Reassessment and tax adjustment rules clarified: paddy tax cannot be set off against central sales tax on rice

Reassessment under Section 21(2) of the U.P. Trade Tax Act was sustained because the Assessing Officer could correct an erroneous earlier adjustment within jurisdiction. Section 15(c) of the Central Sales Tax Act was construed to permit reduction of tax leviable on rice by the tax levied on paddy under the relevant State law, but not to allow adjustment of State purchase tax against central sales tax. The phrase "that law" was treated as referring to the State sales tax law. The challenge based on mere change of opinion was rejected because the proceedings were directed at correcting a legal error, and the reassessment notice remained valid.

---

---

Issues: Whether reassessment proceedings under Section 21(2) of the U.P. Trade Tax Act were liable to be quashed, and whether the tax paid on paddy could be adjusted against the central sales tax on rice under Section 15(c) of the Central Sales Tax Act.

Analysis: The validity of the reassessment notice was tested against the settled position that Section 15(c) permits reduction of tax leviable on rice by the amount of tax levied on the paddy under the State law, but does not confer any right to adjust State purchase tax against central sales tax. The Court relied on the earlier binding view that the words "that law" refer to the relevant State sales tax law, and that the Assessing Officer had acted within jurisdiction in seeking correction of an erroneous adjustment granted earlier. The plea that the proceedings were based merely on a change of opinion was rejected in view of the existence of legal error requiring correction under Section 21(2).

Conclusion: The challenge to the reassessment notice failed, and the proceedings were held valid against the petitioner.

---