2018 (7) TMI 2119 - HC - VAT and Sales Tax

Reassessment Order - rate of tax - instrument cooling fan - case of the petitioner is that the instrument which is called instrument cooling fan is only used for the purposes of coolant in telecommunication equipments - Change of Opinion - HELD THAT - An order for reassessment was passed by the Additional Commissioner on 07.02.2017 for re-opening the assessment which was probably not been served upon the petitioner. In any case when the petitioner had this information he gave a detail reply on 27.02.2017 explaining as to why the reassessment being initiated is not proper etc. and stressed that he was liable to be assessed at the rate of 4.5% as the equipment which is being manufactured by the petitioner is a necessary component of telecommunication equipment for which duty of 4.5% and not of 13.5% has to be given which is in any case aresiduary clause - It appears that the reply given by the petitioner assigning reasons as to why the reassessment is not proper and it is merely a change of opinion has not been considered by the revenue authorities. The writ petition stands disposed with a direction that in case the petitioner moves a representation in this regard within a period of three weeks from the date of production of a certified copy of this order the same shall be considered by the authority concerned by passing a speaking order therein in accordance with law after considering the reply of the petitioner.

Summary

Issues:
1. Assessment under Uttarakhand Value Added Tax Act, 2005 for the sale of "instrument cooling fan" by a registered trader.
2. Re-assessment proceedings initiated by the Department after the closure of the manufacturing unit.
3. Consideration of petitioner's reply and reasons for challenging the reassessment.

Analysis:
The High Court of Uttarakhand addressed the issue of assessment under the Uttarakhand Value Added Tax Act, 2005 concerning the sale of an "instrument cooling fan" by a registered trader. The petitioner, a company manufacturing this component, contended that it should be taxed at 4.5% under Schedule II (B) Entry 3 as it is a necessary component of telecommunication equipment. Initially, the petitioner was assessed at the rate of 4.5%, but re-assessment proceedings were initiated by the Department. The petitioner had informed about the closure of its manufacturing unit before the re-assessment, and despite providing detailed replies explaining the necessity of being taxed at 4.5%, the revenue authorities did not consider the reasons provided.

Regarding the re-assessment proceedings initiated after the closure of the manufacturing unit in 2013-2014, the Court noted that the order for reassessment was passed by the Additional Commissioner. The petitioner had submitted a detailed reply emphasizing the duty rate of 4.5% applicable as the component manufactured was essential for telecommunication equipment. The Court observed that the petitioner's reasons for challenging the reassessment, citing it as a mere change of opinion, were not considered by the revenue authorities.

In conclusion, the High Court disposed of the writ petition with a direction for the authority concerned to consider any representation submitted by the petitioner within three weeks from the date of the order. The authority was instructed to pass a speaking order after evaluating the petitioner's reply in accordance with the law. This decision aimed to ensure a fair consideration of the petitioner's contentions regarding the assessment and reassessment proceedings under the Uttarakhand Value Added Tax Act, 2005.