Chattisgarh High Court
Ambuja Cements Limited vs State Of Chhattisgarh And Ors on 17 July, 2017
Author: Sanjay K. Agrawal
Bench: Sanjay K. Agrawal
W.P.(T)No.157/2014
Page 1 of 28
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Writ Petition (T) No.157 of 2014
Order reserved on: 22-6-2017
Order delivered on: 17-7-2017
Ambuja Cements Limited, a Company incorporated under
Companies Act, 1956, having its Registered Office & Factory at
P.O. Ambuja Nagar, Taluk, Kodinar, District Somnathgiri (Gujrat)
& Unit at Village & PO Rawan, District Baloda Bazar,
(Chhattisgarh) through its Authorised Signatory Anoop Kumar
Jaiswal, Manager (Law), P.O. Rawan, Distt. Baloda Bazar,
(Chhattisgarh)
---- Petitioner
Versus
1. State of Chhattisgarh, Through the Secretary, Commercial Tax
Department, Mantralaya, Mahanadi Bhawan, Naya Raipur
(Chhattisgarh)
2. Commissioner, Commercial Tax, Chhattisgarh, Raipur.
3. Deputy Commissioner, Commercial Tax, Division-II, Raipur
(Chhattisgarh)
4. Commercial Tax Officer, Bhatapara (Chhattisgarh)
5. Assistant Commissioner, Enforcement Cell Division, Commercial
Tax Office, Civil Line, Raipur (Chhattisgarh)
---- Respondents
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For Petitioner: Mr. M.P. Devnath and Mr. Soumya Rai, Advocates.
For Respondents/State: Mr. Shashank Thakur, Govt. Advocate.
--------------------------------------------------------------------------------------
Hon'ble Shri Justice Sanjay K. Agrawal C.A.V. Order
1. Invoking the extraordinary jurisdiction of this Court under Article W.P.(T)No.157/2014 Page 2 of 28 226 of the Constitution of India, the petitioner herein namely Ambuja Cements Limited, a company incorporated under the provisions of the Indian Companies Act, 1956, has called in question legality, validity and correctness of the show cause notice issued under Section 22 (1) of the Chhattisgarh Valued Added Tax Act, 2005 (for short, 'the Act, 2005'), read with Section 13 of the Chhattisgarh Entry Tax Act, 1976 (for short, 'the Act, 1976'), for reassessment and for calculating the entry tax payable by the petitioner Company for the assessment years 2007-08, 2008-09 and 2009-10, and also eventually calls in question the final reassessment order passed during the pendency of the writ petition dated 18-7-2014 for the aforesaid years and finally also questioned the circular dated 16-6-2014 issued by the Commissioner, Commercial Tax, Chhattisgarh, Raipur.
2. The essential facts shorn of unnecessary details imperative to judge the correctness of the plea raised at the Bar are as under: -
2.1) The petitioner was granted mining lease by the State of Chhattisgarh for extracting lime stone for a period of 20 years.
The petitioner made regular payment of royalty of lime stone extracted form the captive mines under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 time to time.
2.2) The petitioner Company was assessed for payment of entry W.P.(T)No.157/2014 Page 3 of 28 tax for the years 2007-08, 2008-09 and 2009-10 on 24-8-2011, 30- 8-2012 and 24-8-2013, respectively, and accordingly, entry tax was paid after taking the matter into appeal. It is the case of the petitioner that thereafter, the State vide the Chhattisgarh Entry Tax (Amendment) Act, 2014, has inserted Section 2 (fff) in the Act, 1976 by inserting the new definition of "Market Value" with effect from 1-4-2014. Thereafter, the Commissioner, Commercial Tax, issued a memo dated 16-6-2014 stating that the definition of "Market Value" in the Act, 1976 has been explained / clarified by the Amendment Act, 2014 which is made applicable with effect from 1-4-2014 stating that by the cement manufacturers, the amount of royalty is not being included for calculating the entry tax and therefore the cases in which the order for payment of entry tax has been passed, their examination is necessary and thereafter, the cases in which even the assessment order has been passed be reopened in exercise of power conferred under Section 22 (1) of the Act, 2005 and order of reassessment be passed. Thereafter, the Deputy Commissioner, Commercial Tax, on 9-7-2014 finding that he has reason to believe that entry tax in the respective years i.e. 2007-08, 2008-09 and 2009-10 has been under assessed, asked the petitioner Company to file reply and fixed the date of hearing on 18-7-2014. The petitioner Company filed reply stating inter alia that details have not been given in fulfillment of conditions given W.P.(T)No.157/2014 Page 4 of 28 under Rule 30 (1)(e) of the Chhattisgarh Value Added Tax Rules, 2006 and requested for supply for reasons for such proceeding, but it appears that no reasons were supplied and the petitioner filed writ petition calling in question the respective show cause notices issued for three years for reassessment under Section 22 (1) of the Act, 2005. Thereafter, the writ petition came up for hearing on 26- 8-2014 but could not be heard and it was listed on 4-9-2014 and in the meanwhile, on 3-9-2014, the order for reassessment for the aforesaid years was passed. Thereafter, the petitioner sought leave to amend the writ petition and the order of reassessment was permitted to be challenged by granting leave and accordingly, the order of reassessment for the respective years was also questioned in this writ petition.
