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2020 (6) TMI 547 - HC - VAT and Sales TaxRate of Tax - Instrument Cooling Fan - whether taxed under the heading Schedule-II(B)-3 taking it to be a part of larger equipment for communication, or under the residuary clause, taking it to be an electrical equipment - justification of the reassessment proceedings by the Revenue Authorities and the orders passed therein. HELD THAT:- The powers which have been given to the Commissioner for opening a reassessment even beyond a period of “three years” under sub-section 4 of Section 29 of the Act, where the Commissioner can initiate reassessment proceedings on his own or when he is satisfied with the reasons recorded by the Assessing Authority. In the present case the reassessment proceeding has been initiated on the basis of the reasons recorded by the Assessing Authority. The Assessing Authority had to assign reasons under sub-section (1) of Section 29 of the Act, which is grounded on the basic foundation of “reasons to believe” - the net result would be that even if the reassessment proceedings under the VAT Act can be initiated on the basis of a “change of opinion” of the Revenue Authorities, this must first satisfy the jurisprudence foundation contained in sub-section (1) of Section 29 of the Act, which is that the Authority must have “reasons to believe”, that such an reassessment should be done. This can only be done when he gives a clear cut finding and reasons as to why reassessment is being done. If he has “reason to believe” then he can change his opinion. But reasons must come first. There is no rebuttal of the petitioner’s claim at any level that the product which he is selling is only a part of telecommunication system and although it is a cooling fan, it cannot be used in any other way but for cooling a telecommunication system. It is hence a part of telecommunication system, though independently it may still be classified for other purposes as an “electric good” - The provision which the petitioner relies upon is Sl. No. 3 of Schedule II (B) of the Uttarakhand Value Added Tax Act, 2005, which relates to a telecommunication system and then it gives a break up of the same and finally adds “and parts thereof”. Being a part of a telecommunication system an “instrument cooling fan” has to be taxed under this clause at 4.5%. It is a settled principle of law that if an item or entry clearly comes under one of the Schedules given in the fiscal law, where the rate of tax is to be determined, then it should not be relegated to the residuary clause. In this case the goods in question is categorically a part of telecommunication equipment and therefore it could have been charged only under entry no. 3 of Schedule II and not under the residuary clause. Petition allowed.
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