Ex parte assessment reopening: limitation risk and suo motu revisional power can justify fresh assessment under discretion

In exercising discretion under section 30 of the U.P. Sales Tax Act, the authority may consider that setting aside an ex parte assessment would leave a fresh assessment time-barred, because reopening is not automatic even where sufficient cause is shown. The High Court further held that the revisional authority could validly use suo motu power to set aside the original assessment and direct a fresh assessment, where that course preserved the assessee's opportunity while protecting the revenue's interest. The assessee's reference request was therefore declined.

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Issues: (i) Whether the fact that a fresh assessment would become time-barred was a relevant consideration while deciding an application to set aside an ex parte assessment under section 30 of the U.P. Sales Tax Act, 1948. (ii) Whether the revisional authority was justified in exercising suo motu powers to set aside the original assessment and direct fresh assessment.

Issue (i): Whether the fact that a fresh assessment would become time-barred was a relevant consideration while deciding an application to set aside an ex parte assessment under section 30 of the U.P. Sales Tax Act, 1948.

Analysis: Section 30 confers discretion on the assessing authority to reopen an ex parte assessment, even where sufficient cause for non-appearance is shown. The use of the word "may" indicates that reopening is not automatic and that surrounding circumstances may be considered. Where setting aside the ex parte order would result in a fresh assessment being barred by limitation, that consequence is a material circumstance relevant to the exercise of discretion under section 30.

Conclusion: The possibility that a fresh assessment would be time-barred was held to be a relevant consideration, and the contrary contention was rejected.

Issue (ii): Whether the revisional authority was justified in exercising suo motu powers to set aside the original assessment and direct fresh assessment.

Analysis: The revisional authority went beyond setting aside the order under section 30 and used suo motu power to set aside the original assessment as well, thereby enabling a fresh assessment without the bar of limitation. On the facts, this course protected the assessee's entitlement to another opportunity while also safeguarding the revenue's interest. No legal infirmity was found in the exercise of that power.

Conclusion: The exercise of suo motu revisional power was held to be justified.

Final Conclusion: The questions referred by the assessee were answered against him, and the request for reference was declined.

Ratio Decidendi: In exercising discretion to set aside an ex parte assessment, the authority may take account of the consequence that a fresh assessment would be barred by limitation, and revisional suo motu power may validly be used to avoid that result where the circumstances justify it.

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