1988 (7) TMI 380 - HC - VAT and Sales Tax

Summary

Issues: Validity of reassessment proceeding under section 18(1) of the Bihar Sales Tax Act, 1959 for the period 1977-78.

In this case, the petitioners, a company engaged in manufacturing wheat products, challenged the validity of a reassessment proceeding initiated by respondent No. 2 under section 18(1) of the Bihar Sales Tax Act, 1959 for the period 1977-78. The petitioners had claimed deduction and exemption for sales made outside Bihar through arhatias, which was allowed by the assessing officer in the original assessment order dated 11th April, 1979.

The Deputy Commissioner initiated a reassessment proceeding in 1982 based on audit objections, which the petitioners sought to understand by requesting a certified copy, but were refused. The assessing officer summarized the audit objection, stating that the deduction granted for sales outside Bihar should not have been allowed as the products were manufactured from wheat purchased on furnishing a declaration in form IX.

The petitioners contended that the reassessment was based on the same materials already on record, which would amount to a change of opinion by the assessing authority, not permissible under the law. The High Court referred to a Full Bench decision in Bhimraj Madanlal v. State of Bihar [1984] 56 STC 273, which clarified that a mere change of opinion on the same facts does not constitute 'information' for reassessment under section 18(1) of the Act.

Considering the Full Bench decision and the fact that the reassessment was based on existing materials, the Court upheld the petitioners' contention, quashed the reassessment order contained in annexure-2, and allowed the writ application without costs.