2.3) In the writ petition, the main ground of challenge is that reassessment has been sought to be opened merely on the basis of alleged change in law which is applicable with effect from 1-4- 2014 as the definition of "Market Value" as used in the Act, 1976 has been enlarged and on the basis of that amendment, mandatory directions have been issued by the Commissioner, Commercial Tax to reopen the already closed and concluded assessment under Section 22 (1) of the Act, 2005 and on that basis, the reassessment notice has been issued by the competent authority in July, 2014 and such a change of opinion on the basis of change in law and / or W.P.(T)No.157/2014 Page 5 of 28 non-application of mind is impermissible in law and would not constitute a reason to believe for reopening the assessment already concluded on the basis of law applicable on the date of assessment for a particular year. Therefore, the impugned proceeding commencing from show cause notice concluded in reassessment order deserves to be quashed.
3. A detailed return has been filed on behalf of the State/ respondents raising the plea that once the final order of reassessment has been passed on 3-9-2014 which is appealable under Section 48 of the Act, 2005, the writ petition as framed and filed is not maintainable in law The petitioner Company deliberately did not include the royalty aspect for determination of market value of goods which may be the cause for occurrence of huge difference in determination of market value. Therefore, the provision for reassessment has been invoked by the competent authority in exercise of the power contained in Section 22 (1) of the Act, 2005.
4. A rejoinder has been filed by the petitioner controverting the averments made in the return.
5. Mr. M.P. Devnath, learned counsel opening the argument on behalf of the writ petitioner, would submit as under: -
5.1) The reassessment proceeding has been initiated on the basis of amended definition incorporated in the Act, 1976 by the Amendment Act, 2014, as the definition of "Market Value" has W.P.(T)No.157/2014 Page 6 of 28 been redefined/enlarged and that has been made applicable with effect from 1-4-2014 which is apparent from the fact that thereafter only the memo dated 16-6-2014 has been issued by the Commissioner, Commercial Tax directing all the assessing authorities to reopen the already concluded assessment under Section 22 (1) of the Act, 2005 and to take into account the amount of royalty paid to the Government under the Mines and Minerals (Regulation and Development) Act, 1957, as it is well settled law that change in law is always prospective unless it is made retrospective expressly or by necessary implication.
Reliance has been placed upon the decisions of the Supreme Court in the matters of Sales Tax Officer, Ward-II, Moradabad and others v. M/s Oriental Coal Corporation, Moradabad 1 and Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited2.
5.2) Subsequent change in law according to which the assessment proceedings were conducted cannot constitute reason to believe of the assessing authority to initiate reassessment proceeding. 5.3) Discovery of inadvertent mistake or even non-application of mind during the original assessment would not be a ground to re- initiate proceeding under Section 22 (1) of the Act, 2005. Heavy reliance has been placed upon a decision of the Supreme Court in 1 1988 (Supp) SCC 308 2 (2015) 1 SCC 1 W.P.(T)No.157/2014 Page 7 of 28 the matters of Commissioner of Income Tax, Delhi v. Kelvinator of India Limited3 and State of Uttar Pradesh & Ors. v. M/s. Aryaverth Chawl Udyoug & Ors.4.
5.4) Royalty paid by the petitioner under mining lease to the State Government under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957, does not attract the liability of entry tax. Reliance has been placed upon a decision of the Supreme Court in the matter of State of H.P. and others v. Gujarat Ambuja Cement Ltd. and another5.
