2003 (12) TMI 602 - HC - VAT and Sales Tax

Reassessment Valid: Timely Challenges Essential as Court Upholds Turnover Reassessment Under U.P. Trade Tax Act.

Shyam Babu Vaishya & Co. and another Versus Assistant Commissioner, Trade Tax and others

Shyam Babu Vaishya & Co. and another Versus Assistant Commissioner, Trade Tax and others - [2005] 139 STC 397 (All) Issues Involved:1. Validity of proceedings u/s 21 of the U.P. Trade Tax Act, 1948.2. Legality of the notice dated February 15, 2003, issued by the Assistant Commissioner, Trade Tax.3. Adequacy of the material for reassessment under section 21 of the U.P. Trade Tax Act, 1948.4. Timeliness of the challenge to the orders and notices.Summary:1. Validity of proceedings u/s 21 of the U.P. Trade Tax Act, 1948:The petitioners challenged the proceedings initiated u/s 21 of the U.P. Trade Tax Act, 1948, arguing that the original assessment was final and no fresh material justified reopening the assessment. The court noted that section 21(1) allows reassessment if the assessing authority believes that any part of the turnover had escaped assessment or was under-assessed. The court found that the Additional Commissioner had reason to believe that the exemption was wrongly granted and necessary papers were not on record, thus justifying the reassessment proceedings.2. Legality of the notice dated February 15, 2003:The petitioners contended that the notice dated February 15, 2003, was illegal as it did not contain reasons for reopening the assessment. The court observed that the petitioners had not challenged the notice promptly and there was an unexplained delay of seven months. Consequently, the court declined to examine the validity of the notice due to the belated challenge.3. Adequacy of the material for reassessment under section 21 of the U.P. Trade Tax Act, 1948:The court referred to previous judgments, including *Commissioner of Sales Tax, U.P. v. Bhagwan Industries (P) Ltd.* and *Kalpana Kala Kendra v. Sales Tax Officer*, to emphasize that reassessment can be initiated if there are reasonable grounds to believe that part of the turnover had escaped assessment. The court held that the allegations against the petitioner, such as not submitting contract papers and purchase documents, constituted relevant material for action u/s 21. The court reiterated that it cannot interfere on the ground of insufficiency of the material, only on the existence of the belief.4. Timeliness of the challenge to the orders and notices:The court highlighted that the writ petition was filed long after the order dated February 11, 2003, and the notice dated February 15, 2003. The court emphasized that a party must approach the court within a reasonable period and not at their convenience. The delay in challenging the orders and notices led the court to dismiss the petition on the grounds of laches, citing *Chandra Singh v. State of Rajasthan*.Conclusion:The court dismissed the petition, finding no merit in the arguments presented by the petitioners. The reassessment proceedings u/s 21 of the U.P. Trade Tax Act, 1948, were deemed valid, and the petitioners' delayed challenge to the orders and notices was not entertained. The court emphasized the importance of timely challenges and the adequacy of material for reassessment under the relevant legal provisions.