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TMI Blog2020 (6) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents submitted by the petitioner before the Revenue Authorities in Uttarakhand showed the product as "Instrument Cooling Fan" and sub heading was that it was a "part of communication equipment". The excise code which was given by the petitioner for the said purposes is 84145990. Admittedly under the Excise Law and the Rules and Regulations framed therein, the said code is given for the goods which are classified as "electrical goods". There are two entries which are necessary to be mentioned here. 3. Entry No. 3 of Schedule II (B) of the Act reads as under:- "SCHEDULE II (B) [See sub-clause (i) of Clause (b) of sub-section (2) of Section 4 of the Uttarakhand Value Added Tax Act, 2005] Tax shall be payable on the goods specified in this Schedule at every point of sale at the rate of five percent. Sl.No. Item Rate of Tax Entry 1. .... 2. .... 3. All equipments for communications such as, Private Branch Exchange (P.B.X.) and Electronic Private Automatic Branch Exchange (E.P.A.B.X.) teleprinters wireless equipments and parts thereof 4.5 % Schedule-II(B)-3 (emphasis provided) 4. Sub-section 2 (b) (i) (d) of Section 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section, where an order of assessment or reassessment is in existence from before the issuance of such notice it shall continue to be effective as such, until varied by an order of assessment or reassessment made under this section in pursuance of such notice. (2) Except as otherwise provided in Section 28 or under this section, no order of assessment or reassessment shall be made under sub-section (1) after the expiry of three years from the end of the year in respect of which or part of which the tax is assessable. (3) Assessment or reassessment in respect of turnover escaped from assessment may be passed at any time within three years and nine months ending on 31st December after the expiry of assessment year for which assessment is to be made, provided that notice under this section has been served within a period of three years and six months ending on 30th September after the expiry of the assessment year for which assessment is to be made. (4) If the commissioner on his own or on the basis of reasons recorded by the Assessing Authority is satisfied that it is just and expedient so to do, he may authorise the Assessing Authority in that behalf, and then such assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the document which was submitted by the petitioner, the Excise Code was 84145990, which is given for electrical goods and not for telecommunication equipment and therefore there was in fact an admission on the part of the petitioner that the goods being manufactured by the petitioner were electrical goods and not telecommunication goods and therefore he was liable to be charged under the residuary clause at the rate of 13.5%. Since these reasons were not sufficient, this Court vide its order dated 25.07.2018 directed the authority concerned to decide the representation of the petitioner by passing a speaking order. 11. The case of the petitioner was that it was merely a change of opinion which is not sufficient for reassessment and therefore reasons have to be assigned as to why reassessment is being done. In view thereof, this Court had directed that in case the petitioner moves a representation within a period of three weeks, the authority concerned was directed to decide the representation of the petitioner by passing a speaking order 12. The Assessing Authority had therefore to give reasons as to why reassessment proceedings are being initiated. All the same, vide order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe". The Division Bench of Allahabad High Court said as under:- "15. The expression "reason to believe" in Section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. It is open to the Court to examine whether the reasons for the belief have a rational connection or a relevant hearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Assessing Officer in starting proceedings under Section 147 is open to challenge in a Court of law as held in S. Narayanappa v. Commissioner of Income Tax, (1967) 63 I.T.R. 219 (SC); Kantamani Venkata Narayana and Sons v. Additional Income Tax Officer, (1967) 63 I.T.R. 638 (SC); Madhya Pradesh Industries Ltd. v. Income Tax Officer, (1970) 77 I.T.R. 268 (SC); Sowdagar Ahmed Khan v. Income Tax Officer, (1968) 70 I.T.R. 79 (SC), Income Tax Officer v. Lakhmani Mewal Das, (1976) 103 I.T.R. 437 (SC); Income Tax Officer v. Nawab Mir Barkat Ali Khan Bahadur, (1974) 97 I.T.R. 239 (SC); Commissioner of Sales Tax v. Bhagwan Industries (P) Ltd., (1973) 31 S.T.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Apex Court in paragraph 25 had this to say: "25. Te import of the words "reason to believe" has also been examined by this court in cases arising out of proceedings under Section 34 of the Indian Income-tax Act, 1922 which also has the same phraseology. It deals with income escaping assessment and confers jurisdiction on the income-tax officer to make assessment or reassessment if he had reason to believe that income, profits or gains chargeable to income-tax had been under-assessed and that such under-assessment had occurred by reasons of either omission or failure on the part of the assessee to make a return of his income or to disclose fully and truly all material facts necessary for his assessment." 21. In paragraph no. 28 of the judgment, the Hon'ble Apex Court has said as under: "28. This Court has consistently held that such material on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfy the jurisprudence foundation contained in sub-section (1) of Section 29 of the Act, which is that the Authority must have "reasons to believe", that such an reassessment should be done. This can only be done when he gives a clear cut finding and reasons as to why reassessment is being done. If he has "reason to believe" then he can change his opinion. But reasons must come first. 25. We would revert once again to the judgment of Hon'ble Apex Court in the case of Aryaverth Chawl Udyoug (supra), where in a case of change of opinion, the Hon'ble Apex Court had this to say in para 30:- "30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion" and the material present before the assessing authority. Discovery of an inadvertent mistake or non- application of mind during assessment would not be a justified ground to reinitiate proceedings under section 21(1) of the Act on the basis of change in subjective opinion (Commissioner of Income-tax v. Dinesh Chandra H. Shah (1972) 3 SCC 231 and Income-tax Officer v. Nawab Mir Barkat Ali Khan Bahadur (1975) 4 SCC 360." 26. The Statute here provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Acme Tele Power Limited has given a certificate to the petitioner stating the requirement and end use of the product purchased by it. The certificate given by the Acme Tele Power Limited dated 25.03.2017 reads as under: "We have been Procuring Instrument cooling fans (Telecommunication equipments) from your depot at Udham Singh Nagar, Rudrapur since 2008-2009. The said equipment are used by us exclusively in the Telecommunication Towers and accordingly forms part and parcel of the Telecommunication equipment." 32. In its order dated 26.10.2018, which is impugned before this Court, the Revenue has not dealt with this aspect as to why it is charging the petitioner at the rate of 13.5%, which is for the goods in the residuary clause, when there is a specific case of the petitioner that the goods in question manufactured and designed are to be sold only as a part of the telecommunication equipment. The only reasons assigned by the Revenue for charging this good under the residuary clause is that since in its invoice the excise number which is given pertains to electrical goods, it will be charged as an electrical good. 33. This is, however, not a sufficient reason as already hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion system, though independently it may still be classified for other purposes as an "electric good". 38. The provision which the petitioner relies upon is Sl. No. 3 of Schedule II (B) of the Uttarakhand Value Added Tax Act, 2005, which relates to a telecommunication system and then it gives a break up of the same and finally adds "and parts thereof". Being a part of a telecommunication system an "instrument cooling fan" has to be taxed under this clause at 4.5%. 39. It is a settled principle of law that if an item or entry clearly comes under one of the Schedules given in the fiscal law, where the rate of tax is to be determined, then it should not be relegated to the residuary clause. In this case the goods in question is categorically a part of telecommunication equipment and therefore it could have been charged only under entry no. 3 of Schedule II and not under the residuary clause. 40. An "instrument cooling fan", strictly speaking may not be a telecommunication equipment in itself but it is definitely a part of it ("parts thereof"). Therefore, the "instrument cooling fan", has a claim to be classified under an enumerated item in the taxing statute and not to be relegated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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