5.5) In view of the decisions of the Supreme Court in Gujarat Ambuja Cement Ltd.'s case (supra), Calcutta Discount Co. Ltd. v. Income-Tax Officer, Companies District I, Calcutta 6, M/s Filterco and another v. Commissioner of Sales Tax. Madhya Pradesh and another7, the writ petition cannot be thrown at this stage on the ground of alternative remedy.
6. Replying the submissions, Mr. Shashank Thakur, learned Government Advocate appearing on behalf of the State/ respondents, would submit as under: -
1. The petitioner has effective and efficacious statutory alternative remedy of invoking the jurisdiction of appellate 3 (2010) 2 SCC 723 4 2014 SCC OnLine SC 1205 5 (2005) 6 SCC 499 6 AIR 1961 SC 372 7 (1986) 2 SCC 103 W.P.(T)No.157/2014 Page 8 of 28 authority under Section 48 of the Act, 2005 by way of appeal, therefore, the writ petition as framed and filed is not maintainable. Reliance has been placed upon the judgment of the Supreme Court in the matter of Union of India and others v. Major General Shri Kant Sharma and another8.
2. The assessing authority has rightly reopened and assessed the entry tax in exercise of power conferred under Section 22 (1) of the Act, 2005. In Section 22 (1) of the Act, 2005, "reason to believe" is not required for reopening the concluded assessment, merely on the subjective satisfaction of the assessing authority, proceeding for reassessment can be reopened and, therefore, it has rightly been reopened.
3. The petitioner itself has suppressed the details with respect to payment of royalty to the Government by which the liability of tax is under assessed/has escaped assessment.
7. Mr. Devnath, learned counsel appearing for the writ petitioner, while replying to the submission made by the learned Government Advocate, in his rejoinder submission would submit that the petitioner Company has submitted all the details about royalty which is apparent from page 72 of the paper book and my attention was drawn to page 72 (paper book) in which it has been mentioned that "Entry tax has been deposited on the value of lime stone 8 (2015) 6 SCC 773 W.P.(T)No.157/2014 Page 9 of 28 excluding the amount of royalty payable on such lime stone. All other variable and invariable expenses have been considered for the purpose of valuation. The claim of non-liability of entry tax on royalty is based on the judgment of the Supreme Court in Gujarat Ambuja Cement Ltd.'s case (supra)". Mr. Devnath, learned counsel, had also drawn my attention towards paragraph 29 of the return filed on behalf of the State/respondents (reply to paras 9.24 to 9.28 of the petition) in which the State Government has clearly stated that proceeding of reassessment was initiated on the basis of circular No.4127 dated 16-6-2014 issued by the Commissioner, Commercial Tax and the assessing authority had asked to furnish the information relating to various expenses which included royalty as well. He has also drawn my attention towards paragraph 20 of the return in which similar averment has been made that on the basis of circular issued, the proceeding for reassessment has been initiated. He would also submit that on the basis of executive instructions, proceeding for reassessment cannot be initiated and therefore it is without jurisdiction and without authority of law.
8. I have heard learned counsel for the parties and considered their rival submissions made herein-above and also gone through the record critically and carefully as well.
9. Since preliminary objection has been raised on behalf of the W.P.(T)No.157/2014 Page 10 of 28 respondents herein regarding maintainability of writ petition, it would be appropriate to deal with the preliminary objection raised on behalf of the respondents first. The objection is that the writ petition was originally filed challenging the show cause notice issued by the assessing authority for reassessment under Section 22 (1) of the Act, 2005 and as such, the writ petition is not maintainable which has been opposed by learned counsel for the petitioner stating that since it is the case where jurisdictional fact that is reason to believe has been raised, therefore, the writ petition would be maintainable in light of the decision of the Supreme Court in Calcutta Discount Co. Ltd. (supra).
10. In Calcutta Discount (supra), Their Lordships of the Supreme Court have clearly and unmistakably held that the High Court in appropriate cases has power to issue an order prohibiting the Income Tax Officer from proceeding to reassess the income when the conditions precedent do not exist. K.C. Das Gupta, J, speaking for the Supreme Court and delivering the majority judgment held as under: -
"It is well-settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate W.P.(T)No.157/2014 Page 11 of 28 orders or directions to prevent such consequences The High Court may, therefore, issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with reassessment when it appears that the Income-tax Officer had no jurisdiction to commence proceeding".
