2022 (4) TMI 512 - HC - VAT and Sales Tax

Initiation of re-assessment proceeding on the basis of subsequent judgement - Classification of goods - Kaththa - exclusion of Gambier from the category of item kaththa when the item Kaththa is not defined under U.P. Trade Tax Act 1948 - Gambier (Uncaria Gambier) is known as WHITE KATHTHA or not - division of kaththa into two groups that is BLACK KATHTHA and second the WHITE KATHTHA or not - Whether if any item under Section 59 of U.P. VAT ACT 2008 declared it as unclassified it is also deemed to be unclassified under U.P. TRADE TAX ACT 1948? - re-assessment by fresh appaisal of the original order would amount to change of opinion or not? HELD THAT - It is admitted between the parties that the applicant is a proprietorship firm and is selling the item as mentioned in the registration certificate. While granting registration the goods have been mentioned as gambier (white kaththa ) which is not disputed. In the disputed year applicant had purchased and sold kaththa. While passing the original assessment order the assessing authority on the basis of material as well as documents available on record and after due verification has assessed the tax @ 4 %. Therefore on the basis of subsequent order passed by this Court the re-assessment proceeding has been initiated and permission was granted and thereafter the assessment order was passed imposing the tax on the item in question as unclassified item. The proceeding of re-assessment has been initiated against the applicant on the basis of subsequent judgement. The Apex Court as well as this Court time and again have held that completed assessment should and must not be re-opened on the basis of subsequent judgment. Reliance can be placed in the case of M/s Samsung India Electronics Pvt. Ltd. Vs. State of U.P. 2 Others 2016 (12) TMI 630 - ALLAHABAD HIGH COURT where it was held that law is well settled that assessment once having become final should not have been reopened on the basis of judgment of the Apex Court which has no applicability to the facts of this case and is in ignorance of factual position as is very clear from facts. Thus a subsequent judgement cannot be used to reopen assessment or disturb past assessment which has been concluded. Therefore the re-assessment proceeding initiated against the revisionist on the basis of subsequent judgement cannot be said to be justified. The impugned order of the Tribunal as well as the re-assessment order passed by the authorities below are hereby quashed. Revision allowed.

Summary

Issues:
1. Interpretation of the term "kaththa" under the U.P. Trade Tax Act, 1948.
2. Classification of Gambier as "white kaththa."
3. Validity of re-assessment under Section 21 (2) of U.P. Trade Tax Act, 1948.
4. Impact of Section 59 of U.P. VAT Act, 2008 on classification under U.P. Trade Tax Act, 1948.
5. Determination of re-assessment as a change of opinion or fresh appraisal.

Issue 1: Interpretation of "kaththa" under U.P. Trade Tax Act, 1948
The revisionist argued that Gambier should be included in the category of "kaththa" based on the registration certificate mentioning "gambier (white kaththa)." The assessing authority imposed tax at 4% on the sale of kaththa/gambier. However, the re-assessment initiated under Section 21 (2) of the Act was challenged as being based on a subsequent judgment, which was not permissible as per legal precedents.

Issue 2: Classification of Gambier as "white kaththa"
The Additional Chief Standing Counsel contended that Gambier cannot be treated as kaththa, citing a previous order where Gambier was taxed as an unclassified item. The assessing authority justified the re-assessment, arguing that the tax should have been levied at a higher rate for the unclassified item, despite the registration certificate mentioning "white kaththa."

Issue 3: Validity of re-assessment under Section 21 (2) of U.P. Trade Tax Act, 1948
The revisionist challenged the re-assessment, claiming it was based on a changed opinion without new evidence, citing legal precedents that prohibit re-opening completed assessments based on subsequent judgments. The Court noted that completed assessments should not be reopened on this basis.

Issue 4: Impact of Section 59 of U.P. VAT Act, 2008
The revisionist argued that the re-assessment was not justified based on Section 59 of U.P. VAT Act, 2008, as it classified the item as unclassified. The Court emphasized that the registration certificate mentioning "white kaththa" did not entitle the dealer to a lower tax rate, as the levy should be based on actual materials traded, not just the certificate.

Issue 5: Determination of re-assessment as a change of opinion or fresh appraisal
The Court referred to legal precedents stating that a subsequent judgment cannot be used to reopen assessments, emphasizing that once an assessment is final, it should not be reopened based on new judgments. The Court quashed the re-assessment order and Tribunal's decision, allowing the revision with costs to be paid to the revisionist.

This detailed analysis of the judgment addresses the key issues raised in the case, providing a comprehensive overview of the legal arguments and the Court's decision.