M/s BHARAT HEAVY ELECTRICALS LIMITED Vs STATE OF U.P.
U.P. Value Added Tax Act, 2008 - Supply, Erection and Commissioning of Complete Power Plants on turnkey basis - reassessment invoking the extended period of limitation - Section 29(1) and (7), Rule 9 (3) - reassessment proceedings - determination of turnover of sale of goods involved in the execution of work contracts - phrase "reason to believe" – belief of escapement on ground of higher deduction towards labour charges
HELD - While it is true that the at the stage of recording reasons, the petitioner's assessing authority was not required to measure in any exact figures the quantum of escapement, however, at the same time he could not have entertained a bona fide belief of escapement without first comparing the figure of actual deduction availed and the figure which according to him was legally allowable to the petitioner as deduction
For a belief of escapement to arise there must be shown to exist, as a fact, amount of deduction allowed to be an amount more than or in excess of 10% of the value of contract, received or receivable. In absence of such fact allegation the belief of escapement is no belief as to escapement - there neither exists a belief with the assessing authority as to escapement of turnover nor there exist any reason to justify a belief of escapement.
The initiation of reassessment proceedings against the petitioner is based on presumptions devoid of factual basis or reasonable ground germane to the formation of belief regarding escaped turnover – order for reassessment is quashed and writ petition is allowed