Reason to believe for reassessment requires fresh material; reopening without a factual basis was quashed.

Reassessment under the U.P. Value Added Tax Act is valid only when the assessing authority has relevant material creating a rational reason to believe that turnover has escaped assessment, been under-assessed, or otherwise wrongly allowed relief. A reopening cannot rest on vague or irrelevant considerations, and the absence of fresh material renders the belief arbitrary. On the facts, the reassessment permission was based only on the alleged omission of royalty in invoices, though the assessee was merely a trader and no legal basis was shown to impose royalty liability. The permission for reassessment and the consequential notice were quashed.

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Issues: Whether permission for reassessment under section 29(7) of the U.P. Value Added Tax Act, 2008 could be sustained in the absence of any fresh material giving rise to a reason to believe that turnover had escaped assessment.

Analysis: Reassessment under section 29(7) is permissible only when the assessing authority has reason to believe that turnover has escaped assessment, been under-assessed, been assessed at a lower rate, or wrong deductions or exemptions were allowed. The phrase "reason to believe" requires relevant material having a rational nexus with the proposed reopening and cannot rest on vague, distant, or irrelevant considerations. The Court applied the settled principle that, without material supporting the belief, reopening is arbitrary and unlawful. Here, no fresh material was shown in the order or notice; reopening was based only on the absence of a stated royalty component in the invoices. The petitioner was merely a trader and not a mining lease holder, and no legal basis was shown to fasten royalty liability on the petitioner for the purchases made.

Conclusion: The permission for reassessment was unsustainable for want of material and reason to believe, and was therefore quashed along with the consequential notice.

Ratio Decidendi: Reassessment can be initiated only on the basis of relevant material creating a rational reason to believe that taxable turnover has escaped assessment; in the absence of such material, reopening is invalid.

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