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1963 (3) TMI 46
Whether income arising to Mrs. C. M. Kothari and Mrs. D. C. Kothari from the property arose indirectly out of the assets transferred indirectly by their husbands so as to attract the provisions of section 16(3)(a)(iii)?
Held that:- Appeal allowed. An intimate connection between the two transactions, which were prima facie separate, is thus clearly established and they attract the words of the section, namely, " transferred directly or indirectly to the wife ". The High Court was in error in ignoring these pertinent matters. The High Court also overlooked the fact that the purchase of the house at first was intended to be in the names of the three partners of the firm. It is difficult to see why the ladies were named as the vendees if they did not have sufficient funds of their own. They could only buy the property if someone gave them the money. It is reasonable to infer from the facts that before the respective husbands paid the amounts, they looked up the law and found that the income of the property would still be regarded as their own income if they transferred any assets to their wives.
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1963 (3) TMI 45
Whether the dividends paid by j. Thomas & Co. Ltd., to Mrs. Judith Thomas, grossed up to the sums of Rs. 97,091/-, Rs. 78,272/, Rs. 1,00,000/. and Rs. 16,385/respectively for the four years in question could be included in the income of Mr. P.J.P. Thomas and be taxed in his hands under the provisions of section 16 (3) (a) (iii) of the Indian lncome-tax Act?
Whether the transfer of shares made by the assessee in favour of Mrs. Judith Knight on December 10, 1947 was to take effect only from the date of their marriage?
Whether the dividends referred to above could be included in the total income of Mr. P. J. P. Thomas under the provisions of sec. 16 (1) (c) of the Indian Income-tax Act?
Held that:- Allow the appeals and answer the question referred to the High Court in favour of the assessee. Sub-cl. (iii) of s. 16 (3) (a) is not attracted to these cases.
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1963 (3) TMI 44
Issues Involved:
1. Interpretation of the expression "sale by the first or the earliest of successive dealers in the State who is liable to tax under this section" in Section 5(3)(a) of the Mysore Sales Tax Act, 1957.
2. Applicability of sales tax to transactions involving coffee seeds purchased before but sold after the Act came into force.
3. Impact of Section 40 and Section 43 of the Mysore Sales Tax Act, 1957 on the assessment of sales tax.
4. Validity of the decision in B. P. Krishnamurthy v. State of Mysore regarding the first or earliest dealer liable to tax under Section 5(3)(a).
Detailed Analysis:
1. Interpretation of the Expression "Sale by the First or the Earliest of Successive Dealers in the State Who is Liable to Tax Under This Section" in Section 5(3)(a) of the Mysore Sales Tax Act, 1957:
The principal question was the meaning of the expression "sale by the first or the earliest of successive dealers in the State who is liable to tax under this section" found in Section 5(3)(a) of the Act. The court examined whether this referred to the first dealer selling the goods after the Act came into force or included dealers who sold goods before the Act but were liable to tax under the Act due to subsequent transactions. The court concluded that the language of Section 5(3)(a) does not explicitly state that the first dealer must be the one who sells after the Act came into force. Therefore, the interpretation should consider the normal meaning, which includes the first or earliest dealer irrespective of when the sale took place. The court found no provision in the Act indicating that the first dealer mentioned in Section 5(3)(a) is the first dealer after the Act came into force.
2. Applicability of Sales Tax to Transactions Involving Coffee Seeds Purchased Before but Sold After the Act Came into Force:
The respondents purchased coffee seeds before October 1, 1957, but sold them after this date when the Act came into force. The court examined whether these sales were liable to sales tax. It was argued that the respondents were not the first or earliest dealers liable to tax under Section 5 because they purchased the seeds from other dealers before the Act's commencement. The court noted that Section 5(3)(a) imposes a single point tax on the first or earliest dealer in the State liable to tax, and this does not necessarily mean the first dealer after the Act came into force. The court concluded that if the respondents were not the first or earliest of successive dealers, they could not be taxed for the turnover in question.
3. Impact of Section 40 and Section 43 of the Mysore Sales Tax Act, 1957 on the Assessment of Sales Tax:
Section 40 repeals the previous sales tax laws but preserves obligations and liabilities already accrued. Section 43(1) states that any person assessed or assessable to tax under the repealed enactments during the assessment year before the Act's commencement is liable for tax on their total turnover during that period. Section 43(2) specifies that for the period after the Act's commencement, the dealer is liable to tax under the new Act. The court concluded that the turnover before the Act should be assessed under the old laws, and the turnover after October 1, 1957, should be assessed under the new Act. Therefore, the respondents' turnover relating to transactions after October 1, 1957, is governed by the new Act.
