Court No. 37
Civil Misc. Writ Petition No. 98 of 2008
M/s J.K. Poly Bag Industry, Meenakashi Road, Hapur, District
Ghaziabad..............Petitioner.
Vs.
Deputy Commissioner (Assessment)-II, Trade Tax, Hapur and
others..........Respondents.
Hon'ble Rajes Kumar, J.
Hon’ble Bharati Sapru, J.
Rejoinder affidavit filed today, the same may be placed on record.
By means of the present writ petition, the petitioner is challenging the
initiation of proceeding under Section 21 of the U.P. Trade Tax Act (hereinafter
referred to as the “Act”) for the assessment years 2002-03 and 2003-04 under the
U.P. Trade Tax Act initiated by the Deputy Commissioner (Assessment)-II, Trade
Tax, Hapur, on the ground that the proceeding has been initiated on account of
change of opinion.
The dispute relates to the taxbility of Lay Flat Tubings. The petitioner
claimed that Lay Flat Tubings, being the attachments of sprinkler, are not liable to
tax under Notification No. ST-II-8305/X-11(9)/78-UP Act XV/48-Order-86, dated
30.6.1986 wherein Agricultural implements and parts, accessories and
attachments thereof have been exempted from tax. The assessing authority in
both the assessment years examined the claim of the petitioner and has held that
Lay Flat Tubings being the attachments of sprinkler is exempted from tax under
the notification of Agricultural implements and parts, accessories and
attachments. The proceeding under Section 21 of the Act has been initiated on
the ground that Lay Flat Tubings is PVC pipe and, therefore, liable to tax @ 10%
as an unclassified items. A reliance has been placed on the decision of the
Commissioner of Trade Tax, dated 21.3.2007 passed under Section 35 of the Act.
Learned counsel for the petitioner submitted that in the original assessment
order, the assessing authority has examined the issue relating to taxbility of Lay
Flat Tubings and has exempted it from tax treating it as the accessories of the
agricultural implements and, therefore, the proceeding under Section 21 of the Act
could not be initiated on account of change of opinion. He submitted that the
opinion of the Commissioner in the proceeding under Section 35 of the Act cannot
be a basis for initiation of the proceeding. A reliance is placed on a recent
decision of the Apex Court in the case of Commissioner of Income Tax v. (1)
Kelvinator of India Limited, reported in [2010] 320 ITR 561 (SC).
Learned Standing Counsel is not able to defend the stand of the
Department.
We have considered the submissions of learned counsel for the petitioner
and perused the assessment orders and the notices issued under Section 21 of
the Act.
On the facts and circumstances, we are of the view that the proceedings
have been initiated only on account of change of opinion. The original assessment
orders reveal that the assessing authority has adjudicated the issue relating to
taxbility of Lay Flat Tubings in detail and has exempted the same treating it as the
accessories of the agricultural implements. There is no material on record on the
basis of which a belief could be formed that Lay Flat Tubings is not accessories
of the agricultural implements. Since the assessing authority has already
adjudicated the issue relating to taxbility of Lay Flat Tubings, the initiation of
proceeding under Section 21 of the Act is merely on account of change of opinion,
which is not permissible in law. The Apex Court in the case of Commissioner of
Income Tax v. (1) Kelvinator of India Limited (Supra) has held that
reassessment proceeding cannot be initiated on account of change of opinion.
In view of the above, the writ petition is allowed. The notices issued under
Section 21 of the Act for the assessment years 2002-03 and 2003-04, both dated
6.12.2007, are hereby quashed.
6.7.2010
OP