# M/s Notional Chemical & Dyes Co v. State of U.P. & Ors

- **Citation:** (2019) 2 ILRA 1068
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-09-18
- **Case number:** Writ Tax No. 336 of 2019
- **Bench:** Bharati Sapru, Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-notional-chemical-dyes-co-v-state-of-u-p-ors-44559
- **Pages:** 4

## Headnote

A. U.P. Value Added Tax Act, 2008Section 29(7) - Schedule 2, Part-C -
Order authorizing reassessment, only on
the basis of audit objection cannot be
sustained - Notice for reassessment
issued - Original assessment order was
passed after scrutiny of the records and
no turnover was assessed to tax at lower
rate - Allowing the petition, the High
Court held - Reassessment cannot be
made on the same material by the same
authority, if there is any change of
opinion, only on the basis of audit
objection. (Para 10)

Writ petition challenges orders dated 07.03.2019,
passed by Additional Commissioner, Grade-I,
Commercial Tax, Varanasi Zone - I, Varanasi, for
assessment year 2010- 11.

Writ Petition allowed (E-4)

Precedent followed: -

## Text

1068 INDIAN LAW REPORTS ALLAHABAD SERIES
(2019)10ILR A 1068

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.09.2019

BEFORE

THE HON'BLE BHARATI SAPRU, J.
THE HON'BLE ROHIT RANJAN AGARWAL, J.

Writ Tax No. 336 of 2019

M/s Notional Chemical & Dyes Co.
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Aloke Kumar

Counsel for the Respondents:
C.S.C.

A. U.P. Value Added Tax Act, 2008Section 29(7) - Schedule 2, Part-C -
Order authorizing reassessment, only on
the basis of audit objection cannot be
sustained - Notice for reassessment
issued - Original assessment order was
passed after scrutiny of the records and
no turnover was assessed to tax at lower
rate - Allowing the petition, the High
Court held - Reassessment cannot be
made on the same material by the same
authority, if there is any change of
opinion, only on the basis of audit
objection. (Para 10)

Writ petition challenges orders dated 07.03.2019,
passed by Additional Commissioner, Grade-I,
Commercial Tax, Varanasi Zone - I, Varanasi, for
assessment year 2010- 11.

Writ Petition allowed (E-4)

Precedent followed: -

1. M/s Vikrant Tyres Ltd. Vs St. of U.P. & ors.,
(2005) UPTC 501 (Para 5)
2. St. of U.P. Vs M/s Aryawart Chawal Udyog &
ors., (2017) UPTC 262 (Para 6)
3. Varun Beverages Ltd. Vs St. of U.P. & 2
ors., (2016) 62 NTN DX 324 (Para 7)
4. M/s Sterling India Vs St. of U.P. & 3 ors.
(2017) UPTC 379 (Para 7)
(Delivered by Hon'ble Rohit Ranjan
Agarwal, J.)

1. Heard Sri Aloke Kumar, learned
counsel for the petitioner and Sri C. B.
Tripathi, learned Special counsel for the
respondents-State.

2. Present petition has been filed
assailing the order dated 07.03.2019
passed by Additional Commissioner,
Grade-I,
Commercial
Tax,
Varanasi
Zone-I, Varanasi under Section 29(7) for
reassessment for assessment year 2010-11
and notice dated 07.03.2019 issued by
Joint Commissioner, (Corporate Circle),
Commercial
Tax,
Varanasi
Zone-I,
Varanasi which had been issued in
consequence of the order of authorisation.

3. According to petitioner the
dispute
relates
to
reassessment
of
assessment year 2010-11. Petitioner is
registered proprietorship firm, and is
involved in manufacture and sale of
chemicals. According to petitioner the
chemicals manufactured are commonly
known as prepared driers and the same
find place at Serial No. 134 of Part-C of
Schedule 2 of Value Added Tax (in short
'VAT Act'). The said prepared driers are
taxable at the rate of 4% from 01.01.2008.
According to petitioner, the petitioner
firm was assessed for assessment year
2008-09 and assessment order was passed
on 22.10.2011, accepting the sale and tax
at 4%. It was on 24.07.2013 that
respondent no. 3 had issued a notice to
2 All. M/s Notional Chemicals & Dyes Co. Vs State of U.P. & Ors.
1069
petitioner firm regarding the taxability of
prepared driers, which was replied on
25.08.2013 and the proceedings were,
thereafter, dropped. According to petitioner
assessment was made for the year 2010-11
and assessment order was passed on
13.01.2014 granting benefit to the firm that
commodity sold by firm was prepared driers
and was taxable under Item No. 134 of
Schedule 2, Part-C. In the assessment year of
2011-12, the contention of the petitioner was
also accepted as regards prepared driers
manufactured and sold by petitioner firm and
assessment order was passed on 23.07.2014.