4. Validity of the Decision in B. P. Krishnamurthy v. State of Mysore Regarding the First or Earliest Dealer Liable to Tax Under Section 5(3)(a):
The court revisited the decision in B. P. Krishnamurthy v. State of Mysore, which held that the first or earliest dealer for the purpose of Section 5(3) is the one who sells the goods after the Act came into force. The court expressed doubt about this decision, noting that there is no clear provision in Section 5(3) indicating that the first dealer must be the one selling after the Act's commencement. The court overruled the decision in B. P. Krishnamurthy, concluding that the first or earliest dealer liable to tax under Section 5(3)(a) can include those who sold goods before the Act but are liable to tax due to subsequent transactions.
Conclusion:
The court concluded that under Section 5(3)(a) of the Mysore Sales Tax Act, 1957, if any sale or sales of specified goods took place before the Act's commencement, no tax is leviable on a sale of those goods after the Act's commencement if any of the earlier dealers are liable to tax under Section 5 due to subsequent transactions. The view that the first or earliest dealer must be determined only with reference to the period after the Act came into force was overruled. The reference was answered accordingly.
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1963 (3) TMI 43
Issues: Reassessment proceedings initiated by Sales Tax authorities based on service of notice on an Advocate; Interpretation of the term "agent" under the Rules made under the Act; Validity of service of notice on the Advocate as good service for reassessment proceedings.
Analysis:
The judgment pertains to a petition under Article 226 of the Constitution challenging reassessment proceedings initiated by Sales Tax authorities based on a notice served on an Advocate. The petitioner argued that service on the Advocate did not constitute valid service on the petitioner, rendering the proceedings illegal and without jurisdiction. The crux of the issue revolved around the definition of "agent" as per rule 2(a) of the Rules made under the Act. The rule defines an agent as a person authorized by a dealer to appear on his behalf before the authorities. The Advocate, in this case, was considered an agent as per the power of attorney executed by the assessee, authorizing him to act and appear before the Assessing Authority.
The judgment highlighted Rule 66 of the Rules, which specifies methods of service of notice, including service on the agent being deemed good service vis-a-vis the principal. It was emphasized that the power of attorney in favor of the Advocate was not revoked before the notice for reassessment was served, further solidifying the validity of service on the Advocate. The court underscored that the specific authorization for receiving notice was not a prerequisite under the rules; once authorized to appear, the agent's role in receiving notice was immaterial. The petitioner's argument that the power of attorney did not explicitly mention receiving notice was deemed irrelevant in light of the rules' provisions.
The judgment dismissed the petitioner's reliance on previous cases unrelated to the specific rules at hand, emphasizing that the interpretation of rules 2 and 66 was crucial in the present matter. The court concluded that service on the agent, in this case, the Advocate, constituted valid service for the purposes of the Act, thereby upholding the reassessment proceedings. Consequently, the petition was dismissed, and costs were awarded to the respondent. The judgment underscored the importance of adherence to the defined rules and the authorized representation of dealers in legal proceedings before the authorities.
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1963 (3) TMI 42
Issues:
1. Whether the sale of tractors by a private limited company should be taxed under entry No. 9 or entry No. 80 of the Bombay Sales Tax Act.
2. Whether tractors can be considered as agricultural machinery under entry No. 9 of the Act.
Detailed Analysis:
The case involved a private limited company that sold tractors and was taxed under entry No. 80 of the Bombay Sales Tax Act. The company contended that tractors should be taxed under entry No. 9, which had lower tax rates for agricultural machinery. The difference in tax rates between the two entries was mainly related to the sales tax component. The company argued that tractors were used for agricultural purposes and should fall under entry No. 9, exempting them from sales tax. However, the Sales Tax Authorities and the Sales Tax Tribunal did not agree with this contention, stating that tractors were not exclusively used for agricultural purposes and, therefore, did not qualify as agricultural machinery under entry No. 9.
The Tribunal considered various factors, including evidence presented by the company and the department, such as import duty treatment, import license, and tractor usage descriptions. The Tribunal concluded that tractors were not primarily intended for agricultural use based on the evidence provided. It noted that tractors were used for various purposes beyond agriculture, such as construction and infrastructure projects. The Tribunal rejected the company's argument that tractors should be classified as agricultural machinery under entry No. 9.
The company appealed the Tribunal's decision, arguing that the term "agricultural machinery" in entry No. 9 was not qualified and should encompass any machinery usable for agriculture. However, the Court found that to qualify as agricultural machinery, a particular type of machinery must be commonly understood and used for agricultural purposes in the commercial world. The Court emphasized that tractors were used for a wide range of activities beyond agriculture, as evidenced by the Tribunal's findings on their diverse applications. Therefore, the Court upheld the Tribunal's decision that tractors did not fall under entry No. 9 and should be taxed under entry No. 80.
