Reassessment jurisdiction requires relevant material; tax on import-point turnover cannot stand without proof of importer status.

Reassessment under section 21 of the U.P. Sales Tax Act was held invalid where initiation was not supported by relevant material existing at the time of notice; later-collected material could not cure the defect, and mere suspicion was insufficient to found jurisdiction. The levy on the disputed turnover was also unsustainable because, after exemption was denied on the basis of allegedly fake sellers, the revenue had to prove that the assessee was the importer where tax was chargeable at the point of manufacture or import. The reassessment was quashed and the revision allowed.

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Issues: (i) whether the notice and reassessment proceedings under section 21 of the U.P. Sales Tax Act, 1948 were valid in the absence of material existing at the time of initiation; and (ii) whether tax could be levied on the disputed turnover without proof that the assessee was the importer of the goods.

Issue (i): whether the notice and reassessment proceedings under section 21 of the U.P. Sales Tax Act, 1948 were valid in the absence of material existing at the time of initiation.

Analysis: Jurisdiction under section 21 could arise only where the assessing authority had reason to believe, on the basis of relevant material, that turnover had escaped assessment or exemption had been wrongly allowed. Material gathered after the notice could not validate the initiation. The letter available at the relevant time was only tentative and inconclusive, asked for complete addresses, and did not establish that the dealers were fictitious or non-existent. Mere suspicion, conjecture, or an unverified inference was insufficient to found reassessment jurisdiction.

Conclusion: The initiation of proceedings under section 21 was without jurisdiction and invalid.

Issue (ii): whether tax could be levied on the disputed turnover without proof that the assessee was the importer of the goods.

Analysis: The turnover related to oil taxable at the point of manufacture or import, and the assessee was not shown to be the manufacturer. Once exemption was denied on the basis that sellers were allegedly fake or untraceable, the burden remained on the revenue to establish that the assessee was the importer so as to attract tax at the relevant point. No material was brought on record to discharge that burden.

Conclusion: The levy of tax on the disputed turnover was unsustainable for want of proof that the assessee was the importer.

Final Conclusion: The reassessment was quashed and the revision was allowed, as the proceedings were initiated without valid jurisdiction and the tax levy was not supported by the necessary factual foundation.

Ratio Decidendi: Reassessment proceedings can be validly initiated only on relevant material creating a rational belief of escaped assessment, and where tax is chargeable at the point of import or manufacture, the revenue must prove the assessee's status as importer before sustaining the levy.

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