Branch sales outside the taxing State cannot be treated as escaped turnover without a legally sustainable nexus.

Sales made through a Delhi branch could not be treated as U.P. sales turnover or reassessed as escaped turnover under section 21 of the U.P. Sales Tax Act absent a legally sustainable nexus with the State. The Tribunal relied on invoices and surrounding materials to find that the branch sales were outside U.P., and the revisional court found no error in that factual and legal conclusion. On that basis, reopening of the accepted assessment was unjustified and the Delhi branch sales could not be included in the assessee's U.P. taxable turnover.

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Issues: Whether the sales of kerosene oil effected through the Delhi branch could be included in the assessee's U.P. sales turnover and subjected to reassessment as escaped turnover under section 21 of the U.P. Sales Tax Act.

Analysis: The assessee's accounts had originally been accepted, and reassessment was initiated on the basis of information received from the Indian Oil Corporation. The Tribunal found, on the basis of invoices and surrounding materials, that the goods sold in the Delhi branch could not be treated as sales in U.P. or as escaped turnover of the assessee. The revisional court found no error in those findings and held that the factual and legal basis for reopening and sustaining the assessment was absent.

Conclusion: The reassessment under section 21 was unjustified and the assessee was not liable to have the Delhi branch sales included in its U.P. taxable turnover.

Ratio Decidendi: Sales effected through a branch outside the taxing State cannot be assessed as escaped turnover within the State unless the revenue establishes a legally sustainable nexus with the State turnover.

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