11. The principle of law laid down in Calcutta Discount (supra) has been followed with approval by the Supreme Court thereafter in the matter of The Commissioner of Income-tax, Gujarat v. M/s. A. Raman and Co.9 in which Their Lordships have held that the High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a notice issued under Section 147 of the Income Tax Act, 1961, if the conditions precedent to the exercise of jurisdiction under Section 147 of the Act do not exist, and observed as under: -
"6. The High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a notice issued under Section 147 of the Income Tax Act, 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may, in exercise of its powers, ascertain whether the Income Tax Officer had in his possession any information: the Court may also determine whether from that information the Income Tax Officer may have reason to believe that income chargeable to tax had escaped assessment. But the jurisdiction of the Court extends no further. Whether on the information in his possession he should commence a proceeding for assessment or reassessment, must be decided by the Income Tax Officer and not by the High Court. The Income Tax Officer alone is entrusted with the power to administer the Act: if he has information from which it may be said, prima facie, that he had reason to believe that income chargeable to tax had escaped 9 AIR 1968 SC 49 W.P.(T)No.157/2014 Page 12 of 28 assessment, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re- appraisal of the evidence."
12. In Gujarat Ambuja Cement's case (supra), Their Lordships of the Supreme Court have held that when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess, the writ petition can be entertained despite the availability of alternative remedy and observed as under in paragraph 23: -
"23. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. ITO10 that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition."
13. The enunciation of law laid down in Calcutta Discount Co. Ltd. (supra) reiterated in the matter of The Commissioner of Income- 10 (1970) 2 SCC 355 : AIR 1971 SC 33 W.P.(T)No.157/2014 Page 13 of 28 tax, Gujarat v. M/s. A. Raman and Co. 11 by Their Lordships of the Supreme Court has further been followed recently in the matter of Jeans Knit Private Ltd. Bangalore v. Deputy Commissioner of Income Tax Bangalore12 and it has clearly been held that writ petition filed by the assessee challenging the issuance of notice under Section 148 of the Income Tax Act, 1961 and the reasons which were recorded by the Assessing Officer for reopening the assessment is maintainable.
14. In light of the principles of law laid down in Calcutta Discount Co. Ltd. (supra) and Gujarat Ambuja Cement's case (supra) followed in M/s. A. Raman and Co.'s case (supra) and Jeans Knit Private Ltd. (supra), I do not have any slightest doubt in my mind to hold that the writ petition is maintainable to challenge the notice for reassessment issued under Section 22 (1) of the Act, 2005 read with Section 13 of the Act, 1976, in view of facts pleaded and grounds raised in the writ petition and accordingly, I overrule the first preliminary objection raised on behalf of the Revenue/State in this regard.
15. This would lead me to the merits of the matter. Concluded assessment has been opened and reassessment has been made in exercise of power conferred under Section 22 (1) of the Act, 2005 read with Section 13 of the Act, 1976. Therefore, it would be 11 AIR 1968 SC 49 12 2016 SCC onLine SC 1536 W.P.(T)No.157/2014 Page 14 of 28 appropriate to notice Section 22 (1) of the Act, 2005. Section 22 of the Act, 2005 provides for assessment/re-assessment of tax in certain circumstances. Sub-section (1) of Section 22 of the Act, 2005 states as under: -
"(1) Where an assessment or re-assessment of a dealer has been made under this Act or the Act repealed by this Act and for any reason any sale or purchase of goods liable to tax under this Act or the Act repealed by this Act during any period,--
(a) has been under-assessed or has escaped assessment; or
(b) has been assessed at a lower rate;
(c) any wrong deduction has been made while making the assessment; or
(d) a rebate of input tax has incorrectly been allowed while making the assessment;
(e) is rendered erroneous and prejudicial to the interest of revenue consequent to or in the light of any judgment or order of any Court or Tribunal which has become final, the Commissioner may, at any time within a period of three calendar years from the date of order of assessment or from the date of judgment or order of any court or Tribunal, proceed in such manner as may be prescribed, to assess or re-assess, as the case may be, the tax payable by such dealer after making such enquiry as he considers necessary, and assess or re-assess to tax."
