1981 (1) TMI 223 - HC - VAT and Sales Tax

Summary

Issues:
Whether the assessment of the dealer could be reopened under section 19(1) of the M.P. General Sales Tax Act, 1958, and if declarations initially accepted could be rejected on the ground of being defective.

Analysis:
The case involved a reference under section 44(1) of the M.P. General Sales Tax Act, 1958, where the Board of Revenue referred a question of law to the High Court regarding reopening an assessment under section 19(1) of the Act. The assessing authority had initially rejected the books of account produced by the assessee and made a best judgment assessment for the year 1962-63. Subsequently, after a series of appeals and remands, the assessing authority issued a notice under section 19(1) to show cause why a deduction should not be disallowed. The assessee objected, arguing that the action under section 19(1) was not warranted. The Board of Revenue held that the assessing authority could not revise its opinion or reassess a dealer under section 19(1) because all facts were before the authority during the initial assessment. The Board allowed the appeal, prompting the reference to the High Court.

The High Court analyzed the language of section 19(1) of the Act, which allows reopening of assessments if goods were under-assessed, escaped assessment, or deductions were wrongly made. Referring to previous decisions, the Court emphasized that the expression "if for any reason" in the Act indicated a broad scope for reopening assessments. Citing precedents, the Court held that the only limitation on the assessing officer was to act in good faith. The Court noted that the Board did not find the assessing authority's actions in this case to be mala fide. Therefore, the Court concluded that the assessment could be reopened under section 19(1) and declarations initially accepted could be rejected if found defective.

In conclusion, the High Court answered the referred question in the affirmative, ruling in favor of the department. The Court held that the assessing authority was justified in exercising powers under section 19(1) of the Act based on the broad language of the provision and the requirement of good faith. The parties were directed to bear their own costs in this reference.