Facts of case
The petitioner Assotech Reality Pvt. Limited, being a builder is engaged in the business of construction and sale of flats to the interested persons/allottee, after purchasing the land from the Development Authorities and developed the land so purchased.
The petitioner had not entered into any agreement between the petitioner and the purchaser. In other words, the petitioner is the sole owner of the land on which the flats were constructed. According to the petitioner, the ownership of the flats continues with it from the time of construction till the execution of registered sale deed in favor of the interested person/prospective buyers. Thus the petitioner does not fall within the category of works contract.
The original assessment order was passed for the year in dispute on 30.04.2013. The Assessing Authority, after considering all the materials available on record as well as the judgment of the Apex Court, letter of allotment, etc., concluded that there is no transfer of any material in the execution of works contract and the petitioner is not liable for payment of any tax.
The department by means of the impugned order dated 30.03.2017, granted permission to the current adjudicating authority to reopen the completed assessment on the ground that the petitioner has received booking amount from the prospective purchasers, which amounts to transfer of property in execution of works contract and hence, the turnover of the petitioner has escaped assessment. Further, on the basis of the judgement in Larsen and Toubro Limited (supra), the petitioner is also liable for payment of tax. In pursuance of the order dated 30.03.2017, the impugned reassessment show cause notice dated 22.04.2017 under section 29(7) of the Act has been issued. Hence, this writ petition.
It is noted that the operation of the business in the disputed year, i.e., 2009-10, was identical and similar to the previous as well as in subsequent years. It has further been stated that against the judgement and order of the Court, dated 20.09.2012, holding that the petitioner is not a dealer and hence, not liable for tax on the material used for execution of works contract, neither any appeal was preferred by the State, nor any material was brought on record showing the order of this Court has been set aside/modified/recalled/stayed by the competent Court. In other words, the Department has accepted the order passed by this Court.
It is a fact that once the issue has been settled inter-parties and there is no new material brought on record to suggest otherwise. The completed assessment is disputed, i.e., 2009-10, shall not be permitted to be reopened merely on the basis of change of opinion. Thus, the impugned order dated 30.03.2017 and consequential notice dated 22.04.2017 is liable to be set aside. If an assessing authority forms an opinion during the original assessment proceedings based on material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for reassessment.
In the present case, entire material which is now being taken into consideration for impugned notice and approval granted was available before Assessing Authority and after having considered the same, the assessment was made. Now authorities, taking a different view, have issued impugned notice. Thus, it is a clear case of change of opinion, hence reassessment is not permissible given an aforesaid exposition of law.
Further submitted that even assuming, without admitting, that the survey report dated 22.09.2009 was to be taken into account, but the same were already considered by the then Assessing Authority while passing the original assessment order. Therefore, there is no fresh or tangible material or information to form a reasonable belief to have a live-link with the information of belief that turnover has escaped assessment, which could legally be permitted for initiation of reassessment proceedings under section 29(7) of the VAT Act.
Basis of High Court for passing of the order
At the best it can be said that it is only a change of opinion, which is not permissible under the Act. It is settled law that the jurisdiction to initiate reassessment proceedings arises only after the assessing authority records his reason to believe that any turnover has escaped assessment. Thus, not only is the belief of escapement essential but more importantly, the Assessing Authority must record his reason/s as to existence of the belief of such escapement.
It is beyond doubt that the reassessment proceedings have been initiated against the petitioner to reopen the completed assessment given the subsequent judgment of the Apex Court in Larsen and Toubro Limited (supra). It is admitted that the fact that at the time of passing of the original assessment order, the Assessing Authority has taken note of survey report dated 22.09.2009 and thereafter, passed the original assessment order holding that the petitioner is not liable for payment of tax on the material used in the execution of works contract.
The Hon'ble Apex Court, time and again, has held that completed assessment should not be reopened based on subsequent judgment being given
In view of the above cited judgements and the principles enunciated therein, reopening of the proceeding of completed assessment in question renders bad and in colourable exercise of powers and without jurisdiction.
It is evidently clear that the assessment, once has become final, should not have been reopened on the basis of subsequent judgment of the Apex Court.
The Hon’ble court took judicial notice of the fact that the country is entering into a new era of taxation, i.e., Goods & Services Tax (GST), so the dealers and the Department are set to take up a new challenge of the said Goods & Services Tax. It will be in the interest of both, the dealers as well as the Department, that all old pending matters to be decided at the earliest and attain finality.
In the result, the writ petition succeeds and is allowed.
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