16. A focused glance of the aforesaid provision would show that the assessing authority is empowered to reopen the assessment "for any reason", if any sale or purchase of goods liable to tax has been under-assessed or has escaped assessment; or has been assessed at a lower rate; or any wrong deduction has been made while making W.P.(T)No.157/2014 Page 15 of 28 the assessment; or a rebate of input tax has incorrectly been allowed while making the assessment; and is rendered erroneous and prejudicial to the interest of revenue consequent to or in the light of any judgment or order of any Court or Tribunal which has become final.
17. This power under Section 22 (1) of the Act, 2005, cannot be exercised as a matter of course. This power can be exercised only in the circumstances which are specified in the Section. It is a prerequisite that before issuing notice the officer must record the reasons for doing so. This is a sufficient safeguard for an assessee against frequent reopening of concluded assessment by the succeeding officers. The power under this section cannot be exercised merely on a 'change of opinion' on the materials already on record. When all the materials on record were considered and after investigation and enquiry a conclusion has been arrived at by an officer in an adjudication of a dispute, such conclusion is in the nature of a judgment. It cannot be reopened by forming a different opinion on the same materials by the same officer or the succeeding officer unless there are fresh materials for doing so. The meaning of the words 'for any reason' contained in Section 22 (1) of the Act, 2005 cannot be enlarged so as to take in 'change of opinion' or 'error of judgment'.
18. The M.P. High Court in the matter of Laduram Ramniwas v. W.P.(T)No.157/2014 Page 16 of 28
State of M.P. and others13 while dealing with Section 19 (1) of the M.P. General Sales Tax Act, 1958, which is pari materia provision to Section 22 (1) of the Act, 2005, and which also provides reassessment by employing the words "for any reason", held that such a provision has a restrictive meaning. The M.P. High Court relying upon the earlier decision of that Court in the matter of Firm Janta Hardware Stores v. B.S. Parihar, Assistant Sales Tax Officer14 narrated with approval the following paragraph of that judgment which states as under: -
"But the requirement after the amendment is of a certainty of there being for any reason an under- assessment or escaped assessment. There must be a causative and rational connection between the reason stated and the consequence of under- assessment or escaped assessment. The result of the amendment actually effected is that proceedings under the section cannot be initiated merely on the chance of under-assessment or escaped assessment or assessment at a lower rate or a wrong deduction being established in those proceedings."
19. Thus, the phrase "for any reason" has same import and consequences as that of phrase "reason to believe" because reason cannot exist in vacuum i.e. formation of belief that reason exists, it must and this formation of belief must have live link with material on record.
20. Their Lordships of the Supreme Court in the matter of Sales Tax 13 (1996) 102 STC 240 (MP) 14 (1963) 14 STC 67 (MP) W.P.(T)No.157/2014 Page 17 of 28 Officer, Ganjam v. M/s. Uttareswari Rice Mills15 while dealing with Section 12 (8) of the Orissa Sales Tax Act, 1947 which also empowers the assessing authority "if for any reason the turnover of sales or the turnover of purchases of a dealer has escaped assessment or has been under-assessed", the Supreme Court while examining the ambit and scope of reassessment has held that existence of a reason that the turnover of dealer escaped assessment or has been under-assessed is a condition precedent to issuance of notice of reassessment under Section 12 (8) of the Act and the existence of such reason is sine qua non for the issuance of notice. Their Lordships concluded in paragraph 8 of the report as under: -
"8. Although the opening words used in section 12(8) are "if for any reason" and not "if the sales tax authority has reason to believe", the difference in phraseology, in our opinion, should not make much material difference. A reason cannot exist in vacuum. Somebody must form the belief that reason exists and looking to the context in which the words are used, we are of the view that it should be the sales tax authority issuing the notice who should have reason to believe that the turnover of a dealer has escaped assessment or has been under-assessed. The approach in this matter has to be practical and not pedantic. Any view which would make the opening words of section 12(8) unworkable has to be avoided. It may be noted in this context that in Form VI appended to the rules, which has been prepared in pursuance of Rule 23, the words used are "whereas I have reason to believe that your turnover........has escaped assessment.........""
15 (1973) 3 SCC 171 W.P.(T)No.157/2014 Page 18 of 28
21. Similar proposition has been stuck by this Court in the matter of Shree B.R. Steels v. Additional Commissioner of Commercial Tax16, while dealing with the provisions contained in Section 28 (1) of the Chhattisgarh Commercial Tax Act, 1994, and this Court held that concluded assessment can be reopened, in other words, reassessment can be done on the grounds mentioned therein on satisfaction of the condition precedent being "for any other reason".
