2026-VIL-877-GUJ
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VAT High Court Cases

Gujarat Value Added Tax Act, 2003 - Composition Permission - Reassessment based on Change of Opinion on rate of tax – Assessee engaged in restaurant business and resale of liquor obtained composition permission for restaurant business under Section 14D of VAT Act and paid normal tax rate on liquor resale purchased from outside the State as it could not be produced in the State. Audit assessment accepted this position. Subsequently reassessment notice was issued to withdraw composition benefit – Whether reassessment order initiated on change of opinion about tax rate without proper evidence is valid and whether composition permission can be withdrawn when goods cannot be produced in the State due to legal constraints – HELD - After the retrospective amendment to Rule 28C(6) of the VAT Rules purchase of goods from outside the State is permissible by a dealer enjoying composition permission where such goods could not be produced in the State due to legal constraints and tax is paid at normal rate on resale - The assessee had determined the turnover of liquor separately and paid tax at normal Schedule Rate which was accepted in the Audit assessment order. The provision of Section 14D read with amended proviso to Rule 28C(6) stipulates that a dealer is entitled to the benefit of composition permission if goods are not capable of being produced in the State of Gujarat for any reason and tax is paid at normal rate on such goods. The amendment is retrospective in nature - The reassessment order ignoring the composition permission and raising demand on the entire turnover at normal rate was wrongly confirmed by the First Appellate Authority without considering merit of the case. The reassessment was carried on based on merely change of opinion about the rate of tax - The Tax Appeal by Revenue stands dismissed
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