Reassessment for under-assessed turnover upheld where woollen cardigans and pullovers were taxed at the wrong rate.

Retrospective section 21(1) of the U.P. Sales Tax Act permitted reassessment where turnover had been under-assessed or assessed at a lower rate than legally payable. Woollen cardigans and pullovers were treated as woollen goods, not woollen hosiery, so the correct rate was 6% rather than 3%. Because the original assessment applied a lower rate, the case fell within section 21(1), making reassessment legally permissible and rendering the quashing by the revising authority unsustainable.

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Issues: Whether reassessment under section 21(1) of the U.P. Sales Tax Act was valid where the original assessment had taxed woollen cardigans and pullovers at a rate lower than the rate at which they were legally assessable.

Analysis: Section 21(1), as substituted retrospectively by the U.P. Sales Tax (Amendment) Act, 1973, authorises reassessment where turnover has escaped assessment, has been under-assessed, or has been assessed at a rate lower than the rate at which it is assessable under the Act. Woollen cardigans and pullovers were treated as woollen goods and not woollen hosiery, so the correct rate was 6 per cent and not 3 per cent. The original assessment therefore involved assessment at a lower rate within the scope of section 21(1).

Conclusion: Reassessment under section 21(1) was legally permissible and the revising authority was wrong in quashing it.

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