In conclusion, the Court ruled against the company, affirming that the sale of tractors should be taxed under entry No. 80 of the Act. The Court held that tractors were not exclusively used for agriculture and did not meet the criteria to be classified as agricultural machinery under entry No. 9. Consequently, the company was directed to pay the costs of the department, and the reference was answered in the negative.
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1963 (3) TMI 41
Issues Involved:
1. Purchase tax liability for cotton sold to Anglo-French Textile Mills Ltd., Pondicherry.
2. Taxability of cotton seeds.
3. Deduction of turnover subjected to Central Sales Tax.
4. Jurisdiction of the Sales Tax Appellate Tribunal to interfere with the order of the Commercial Tax Officer regarding the turnover of Rs. 3,61,663.
Issue-wise Detailed Analysis:
1. Purchase Tax Liability for Cotton Sold to Anglo-French Textile Mills Ltd., Pondicherry:
The petitioner contended that the transactions with Anglo-French Textile Mills Ltd., Pondicherry, were inter-State sales and thus not liable for purchase tax under the Andhra Pradesh General Sales Tax Act, 1957. The assessee argued that the mills should be considered the last dealer in the State, making them liable for the tax. The court examined the nature of the sales, considering sections 2(n) and 4 of the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act, 1956. The court concluded that the situs of the sale was in Andhra Pradesh but emphasized that the transactions were in the course of export, falling under section 5 of the Central Sales Tax Act, 1956. Therefore, the petitioner was deemed the last dealer liable for the tax, affirming the decision of the Sales Tax Appellate Tribunal.
2. Taxability of Cotton Seeds:
The petitioner argued that taxing cotton seeds amounted to double taxation since they were originally part of cotton. The court rejected this argument, stating that cotton and cotton seeds are distinct commodities once separated. Therefore, taxing cotton seeds separately did not constitute double taxation, and the claim was rightly rejected.
3. Deduction of Turnover Subjected to Central Sales Tax:
The petitioner sought deduction of turnover subjected to Central Sales Tax from the purchase turnover under rule 6(1)(j) of the Andhra Pradesh General Sales Tax Rules. The court noted that the objection was not presented in this form before the Commercial Tax Officer, leading to a lack of factual investigation. The court emphasized that total turnover includes all transactions, whether taxed under the Central Act or exempted. The net turnover is determined by deducting specified amounts from the gross turnover. The court found no merit in the argument that the turnover should only include purchase transactions, rejecting the claim for deduction.
4. Jurisdiction of the Sales Tax Appellate Tribunal:
The petitioner contended that the Tribunal lacked jurisdiction to interfere with the Commercial Tax Officer's order regarding the turnover of Rs. 3,61,663, as the department did not appeal against it. The court referred to section 21(4) of the Andhra Pradesh General Sales Tax Act, 1957, which grants the Tribunal broad powers to confirm, reduce, enhance, annul, or set aside assessments and penalties. The Tribunal's decision to remand the case for further investigation was within its jurisdiction, as it aimed to correct departmental errors. The court affirmed the Tribunal's order, finding no grounds for interference.
Conclusion:
The court affirmed the decision of the Sales Tax Appellate Tribunal on all issues. The petition was dismissed with costs, and the order of the Tribunal was upheld in its entirety.
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1963 (3) TMI 40
Issues:
Jurisdiction of Deputy Commissioner of Commercial Taxes to re-open assessment and revise turnover under the Andhra Pradesh General Sales Tax Act.
Analysis:
The judgment involves a revision filed by the State of Andhra Pradesh against the decision of the Andhra Pradesh Sales Tax Appellate Tribunal regarding the revisional jurisdiction of the Deputy Commissioner of Commercial Taxes. The case pertains to a dealer in bullion and jewelry provisionally assessed for the year 1955-56, where the assessing authority estimated the turnover to the best of his judgment due to alleged suppression of turnover. The Deputy Commissioner of Commercial Taxes, in the exercise of his revisional jurisdiction, enhanced the turnover significantly, leading to an appeal by the assessee to the Sales Tax Appellate Tribunal.
The key question in this case was whether the Deputy Commissioner had the authority to re-open the assessment made by the Commercial Tax Officer. The interpretation of Section 20 of the Andhra Pradesh General Sales Tax Act, corresponding to Section 12 of the Madras General Sales Tax Act, was crucial. The language of these sections was analyzed to determine the scope of the revising authority's powers in dealing with assessment orders.
