2007 (1) TMI 529 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of the U.P. Trade Tax Act, 1948 regarding whether freight should be included in turnover.
- Validity of the order passed under section 21 of the Act based on change of opinion.

Analysis:
The case involved a dealer engaged in the business of coal importation through truck and railway. The dealer claimed that freight paid directly by purchasers to the railway should not be part of the turnover, as the dealer only received the price of coal and commission. The assessing authority initially accepted this claim in the original assessment order dated August 31, 1992. However, a proceeding under section 21 was later initiated, and tax on freight was levied in an order dated September 15, 1994. The Tribunal, in the impugned order, allowed the dealer's appeal and quashed the section 21 order, stating that taxing freight solely based on a change of opinion was impermissible under the law.

The Learned Standing Counsel argued that inward freight should be part of the turnover, citing previous court decisions. However, the court found no merit in this argument, emphasizing that the original assessment had already addressed the issue of freight in detail. The court highlighted that the assessing authority had previously determined that freight directly paid to the railway by purchasers should not be included in turnover, as the dealer had only received commission. The court clarified that the correctness of the original assessment's view on freight was a separate matter from the prohibition against changing opinions in section 21 proceedings.

The court concluded that initiating proceedings under section 21 and levying tax based solely on a change of opinion was against established legal principles. It affirmed the Tribunal's decision, upholding that the assessing authority's reversal of its earlier stance on freight inclusion in turnover was not justified. Consequently, the revision was dismissed, and the Tribunal's order was upheld.