2005 (1) TMI 634 - HC - VAT and Sales Tax

Summary

Issues:
Reassessment order challenged under Article 226 - Eligibility for tax exemption under notifications - Reopening of assessment order - Interpretation of Section 19 of Act of 1958.

Analysis:
The petitioner, a registered dealer under the M.P. General Sales Tax Act and Central Sales Tax Act, set up an industrial unit in Pithampur for manufacturing light commercial vehicles (LCV). The State Government issued notifications providing tax exemptions for registered dealers setting up industries in specific districts. The petitioner applied for and received an eligibility certificate for tax exemption. However, the assessing officer later reopened the assessment, claiming that certain items were wrongly exempted from tax. The petitioner challenged this reassessment order through a writ petition.

The main contention raised by the petitioner was that the provisions of Section 19 of the Act of 1958 did not authorize the reopening of the assessment. The petitioner argued that the assessing authority could not assess tax on items exempted under the eligibility certificate. On the other hand, the Government Advocate justified the reassessment and additional tax demand.

The Court analyzed the provisions of Section 19(1) of the Act of 1958, which allow reassessment if turnover has escaped assessment. The Court emphasized that a turnover escapes assessment when it is not noticed due to various reasons, such as inadvertent omission or deliberate concealment. In this case, the reassessment was based on a flying squad report, which the Court deemed insufficient to invoke Section 19 for reassessment.

Referring to previous judgments, the Court held that reassessment cannot be based solely on a change of opinion or new reports without substantial evidence of concealed turnover. The Court concluded that the authorities exceeded their jurisdiction by initiating the reassessment proceedings and quashed the reassessment order. As a result, the writ petition was allowed, and the impugned reassessment order and additional tax demand were quashed. No costs were awarded in the matter.