The Court examined Section 14 of the Andhra Pradesh General Sales Tax Act, which governs the assessment of tax payable by a dealer. It was observed that the function performed by the Deputy Commissioner in enhancing the turnover fell under Section 14(4), which deals with cases where turnover has escaped assessment to tax. The judgment emphasized that the power to redetermine turnover under Section 14(4) is vested in the assessing authority, not in appellate or revisional authorities.
The Court referred to a judgment of the Madras High Court, highlighting the distinction between correcting improper assessment orders and dealing with escaped turnovers. The judgment emphasized that turnover escapes assessment when not noticed due to inadvertence, omission, or deliberate concealment. Applying this principle, the Court concluded that the Deputy Commissioner's re-estimation of turnover was beyond his competence, as it was a function assigned to the assessing authority under Section 14(4).
Ultimately, the Court dismissed the tax revision cases, upholding the decision of the Sales Tax Appellate Tribunal. The judgment clarified the scope of the revising authority's powers and affirmed that re-determining turnover in cases of escaped assessment falls under the assessing authority's jurisdiction, not the revisional authority.
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1963 (3) TMI 39
Issues:
Determining whether the goods sold by the applicants constituted "textile fabrics" under entry 79 of the Bombay Sales Tax Act, 1953.
Analysis:
The applicants sold "machine cloth" or "silk bolting cloth" and contended that their goods did not fall under entry 79 but should be taxed under the residuary entry, which was entry No. 80. They argued that entry 79 was limited to specific textile fabrics like saris, dhottes, sheets, chaddars, blankets, and similar articles. However, the Sales Tax Authorities held that the cloth sold by the applicants fell under "textile fabrics" and should be taxed under entry 79 as it encompassed textile fabrics of any kind. The Sales Tax Tribunal also rejected the argument that the scope of "textile fabrics" in entry 79 was limited by the specific items listed in the entry.
In the revision before the Sales Tax Tribunal, the applicants further argued that the expression "textile fabrics" in entry 79 should be interpreted restrictively based on the items listed in the inclusive part of the entry. They contended that common understanding of "textile fabrics" would not include the type of cloth they sold. However, the Tribunal, citing a Supreme Court decision, emphasized that inclusive definitions are meant to extend the scope and should not be restricted. The argument that the inclusive part of the entry limited the meaning of "textile fabrics" was rejected.
The applicants also tried to argue that common parlance understanding of "textile fabrics" would not cover the cloth they sold. They cited a letter from the manufacturers stating that the cloth was treated differently for customs purposes in certain countries. However, the Court found this argument unsubstantiated as the letter did not provide enough evidence to show that the cloth did not fall under the common understanding of textile fabrics. The Court concluded that despite the wide scope of "textile fabrics of any kind" in entry 79, the specific items listed did not restrict its interpretation. Therefore, the goods sold by the applicants were deemed to fall under entry 79 and were taxable accordingly.
In conclusion, the Court answered the reference question in the affirmative, stating that the goods sold by the applicants constituted "textile fabrics" under entry 79. The applicants were directed to pay the costs of the department.
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1963 (3) TMI 38
Issues Involved:
1. Whether the Kanpur Development Board is a 'dealer' under section 2(c) of the U.P. Sales Tax Act.
2. Whether the Board can be assessed to sales tax on the value of materials supplied to its contractors.
Issue-wise Detailed Analysis:
1. Whether the Kanpur Development Board is a 'dealer' under section 2(c) of the U.P. Sales Tax Act:
The primary question was whether the Kanpur Development Board qualifies as a 'dealer' under the U.P. Sales Tax Act. The Board was constituted for specific purposes such as provision of water supply, public drains, development and maintenance of streets, regulation of traffic, town planning, and other civic functions. It supplied materials to contractors from its stores to ensure timely and quality construction.
The definition of 'dealer' in the Act is "an association of persons carrying on the business of selling goods." The Court noted that the Board, constituted under the Kanpur Urban Area Development Act, is indeed an association of persons. However, the crux of the matter was whether the Board was engaged in the 'business' of selling goods.
The term 'business' was analyzed in both its broad and narrow senses. The broad sense includes any activity that occupies one's time and attention, while the narrow sense refers to activities engaged in for livelihood or profit. The Court emphasized that in the context of the Sales Tax Act, 'business' is understood in its commercial sense, implying an activity pursued for profit or livelihood.
The Court concluded that the Board did not carry on the business of selling goods. The materials were supplied to avoid construction delays and ensure proper quality, not for profit. The Board did not exhibit or sell goods to the general public, nor did it operate a regular shop. The conditions imposed on the contractors, such as restrictions on removing materials from the site and the right of repurchase by the Board, were inconsistent with a profit-making intention.
