Wrong industrial classification cannot secure concessional sales tax, and reassessment may follow escaped assessment from the error.

A dealer cannot claim concessional Central sales tax reserved for a small-scale industrial unit where the reclassification was obtained after the prescribed 180-day period and no eligibility certificate for the lower concession was shown. The later small-scale registration was treated as having been granted under a mistake of fact, while the dealer had already enjoyed incentives as a medium-scale unit. Reassessment was also sustainable because the original assessment had proceeded on an erroneous classification, which amounted to under-assessment or escaped assessment under the applicable rules; an audit objection could validly bring that mistake to notice.

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Issues: (i) Whether the petitioner was entitled to claim concessional Central sales tax at the rate applicable to a small-scale industrial unit on the basis of reclassification granted after the prescribed period; (ii) Whether reassessment could validly be reopened on the basis of audit objection where the original assessment had proceeded on a mistaken classification.

Issue (i): Whether the petitioner was entitled to claim concessional Central sales tax at the rate applicable to a small-scale industrial unit on the basis of reclassification granted after the prescribed period.

Analysis: The reclassification order of the Central Government permitted existing industrial units to opt for small-scale status only if they applied within 180 days from publication of the order. The petitioner did not apply within that period in the prescribed manner and had already enjoyed incentives as a medium-scale unit. The later registration as a small-scale unit was held to have been granted under a mistake of fact, and no eligibility certificate for availing the lower tax concession as a small-scale unit had been shown to exist.

Conclusion: The petitioner was not entitled to the concessional rate of Central sales tax applicable to small-scale industrial units.

Issue (ii): Whether reassessment could validly be reopened on the basis of audit objection where the original assessment had proceeded on a mistaken classification.

Analysis: Rule 12(8) of the Central Sales Tax (Orissa) Rules, 1957 empowered reopening of a concluded assessment where turnover had escaped assessment or the dealer had been under-assessed. Since the original assessments had been completed on the erroneous footing that the petitioner was a small-scale unit, the assessments were treated as having suffered from under-assessment. The audit objection merely brought the mistake to notice, and the reopening was held to be within jurisdiction.

Conclusion: Reassessment was validly reopened under the rules.

Final Conclusion: The writ petitions failed because the lower tax concession was not available on the facts, and the reassessment proceedings were legally sustainable.

Ratio Decidendi: A dealer cannot claim fiscal concession reserved for a preferred class when its status was wrongly recorded under a bona fide mistake of fact and the statute permits reassessment for escaped assessment or under-assessment.

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