Reassessment needs fresh material and a real reason to believe; mere verification or excise-search information is insufficient.

Reassessment under the U.P. Value Added Tax Act, 2008 cannot rest merely on search-and-survey information from excise authorities where no tax, duty, or penalty order has been passed and the original assessments already examined the relevant records. The High Court noted that reopening requires fresh material and a recorded reason to believe that turnover has escaped assessment; a reopening sought only for verification or re-examination of the same material amounts to a fishing or roving inquiry. On those facts, the sanction, reopening, and reassessment notices were held unsustainable and the writ petition succeeded.

---

---

Issues: (i) Whether reassessment proceedings under the U.P. Value Added Tax Act, 2008 could be initiated merely on the basis of information derived from a search and survey by excise authorities, when no further action, tax, duty, or penalty had been imposed on the assessee; (ii) Whether the sanction and reopening of the completed assessments were sustainable in the absence of fresh material and a legally sustainable reason to believe that turnover had escaped assessment.

Issue (i): Whether reassessment proceedings under the U.P. Value Added Tax Act, 2008 could be initiated merely on the basis of information derived from a search and survey by excise authorities, when no further action, tax, duty, or penalty had been imposed on the assessee.

Analysis: The reassessment notices were founded only on search and survey proceedings conducted by the DGCEI and on an internal report, while the original assessments had already examined the books of account, purchases, sales, and input tax credit claims. No order levying tax, duty, or penalty was shown to have been passed against the assessee on the basis of the excise proceedings. In such circumstances, the material relied upon did not constitute a fresh foundation justifying reopening, and reassessment could not be used for a probing verification exercise.

Conclusion: The reassessment proceedings were not sustainable merely on the basis of the excise search and survey information.

Issue (ii): Whether the sanction and reopening of the completed assessments were sustainable in the absence of fresh material and a legally sustainable reason to believe that turnover had escaped assessment.

Analysis: The statutory power to reopen assessment requires a recorded reason to believe that turnover has escaped assessment. The sanction order itself disclosed that reopening was sought essentially for verification, not on the basis of concrete fresh material showing escapement. Reopening completed assessments on such a footing amounts to a fishing and roving inquiry, which is impermissible under the reopening provisions of the Act. The prior assessments having already been scrutinized, the impugned reopening reflected only a re-examination of the same material.

Conclusion: The sanction and consequential reassessment notices were invalid and liable to be quashed.

Final Conclusion: The completed assessments could not be reopened on the basis of mere suspicion or for verification in the absence of fresh material, and the writ petition therefore succeeded.

Ratio Decidendi: Reassessment under the VAT Act can be sustained only on the basis of fresh material giving rise to a recorded reason to believe that turnover has escaped assessment, and not for a fishing or roving inquiry or a mere change of opinion.

---