M/S R.B. TRADING COMPANY V. THE COMMISSIONER COMMERCIAL TAXES

STRE/64/2016

AI Insights

The case involves M/S R.B. Trading Company, which was engaged in the business of trading Kaththa, specifically Gambier (white kaththa). The company was initially assessed and taxed at a rate of 4% based on the original assessment order. However, re-assessment proceedings were initiated under Section 21(2) of the U.P. Trade Tax Act, 1948, following a subsequent judgment that pertained to the VAT Act, leading to a higher tax rate being imposed. The company contested the re-assessment, arguing that it was based on a change of opinion and not on new material or evidence, and cited precedents that completed assessments should not be reopened based on subsequent judgments. The court agreed with the revisionist, quashing the re-assessment orders and allowing the revisions.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 727421 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 06-04-2022
• Assessment Year: misc
• Other Referred Cases: Assotech Realty Pvt. Ltd. Vs. Additional Commissioner Grade 1 Commercial Tax and others, M/s Aryaverth Chawal Udyog and others Vs. State of UP and others, Samsung India Electronics Pvt. Ltd. Vs. State of U.P. & 2 Others, Deputy Commissioner of Income Tax Vs. Simplex Concrete Piles (India) Limited
• Laws Referred To: U.P. Trade Tax Act, 1948, U.P. VAT ACT, 2008
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NITIN AGRAWAL
• Assessee Lawyers: VIVEK SINGH
• Keywords: Re-assessment; Tax rate; Unclassified Item; Gambier; Kaththa
• Section: 59; 21(2)

