Reassessment based on excluded sale value failed after binding VAT interpretation required inclusion of de-oiled rice bran turnover.

Reassessment based on alleged escaped turnover could not survive after the Supreme Court held that the sale value of exempt de-oiled rice bran must be included in the statutory exclusion under the Uttar Pradesh VAT regime. Once that legal foundation was displaced, the premise that input tax credit had been wrongly granted on rice bran purchases no longer supported the limitation order or consequential reassessment notice. The Allahabad HC therefore quashed the impugned reassessment action and allowed the writ petition.

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Issues: Whether reassessment proceedings based on the earlier view that the sale value of exempt de-oiled rice bran could be excluded were sustainable after the Supreme Court held that such sale value must be included for the purpose of the exclusion under the Uttar Pradesh VAT regime.

Analysis: The petition challenged the order extending limitation and the consequential reassessment notice for assessment year 2012-13. The reassessment was founded on the view that the petitioner had escaped assessment because the benefit of input tax credit had allegedly been wrongly granted on purchase of rice bran. The legal basis for that action stood displaced once the Supreme Court declared that, notwithstanding the exempt nature of the by-product, its sale value had to be taken into account while applying the relevant exclusion under Section 13 of the Uttar Pradesh Value Added Tax Act. In view of that declaration, the premise that turnover had escaped assessment could no longer be sustained.

Conclusion: The reassessment proceedings could not be sustained and the petitioner succeeded.

Final Conclusion: The impugned reassessment action was quashed, and the writ petition was allowed.

Ratio Decidendi: When the legal foundation of reassessment is removed by a binding declaration that the relevant turnover or sale value must be included in the statutory computation, proceedings alleging escaped assessment cannot survive.

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