High Court Allows Revision; Reassessment Upheld Under Section 29(7) of UP VAT Act

The Commissioner, Commercial Tax, U.P., in Second Appeal No. 57/ 2021 for A.Y. 2013-14 preferred revision against the order dated 19/07/2023 passed by the Commercial Tax Tribunal under Section 29 read with Section 28(2) of the UP VAT Act. The opposite party was dealing in the business of electronics goods and DTH equipment. The assessing authority, on scrutiny of the turnover, discovered that the commodity DTH was not included in Schedule II and therefore considered it as an unclassified product subject to higher VAT at 14%. The Additional Commissioner, Grade I, Commercial Tax, accorded permission to reopen the finalised assessment by order dated 13/05/2019. After serving notice and conducting an enquiry, a reassessment order was issued on 07/02/2020, raising demand. The assessee’s first appeal was dismissed; however, the Tribunal allowed the second appeal, holding that reassessment proceedings were initiated without sanction and involved a mere change of opinion. The Department challenged this finding through the present revision.

Issue Raised: Whether reassessment under Section 29 (read with Section 28(2)) of the UP VAT Act was invalid because it involved a change of opinion despite the existence of the Additional Commissioner’s authorisation for reopening the assessment.

Court’s Decision: The Court concluded that the statutory provisions under Section 29(1) and 29(7) of the UP VAT Act evidently empower reassessment in the event of escaped turnover assessment or assessment at a reduced rate, even if the reassessment is due to a change of opinion. It added that as soon as the Commissioner or an empowered officer enters satisfaction and gives approval, the assessing authority is eligible to conduct the reassessment. In this case, the permission of the Additional Commissioner dated 13/05/2019 was part of the assessment record, and notices were duly issued before such approval. Hence, the Tribunal’s conclusion that there was no sanction for reopening was erroneous and contrary to the evidence. The Court further made it clear that the Tribunal had inappropriately drawn on judgments under Section 21(2) of the previous Trade Tax regime, while the current case was subject to Section 29(7) of the UP VAT Act that specifically permits reassessment despite a change of mind.

The High Court held that the reassessment proceedings were legal and sustainable. The intervention on the part of the Tribunal was unjustified, considering that reopening permission was properly permitted and the very act permitted re-examination in such a case. Therefore, the impugned order dated 19/07/2023 of the Commercial Tax Tribunal was rescinded and the order of re-assessment under Section 29 read with Section 28(2) was revived. Remand was allowed in the interest of the State, and all legal issues were decided against the assessee. The Court directed the original records produced to be handed back to the concerned department.

To Read Full Judgment, Download PDF Given Below