Wilful evasion requirement limits extended reassessment period; a mere wrong tax rate does not justify jurisdiction.

Section 21(5) of the A.P. Value Added Tax Act, 2005 can extend the reassessment period only where wilful evasion of tax is specifically alleged and found. A revised show-cause notice that merely stated tax had been proposed at a lower rate, without any factual averment of evasion, did not satisfy that jurisdictional requirement. The assessment order also contained no finding of wilful evasion. A mere incorrect application of a lower tax rate, by itself, is insufficient to invoke the extended limitation. Accordingly, the reassessment, revised notice, and consequential penalty were held to be without jurisdiction.

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Issues: (i) Whether the reassessment and revised show-cause notice invoking the extended period under Section 21(5) of the A.P. Value Added Tax Act, 2005 were valid in the absence of an allegation or finding of wilful evasion of tax.

Analysis: Section 21(4) prescribes the ordinary limitation period for assessment, while Section 21(5) permits extension only where wilful evasion of tax is shown. The revised show-cause notice merely stated that tax had been incorrectly proposed at 1% and that a higher rate of 14.5% was payable. It did not contain any factual averment of wilful evasion. The assessment order also recorded no finding that the assessee had wilfully evaded tax. A mere incorrect application of a lower rate of tax does not, by itself, establish wilful evasion. Since the jurisdictional fact required for invoking Section 21(5) was absent, the higher assessment and consequential penalty could not be sustained.

Conclusion: The invocation of Section 21(5) was invalid and the impugned assessment proceedings were without jurisdiction, in favour of the assessee.

Ratio Decidendi: An extended limitation for reassessment can be invoked only when wilful evasion of tax is specifically alleged and found; absent such jurisdictional fact, the reassessment is without jurisdiction.

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