2. Whether the Board can be assessed to sales tax on the value of materials supplied to its contractors:
The Board supplied materials to contractors and realized their price through adjustments in the contractors' bills. The Sales Tax Officer assessed the Board to sales tax, considering it a dealer. However, the Judge (Appeals) set aside this assessment, stating that the Board did not carry on any business by selling materials and was not a dealer.
The Judge (Revisions) reinstated the assessment, arguing that the transactions amounted to sales since the property in the materials was transferred to the contractors for deferred payment. The High Court, however, disagreed with this view. It held that although the transactions involved the transfer of property in goods, the Board did not engage in these transactions as a business activity aimed at making a profit.
The Court noted that the materials were supplied at cost, including insurance, freight, cartage, octroi, sales tax, and other expenses, without any intention of making a profit. The repurchase clause did not indicate a profit motive but was a measure to ensure the availability of materials for other projects.
Thus, the Court concluded that the Board did not sell goods as a dealer and was not liable to pay sales tax on the turnover of the sales to contractors. The answer to the referred question was given in the negative.
Conclusion:
The High Court held that the Kanpur Development Board is not a 'dealer' under section 2(c) of the U.P. Sales Tax Act and is not liable to be assessed to sales tax on the value of materials supplied to its contractors. The reference was answered in the negative, and the applicant was awarded costs.
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1963 (3) TMI 37
Issues:
1. Interpretation of the proviso to section 9 of the Sales Tax Act regarding the requirement of depositing the admitted tax amount with the memorandum of appeal.
2. Validity of the service of notice of the hearing of the assessment case on the applicants.
Detailed Analysis:
Issue 1: The High Court was tasked with interpreting the proviso to section 9 of the Sales Tax Act, which mandates that an appeal must be accompanied by proof of payment of the admitted tax amount. The court examined the timeline of events where the assessee failed to deposit the full admitted tax amount with the appeal memorandum within the stipulated 30 days. The court emphasized that the proviso necessitates the simultaneous presentation of the memorandum of appeal and the proof of payment. It was clarified that presenting the proof later does not fulfill the requirement of the proviso. The court rejected the argument for a fictional return of the memorandum of appeal with the proof at a later date, emphasizing that legal fictions cannot circumvent statutory provisions.
Issue 2: The judgment did not delve into the second issue regarding the validity of the service of notice of the assessment case hearing on the applicants. The court's focus remained on the interpretation of the proviso to section 9 of the Sales Tax Act and the requirements for a valid appeal. It was concluded that the failure to accompany the appeal memorandum with proof of payment within the specified time rendered the appeal defective and subject to rejection by the Judge (Appeals). The court highlighted the importance of strict compliance with statutory provisions in filing appeals and rejected any attempts to introduce legal fictions to remedy procedural shortcomings.
The court's decision was to answer the first question in the negative, indicating that the defect regarding the failure to deposit the admitted tax amount with the appeal memorandum was not cured by subsequent actions. The second question did not arise for consideration in the judgment. The court directed the dissemination of the judgment copies to the relevant authorities and awarded costs to the Commissioner, Sales Tax, U.P., from the assessee.
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1963 (3) TMI 36
The petition was filed by Messrs Sewak Hotel against an order assessing them to sales tax retrospectively. The court held that the firm was exempt from sales tax under section 6 of the Punjab General Sales Tax Act, and the exemption could not be withdrawn retrospectively. The court quashed the Assessing Authority's order, ruling in favor of the petitioner.
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1963 (3) TMI 35
Issues:
Interpretation of section 31 of the Madras General Sales Tax Act regarding the right to appeal against specific orders of Sales Tax Authorities.
Analysis:
The judgment in question revolves around the interpretation of section 31 of the Madras General Sales Tax Act concerning the right to appeal against certain orders of Sales Tax Authorities. The core issue raised in the revision petition was whether the order of confiscation of goods in the present case falls within the scope of section 31, enabling the petitioner to file an appeal before the Appellate Assistant Commissioner. The case originated when a lorry carrying 291 tins of coconut oil was found, leading to an investigation revealing the assessee's involvement in receiving similar consignments. The assessing authority estimated the turnover of the assessee and imposed a tax and penalty. The order provided the assessee with an option to pay the tax and penalty within a specified period to avoid confiscation of goods.