4. According to petitioner, on
07.02.2019, respondent no. 2 exercising
power under Sub-section 7 of Section 29
issued notice stating that the goods sold
by the petitioner firm are liable to be
taxed at the rate of 12.5% and stated that
HSN Code 05000039 is for paints and
varnishes of all kinds and all materials
used in painting and varnishes, and
prepared
driers
manufactured
by
petitioner was used only in manufacture
of paint and varnishes, thus, it falls under
the said HSN Code and accordingly 8.5%
tax had been left to be imposed on the
turnover
of
prepared
driers
and
permission
has
been
sought
for
reassessment. Petitioner appeared on the
date fixed and filed his reply and
submitted that original assessment order
was passed after scrutiny of the records
and no turnover was assessed to tax at
lower rate and as such there was no
occasion
to
grant
permission
for
reassessment on basis of change of
opinion. Respondent no. 2 exercising
power under Section 29(7) passed the
order of authorisation on 07.03.2019.

5. Counsel for the petitioner
submitted that the order authorising for
reassessment amounts to change of
opinion as the question of taxability was
never in dispute and the same has been
accepted even after recording finding on
the same by taking note of HSN Code
specially prescribed for prepared driers.
He submitted that reassessment cannot be
made on the same material which was
subject-matter of the original assessment.
He relied upon judgment of this Court in
case of M/s Vikrant Tyres Ltd. vs. State
of U.P. and others, 2005 UPTC 501 that
no reassessment can be made by same
authority on the same material and if the
same was permitted will open flood gate
for arbitrary action exposing one to
unending process, permitting uncertainty,
reopening of closed chapters without
assigning good reason, depending upon
whims of individuals.

6. He further relied upon a judgment
of the Apex Court in case of State of U.P.
vs. M/s Aryawart Chawal Udyog and
others, (2017) UPTC 262 which is on the
question of change of opinion. Relevant
Para 30 is extracted hereasunder:-

"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 (CIT v. Dinesh Chandra
Hon'ble Supreme Court Shah, (1972) 2 SCC
231; CIT v. Nawab Mir Barkat Ali Khan
Bahadur, (1975) 4 SCC 360)."

7. He also relied upon the Division
Bench judgment of this Court in Varun
1070 INDIAN LAW REPORTS ALLAHABAD SERIES
Beverages Ltd. Vs. State of U.P. and 2
others, (2016) 62 NTN DX 324 and case
of M/s Sterling India vs. State of U.P.
and 3 others, (2017) UPTC 379.

8. Per contra, learned Special
counsel for the Department submitted that
the case of the petitioner was not covered
under Article 134, Schedule 2, Part-C but
was covered under HSN Code 05000039.
He further submitted that it was not
change of opinion but was on the basis of
an audit held in the Department in which
the said fact was pointed out and pursuant
to the audit objection, review pertaining
to the assessment year 2010-11 was taken.
The said fact has been stated in Para Nos.
7 and 14 of the counter affidavit which is
extracted hereasunder:-

"7. That there was an audit held
in the department in which the aforesaid
inadvertence
was
pointed
out
and
pursuant to the audit objection, review
pertaining to the assessment year 2010-11
in respect of petitioner was made and
during review of the matter it was found
that 13.5% tax ought to have been
charged instead of 5% tax inasmuch as
Paint Drier comes under the purview of
non-clasified category. Hence it has been
decided
to
rectify
the
aforesaid
inadvertence as per provision laid under
under Section 29(7) of the Act which
provides;

"Where the Commissioner, on
his own or on the basis of reason
recorded by the assessing authority, is
satisfied that it is just and expedient so to
do authorize the assessing authority in
that behalf, such assessment or reassessment may be made within a period
of eight years after expiry of assessment
year to which such assessment or reassessment relates notwithstanding such
assessment or re-assessment may involve
a change of opinion.

Provided that it shall not be
necessary for the Commissioner to hear
the
dealer
before
authorising
the
assessing authority."

