Conditional exemption under trade tax law justified reassessment when assessment records showed no finding on required statutory conditions.

A conditional exemption notification under the U.P. Trade Tax Act applied only if the prescribed requirements, including export of manufactured goods outside India, were fulfilled. Because the assessment order recorded no finding that those conditions were satisfied and did not even refer to the notification, the grant of full exemption could reasonably give rise to a belief that turnover had escaped assessment. The reassessment notice under section 21 was therefore upheld as valid, and the challenge to it failed.

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Issues: Whether the initiation of reassessment proceedings under section 21 of the U.P. Trade Tax Act was justified on the ground that exemption had been wrongly granted and turnover had escaped assessment.

Analysis: The notification granting full exemption under section 4B of the U.P. Trade Tax Act was not unconditional. It operated only if the specified conditions, including export of the manufactured goods outside India, were fulfilled. The assessment order did not refer to that notification and did not record any finding that the conditions attached to the exemption had been satisfied. In particular, there was no finding that the dealer of Uttarakhand had exported the manufactured goods outside the country. In these circumstances, the grant of full exemption without examining the statutory conditions furnished material for the formation of a belief that turnover had escaped assessment, justifying action under section 21.

Conclusion: The initiation of reassessment proceedings was held to be valid and justified, and the challenge to the notice failed.

Final Conclusion: The writ petition was not entertained on merits of the claimed exemption and the reassessment notice was sustained.

Ratio Decidendi: Where an exemption notification is conditional, and the assessment order records no finding that its conditions were fulfilled, the assessing authority may form a valid belief of escaped assessment and initiate reassessment proceedings.

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