Sales tax reassessment needs material linking disclosed income to taxable sales; income-tax disclosure alone is insufficient.

A sales tax reassessment cannot be initiated solely on the basis of a dealer's confidential income-tax disclosure unless there is independent material linking the disclosed amount to taxable sales transactions. The article notes that a disclosure of income, without proof that it represents consideration for sales liable to sales tax, is insufficient to justify reopening or enhancing turnover. It also records the concern that confidential income-tax material under the Finance Act should not be used by the sales tax department without proper legal basis. On those facts, the notice was treated as beyond jurisdiction and liable to be quashed, with consequential return of seized books and documents.

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Issues: Whether the impugned notice proposing revision of the sales tax assessment was jurisdiction and invalid for want of material linking the disclosed income to taxable sales, and whether confidential income-tax disclosure under the Finance Act could be used to initiate sales tax reassessment.

Analysis: A sales tax authority cannot reopen or enhance turnover merely because the partners of a dealer made a disclosure of income before the income-tax authorities. For sales tax purposes, there must be material showing not only that money was disclosed or received, but also that it represented consideration from transactions liable to sales tax. The disclosed income here was said to relate to a period prior to the assessment years in question, and that factual assertion was not controverted. No independent material was shown to justify the proposed reassessment, and the notice rested only on the fact of disclosure under the Finance Act. The Court also noted that no convincing answer was given to the objection that confidential disclosure made before the income-tax authorities could not be used by the sales tax department.

Conclusion: The notice was held to be without jurisdiction and liable to be quashed. The respondents were restrained from acting on it and were directed to return the seized books and documents.

Ratio Decidendi: For sales tax reassessment, the authority must have material connecting the disputed amount with taxable sales transactions, and a confidential income-tax disclosure by itself is not sufficient basis to infer concealed sales turnover.

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