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2025 (5) TMI 1813 - HC - VAT / Sales Tax


1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Court was whether the provisions of Section 10 B of the Uttar Pradesh Trade Tax Act (the Act) could be invoked to revise an assessment order on the basis of material or a judgment that was not on record at the time the original order was passed. Specifically, the issue was whether a subsequent judicial decision, rendered after the assessment order, could serve as a valid ground for initiating proceedings under Section 10 B to revisit and revise that order.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Whether proceedings under Section 10 B of the Act can be initiated on the basis of a subsequent judgment not available on record at the time of the original assessment order.

Relevant Legal Framework and Precedents: Section 10 B of the Act empowers the authorities to examine the legality and propriety of orders passed by subordinate officers. However, the revisional jurisdiction under this provision is confined to the material available on record at the time the order was passed. The Court relied on several precedents, including a Division Bench decision in M/s A.K. Corporation and another Vs. State of UP, which emphasized that revisional jurisdiction does not authorize reopening or reassessment based on material not on record at the time of the original order.

The Court also referred to decisions such as Commercial Trade Tax UP Lucknow Vs. M/s Assam Bengal Roadway and Commissioner Trade Tax UP Vs. S/S Kamal Agencies Saharanpur, which consistently upheld the principle that subsequent judgments or new material cannot be used to reopen finalized assessments.

Further, the Division Bench in M/s Samsung India Electronics Pvt. Ltd. Vs. State of UP and others clarified that subsequent judgments cannot be employed to disturb concluded assessments, citing authoritative rulings including the Supreme Court decision in MEPCO Industries V. CIT, which held that reliance on subsequent decisions to alter earlier orders amounts to impermissible change of opinion.

Court's Interpretation and Reasoning: The Court observed that the original assessment order was passed on 15.12.2006, and the proceedings under Section 10 B were initiated only after a subsequent judgment (M/s Aryaverth Chawal Udyog and others) was delivered. At the time of the original order, no material existed on record to suggest any illegality or impropriety that would justify revision.

The Court held that while Section 10 B permits scrutiny of the legality and propriety of an order, such scrutiny must be confined to the record as it existed on the date of the original order. Initiating revision on the basis of a judgment that was not available at that time is impermissible. The Court emphasized that the jurisdiction under Section 10 B is not a tool for rectification or reassessment based on new material or subsequent legal developments.

Key Evidence and Findings: The record showed that the revisionist was allowed adjustment of tax liability based on the material available at the time of assessment. The subsequent judgment, which formed the basis for reopening the assessment, was not on record at that time. The authorities invoked Section 10 B only after this judgment was pronounced, which was found to be legally untenable.

Application of Law to Facts: Applying the legal principles, the Court concluded that the initiation of proceedings under Section 10 B on the basis of a subsequent judicial pronouncement was beyond the scope of the Act. The revisionist's challenge to the jurisdiction was upheld, as the proceedings were not supported by material existing at the time of the original order.

Treatment of Competing Arguments: The State contended that the revisionist was not legally entitled to the benefit of tax adjustment and that the proceedings were justified by law, supported by decisions of this Court and the Apex Court. However, the Court distinguished these arguments by underscoring the fundamental limitation on the scope of Section 10 B, which restricts revision to the record existing at the time of assessment. The Court rejected the State's reliance on subsequent judgments as a basis for reopening the assessment.

Conclusions: The Court held that the proceedings under Section 10 B initiated solely on the basis of a subsequent judgment were not permissible. The revisional jurisdiction is confined to examining the legality and propriety of the order based on the contemporaneous record. Consequently, the impugned orders passed by the Commercial Tax Tribunal and the subsequent appellate orders were set aside.

3. SIGNIFICANT HOLDINGS

"The propriety and legality of any order can be tested under Section 10 B of the Act but the revisional jurisdiction is confined to the materials on record on the date of passing of such order."

"Section 10 B of the Act confers the jurisdiction to examine the legality and propriety of the order passed by the assessing authority. The legality and propriety of the order has to be decided with regard to the material that was available on record as it existed on the date of passing of the assessment order and not afterwards or some new material of law."

"A subsequent judgment cannot be used to reopen assessments or disturb past assessments which have been concluded."

"The proceedings under Section 10 B restrict the jurisdiction of the authority to scrutinize the records already in existence with the assessment authority on the date of passing of the assessment order and not on the material found subsequently or order being passed subsequent thereto."

The Court answered the question of law in favour of the revisionists and against the revenue, setting aside the impugned orders and directing refund of any amounts deposited by the revisionists.

 

 

 

 

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