Reopening of sales tax assessment upheld where factual disputes required reassessment and prior notice of precise escapement was not mandatory.

Section 12(7) of the Orissa Sales Tax Act, 1947 was treated as conferring wide power to reopen an assessment where turnover has escaped assessment or been under-assessed. The Orissa HC held that disputes over whether the assessee was a manufacturer and whether exemption was correctly claimed required scrutiny of the accounts in reassessment, so the writ challenge was premature when the accounts had not been produced. It also held that the taxing officer was not obliged to convene the assessee or to specify in advance the exact nature of the alleged escapement, and the reopening proceedings were upheld for the revenue.

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Issues: Whether the notice and proceedings for reopening the completed sales tax assessment under section 12(7) of the Orissa Sales Tax Act, 1947, were without jurisdiction and liable to be quashed in writ proceedings.

Analysis: The provision confers wide power on the taxing authority to reopen an assessment where turnover has escaped assessment or has been under-assessed, and the existence of factual controversy as to whether the petitioner was a manufacturer and whether the exemption was properly claimed could be examined only on scrutiny of the accounts in the reassessment proceedings. The Court held that the petitioner had not produced the accounts and that the writ petition was premature at that stage. It further held that the taxing officer was not required by the provision to convene the assessee or to intimate in advance the precise nature of the alleged escapement.

Conclusion: The challenge to the reopening proceedings failed and the petition was dismissed in favour of the revenue.

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