Judgement Text

"Court No. - 1 Case :- SALES/TRADE TAX REVISION No. - 64 of 2016 Revisionist :- M/S R.B. Trading Company Opposite Party :- The Commissioner Commercial Taxes Counsel for Revisionist :- Mr. Vivek Pratap Singh, Advocate Counsel for Opposite Party :- Mr. Nitin Agrawal, Additional Chief Standing Counsel With Case :- SALES/TRADE TAX REVISION No. - 65 of 2016 Revisionist :- M/S R.B. Trading Company Opposite Party :- The Commissioner Commercial Taxes Counsel for Revisionist :- Mr. Vivek Pratap Singh, Advocate Counsel for Opposite Party :- Mr. Nitin Agrawal, Additional Chief Standing Counsel Hon'ble Piyush Agrawal,J. 1. The present revisions have been filed against the order dated 30.11.2015 passed by Commercial Tax Tribunal, Varanasi in Second Appeal No. 156 and 157 of 2014 (A.Y. 2006-07 and 2007-08) in which following questions of law have been framed:- “A. Whether in light of judgement of Hon’ble S.C. in Mathuram Agarwal case it is right to exclude Gambier from the category of item kaththa, when the item Kaththa is not defined under U.P. Trade Tax Act, 1948? B. Whether the Gambier (Uncaria Gambier) is known as WHITE KATHTHA or not? C. Whether the category Kaththa under the U.P. TRADE TAX ACT, 1948 is not divided in to two groups that is BLACK KATHTHA and second the WHITE KATHTHA. D. Whether the order passed under sec.59 of U.P. VAT ACT, 2008 can be apply to initiate re-assessment proceeding under Sec. 21 (2) of U.P. TRADE TAX ACT, 1948? E. 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? F. Whether under section 21 re-assessment by fresh appaisal of the original order would amount to change of opinion or not?” 2. Counsel for the revisionist submits that the revisionist is engaged in the 2 business of trading of Kaththa for which registration has been granted. He submits that while granting the registration certificate, item Gambier (white kaththa) was specifically mentioned against the nature of business. Copy of the certificate is on record as S.A.-1 at page 6 A. He further submits that assessing authority while framing the original assessment order dated 3.3.2009, on the basis of materials on record and after due verification of the documents had rightly imposed the tax on the sale of kaththa / gambier at the rate of 4 %. The re-assessment proceeding was initiated under Section 21 (2) of the Act and notice was issued on the basis of subsequent judgement that too pertains to under the VAT Act, which is not permissible as held by the Division Bench of this Court in Assotech Realty Pvt. Ltd. Vs. Additional Commissioner Grade 1 Commercial Tax and others, 2020(1) AWC 268. 3. He further submits that re-assessment proceeding has been initiated against the revisionist on the basis of changed opinion as no new material or evidence has brought on record for initiating the proceeding of re-assessment. He submits that in view of the judgement of this Court in the case of M/s Aryaverth Chawal Udyog and others Vs. State of UP and others, 2008 Law Suit (All) 2155, the re-assessment proceedings under Section 21 (2) of the Act cannot be initiated. 4. He further submits that gambier is treated as kaththa which is evident from the registration certificate and it has neither been modified nor been cancelled nor any action on date has been initiated against the said certificate. So the proceeding of re-assessment is bad. He further submits that rate of tax on kaththa has been specifically provides in the entry for levy of tax @ 4 %. The said entry covers all kinds of kaththa and therefore, prays for allowing the revision. 5. Per contra, learned Additional Chief Standing Counsel supports the order of the authorities below. He further relied upon the counter affidavit wherein the order inter-party has been annexed, which has been passed in the case of applicant itself in S./T.T.R. No. 52 of 2012, wherein this Court held that gambier cannot be treated as kaththa and liable to be taxed as unclassified item. 3 Since in the case in hand, tax is levied @ 4%, therefore, he tries to justify the re-assessment proceeding. 6. He further submits that under Section 21, the assessing authority was empowered to initiate re-assessment proceeding on the basis of reasons to believe that tax has been assessed at lower rate of 4 % whereas it should be on higher rate treating the same as unclassified item. He further submits that even assuming without admitting the trade tax and VAT are two different Acts but commodity in question i.e. gambier for which registration has been granted on which against the business item gambier (white kaththa) has been mentioned, which will not give any advantage and is of no help to the dealer. Only by mentioning certain items on the registration certificate will not entitle the dealer for lower the rate of tax. The levy of tax is to be assessed on the basis of materials on record and not item mentioned on the registration certificate. It is admitted by perusal of the registration certificate that primary item which was required to be imported was gambier and not kaththa as in the registration certificate ‘white kaththa’ has been mentioned in inverted commas(“”) meaning thereby at the time of getting registration certificate, the dealer in its wisdom and knowledge knows that he will be trading in gambier and not kaththa. Had it not been so, the dealer must have got its registration certificate amended by getting it correct as kaththa. He further submits that it is not a case of change of opinion but it is a clear case of assessing the tax at the lower rate than what it is assessable under the Act i.e. as unclassified item because the gambier was being imported in the garb of kaththa. He further submits that once an order inter-party is passed by this Court, the applicant was not justified in saying that kaththa has been imported and tax has rightly been imposed at the lower rate of 4 % . He prays for dismissal of the revision. 7. After hearing learned counsel for the parties, the Court has perused the records. 8. 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 4 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. But the dealer has specifically raised the dispute on initiation of re-assessment proceeding on the basis of subsequent judgement but the said fact has not been noticed by the authorities below and just on relying upon the order of this Court, has confirmed the re-assessment proceeding and imposed the tax at the higher rate. 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. 9. This Court in the case of M/s Samsung India Electronics Pvt. Ltd. Vs. State of U.P. & 2 Others, reported in 2017 UPTC 63, in paragraph nos. 11, 14 & 15, has held as under:- \"11. Further, a subsequent judgment cannot be used to reopen assessments or disturb past assessments which have been concluded. [See Para 7, Austin Engineering V. JCIT (2009) 312 ITR 70 (Guj.) Para 4 and 5, Bear Shoes 2011 (331) ITR 435 (Mad.), B.J. Services Co. Middle East Ltd. v. Deputy Director (2011) 339 ITR 169 (Uttarakhand), Sesa Goa V. JCIT 2007 (294) ITR 101 (Bom.), Geo Miller and Co. 2004 (134) Taxmann 552 (Cal)]. Reliance is also placed on the decision of the Hon'ble Supreme Court in MEPCO Industries V. CIT, (2010) 1 SCC 434, where the CIT on the basis of a subsequent decision of the Supreme Court sought to rectify his earlier order. The Hon'ble Court held that this would amount to a change of opinion. 14. Impugned notices are bad and against principles enunciated by Apex Court in afore quoted decisions. This renders the notices and orders bad and have been passed in colourable exercise of powers and are without jurisdiction. 15. This writ petition has to be allowed with cost as law is well settled that assessment once having become final should not have been reopened on the basis of judgment of the Apex Court. \" 10. Similarly, the Apex Court, in the case of Deputy Commissioner of 5 Income Tax Vs. Simplex Concrete Piles (India) Limited reported in (2012) 25, 283 (SC) has held as under:- \"3. We see no error in the observation made by the Divisoin Bench of the High Court in the impugned judgement that once limitation period of four years provided under Section 147/149(1A) of the Income Tax Act, 1961 (for short, Rs. The Act') expires then the question of reopening by the Department does not arise. In any event, at the relvant time, when the assessment order got completed, the law as declared by the jurisdictional High Court, was that the civil construction work carried out by the assessee would be entitled to the benefit of Section 80HH of the Act, which view was squarely revsersed in the case of CIT Vs. N.C. Budharaja & CO. (1993) 204 ITR 412/70 Taxman 312 (SC). The subsequent reversal of the legal position by the judgement of the Supreme Court does not authorize the Department to reopen the assessment, which stood closed on the basis of the law, as it stood at the relevant time.\" 11. This Court in the case of Assotech Realty Pvt. Ltd (supra) has held as under :- 25.In view of the above cited judgements and the principles enunciated therein, reopening of the proceeding of completed assessment in question renders bad and in colourable exercise of powers and without jurisdiction. 26.It is evidently clear that the assessment, once has become final, should not have been reopened on the basis of subsequent judgment of the Apex Court. 12. In view of above law laid down by Hon’ble the Apex Court as well as by Division Bench of this Court,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. 13. The revision are allowed with cost of Rs. 1000/- (one thousand) in each revision, which shall be paid to the revisionist within one month from today. The compliance affidavit must be filed within two months before the registry, failing which the matter shall be listed in chamber for orders. 14. The questions of law are answered accordingly. Order Date :- 6.4.2022 Rahul Dwivedi/- Digitally signed by RAHUL DWIVEDI Date: 2022.04.07 14:40:13 IST Reason: Location: High Court of Judicature at Allahabad "