Retrospective Supreme Court ruling and escaped-assessment reopening upheld despite earlier contrary classification and change of opinion

A Supreme Court declaration on the classification of bubble gum and chewing gum as unclassified items taxable at a higher rate was treated as operating retrospectively from the relevant notification date, and under Article 141 it bound authorities and courts. That later declaration justified reopening escaped-assessment proceedings under section 21(2) of the U.P. Trade Tax Act, 1948, despite an earlier contrary view treating the goods as confectionery and despite a prior interim stay that had merged in the final appellate order. The proviso to section 21(2) also allowed reopening notwithstanding change of opinion, where the Commissioner recorded reasons and was satisfied that reopening was just and expedient; on that basis, material existed to form a belief of escaped turnover.

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Issues: Whether reassessment proceedings under section 21(2) of the U.P. Trade Tax Act, 1948 could be initiated for bubble gum and chewing gum on the basis of the later Supreme Court ruling treating them as unclassified items taxable at a higher rate, notwithstanding the earlier stay order and the plea of change of opinion.

Analysis: The earlier view treating the goods as confectionery did not prevent reopening once the Supreme Court finally declared the correct legal position. The declaration of law by the Supreme Court operates retrospectively unless expressly made prospective, and under Article 141 of the Constitution of India that declaration binds all authorities and courts. The interim stay merged in the final appellate order, and the final pronouncement established that the goods were taxable at the higher rate from the relevant notification date. The proviso to section 21(2) of the U.P. Trade Tax Act, 1948 also permits reopening even where the case involves a change of opinion, so long as the Commissioner is satisfied that reopening is just and expedient on the recorded reasons. In these circumstances, material existed to form the belief that turnover had escaped assessment.

Conclusion: Reopening under section 21(2) was valid and the challenge to the reassessment notice failed.

Final Conclusion: The writ petition was liable to be dismissed because the reassessment action was supported by the retrospective effect of the Supreme Court's ruling and by the statutory power to reopen escaped assessments notwithstanding change of opinion.

Ratio Decidendi: A Supreme Court declaration of law ordinarily operates retrospectively from the date the law took effect, and reassessment may be initiated where escaped turnover is disclosed by that declaration, even if the earlier assessment reflected a contrary view and the statute permits reopening despite change of opinion.

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