1987 (2) TMI 496 - HC - VAT and Sales Tax

Summary

Issues:
1. Valid exercise of jurisdiction under section 21 for reassessment.

The judgment delivered by the High Court pertains to a revision filed against the Tribunal's order affirming the remand of a case by the Assistant Commissioner (Judicial) to the assessing officer for reassessment for the assessment year 1978-79. The primary issue at hand was whether the assessing officer validly exercised jurisdiction under section 21 of the U.P. Sales Tax Act, 1948, for making the reassessment. The contention raised was that there was no discovery of new facts warranting the invocation of jurisdiction under section 21, and it was merely a change of opinion. The assessing officer had reopened the assessment based on the discovery that the assessee had made purchases of coal after the initial assessment period, leading to an estimation of turnover at a higher figure. However, it was observed that the reassessment was done without establishing that the original assessment resulted in under-assessment due to suppression or non-disclosure of facts. The High Court emphasized that section 21 cannot be used to rewrite an order in an improved manner or to provide additional reasons beyond those considered in the original assessment.

The Court highlighted that the assessing officer, once making an assessment, becomes functus officio, and the assessment is final unless reopened for valid reasons under section 21. It was noted that reassessment cannot be initiated solely for the purpose of giving additional reasons or considering aspects that should have been addressed in the original assessment. The judgment emphasized that reassessment under section 21 is warranted only when turnover has escaped taxation, been under-assessed, assessed at a lower rate, or if deductions/exemptions were wrongly allowed. In this case, the reassessment was for the same period as the original assessment, indicating that it was not based on new discoveries post the initial assessment period. The Court rejected the approach of allowing reassessment for providing new reasoning or considering aspects that should have been addressed in the original assessment, as it would lead to multiple assessments at different stages, contrary to the statutory provisions.

Ultimately, the High Court allowed the revision, setting aside the order of the Tribunal and the reassessment proceedings. The Court directed the Tribunal to pass an order under section 11(8) of the Act, 1948, to annul the reassessment order.