Subsisting composition order bars escaped-assessment proceedings absent fraud or lawful cancellation under trade tax law.

A valid and subsisting composition order under section 7D of the U.P. Trade Tax Act displaced the ordinary assessment machinery for the covered period, because tax liability stood fixed by the accepted composition terms and not by actual turnover. In the absence of fraud, misrepresentation, suppression of material facts, or lawful setting aside of that order, the assessing authority could not invoke section 21(2) on the basis that the work was outside the composition scheme. The reassessment notice was therefore without jurisdiction and liable to be quashed.

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Issues: Whether, during the subsistence of an accepted composition order under section 7D of the U.P. Trade Tax Act, 1948, the assessing authority could initiate reassessment proceedings under section 21(2) on the footing that the work did not fall within the composition scheme.

Analysis: Section 7D creates a composition mechanism whereby, once the dealer's application is accepted, the tax liability for the relevant period is determined by the agreed lump-sum or agreed rate and not by reference to actual turnover. The provision operates with a non obstante clause and therefore displaces the ordinary assessment machinery for the period covered by the agreement. The accepted composition order remained in force, there was no finding of fraud, misrepresentation, suppression of material facts, or concealment, and an earlier attempt to cancel that order had already been quashed. In those circumstances, the authority could not treat the same period as one of escaped assessment and could not ignore a binding composition order by resorting to section 21(2).

Conclusion: The reassessment notice under section 21(2) was without jurisdiction and liable to be quashed.

Final Conclusion: The accepted composition order under section 7D prevailed over the ordinary reassessment mechanism, and the department was bound by that order until it was lawfully set aside.

Ratio Decidendi: Where a composition application under a taxing statute has been validly accepted and remains operative, the assessment authority cannot invoke escaped-assessment powers for the same period in the absence of fraud, suppression, or lawful setting aside of the composition order.

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