Hon'ble Piyush Agrawal,J.
(Delivered by Hon'ble Piyush Agrawal, J.) By means of the present writ petition the petitioner has challenged the reassessment proceedings initiated against it for the Assessment Year 2012-13 and by impugned order dated 14.11.2017 passed under section 29(7) of the U.P. Value Added Tax Act, 2008 (in short the 'Act') by which permission has been granted to reopen the completed assessment as well as also challenged the consequential reassessment notice dated 26.12.2017 issued by the respondent nos. 2 and 3 respectively.
The petitioner is a U.P. Cooperative Federation Ltd. which is registered under the U.P. Cooperative Society Act, 1965. The petitioner was nominated as purchase agency in relation to wheat and paddy from the farmers on a minimum support price as per scheme annexed by U.P. Food and Supply Department, Government of Uttar Pradesh.
As per the instruction and procedure prescribed under the purchase policy the petitioner has prepared a list of places and made available with the District Magistrate informing him with regard to purchase of paddy and rice.
The District Magistrate of the District decides where the purchase center, in pursuance of purchase policy, will have to be opened and accordingly the facilities are being provided by Rajya Krishi Utpadan Mandi Parishad.
The petitioner purchased paddy from central pool and the same has been delivered to Food Corporation of India (in short 'FCI') on the direction issued by the Area Manager of the FCI. On the basis of the acknowledgment receipt the bills are prepared in accordance with the cost sheet issued by the Government of India. The bills raised from the FCI which are directly paid to the petitioner by the FCI.
The petitioner pays Mandi fee on behalf of the FCI which is subsequently reimbursed by the FCI. The said modus operandi has been prescribed in the Scheme floated by the Government of India as well as from the State of Uttar Pradesh. The said procedure is being followed in the previous and subsequent years as well.
The petitioner as per the Scheme has given broken rice/paddy (Kana) to the millers in lieu of hulling charges and no amount has been paid towards labour charges for hulling done by millers.
The assessing authority while passing the assessment order dated 8.10.2015 for the assessment year 2012-13 has accepted the contention of the petitioner and has held that the broken rice (kana) which has been given free of cost to the millers in lieu of hulling charges are not liable to be included in the taxable turn over.
Thereafter by means of the impugned order dated 14.11.2017 the respondent no.2 has granted permission under section 29(7) of the Act to reopen the completed assessment on the basis of the fact that rice bran and borken rice (kana) has been given free of cost of the hulling millers on which levy of tax has been escaped to assessment.
After receipt of the said order, the respondent no.3 has issued consequential reassessment notice under section 29(7) of the Act.
We have heard Mr. Aditya Pandey, learned counsel for the petitioner and Mr. C.B.Tripathi, learned special counsel on behalf of the respondents.
Mr. Pandey vehemently argued that at the time of passing of the original assessment order dated 8.10.2015 the then assessing authority has considered the facts and materials on record and has rightly accepted that rice bran and broken rice (kana) which has been given free of cost to the millers in lieu of hulling charges will not form part of taxable turn over and there is no escapement of assessment. It was further argued that there is no fresh material on record for initiating reassessment proceeding. The present reassessment proceeding has only been initiated on the basis of change of opinion which is not permissible under the law.
Moreover, it was also pointed out that broken rice (kana) which has been given free of cost to the hulling millers and millers have paid the tax on the sale of broken rice, hence there is no question of any escapement of tax on the said turn over. The said fact has been mentioned in paragraph 25 of the writ petition, which has not been controverted by the respondents in its reply in paragraph 14 of the counter affidavit.
It was also argued by Mr. Pandey that against the assessment order for the assessment year 2010-11 the petitioner had filed First Appeal No. BAN1-0487-15 which was decided by the Additional Commissioner Grade II (Appeals) Banda Division Banda by order dated 23.6.2016 holding that broken rice (kana) given free of cost in lieu of hulling charges will not form part of taxable turn over in the hands of the petitioner.
Against the said order passed on the first appeal the Department preferred Second Appeal No. 78 of 2018 Bench, Jhansi. The appeal filed by the Revenue has been dismissed by the judgment and order dated 29.8.2018 and the order of the first appellate authority has been confirmed holding that broken rice (kana) given in lieu of hulling charges will not form part of the taxable turn over in the hands of the petitioner. The tribunal has further held that broken rice (kana) which has been given in lieu of hulling charges will not be liable to tax as sales in the hands of the petitioner.
Mr. Tripathi, learned counsel for the respondent has tried to emphasize on the order dated 14.11.2017 and submitted that there is escapement of tax on the rice bran given by the petitioner free of cost to the rice millers in lieu of hulling charges. He further submits that in view of the said fact the judgment and order given by the first appellate authority which is confirmed by the Tribunal in the previous year are not binding and is not applicable to the facts and circumstance of the present case as it relate to only non levy of tax on broken rice (kana) given free of cost in lieu of hulling charges.
Rebutting the argument of the learned counsel for the respondent, Mr. Pandey, learned counsel for the petitioner has brought to the notice of the Court that subsequent reassessment impugned notice dated 26.12.2017, filed as Annexure 2 was issued only on the ground of non levy of tax of broken rice (kana) given to the rice millers as free of cost.
The Hon'ble Supreme Court in the case of State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog and others (2015) 17 SCC 324 has held that mere change of opinion while perusing the same material cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. The Apex Court in paragraph 30 has held as follows:
"30 In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion" and the material present before the assessing authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under section 21(1) of the Act on the basis of change in subjective opinion Commissioner of Income-tax v. Dinesh Chandra H. Shah [1972] 3 SCC 2311 and Income-tax Officer v. Nawab Mir Barkat Ali Khan Bahadur [1975] 4 SCC 3602 ) (emphasis supplied).
On perusal of record it reveals that reassessment proceedings have been initiated on the ground that broken rice (kana) amounting to Rs. 44,17,630/- has been given to the rice millers free of cost in lieu of hulling charges on which tax has escaped to assessment. On perusal of first appellate order as well as the tribunal's order the issue is squarely covered in favour of the petitioner wherein similar controversy was involved with regard of broken rice given to the rice millers free of cost in lieu of hulling charges.
However, on the earlier occasion Mr. Tripathi, special counsel for the respondent was granted time to seek instructions whether for the previous and subsequent years any revision was filed against the order passed in favour of the assessee. The answer was in negative. The dispute is, therefore, stands concluded by those decisions as stated in paragraph 10 of the rejoinder affidavit.
In view of the aforesaid facts and circumstances we are of the opinion that the order dated 14.11.2017 granting permission to reopen the completed assessment as well as consequential reassessment notice dated 26.12.2017 for the assessment year 2012-13 are liable to be set aside being tantamount to change of opinion which is not permissible under the law.
The writ petition succeeds and is allowed. The order dated 14.11.2017 as well as consequential reassessment notice dated 26.12.2017 for the assessment year 2012-13 are set aside.
Order Date :- 30.1.2019 samz