In Brief
Larsen & Toubro Ltd., a contractor for TISCO, had filed sales tax returns under the Bihar Finance Act, 1981 for assessment year 1991-92. An audit by the Auditor General identified goods consumed during contract work worth Rs. 3.12 crores that allegedly escaped taxation because no Form IX-C declaration was produced. The tax authority issued a reassessment demand. The Supreme Court held that while audit objections can be 'information' for reassessment, the Assessing Officer must independently form the satisfaction that turnover escaped assessment. Here, the Assessing Officer himself believed consumed goods did not attract purchase tax and thus was never satisfied assessment had escaped. Issuing the reassessment notice based merely on the audit direction, without the Officer's personal satisfaction, was without jurisdiction. The appeal was allowed and the reassessment order set aside.
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