Assotech Realty PVT. LTD. vs. Additional Commissioner Grade-1 Commercial Tax And 2 Others

Held

The Court held that the reassessment proceedings were initiated on the basis of a subsequent judgment of the Apex Court, which cannot be used to reopen or disturb past assessments that have been concluded. The Court emphasized that the Department cannot be authorized to reopen an assessment that stood closed based on the law as it existed at the relevant time. The Court referred to its own judgment in M/s Samsung India Electronics Pvt. Ltd. Vs. State of U.P. & 2 Others and the Supreme Court's decision in Deputy Commissioner of Income Tax Vs. Simplex Concrete Piles (India) Limited, both of which state that a subsequent judgment cannot be used to reopen concluded assessments. The Court found that the reassessment proceedings were initiated without new material and were based on a change of opinion, rendering them bad in law and without jurisdiction. Consequently, the impugned order and notice were quashed. The Court noted that the country is entering the GST era and it is in the interest of all to decide old pending matters.

Facts

The petitioner, Assotech Realty Pvt. Ltd., a builder, challenged a sanction order dated 30.03.2017 and a consequential notice dated 22.04.2017, both pertaining to the Assessment Year 2009-10. The petitioner argued that it constructs and sells flats as the sole owner of the land, and ownership transfers only upon execution of a registered sale deed, thus not falling under works contract. An original assessment order for the year had previously concluded no tax liability. However, the respondent authorities sought to reopen the assessment based on the Supreme Court judgment in Larsen and Toubro Limited, citing receipt of booking amounts as transfer of property in works contract and escaped turnover. The petitioner contended that the issue of its non-liability for tax on materials used in works contract had been settled in its favour by previous High Court and Tribunal orders, which were not challenged by the State.

Key Issues

1. Whether the completed assessment for the Assessment Year 2009-10 can be reopened under Section 29(7) of the U.P. Value Added Tax Act, 2008, based on a subsequent Supreme Court judgment (Larsen and Toubro Limited) when the issue of the petitioner's liability for tax on materials used in works contract had already been decided in its favour by this Court and the Tribunal, and no appeal was preferred by the State against those decisions? Petitioner's arguments: The petitioner contended that reopening the assessment based on a subsequent judgment amounts to a 'change of opinion' and is impermissible, citing the Supreme Court's decision in State of Uttar Pradesh and others Vs. Aryaverth Chawl Udyoug and others. They argued that since the issue was settled inter-parties and no new material was brought on record, the completed assessment should not be reopened. They relied on this Court's judgment in Varun Beverages Ltd. Vs. State of U.P. & Others and the Supreme Court's decision in Deputy Commissioner of Income Tax Vs. Simplex Concrete Piles (India) Limited. Respondent's arguments: The respondent authorities argued that the petitioner received booking amounts from prospective purchasers, which constituted a transfer of property in execution of works contract, leading to escaped assessment. They relied on the judgment in Larsen and Toubro Limited and Others Vs. State of Karnataka and Others to assert the petitioner's tax liability.