Reopening of closed sales tax assessment requires objective material; bare suspicion is insufficient to justify reassessment.

A notice reopening a closed sales tax assessment was invalid because the authority did not disclose any cogent, objective material justifying reassessment. Although the reopening power under section 16 of the Madras General Sales Tax Act is wide, it cannot be exercised on mere conjecture or suspicion. The notice also failed to substantiate the alleged commission-agent transaction issue under explanation (4) to section 2(n) or the suggested independent sales contract theory. In the absence of legally relevant reasons, the reassessment initiation was interdicted and the writ petition succeeded for the assessee.

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Issues: Whether the notice reopening the closed sales tax assessment under section 16 of the Madras General Sales Tax Act was sustainable in the absence of cogent reasons or objective material.

Analysis: The assessment had originally been completed after scrutiny of the relevant books and records, and the impugned notice did not disclose any concrete basis showing why the concluded assessment required reopening. The power under section 16 is wide, but it is not arbitrary and must rest on some objective reason, not mere conjecture or suspicion. The notice also did not establish how the alleged commission-agent transactions violated the statutory prescription in explanation (4) to section 2(n), nor did it identify the factual basis for the alleged independent sales contract theory. In these circumstances, the material relied upon was insufficient to justify initiation of reassessment proceedings.

Conclusion: The reopening notice was invalid and liable to be interdicted; the writ petition was allowed in favour of the assessee.

Ratio Decidendi: A closed assessment can be reopened only on the basis of some objective and legally relevant reason disclosed by the authority, and not on bare suspicion or conjecture.

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