Reassessment confined to prior assessment errors: reopening on already disallowed input tax credit was held outside statutory scope.

Reassessment under section 35 of the Gujarat Value Added Tax Act, 2003 is confined to cases where taxable turnover has escaped assessment, been under-assessed, or a deduction or tax credit was wrongly allowed after the original assessment. Because the original assessment had already disallowed the disputed input tax credit, there was no prior allowance of credit to justify reopening on the same basis. The reassessment therefore fell outside the statutory scope and was not tenable in law, with the challenge succeeding in favour of the assessee.

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Issues: Whether reassessment under section 35 of the Gujarat Value Added Tax Act, 2003 was sustainable when the alleged input tax credit had not been allowed in the original assessment.

Analysis: Section 35 applies where, after assessment, the Commissioner has reason to believe that taxable turnover has escaped assessment, been under-assessed, or that a deduction or tax credit has been wrongly allowed. The power is therefore attracted only when there is a prior assessment error of the kind contemplated by the provision. On the facts, the original assessment itself had disallowed the credit in question, so there was no earlier allowance of tax credit that could justify invoking section 35 for reassessment on the same basis. The reassessment thus exceeded the statutory scope.

Conclusion: The reassessment under section 35 was not tenable in law and the challenge succeeded in favour of the assessee.

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