The Appellate Assistant Commissioner initially held that no appeal lay against the order. Subsequently, the Sales Tax Appellate Tribunal concluded that section 31 did indeed allow for an appeal in such cases and directed the hearing of the appeal by the Appellate Assistant Commissioner. The State challenged this decision through a revision petition. The critical aspect of the judgment focused on the interpretation of section 31 and its relation to section 42(3) of the Act, which empowers officers to seize and confiscate goods, subject to certain conditions. The first proviso mandates the officer to conduct an inquiry and provide the affected person with an opportunity to be heard before confiscation. The second proviso requires the officer to offer the person the option to pay in lieu of confiscation.
The Court emphasized that an order for confiscation must include the option specified in the second proviso. The State contended that the order in question was not final as it depended on the assessee's compliance with the payment direction. However, the Court rejected this argument, stating that the right of appeal under section 31 is not contingent on the finality of the confiscation order. The Court concluded that the order in question fell within the ambit of section 42(3) and thus qualified for appeal under section 31. Therefore, the Tribunal's decision allowing the appeal was deemed correct, leading to the dismissal of the revision petition with costs.
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1963 (3) TMI 34
Issues:
1. Whether powdered milk and condensed milk are exempt from tax as milk or taxable as milk products?
2. Whether the assessee is considered a dealer under the U.P. Sales Tax Act?
3. Whether the sale took place within the State of Uttar Pradesh?
Analysis:
Issue 1:
The first issue revolves around whether powdered milk and condensed milk qualify as "milk" under section 4(1) for tax exemption or are considered taxable as milk products. The Court determined that while condensed milk and milk powder are derived from milk, they are distinct from milk itself. The exemption under section 4(1) applies to essential items like water, milk, salt, newspapers, and motor spirit. The Court emphasized that condensed milk and milk powder do not fall under the category of "milk" due to not being universally required daily items. The judgment cited a previous case to support the interpretation of "milk" as a staple product. Additionally, a notification by the State Government exempted specific milk products, indicating a differentiation between milk and milk products. As condensed milk involves the addition of sugar and milk powder is essentially dehydrated milk, they were categorized as milk products, not exempt from tax when sold in sealed containers. Therefore, the Court answered question 1 in the negative, against the assessee.
Issue 2:
The second issue addresses whether the assessee qualifies as a dealer under the U.P. Sales Tax Act. The Court analyzed the business activities conducted by the assessee in Uttar Pradesh, despite its headquarters being in Calcutta and having no physical office in Uttar Pradesh. The definition of "dealer" encompasses engaging in business activities within the state. The Court determined that the presence of the assessee's agents in Uttar Pradesh, acting on its behalf in delivering goods and completing sales transactions, constituted carrying on business within the state. Reference to relevant case law emphasized that physical presence or representation through agents suffices to establish conducting business activities. The Court highlighted the significance of the location where goods are delivered and contracts are executed in determining business presence. As the assessee's agents operated in Uttar Pradesh to facilitate sales, the Court affirmed that the assessee was indeed a dealer within the state. Therefore, the answer to question 2 was affirmative, in favor of considering the assessee as a dealer.
Issue 3:
The final issue pertains to determining the location of the sale, specifically whether it occurred within the State of Uttar Pradesh. The Court deemed this question irrelevant in light of establishing the assessee's liability for sales tax and the nature of the goods sold. Given the absence of crucial facts regarding the passing of property in the goods, the Court could not definitively ascertain where the sale took place. However, based on the previous findings regarding the assessee's business operations and tax liability, the Court concluded that the sale could not be deemed as not happening within Uttar Pradesh. Therefore, if the question were to be answered, it would affirm that the sale indeed took place within the State of Uttar Pradesh.
In conclusion, the judgment addressed the classification of powdered milk and condensed milk, the assessee's status as a dealer, and the location of the sale within Uttar Pradesh, providing detailed legal reasoning and referencing relevant case law to support the decisions rendered by the Court.
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1963 (3) TMI 33
Issues:
1. Limitation period for issuing notice of demand after assessment
2. Validity of assessment based on turnover of Rs. 2,00,000
Analysis:
The judgment pertains to a case where the Sales Tax Officer estimated the turnover of the assessee for the year 1949-50 at Rs. 6,00,000 due to the non-submission of a return by the assessee. The assessment order was passed on 31st March, 1953, without specifying the date of notice of demand issuance to the assessee. The assessee appealed, leading to a reduction in the estimated turnover to Rs. 2,00,000 by the judge (Appeals). The assessee then applied for revision, which was rejected, prompting the submission of a statement of the case for reference to the High Court.
Regarding the first issue of limitation for issuing a notice of demand post-assessment, it was clarified that the Sales Tax Act does not prescribe a specific period for serving a notice of demand after the assessment order. Rule 45 mandates the Sales Tax Officer to send a notice to the dealer for tax payment promptly after assessment, without a defined limitation. The judgment emphasized that as long as the notice of demand is issued within a reasonable time after the assessment order, there is no requirement for it to be served before the expiry of the three-year period. The court cited precedent to support this interpretation, ultimately answering the first question in the negative.
