Reasonable grounds for reassessment required; a memo based only on suspicion could not sustain jurisdiction.

A reassessment notice under the Bihar Sales Tax Act is valid only where the prescribed authority has information creating reasonable grounds to believe turnover has escaped assessment; mere suspicion is insufficient. On that basis, the memo issued to the dealer was not a valid notice under section 18(1), so the reassessment lacked jurisdiction and could not stand. The Court further stated that failure to object before the assessing authority does not amount to waiver where the authority had no inherent jurisdiction, and there can be no estoppel against the statute. The reassessment was therefore held illegal and invalid.

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Issues: (i) Whether the memo issued to the dealer amounted to a valid notice for reassessment under section 18(1) of the Bihar Sales Tax Act, 1959. (ii) Whether the reassessment made in pursuance of that memo was legal and valid.

Issue (i): Whether the memo issued to the dealer amounted to a valid notice for reassessment under section 18(1) of the Bihar Sales Tax Act, 1959.

Analysis: The statutory condition for initiating reassessment required the prescribed authority to have information giving rise to reasonable grounds to believe that turnover had escaped assessment. The Court held that the expression "reasonable grounds" imports relevant and material reasons capable of objective scrutiny and that mere suspicion cannot substitute for such grounds. Since the memo was issued only on suspicion and the necessary preconditions were absent, the notice was not valid in law.

Conclusion: The memo did not constitute a valid notice under section 18(1) of the Bihar Sales Tax Act, 1959, and the initiation of reassessment was without jurisdiction.

Issue (ii): Whether the reassessment made in pursuance of that memo was legal and valid.

Analysis: Once the foundational notice was held invalid, the reassessment could not stand. The Court also held that absence of an objection before the assessing authority did not amount to waiver where the authority lacked inherent jurisdiction, and there can be no estoppel against statute. A defect going to jurisdiction cannot be cured by concession or failure to object.

Conclusion: The reassessment was illegal and invalid, and the objection based on waiver failed.

Final Conclusion: The reference was answered in favour of the dealer, holding that the reassessment proceedings could not be sustained for want of a valid statutory foundation.

Ratio Decidendi: A reassessment notice founded only on suspicion, and not on reasonable grounds to believe escapement of turnover, is jurisdictionally invalid; absence of objection before the assessing authority cannot cure a complete lack of jurisdiction.

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