Reassessment of wrongly excluded turnover and exclusion of notional depreciation from subsidy claims were upheld.

Section 16 of the Tamil Nadu General Sales Tax Act, 1959 was read broadly to permit reassessment not only of turnover that escaped assessment entirely, but also of turnover earlier considered and wrongly excluded in the original assessment, so the reopening was upheld. Depreciation on canteen equipment was treated as a notional allowance, not actual expenditure, and could not be counted towards the employer's required subsidy under G.O. Ms. No. 2238; the exemption claim therefore failed. Turnover from scrap sales and export sales was also held includible in taxable turnover in light of the governing Supreme Court decisions, and the reassessments were sustained.

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Issues: (i) whether the reopening and reassessment of turnover under section 16 of the Tamil Nadu General Sales Tax Act, 1959 could cover turnover earlier considered and excluded in the original assessment, (ii) whether depreciation allowance on canteen equipment could be treated as part of the employer subsidy for claiming exemption under G.O. Ms. No. 2238, Revenue dated 1st September, 1964, and (iii) whether the turnover relating to scrap sales and export sales was liable to be included in the taxable turnover.

Issue (i): Whether the reopening and reassessment of turnover under section 16 of the Tamil Nadu General Sales Tax Act, 1959 could cover turnover earlier considered and excluded in the original assessment.

Analysis: Section 16 was construed broadly to apply not only where turnover had escaped notice altogether, but also where turnover had been considered in the original assessment and wrongly treated as exempt or non-taxable. The reference to determination to the best of judgment in section 16(1) was held not to confine the power only to cases of estimate or uncertainty as to the amount of turnover. The provision was therefore held applicable to reopen the assessments in question.

Conclusion: The reopening under section 16 was valid and was against the assessee.

Issue (ii): Whether depreciation allowance on canteen equipment could be treated as part of the employer subsidy for claiming exemption under G.O. Ms. No. 2238, Revenue dated 1st September, 1964.

Analysis: The notification required the employer to subsidise at least twenty-five per cent of the total expenses actually incurred in running the canteen. Depreciation allowance was treated as a notional allowance and not as actual expenditure. It was therefore excluded from the computation of total expenses for the purpose of satisfying the subsidy condition in the notification.

Conclusion: Depreciation allowance could not be included, and the exemption claim failed against the assessee.

Issue (iii): Whether the turnover relating to scrap sales and export sales was liable to be included in the taxable turnover.

Analysis: The liability of the scrap turnover and the turnover treated as export sales stood concluded by the governing decisions of the Supreme Court relied upon by the Court. On that basis, the excluded turnover was held to be includible in the taxable turnover and the reassessments were sustained.

Conclusion: The turnover was liable to be included, against the assessee.

Final Conclusion: The petitions were not successful and the reassessments and inclusion of the disputed turnovers in the taxable turnover were upheld.

Ratio Decidendi: Section 16 of the Tamil Nadu General Sales Tax Act, 1959 authorises reassessment of turnover previously considered and wrongly excluded, and exemption notifications requiring a percentage of actual expenditure do not permit inclusion of notional depreciation in the subsidy computation.

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