M/s. Sterling India vs State of U.P.

This writ petition has been filed to challenge the sanction order dated 16.4.2016 passed by the Additional Commissioner, Commercial Tax Gautam Budh Nagar Zone, NOIDA to initiate reassessment proceedings in the case of the petitioner for the assessment year 2010-11 (U.P. and Central) and the consequential re-assessment proceedings initiated by the petitioner''s Assessing Authority for that assessment year vide notice dated 28.4.2016.

Reassessment proceedings have been initiated for the reasons recorded in the sanction order dated 16.04.2016 to the effect that sale turnover of varnish used in execution of job work for Ex-U.P. dealers has escaped assessment at the hands of the petitioner. The petitioner having processed the goods, namely, Copper Wire on job-work basis, in course of which petitioner consumed varnish of value Rs. 1,38,84,266/-. It is the case of the petitioner that re-assessment proceedings have been initiated on a simple change of opinion inasmuch as said issue had been specifically examined in the original assessment proceedings concluded by the assessment order dated 28.04.2014.

We have heard Sri Nishant Mishra, learned counsel appearing for the petitioner and Sri C.B. Tripathi, learned special counsel appearing on behalf of the respondents.

A bare perusal of the original assessment order annexed to the writ petition reveals that the assessing authority had examined the issue of job work done by the petitioner in course of which varnish of value of Rs. 1,38,84,266/- was treated to have been sold by the petitioner assessee in course of interstate against form ''C'' and subjected to Tax accordingly at the rate of 2%.

Thus it is established that the assessing officer was not only aware of the nature of the transaction but had, upon the application of mind taken a categorical view that the transaction was liable to be taxed as interstate sale and by virtue of Form ''C'' being submitted by the Ex-U.P. Dealer, the transaction was taxed @ 2% only.

Perusal of the sanction order dated 16.04.2016 reveals that no new material or information has come on record and that perhaps because a different view has been taken in similar facts in a subsequent assessment year which matter is under challenge in an appeal before the Tribunal, the petitioner''s Assessing Officer has proposed to reassess the petitioner for the assessment year 2010-11 as well.

While this Court has consistently held that the simple change of opinion cannot be a ground to initiate re-assessment proceeding, in a recent decision of the Supreme Court in the case of State of U.P. and others v. M/s. Aryaverth Chawl Udyoug and others (2016) 91 VST 1 (SC) the Supreme Court in paragraph 31 has, in a case arising under a pari-materia provision of the U.P. Trade Tax Act, 1948, held as under :-

"31. 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 re-initiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v. Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360)."

In view of the fact that the full value of varnish used by the petitioner had been consciously subjected to Central Sales Tax @ 2% in original assessment proceedings and no new material or information has come on record that may lead to formation of a reason to believe otherwise and there is no new or other law in favour of the revenue, we have no doubt the petitioner''s assessing authority has initiated reassessment proceedings against the petitioner for A.Y. 2010-11 (UP & Central) on a mere change of opinion in the self same facts and evidence as existed at the time of original assessment. Thus, the sanction order dated 16.04.2016 and the reassessment notice dated 25.04.2016 issued by the assessing authority of the petitioner are without jurisdiction for that reason.

Accordingly the sanction order dated 16.04.2016, passed by the Additional Commissioner, Commercial Tax Gautam Budh Nagar Zone, NOIDA and the reassessment notice dated 25.04.2016 for the assessment year 2010-11 (U.P. and Central) are quashed. The writ petition stands allowed.

No order as to costs.