, which were later modified. Upon the introduction of the U.P. Value Added Tax Act, 2008, the exemption was continued through a Certificate of Entitlement issued by the Commissioner of Commercial Tax. The challenge was based on the argument that the reassessment was not permissible due to a change of opinion rather than escaped assessment.

2. The Additional Commissioner issued a notice for reassessment for the Assessment Year 2008-09, alleging an error in the calculation of the refund amount in the assessment order. The Assessing Officer was criticized for not deducting the tax deposited by the Assessee and the input tax credit while computing the refund amount. The respondent relied on Rule 70(9) of the U.P. Value Added Tax Rules, 2008, which was substituted in 2010, after the assessment year in question. The petitioner argued that this constituted a change of opinion and hence reassessment was impermissible.

3. The Court considered the applicability of the principle of change of opinion in tax assessments, citing the Apex Court's decision in State of Uttar Pradesh v. Aryaverth Chawl Udyoug. The Court held that if a different view is taken based on the same facts considered during the original assessment, it amounts to a change of opinion. In this case, the material considered for the reassessment was already available to the Assessing Authority during the original assessment, indicating a clear case of change of opinion.

4. Ultimately, the Court allowed the writ petition, quashing the impugned notice and order for reassessment. It was concluded that the reassessment was impermissible due to being based on a change of opinion rather than escaped assessment. The petitioner was also awarded costs amounting to ?5,000.