22. Their Lordships of the Supreme Court in the matter of Commissioner of Income Tax, Delhi v. Kelvinator of India Limited17 have held that the concept of "change of opinion" is an inbuilt safeguard in all reassessment proceedings, otherwise power to reassess would become power to review and it would give arbitrary power to the assessing officer to open concluded assessment on mere change in opinion. Their Lordships observed as under: -
"5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under the above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the 16 MANU/CG/0359/2014 17 (2010) 2 SCC 723 W.P.(T)No.157/2014 Page 19 of 28 assessment. Therefore, post-1-4-1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open.
6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re- assessment has to be based on fulfillment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place.
7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer. ..."
23. It is well settled law that mere change in opinion/reaching different or divergent view (as to one reached at the time of original assessment) while perusing same material cannot give rise to necessary precondition of "reason to believe" to reopen concluded assessments and accordingly, reassessment cannot be done on mere change in opinion. The Supreme Court in the matter of State of Uttar Pradesh and others v. M/s. Aryaverth Chawl Udyoug and others18 has clearly held that discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to re-initiate the concluded assessment and has held in paragraph 31 as under: -
"31. In case of there being a change of opinion, 18 2014 SCC OnLine SC 1205 W.P.(T)No.157/2014 Page 20 of 28 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 (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v.
Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360)."
24. Their Lordships further held in M/s. Aryaverth Chawl Udyoug's case (supra) that subsequent change in law according to which the assessment proceedings were conducted, cannot constitute "change in opinion" of the assessing Authority so as to initiate reassessment proceedings, and held in paragraph 35 as under: -
"35. A perusal of the show-cause notice and also the order issued by both, the Additional Commissioner while exercising jurisdiction under Section 21(2), and the assessing authority while re- opening assessment proceedings under Sections 21(1) and 21(2) would clarify that both the Authorities have only noticed and reiterated the contents of the Circular. The assessing authority has substantiated its "reason to believe" by placing reliance on the change in position of law under Section 15(c) of the Act, as contained in the Circular and thus, issued the show cause notice. It is trite that subsequent change in law according to which the assessment proceedings were conducted, cannot constitute "change in opinion" of the assessing authority so as to initiate reassessment proceedings. In fact, the same is impermissible if the Act does not specify the operation of law as retrospective."
25. Their Lordships also held that without having any additional material, merely on "change of opinion", assessment already concluded cannot be reopened and observed in paragraph 37 as W.P.(T)No.157/2014 Page 21 of 28 under: -
"37. In the instant case, reliance placed on the change in law as specified under the Circular and action taken on the basis of directions issued by the Commissioner of Trade Tax, the assessing Authority has reached the purported "reason to believe" that reassessment proceedings are required to be initiated. The material in existence remains the same during both, the assessment and the reassessment proceedings and no additional material or facts have been referred to explaining such "reason to believe" as per the mandate of Section 21(1) of the Act before initiating reassessment proceedings. In fact, the assessing Authority has not indicated any material at all that has given rise to such reason and thus, on the basis of mere "change of opinion" concluded that exemption on purchase tax has wrongly been allowed."
26. Similar view has been expressed by the M.P. High Court, as already noticed, in Laduram Ramniwas (supra).
27. Noticing the aforesaid statutory provisions and the principles relating to reopening of concluded assessment emanating from the judgments of the Supreme Court, now, I would proceed to examine the factual matrix of the case in hand in light of those principles and statutory provisions.
28. In the present case, the concluded assessment has been sought to be reopened on the basis of amendment made in the definition of "market value" as contained in the Entry Tax Act and thereafter, certain directions have been issued by the Commissioner, Commercial Tax even to reopen the concluded assessment. The definition of "market value" as contained in the Act, 1976, W.P.(T)No.157/2014 Page 22 of 28 suffered amendment by the Chhattisgarh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar (Sanshodhan) Adhiniyam, 2014 and new definition in shape of Section 2 (fff) was introduced explaining/ clarifying the earlier definition which has been made affective with effect from 1-4-2014. The definition of "market value" as inserted by the Amendment Act, 2014, reads as under: -
"(fff) "Market Value" means the value at which the goods are generally sold in the market or where the goods are not generally sold in the market or the correct sale price thereof is not ascertainable, such value as may be notified by the State Government."
