Common parlance test treats anhydrous ammonia as a chemical; reassessment cannot rest on mere change of opinion.

Anhydrous ammonia kept in liquid form for commercial use was treated as a chemical under the common parlance test, and where competing entries were possible the beneficial entry was preferred in favour of the assessee. On reassessment, the court noted that action under section 21(2) of the U.P. Trade Tax Act required material with a nexus to escaped assessment; a mere change of opinion was insufficient. The text states that the original assessment had already applied mind to the commodity, and the later notification did not amount to fresh material. The reassessment sanction and consequential notice were therefore described as invalid.

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Issues: (i) Whether anhydrous ammonia was to be treated as a chemical or as gas for the purpose of levy of trade tax; (ii) whether the sanction for reassessment under section 21(2) of the U.P. Trade Tax Act, 1948 was founded on a genuine reason to believe or merely on a change of opinion.

Issue (i): Whether anhydrous ammonia was to be treated as a chemical or as gas for the purpose of levy of trade tax.

Analysis: The petitioner dealt in anhydrous ammonia kept in liquid form for commercial purposes. The assessment orders for earlier years had also treated the commodity as a chemical and taxed it accordingly. Applying the common parlance test, the Court held that the commodity was understood as a chemical, and where two competing entries were possible, the beneficial entry had to be preferred in favour of the assessee.

Conclusion: Anhydrous ammonia was held to fall under the chemical entry and not under the gas entry, in favour of the assessee.

Issue (ii): Whether the sanction for reassessment under section 21(2) of the U.P. Trade Tax Act, 1948 was founded on a genuine reason to believe or merely on a change of opinion.

Analysis: Reassessment could be initiated only on the basis of material having a nexus with escaped assessment and not on a mere change of opinion. The Court found that the assessing authority had consciously applied its mind at the time of the original assessment and that the subsequent notification did not constitute fresh material or a circumstance that had escaped consideration. The reassessment was therefore based on a change of opinion, which is impermissible.

Conclusion: The sanction for reassessment was invalid as it was founded on a change of opinion and not on a legally sustainable reason to believe, in favour of the assessee.

Final Conclusion: The reassessment sanction and the consequential notice were quashed, and the writ petition succeeded.

Ratio Decidendi: Reassessment cannot be sustained where the original assessment was made on application of mind and the later attempt rests only on a change of opinion rather than fresh material giving reason to believe that assessment had escaped or been undervalued.

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