TMI Blog1988 (1) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... uently, proceedings under section 21 of the U.P. Sales Tax Act (for short "the Act") were initiated against the assessee and the turnover was assessed to tax at 7 per cent. The justification for taking proceedings under section 21 of the Act, as stated in the reassessment order, is to the following effect: "........ Kardata dwara ghoshit saccharin ki Rs. 2,25,918.43 ki bikri ko sweekar karte huye avargikrit vastuon ki bhanti 3.5% ki dar se kar lagaya gaya tha. Tatapaschat mamle par punarvicharoparant yeh anubhav kiya gaya ki kardata dwara bechi gyai saccharin par kar kee dar 3.5% na hokar chemical ki bhanti 7% ki dar se kar lagaya jana chahiya tha kyonki kardata saccharin mein soda bi carb ek nischit matra mein mishrit karte huye banate va bechate hain aur soda bi carb milane par saccharin sadharan saccharin nahin kahi ja sakti balki sodium saccharin ho jati hai jo ki ek prakar ka chemical hai." From the above, it is evident that the action for reassessment was necessitated as after the original assessment and on reconsideration of the matter the Sales Tax Officer felt that assessee's turnover should have been taxed at 7 per cent as "chemical". This was so, because in manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or the appellant is over rupees ten thousand. In the instant case, the assessee did not dispute its liability to pay tax at 3.5 per cent plus an additional amount at 5 per cent on the turnover in excess of Rs. 2 lacs which was charged under section 3-F of the Act by the original assessment order. The aggregate admitted liability by the assessee was Rs. 9,036.73. Deducting the amount of tax on which there was no contest from the tax levied by the reassessment order, the disputed tax in appeal was less than Rs. 10,000. The learned Standing Counsel, appearing for the Revenue, when confronted with these facts conceded the position and gave up the point at issue. The first question is, therefore, decided by saying that as the tax in dispute was less than Rs. 10,000 the appeal giving rise to this revision was rightly tried by a single Member of the Sales Tax Tribunal. This brings me to the second question raised in this revision. The argument advanced for the Revenue is, that in the original assessment by an inadvertent mistake or omission the Sales Tax Officer taxed the turnover of saccharin at 3.5 per cent, inasmuch as, the assessee failed to disclose the fact that it adds soda-bi- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee was an unclassified commodity liable to tax at 3.5 per cent. These are also the findings of fact recorded by the appellate authorities. The important words in section 21 are "reason to believe". The formation of belief regarding escaped assessment constitutes the sine qua non for taking action under this section. The expression "reason to believe" was construed by the Supreme Court in Commissioner of Sales Tax v. Bhagwan Industries (P.) Ltd. [1973] 31 STC 293. Explaining the import of these words, the court observed: "In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year......... Reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment ......... the belief must be held in good faith and should not be a mere pretence." Unlike, as required in the corresponding provisions of the Income-tax Act for initiating proceedings under section 21 of the Act the Sales Tax Officer is not required to record his reason for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant notification, and therefore, it cannot be said that proceedings under section 21 were taken as a result of change of opinion. While rejecting the contention a learned single judge of this Court held: "It is correct that in the order no mention whatsoever was made of this notification. But since there was no provision allowing exemption other than this notification, it will have to be taken that while allowing the exemption the assessing authority had this notification in its mind. Therefore, when action was taken subsequently under section 21 of the Act, for the reason that the assessee had not furnished details of the type of trees, the timber of which he had purchased, it will be only as a result of change of opinion which cannot be permitted. This being so, the assessing authority had no jurisdiction to take action under section 21 of the Act." In Commissioner of Sales Tax v. Adarsh Paper and Board Manufacturing Company [1987] 65 STC 243 (All.); 1985 UPTC 15, "mill board" was treated as a kind of paper by the Sales Tax Officer in three consecutive preceding years, namely, for the years 1975-76 to 1977-78, and taxed as paper under a particular notification after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same issue should not be reactivated beyond a particular stage. The rule of finality is that the assessing officer cannot change his mind and try to reopen the closed state of affairs, but if it is a case where the reopening is sought basing the belief on an objective consideration of the material in his (the Sales Tax Officer) possession, which leads to a reasonable belief that there had been escapement and that material is not the product of a change in mood but is attributed to concrete material noticed by him then the assessment can be allowed to be reopened. The distinction between an advertent mistake or omission and change of opinion is well-settled. In a case where a particular point has been considered on merits, and a view is taken, it would not be a case of inadvertent mistake or omission, if it is found that the view taken earlier was wrong. It would be a case of change of opinion, but if it is not so, then it would be a case of non-application of mind and certainly an action would be justified under section 21 of the Act [see Commissioner of Sales Tax v. Steel Engineering Corporation [1981] 48 STC 432 (All.)]. A Division Bench of this Court in Hindustan Insulated C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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