29. Thereafter, on the basis of amendment made in such a definition clause, a circular has been issued by the State Government on 16- 6-2014 filed as Annexure P-1 in which the Commissioner, Commercial Tax, has directed all the Deputy Commissioners that the amount of royalty has to be taken into account in calculating the entry tax, which has not been taken, and since the definition of market value has been amended with effect from 1-4-2014, therefore, the cases in which assessment has already been concluded be reopened under Section 22 (1) of the Act, 2005 and reassessment be done. For ready reference, directions issued by the Commissioner of Commercial Tax state as under: -
dk;kZ y ; vk;q D r] okf.kfT;d dj] NRrhlx< +] jk;iq j Øekad@okd@rd@2014@4127 jk;iqj] fnukad 16@06@2014 W.P.(T)No.157/2014 Page 23 of 28 izfr] laHkkxh; mik;qDr] jk;iqj laHkkx Øekad&,d@nks] nqxZ laHkkx] okf.kfT;d dj] NRrhlx<+ fo "k; %& lhesaV fuekZrk m|ksxksa }kjk dsfIVo ekbal ls pwuk iRFkj ¼lime stone½ mR[kuu dj izos'k djkus ij izos'k dj dk Hkqxrku ckcr~ A &&000&& lhesaV fuekZrk m|ksxkas }kjk dsfIVo ekbal ls pwuk iRFkj (lime stone) mR[kuu dj LFkkuh; {ks= eas izos'k djkus ij Hkqxrku fd, x, izos'kdj laca/kh tkudkjh dk ijh{k.k djus ij ik;k x;k fd vyx&vyx lheasV fuekZrk m|ksxkas }kjk ftl ykxr ewY; ij izos'kdj dk Hkqxrku fd;k tk jgk gS] buesa dkQh fHkUurk gSA lkFk gh ;g Hkh ik;k x;k fd tks ewY; muds }kjk n'kkZ;k tk jgk gS] og cktkjewY; dk yxHkx ,dpkSFkkbZ gSA izos'kdj vf/kfu;e] 1976 dh /kkjk&2 ¼t½ eas dj ;ksX; cktkjewY; dks ifjHkkf"kr fd;k x;k gSA lkFk gh fnukad 01-04-2014 ds izHkko ls izos'kdj vf/kfu;e esa la'kks/ku djus gq, cktkjewY; dks vkSj Li"V fd;k x;k gS ftlds varxZr [kfut ds mR[kuu essa fd, x, leLr izR;{k ,oa vizR;{k O;; 'kkfey gS] izos'kdj vkjksfir fd;s tkus gsrq ykxrewY; dk Hkkx gksaxs] ftleas jkW;YVh Hkh 'kkfey gSA dqN lheasV m|ksxksa }kjk jkW;YVh dh jkf'k dks ykxr ewY; esa 'kkfey ugh fd;k x;k gSA blh izdkjk ykxrewY; dkQh de n'kkZ;s tkus ds QyLo:i ns; izos'kdj dh rqyuk eas dkQh de izos'kdj dk Hkqxrku fd;k tk jgk gS ftlls 'kklu dks buls izkIr gksus okys izos'kdj jktLo ij izfrdwy vlj gks jgk gSA vr,o vkids laHkkx eas iath;r leLr lheasV fuekZrk W.P.(T)No.157/2014 Page 24 of 28 daiuh ds fooj.k&i=ksa ,oa dj fu/kkZj.k izdj.k ftuesa vkns'k ikfjr fd, tk pqds gS mudk ijh{k.k fd;k tkuk vko';d gSA lkFk gh bu daifu;ksa ls] pquk iRFkj (lime stone) dk lhesaV fuekZ.k eas miHkksx gksus laca/kh ek=kRed fooj.k] ykxrewY;] jkW;YVh ,oa vU; [kpksZ dh tkudkjh izkIr dh tk,A rRi'pkr ftu izdj.kkas es dj fu/kkZj.k vkns'k ikfjr fd;s tk pqds gS rFkk tks /kkjk&22¼1½ ds varxZr dk;Zokgh gsrq fu/kkZfjr le;lhek ds Hkhrj gS] bu izdj.kksa dks /kkjk&22¼1½ ds varxZr [kksyk tkdj iqu% dj fu/kkZj.k dh dk;Zokgh dh tk,A
30. In the counter affidavit filed by the State/respondents, it has been emphatically submitted that pursuant to the amendment in the definition of "market value", notification has been issued by the State Government and on the basis of the said notification, notice for reassessment was issued. Para seven of the counter affidavit filed by the State clearly affirms the aforesaid fact. Not only this, in para 29, the State Government has clearly stated that the reassessment proceeding was initiated based on the circular dated 16-6-2014 issued by the Commissioner, Commercial Tax and the assessing authority had asked to furnish the information relating to the various expenses which included royalty as well.
