Reassessment notices depend on relevant material showing escaped turnover; U.P. reopening failed, while Central Sales Tax notices were upheld.

Reassessment requires relevant material giving rise to reasons to believe that taxable turnover has escaped assessment, and at the notice stage the court examines the existence of such material rather than its sufficiency. On the U.P. Trade Tax side, no material showed escapement of U.P. turnover, so the reopening was unsustainable and the notices were quashed. Under the Central Sales Tax Act, verification reports indicating unverifiable or unauthorised Form C declarations provided relevant material to support initiation, and the reassessment notices were upheld.

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Issues: (i) Whether reassessment proceedings under section 21 of the U.P. Trade Tax Act could be sustained in the absence of material showing escapement of turnover under the U.P. Act. (ii) Whether reassessment proceedings under the Central Sales Tax Act could be sustained on the basis of allegedly false or unverifiable Form C declarations and other material showing wrongful grant of concessional tax.

Issue (i): Whether reassessment proceedings under section 21 of the U.P. Trade Tax Act could be sustained in the absence of material showing escapement of turnover under the U.P. Act.

Analysis: The power to reopen requires relevant material giving rise to reasons to believe that turnover has escaped assessment. The existence of such belief, and not the sufficiency of the material, is the relevant test; however, the material must have a nexus with the alleged escaped assessment. On the record, the authority had no material showing escapement of any U.P. turnover, and the reopening was sought only on facts relating to interstate sales and Form C declarations.

Conclusion: The reassessment notices relating to the U.P. Act were unsustainable and were quashed.

Issue (ii): Whether reassessment proceedings under the Central Sales Tax Act could be sustained on the basis of allegedly false or unverifiable Form C declarations and other material showing wrongful grant of concessional tax.

Analysis: Concessional tax under the Central Sales Tax framework depends on Form C declarations being duly obtained and signed as required by the statutory scheme. The record disclosed detailed verification reports from other States indicating that several Form C declarations were unverifiable, unauthorised, or issued to different dealers, and the assessing authority recorded reasons to believe on that basis. The Court held that there was relevant material supporting initiation of proceedings and that the challenge to the sufficiency of that material was not decisive at the notice stage.

Conclusion: The reassessment notices under the Central Sales Tax Act were upheld.

Final Conclusion: The challenge succeeded only to the extent of the U.P. Trade Tax reopening, while the reassessment proceedings under the Central Sales Tax Act were left undisturbed.

Ratio Decidendi: Reassessment can be initiated only on relevant material showing reasons to believe that taxable turnover has escaped assessment, and at the notice stage the Court examines the existence of such material rather than its sufficiency; where the material supports only the Central Sales Tax component, a parallel reopening under the U.P. Act without such material cannot stand.

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