IMPORTANT POINT
Nylon Chips are classified as plastic granules under the Uttarakhand Value Added Tax Act, and reassessment procedures were correctly followed.

JUDGMENT :

Ritu Bahri, C.J.

There is a delay of 164 days in filing the present Revision. For the reasons stated in the application seeking condonation of delay, the delay is condoned. Delay Condonation Application (IA/1/2023) is allowed.

2. The present Revision has been filed by the State against the order dated 03.04.2021, passed by the Commercial Tax Tribunal, Uttarakhand, Division Bench, Haldwani, whereby two Second Appeals filed by M/s S.R.F. Ltd. Kashipur have been allowed. The dispute in the above two Second Appeals was with respect to tax amount of Rs. 95,22,567/- and Rs. 28,024/- respectively.

3. For the Assessment Year 2011-12, vide order dated 27.03.2017 passed under Section 29(4) read with Section 25(7) of the Uttarakhand Value Added Tax Act, on the self-manufacture of Nylon Chips, the Assessing Officer, in the absence of Form-C assessed the total tax of Rs. 3,14,40,432/-, including Rs. 30,736/-, @ 13.5 % on the sale of Rs. 2,07,481/-, totalling Rs. 2,27,677/-. Against the said order, the Assessee filed an Appeal before the First Appellate Authority. The First Appellate Authority dismissed the Appeal, by observing that the trader had used the processing chemicals and compounds on raw materials plastic granules, and the product was being sold under a new name/ commodity called Nylon Chips, and there was no Entry with regard to notified Schedule-II of the Uttarakhand Value Added Tax Act, and the Assessing Officer had rightly considered that Nylon Chips cannot be considered as plastic granules, and they are not covered by Schedule-II of the Uttarakhand Value Added Tax Act, and hence the tax liability fixed on the sale of self-manufactured Nylon Chips, as 13.5%, was rightly done under Section 29(1)(c) of the Act, which allows for re-assessment in case of incorrect rate of tax being applied in the previous assessment.

4. The question before the Tribunal was, whether re-assessment, under Section 29(4) of the Act could be made on the change of opinion, especially keeping in view that the same records had already been scrutinized by the Assessing Authority. The main argument of the respondent before the Tribunal was that, by the Original Order, the department had accepted that Nylon Chips were plastic granules. It had already formed an opinion on the nature of the product, and accordingly levied tax, and subsequently, the department changed its stand/ view on the nature of product, and accordingly higher rate of tax was sought to be applied. Section 29(1)(c) of the Act applies to cases, where department has applied the wrong rate of tax to the sale of a product, and desires to apply the correct rate of tax. The opinion of the department, on the nature of the product, remains the same.

5. In the present case, the department has taken a different view by changing the nature of the product, and not on account of wrong application of rates. Re-assessment, in such type of situation, is prohibited. The assessment order was a clear change of opinion, and was not under Section 29(1)(c).

6. The other ground taken by the respondent was that the impugned order was illegal, as Section 29(4) of the Uttarakhand Value Added Tax Act does not apply to the present case. In the instant case, the assessment year ended on 31.03.2012, and the period of limitation is to be counted from 31.12.2012. Three years & nine months from that date is 30.09.2016, and the authorization notice dated 27.02.2017, under Section 29(4) of the Act, was issued beyond the period of limitation. The second notice was sent on 29.11.2016, and limitation had expired on 30.09.2016.

7. For seeking the benefit of enlarged period of limitation, under Section 29(4) of the Act, reasons in writing have to be given. Moreover, there is no suppression of facts, or evidence by the respondent, with the intention to evade the payment of VAT. There is no reason given in the authorisation order and the impugned order, justifying the applicability of Section 29(4) of the Act, where the time peri