31. The aforesaid facts incorporated in the return on oath clearly establish that reassessment notice was issued by the State Government on the basis of circular issued by the Commercial Tax Officer as the petitioner did not include the royalty aspect for determination of market value on goods for the purpose of W.P.(T)No.157/2014 Page 25 of 28 payment of entry tax.
32. The amendment was made in the year 2014, on the face of it, clearly states that it shall come into force with effect from 1-4- 2014 and on the basis of said amendment, circular dated 16-6- 2014 has been issued which directs reopening of the concluded assessment based on the said prospective amendment.
33. In M/s. Aryaverth Chawl Udyoug's case (supra), in similar fact situation, Their Lordships of the Supreme Court have clearly held that subsequent change in law according to which the assessment was conducted cannot constitute change in opinion for reopening the concluded assessment. It is impermissible in law when the Act does not specify the operation of law as retrospective. Their Lordships further held that discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to re-initiate proceedings.
34. Further, in the matter of M/s. Reliance Jute and Industries Ltd. v. C.I.T., West Bengal, Calcutta19, Their Lordships of the Supreme Court have held that it is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication.
35. Thus, it is crystal clear that in the instant case, assessment has been 19 (1980) 1 SCC 139 W.P.(T)No.157/2014 Page 26 of 28 made as per law in force and after the definition of "market value"
is amended with effect from 1-4-2014, and on that basis, circular has been issued by the State Government, the proceeding for reassessment of concluded assessment was initiated and it was concluded making reassessment and taking the amended definition of "market value" into account, and except the circular of the Commissioner directing opening of reassessment even of concluded assessment on the basis of amendment brought into force from 1-4-2014, there is no fresh/additional material brought on record which can be made basis for reopening the concluded assessment by the assessing officer. Thus, in my considered opinion, the assessing authority has sought to reopen the assessment and made reassessment only on the basis of change of opinion and on the basis of the circular issued by the State Government by which the Commissioner, Commercial Tax has directed to take into account the amount of royalty in calculating the entry tax without being any additional/fresh material brought on record. The circular of the State Government is based on change in law in the definition of "market value" which is only prospective in nature.
36. In view of the decision of the Supreme Court in M/s. Aryaverth Chawl Udyoug's case (supra), subsequent change in law cannot constitute "change of opinion" by the assessing authority to reopen W.P.(T)No.157/2014 Page 27 of 28 the concluded assessment particularly, when the amendment made in definition of "market value" by Section 2 (fff) is prospective in nature applicable from 1-4-2014, as the law in force at the time of assessment would apply to make an assessment which has already been made for the respective years i.e. 2007-08, 2008-09 and 2009-10 as held in M/s. Reliance Jute and Industries Ltd.
(supra). The assessing authority in the order of reassessment has not indicated any reason much less the reason over any other reason and on the basis of only above-stated change of opinion that royalty aspect has not been included while making payment of entry tax, the concluded proceedings have been reopened.
37. As a fallout and consequence of above-stated legal analysis, the show-cause notice issued for reassessment under Section 22 (1) of the Act, 2005 and the final order passed on such reassessment during the pendency of this writ petition, deserve to be quashed.
In view of the above-stated finding reached, I deem it inexpedient to deal with the contention that the petitioner is not liable to pay entry tax on the royalty paid and further, it is also unnecessary to deal with legality or otherwise of the circular (Annexure P-1).
38. In the result, the show-cause notice Annexure P-2 and the consequent reassessment order (Annexure P-12) passed by respondent No.3 are hereby quashed.
39. The writ petition is allowed to the extent sketched herein-above W.P.(T)No.157/2014 Page 28 of 28 leaving the parties to bear their own cost(s).
Sd/-
(Sanjay K. Agrawal) Judge Soma