On the second issue of the validity of the assessment based on a turnover of Rs. 2,00,000, it was noted that the Sales Tax Officer and judges relied on evidence indicating the assessee's dishonest conduct, including false statements about business activities. The judgment highlighted that a best judgment assessment can be made by inference, provided there is sufficient material to support the inference. In this case, the court found that the facts presented could sustain a finding that the turnover for 1949-50 was at least Rs. 2,00,000. Consequently, the court answered the second question in the affirmative, affirming the validity of the assessment based on the provided evidence.
In conclusion, the court directed the dissemination of the judgment copies to the relevant authorities, with the Commissioner of Sales Tax, U.P., entitled to costs of the reference, assessed at Rs. 100, along with a fixed counsel's fee of Rs. 100. The reference was answered accordingly, affirming the assessment based on a turnover of Rs. 2,00,000 for the year in question.
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1963 (3) TMI 32
Issues Involved:
1. Jurisdiction of the Assessing Authority to reopen the case under Section 11-A of the Punjab General Sales Tax Act.
2. Interpretation of "definite information" under Section 11-A.
3. Whether goods transferred to a branch outside the state can be considered as "manufactured for sale" under Section 5(2)(a)(ii) of the Punjab General Sales Tax Act.
Detailed Analysis:
1. Jurisdiction of the Assessing Authority to Reopen the Case under Section 11-A:
The primary issue was whether the Assessing Authority had the jurisdiction to reopen the case under Section 11-A. The petitioner argued that the Assessing Authority could only reopen the case if it came into possession of some "definite information" that was not available at the time of the original assessment. The court noted that the fact that goods worth Rs. 1,09,130-74 nP. had been transferred to the petitioner's Delhi branch was already known to the Assessing Authority during the initial assessment. There was no new fact or judicial decision that had come to light subsequently. The court concluded that reopening the case based on the same information amounted to a mere change of opinion, which is not permissible under Section 11-A.
2. Interpretation of "Definite Information" under Section 11-A:
The court examined the term "definite information" as used in Section 11-A. It referred to a Division Bench decision of the Madhya Pradesh High Court in Kanhaiyalal Bahadursingh v. Commissioner of Sales Tax, which held that "definite information" must be new information that comes into possession after the original assessment. The court distinguished this from the Supreme Court's interpretation in Maharaj Kumar v. Income-tax Commissioner, where "information" could include a new judicial decision. However, in the present case, there was no new information or judicial decision. Therefore, the court held that the Assessing Authority had no jurisdiction to reassess under Section 11-A.
3. Whether Goods Transferred to a Branch Outside the State Can Be Considered as "Manufactured for Sale":
The court analyzed whether goods transferred to the petitioner's branch in Delhi could be considered as "manufactured for sale" under Section 5(2)(a)(ii). The relevant section allowed deductions from the taxable turnover for goods used in manufacturing for sale. The court noted that the law, as it stood before the amendment by Ordinance No. 2 of 1963, did not explicitly require that the sale be within Punjab. The court held that goods manufactured in Punjab and sold outside the state, including through a branch, could still be considered as "manufactured for sale." The court found that the goods transferred to Delhi and sold there met this criterion, and thus the second proviso of Section 5(2)(a)(ii) was inapplicable.
Conclusion:
The court concluded that the impugned order was without jurisdiction for two main reasons: (1) there was no "definite information" justifying the reopening of the assessment under Section 11-A, and (2) the goods transferred to the Delhi branch and sold there were indeed "manufactured for sale" under Section 5(2)(a)(ii) as it stood at the relevant time. Consequently, the rule was made absolute, and the impugned order was quashed. No order as to costs was made due to the peculiar circumstances of the case.
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1963 (3) TMI 31
Issues:
Compliance with natural justice in assessing sales tax under the Orissa Sales Tax Act, 1947.
Detailed Analysis:
Issue 1: Compliance with natural justice
The Sales Tax Tribunal referred a question regarding the correctness of holding that there was sufficient compliance with natural justice in the assessment of sales tax under the Orissa Sales Tax Act, 1947. The assessee-dealer, a wholesaler in grocery goods, was assessed for sales tax for four consecutive quarters. The Sales Tax Officer found that the dealer had suppressed sales to certain retailers and assessed the dealer to the best of judgment. The dealer appealed, requesting to summon the retailers for examination. The Assistant Commissioner and the Tribunal upheld the decision, leading to the reference question.
