1976 (3) TMI 214 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the manure mixtures sold by the assessee are commercially different commodities from the organic chemicals purchased.
2. Whether the reassessment proceedings under section 16 for the assessment years 1962-63 to 1965-66 were valid.

Detailed Analysis:

1. Commercial Difference of Manure Mixtures:
The primary issue was whether the manure mixtures sold by the assessee were commercially different commodities from the organic chemicals purchased. The court referred to the precedent set in Imperial Fertiliser and Company v. State of Madras [1973] 31 S.T.C. 390, which held that for an exemption on the ground of a second or subsequent sale, there must be a sale of the same goods at an anterior point of time. If there was no identity between the product sold and the product purchased, it could not be treated as a second sale. This view was supported by State of Tamil Nadu v. Rallis India Ltd. [1974] 34 S.T.C. 532, which stated that even though no manufacturing process is involved in the mixing, the components of the mixture have different chemical properties and uses. Consequently, the court concluded that the manure mixtures, such as "tea manure" and "coffee manure," were different articles from the organic chemicals used to make them, and therefore, the turnover relating to their sales was liable to be taxed.

2. Validity of Reassessment Proceedings:
The second issue was whether the reassessment proceedings under section 16 for the assessment years 1962-63 to 1965-66 were valid. The assessee argued that the turnover had been considered and deliberately exempted by the assessing authority in the original assessment, and thus it could not be said to have "escaped assessment." The court examined Section 16(1) of the Madras General Sales Tax Act, 1959, which allows reassessment within five years if any part of the turnover has escaped assessment. The court referred to State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 S.T.C. 318 (F.B.), which defined "escape" as the turnover not being noticed by the officer due to inadvertence, omission, or deliberate concealment.

However, the court also considered the Supreme Court's decision in Maharajadhiraj Sir Kameshwar Singh v. State of Bihar [1959] 37 I.T.R. 388 (S.C.), which stated that the words "for any reason" in the reassessment provision removed all fetters and limitations, allowing reassessment even if the turnover was initially considered and exempted. This view was further supported by F. K. Hasheeb & Co. v. State of Madras [1966] 17 S.T.C. 38 and East India Corporation Ltd. v. State of Madras [1973] 31 S.T.C. 330, which held that even a turnover considered and exempted could be reassessed under section 16.

The court distinguished these cases from Deputy Commissioner v. Dhanalakshmi Vilas Cashew Co. [1969] 24 S.T.C. 491 (S.C.) and State of Kerala v. K. E. Nainan [1970] 26 S.T.C. 251 (S.C.), which dealt with the powers of the same authority to assess escaped turnover and revise assessments. The court concluded that in the absence of such overlapping powers in the present case, the reassessment proceedings under section 16 were validly initiated by the assessing officer for the assessment years 1962-63 to 1965-66.

Conclusion:
The court dismissed the petitions, holding that the manure mixtures were commercially different commodities and liable to be taxed. It also upheld the validity of the reassessment proceedings under section 16 for the specified assessment years. The petitions were dismissed with costs, and counsel's fee was set at Rs. 150 in each case.