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TMI Blog2015 (8) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the cases, initially, at the time of assessment, the petitioner was not subjected to any entry tax in respect of purchase of M. S. iron and steel scrap from Bharat Aluminium Company (in short, "BALCO")-respondent No. 4. Later on, in all three cases, reassessment notice purporting to be under section 28(1) of the Commercial Tax Act, 1994 (in short, "the Act of 1994") read with section 13 of the Act was issued and reassessment proceedings were drawn. (I) In W. P. (T) No. 4775 of 2006, reassessment order was passed on January 16, 2006 for the period April 1, 2000 to March 31, 2001 by the Assistant Commissioner, Commercial Tax, Durg. A revision was preferred by the writ petitioner before the Additional Commissioner, Commercial Tax, which was dismissed on May 29, 2006. (II) In W. P. (T) No. 5449 of 2006, reassessment order was passed on January 16, 2006 for the period April 1, 2001 to March 31, 2002 by the Assistant Commissioner, Commercial Tax, Durg. A revision was preferred by the writ petitioner before the Additional Commissioner, Commercial Tax, which was dismissed on May 29, 2006. (III) In W. P. (T) No. 5448 of 2006, reassessment order was passed on January 13, 2006 for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January 13, 2006 passed in reassessment for three different assessment years held that the M. S. steel scrap purchased by the petitioner were wrongly indicated as tax paid though in respect of such purchases, the petitioner was liable to pay entry tax, and therefore, such purchases had escaped assessment for the purpose of levy of entry tax. In the reassessment proceedings drawn by the respondents in the aforesaid three different assessment years, entry tax and penalty was levied on the petitioner as follows: (I) For assessment year 2000-01, entry tax of Rs. 22,820 as also penalty of Rs. 22,820 were levied. (II) For assessment year 2001-02, entry tax of Rs. 1,61,385 as also penalty of Rs. 1,61,385 were levied. (III) For assessment year 2002-03, entry tax of Rs. 5,34,652 as also penalty of Rs. 5,29,549 were levied. Revisions preferred in each of the cases were dismissed by the Additional Commissioner, Commercial Tax, Raipur, giving rise to these three writ petitions involving identical issue for consideration. The learned counsel for the petitioner contended that the petitioner purchased M. S. steel scrap from BALCO. The BALCO purchased plant and machinery and building st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at lower rate or deduction has been wrongly made from their account. In the absence of any such contingencies, reassessment was not permissible under the law only because there is a change of opinion. In support of his submission, learned counsel for the petitioner relied upon the decisions in the case of Sales Tax Officer, Ganjam v. Uttareswari Rice Mills [1972] 30 STC 567 (SC), C. Sathiraju and Sons v. State of Andhra Pradesh [1998] 111 STC 703 (AP), Suburban Industries Kalinga Private Limited v. Sales Tax Officer, Bhubaneswar [1993] 90 STC 280 (Orissa), State of Andhra Pradesh v. Ampro Food Products Limited [1995] 96 STC 617 (AP) and Madhya Pradesh Industries Ltd. v. Income-tax Officer, Special Investigation Circle 'B' Nagpur [1965] 57 ITR 637 (SC). The learned counsel for the petitioner further argued that in any case in view of the authoritative pronouncement of the Supreme Court in the case of Grasim Industries Ltd. v. Union of India [2011] 11 GSTR 176 (SC); JT (12) SC 89, metal scrap generated during the process of repair and main tenance of the machinery of a manufacturing plant, cannot be said to be a by-product as a result of manufacturing activity in relation to produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose metal scrap purchased have been held in respect of local goods, and therefore, the petitioner was rightly held liable for payment of entry tax in respect of purchase of such M. S. steel scrap. Learned State counsel relying upon the order passed by the Board of Revenue, M. P. Gwalior in the case of Raj Enterprises Fastners Pvt. Ltd., Indore v. Commissioner of Commercial Tax, Madhya Pradesh [1999] 32 VKN 155 submits that metal scrap are by-product and fall under a different category and they cannot be treated as tax paid. Learned State counsel relied upon the judgment of the Supreme Court in the case of State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 (SC), in which, the Supreme Court held that M. S. steel scrap are generated out of manufacturing process and are different and distinct, and therefore, the authority rightly opened the assessment in exercise of power under section 28(1) of the Act of 1994 and levied entry tax in respect of M. S. steel scrap purchased by the petitioner from the BALCO which earlier had escaped assessment on incorrect factual information that the goods were tax paid. It is not in dispute that the petitioner during three assessment years pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h goods endorses in the sale document that such goods are local goods and no entry tax has been paid on them that the purchaser is liable for payment of entry tax on such local goods. In the present case, the BALCO while effecting entry of plant and machinery and building structural into the local area paid entry tax and this is the factual position which has not been disputed by any of the parties before the court. Once those iron and steel items have been subjected to entry tax, the steel scrap which are being generated out of repair and maintenance of those plant and machinery and building structural, in the absence of any endorsement made in the sale document by the seller-BALCO, would not create any liability for payment of entry tax by its purchaser, i.e., the petitioner. Present is not a case where the BALCO has treated or declared M. S. steel scrap manufactured by it being goods specified in Schedule II in a local area and endorsement to that effect in the sale document that they are local goods but not tax paid. In the absence of any such declaration by BALCO, there was no liability cast on the petitioner under section 3 of the Act to pay entry tax in respect of purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment under section 12(8) of the Orissa Sales Tax Act, which is pari materia provisions contained in section 28(1) of the Act of 1994. It was held that existence of a reason that the turnover of dealer escaped assessment or has been under-assessed is a condition precedent to issuance of notice of reassessment under section 12(8) of the Act and the existence of such reason is sine qua non for the issuance of notice. In the case of Ritu Investments P. Ltd. v. Deputy Commissioner of Income-tax [2012] 345 ITR 214 (Delhi), dealing with the power of reassessment of assessing authority under section 147 of the Income-tax Act, it has been held that change of opinion cannot clothe the assessing officer with the jurisdiction to initiate the proceeding under section 147 of the Act. It has been further held that an error of judgment does not confer such a jurisdiction on the assessing officer. Dealing with the provisions contained in section 19 of the Madhya Pradesh General Sales Tax Act, 1958, which is in pari materia of section 28(1) of Act of 1994 involved in the present case. Having application in the present case, the High Court of the Madhya Pradesh in the case of Eicher Motors L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itative pronouncement of the Supreme Court in the case of Commissioner of Income-tax v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC). Upon scrutiny of order passed by the assessing authority at the time of assessment and reassessment in the facts and circumstances of the present case and having held in discussions hereinabove that the main operative reason for reassessment was change of opinion rather than purchase of M. S. steel scrap by the petitioner from the BALCO having escaped assessment, applying well settled legal position laid down in plethora of decisions cited above, I am of the considered opinion that the reassessment carried out by the assessing authority was impermissible under section 28(1) of the Act of 1994. For yet another reason, the order of reassessment levying entry tax on purchase of M. S. steel scrap by the petitioner from BALCO by holding it to be local goods manufactured out of any manufacturing process and being by-product different from plant and machinery and building structural has to be held illegal and unsustainable in law in view of the decision of the Supreme Court in the case of Grasim Industries Ltd. [2011] 11 GSTR 176 (SC); JT (12) SC 89. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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