14.
That,
the
contents
of
paragraph nos. 7,8,9 and 10 of the writ
petition are not admitted as stated hence
denied, in reply it is submitted that there
was an audit held in the department in
which the aforesaid inadvertence was
pointed out and pursuant to the audit
objection,
review
pertaining
to
the
assessment year 2010-11 in respect of
petitioner and during review of the matter
it was found that 13.5% tax ought to have
been charged instead of 5% tax inasmuch
as the Paint Drier comes under the
purview
of
non-classified
category.
Thereafter, after examining entire facts of
the
matter,
impugned
order
dated
07.03.2019
has
been
passed
by
respondent no. 1 and consequently as
show-cause notice dated 07.03.2019 was
issued to the petitioner for initiating reassessment process."

9. Having heard learned counsel for
the parties and perusing the records of the
case, we find that in previous as well as in
subsequent years the petitioner had been
constantly assessed under the heading
prepared driers for which he has been
taxed at the rate of 5% under the relevant
Code by the assessing authority. Earlier in
2013 the notice was also issued to the
petitioner which was replied by him and it
seems that further proceedings were
dropped and no orders were passed. For
the
relevant
assessment
year,
the
averment made in Para Nos. 7 and 14 of
the counter affidavit clearly states that the
reassessment is being made on the basis
of audit objection thus, it is not the case of
2 All. Rakesh Kumar & Anr. Vs. The Addl. District Judge Court No. 2, Bulandshahr & Ors. 1071
the Department that any part of the
turnover of a dealer for any assessment
year
or
part
thereof
has
escaped
assessment to tax, it is only on the basis of
the audit objection that the proceedings
for reassessment has been initiated by
passing
orders
of
authorisation
by
respondent no. 2 against the petitioner
firm.

10.

It
is
well
settled
that
reassessment cannot be made on the same
material by the same authority nor if there
is any change of opinion, as in the present
case there was no fresh material on record
on which the authorities proceeded for
reassessment, thus the order authorising
for reassessment only on the basis of audit
objection cannot be sustained. Thus we
are of the considered view that the order
dated 07.03.2019 passed by respondent
no.
2
under
Section
29(7)
for
reassessment of assessment year 2010-11
and notice dated 07.03.2019 issued by
respondent no. 3 are unsustainable and are
hereby quashed.

11. Writ Petition stands allowed.
----------

(2019)10ILR A 1071

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.09.2019

BEFORE

THE HON'BLE SURYA PRAKASH
KESARWANI, J.

Matter Under Article. 227 No. 5718 of 2019
(Civil)

Rakesh Kumar & Anr.
 ...Petitioners/Defendants (Tenants)
Versus
The Addl. District Judge Court No. 2,
Bulanshahar & Ors.
 ...Respondents/Plaintiffs

Counsel for the Petitioners:
Sri Some Narayan Mishra

Counsel for the Respondents:
Sri Nitin Kumar Agarwal

A. Transfer of Property Act, 1882 -
Section 106 - Determination of tenancy and
demand for arrears of rent- to answer the
following questions: (a) Under the facts and
circumstances of the case what would be the
minimum period of notice under Section 106
of the Transfer of Property Act, 1882 as
substituted by the Central Act No.3 of 2003?

B. Whether the amendment made by the
Transfer of Property (Amendment) Act (Central
Act No.3 of 2003), would prevail over the U.P.
Amendment by U.P. Act No.24 of 1954 and
consequently, the minimum period of notice
would be 15 days? (Paras 10, 13, 19, 20 & 24).

Matter is referred to a larger bench (E-8)

List of Cases Cited: -

1. Mohd. Afzal Vs. Smt. Ramesh Kumari,
2014(3) ARC 864

2. Hardoi Zila Sahkari Bank Limited, Hardoi Vs.
Smt. Sarla Gupta and another, 2010(2) A.R.C. 144

3. Dharam Pal Vs. Harbans Singh, 2006 (9)
SCC 216

4. Parwati Bai Vs. Radhika, (2003) 12 SCC 551

5. Food Corporation of India and another Vs.
Smt. Nisha Agnihotri, 2016 (9) ADJ 452

6. Sri Janki Devi Bhagat Trust, Agra Vs. Ram
Swarup Jain (Dead) by LRs., (1995) 5 SCC 314

7. Bradley vs. Atkinson, ILR (1885) 7 All 596:
1885 SCC OnLine All 89

8. Pt. Rishikesh and another vs. Salma Begum
(Smt.), (1995) 4 SCC 718