1996 (5) TMI 418 - HC - VAT and Sales Tax

Peas not cereals for tax exemption under Sales Tax Act. Court upholds reassessment notices.

The court upheld the reassessment notices under the U.P. Sales Tax Act for the assessment years 1977-78 and 1978-79. It was determined that peas, although ... - Issues:Challenge to reassessment notices under U.P. Sales Tax Act for assessment years 1977-78 and 1978-79.Analysis:The petitioner, a foodgrains dealer, challenges reassessment notices for inter-State sales of peas that escaped assessment in the original assessment. The petitioner argues that the turnover of cereals and pulses was exempted by a state notification under the Central Sales Tax Act, and no tax was levied initially. The respondent contends that peas do not fall under cereals or pulses as per Section 14 of the Central Sales Tax Act, and the exemption applies only to declared goods. The notification specifically lists cereals and pulses exempt from tax. The assessing officer did not address whether peas were covered under the exemption during the original assessment, leading to the turnover of peas escaping assessment. The respondent argues that this is not a case of change of opinion but a failure on the part of the assessing officer to consider the turnover of peas.The definitions of cereals and pulses under the Central Sales Tax Act are exclusive, meaning only items explicitly listed are considered as such. Peas, although a cereal in general terms, do not qualify as cereals or pulses under the Act. The assessment orders did not specifically mention peas, and the assessing officer did not address this issue during the original assessment. As peas were not classified as cereals or pulses under the Act, their turnover escaped assessment due to the assessing officer's oversight. This oversight does not constitute a change of opinion but a failure to apply the law correctly during the original assessment.In a similar case cited by the respondent, it was held that reassessment can be initiated when there is a lapse on the part of the assessing officer, not merely a change of opinion. The respondent provided information that was already on record but overlooked during the original assessment, justifying the initiation of reassessment proceedings. The court found no illegality in the notices issued by the respondent and dismissed the writ petition with costs. The judgment highlights the importance of correctly applying tax laws during the assessment process to avoid the escape of taxable turnover.In conclusion, the court upheld the reassessment notices, emphasizing the assessing officer's duty to accurately apply tax laws to prevent the evasion of tax liabilities. The petitioner's argument that the turnover of peas was exempted under the Central Sales Tax Act was dismissed, as peas did not fall under the defined categories of cereals or pulses for tax exemption purposes. The judgment serves as a reminder of the significance of thorough assessment procedures in ensuring tax compliance and preventing revenue loss due to oversight or misinterpretation of tax laws.