2017 (5) TMI 1276

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....008(hereinafter referred to as 'the Act') or making re-assessment of the petitioner for the year 2009-10 and the consequential notice dated 10.1.2017 calling upon the petitioner to participate in the re-assessment proceedings is under challenge in this petition. The petitioner is a dealer who is doing business of stone, grit and sand. The petitioner is not a holder of the mining lease or a person involved in the activity of extracting or mining any minor minerals. He simply purchases stone, grit and sand from other dealers and sells it in open market. In respect of the above assessment year, on the basis of the return submitted by the petitioner an order of assessment was passed by the assessing authority on 30.3.2013 holding the....

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....petitioner is not liable to pay any royalty in respect of the purchase made by him and therefore the ground for reassessment that the petitioner has not paid the royalty amount is non-existing and cannot be a valid ground for re-opening the assessment. Sri C.B. Tripathi, learned Standing Counsel on the other hand submits that as the order of the assessing authority is completely silent with regard to the payment of royalty, and the permission for reopening the assessment has been granted on the ground that the petitioner has not paid royalty on the purchases made from the unregistered dealers, it would constitute a valid ground for forming an opinion regarding the reassessment in support he has placed reliance upon the decision of Cataly....

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.... petitioner is concerned, his turn over has to be assessed on its basis alone without including anything further therein, much less any amount of royalty irrespective of the fact whether the aforesaid amount paid by the petitioner is inclusive of the royalty or not. Section-29 of 'the Act' provides for the reassessment of tax on turnover escaping from assessment. It lays down that if the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowe....

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....yaverth Chawl Udyog and others reported in [2016] 91 VST 1 (SC). The 3 judges Bench of the Supreme Court in the above case while interpreting the phrase 'reason to believe' used under Section 21(1) of U.P. Trade Tax Act, 1948 held that reassessment proceedings can be initiated only if the assessing authority has 'reason to believe' that there is a case of escaped assessment and not otherwise. In every case where the statute provides for 'reason to believe', either the reason should appear on the face of the notice or they must be available on the material which have been placed before the authorities concerned. The expression 'reason to believe' does not mean a power subjecting assessment on part of the asses....