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Issues: (i) Whether the dealer was liable to tax under section 3-D(2) of the U.P. Sales Tax Act in respect of sales of foodgrains made on behalf of ex-U.P. principals; (ii) Whether proceedings under section 21 of the U.P. Sales Tax Act could be initiated on a mere change of opinion by the Sales Tax Officer.
Issue (i): Whether the dealer was liable to tax under section 3-D(2) of the U.P. Sales Tax Act in respect of sales of foodgrains made on behalf of ex-U.P. principals.
Analysis: The question was covered by an earlier decision holding that such sales attracted liability under section 3-D(2). The reference on this point was answered by applying that binding view.
Conclusion: The dealer was liable to tax under section 3-D(2) of the U.P. Sales Tax Act.
Issue (ii): Whether proceedings under section 21 of the U.P. Sales Tax Act could be initiated on a mere change of opinion by the Sales Tax Officer.
Analysis: Section 21 was held to operate on the same principle as the reopening provision in section 34 of the Income-tax Act, 1922 and section 147 of the Income-tax Act, 1961, requiring a reasonable belief based on objective material that turnover had escaped assessment. A mere subjective reappraisal or change of opinion, without fresh objective basis, was held insufficient to satisfy the statutory condition of "reason to believe".
Conclusion: Proceedings under section 21 of the U.P. Sales Tax Act could not be initiated on a mere change of opinion.
Final Conclusion: The reference was answered partly in favour of the assessee: tax liability under section 3-D(2) was upheld, but reassessment under section 21 on mere change of opinion was rejected.
Ratio Decidendi: The expression "reason to believe" in a reassessment provision requires objective material and cannot be satisfied by a mere change of opinion or subjective reassessment of an earlier view.
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