2010 (5) TMI 757 - HC - VAT and Sales Tax

Summary

Issues: Challenge to notice under section 21 for assessment year 1997-98 based on change of opinion regarding exemption on imported high speed diesel sales under a specific notification.

Analysis:
1. Challenge to Notice under Section 21: The petitioner challenged the notice issued under section 21 for the assessment year 1997-98, which aimed to levy tax on the sales of imported high speed diesel. The petitioner had imported high speed diesel worth Rs. 20,99,004, made sales amounting to Rs. 21,31,610, and claimed exemption under a specific notification by furnishing the required declaration.

2. Basis of Challenge - Change of Opinion: The petitioner contended that the notice under section 21 was issued solely due to a change of opinion. The assessing authority had initially granted the exemption on the sales of imported high speed diesel after examining the necessary certificate filed by the petitioner as per the notification. The petitioner argued that there was no evidence to suggest that the certificate was incorrect or false, and thus, the initiation of proceedings was unwarranted.

3. Absence of Material Supporting Tax Levy: The learned standing counsel representing the department failed to provide any material supporting the inference that the exemption had been wrongly allowed. There was a lack of evidence on record indicating that the declaration submitted by the petitioner was inaccurate or invalid, thereby weakening the department's position in justifying the tax levy on the sales of imported high speed diesel.

4. Initiation of Proceedings Without Substantive Basis: The court observed that the proceedings under section 21 seemed to have been initiated merely due to a change of opinion without any substantial material to indicate that the exemption on the sales of imported high speed diesel was wrongly permitted or that there was any escaped assessment. Consequently, the court allowed the writ petition and quashed the notice under section 21 dated March 8, 2002, pertaining to the assessment year 1997-98.

5. Final Decision: The court, in its final decision, ruled in favor of the petitioner, thereby setting aside the notice under section 21 for the specified assessment year. The judgment concluded without imposing any costs on either party involved in the legal dispute.