Issue 2: Legal Provisions
Section 21 of the Act grants powers to summon and examine individuals for assessment purposes. The contention arose regarding the admissibility of evidence obtained from the seized books of account of the retailers against the assessee-dealer without providing an opportunity to confront the retailers during the assessment proceedings.
Issue 3: Rival Contentions
The assessee-dealer argued that denial of the opportunity to confront the retailers amounted to a breach of natural justice. The department contended that the assessing officers were not obligated to accede to the request to examine the retailers in the presence of the assessee-dealer.
Issue 4: Precedent
Referring to the case law, the court reiterated the principle that the assessing officer must disclose the material on which an estimate is made and provide the assessee an opportunity to rebut it. The essence of private information collected should be communicated to the assessee for a fair assessment process.
Issue 5: Analysis of Proceedings
The court found that the extracts from the retailers' books of account were disclosed to the assessee-dealer, who failed to disprove the entries. The dealer did not request to confront the retailers during the assessment proceedings, indicating a lack of objection at that stage. The court concluded that there was sufficient compliance with natural justice as the dealer had the opportunity to challenge the disclosed transactions.
Conclusion
The court held that there was adequate compliance with natural justice in the assessment proceedings. The Tribunal's decision was upheld, and the reference question was answered in the affirmative. The assessee-dealer was directed to pay the costs of the reference.
*Judges: Narasimham R.L. C.J. and Baan S.RM, JJ.*
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1963 (3) TMI 30
Issues:
1. Whether the sale of foodstuffs by the Carriage Works Canteen, Southern Railway, Perambur, qualifies as a business activity for the purpose of the Madras General Sales Tax Act.
2. Interpretation of the definition of "business" under the Sales Tax Act in the context of profit motive.
Analysis:
The High Court of Madras, in a judgment delivered by Srinivasan, J., addressed the issue of whether the sale of foodstuffs by the Carriage Works Canteen of the Southern Railway constitutes a business activity for the purpose of the Madras General Sales Tax Act. The Sales Tax Appellate Tribunal had held that since the canteen was under a statutory duty to provide foodstuffs to its workers on a non-profit basis, it did not qualify as a "dealer" carrying on business. The Court, after considering relevant precedents, including Integral Coach Factory Canteen v. Deputy Commercial Tax Officer and Soundarapandian and Bros. v. Deputy Commercial Tax Officer, concurred with the Tribunal's view. It emphasized that a business activity should have a profit motive to fall within the scope of the Sales Tax Act's definitions of "dealer" and "sale."
The judgment also delved into the interpretation of the definition of "business" under the Sales Tax Act. The definition includes any trade, commerce, or manufacture, regardless of profit accrual. The State argued that this definition should be construed to exclude the profit motive, thereby encompassing non-profit activities as well. However, the Court rejected this argument, citing previous decisions where it was held that a business conducted without a profit motive does not meet the criteria of a business under the Sales Tax Act. The Court emphasized the need to interpret statutory language as it stands, without inferring legislative intent that is not explicitly stated.
In conclusion, the Court dismissed the petition, upholding the Tribunal's decision that the sale of foodstuffs by the Carriage Works Canteen did not amount to a business activity under the Sales Tax Act. The judgment clarified that a profit motive is essential for an activity to be considered a business within the Act's purview, and the statutory duty to provide foodstuffs on a non-profit basis did not alter this requirement. The petitioner was ordered to bear the costs, including counsel's fee.
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1963 (3) TMI 29
Issues:
Interpretation of the term "raw tobacco" under section 5(viii) of the Madras General Sales Tax Act.
Classification of processed tobacco as raw tobacco or a manufactured product under section 5(vii).
Application of legal principles from previous judgments to determine tax liability on tobacco products.
Analysis:
The case involved a revision petition challenging the decision of the Sales Tax Appellate Tribunal regarding the classification of beedi tobacco as raw tobacco under section 5(viii) of the Madras General Sales Tax Act. The respondents, beedi manufacturers, argued that the tobacco they purchased was not raw tobacco but a processed form, subject to tax under section 5(vii) on the sale of manufactured products. The Tribunal considered affidavits stating that the tobacco underwent processing steps like drying, pounding, and sieving before sale, concluding it was not raw tobacco. However, the State contended that these processes did not transform the tobacco into a different manufactured product.
In analyzing the issue, the Tribunal referred to a previous case involving chewing tobacco to determine the scope of manufacturing processes that would classify a product under section 5(vii). It was established that mere soaking and drying of tobacco did not change its classification unless additional processes resulted in a substantially different product. The court also cited another case where tobacco processing steps were deemed insufficient to alter the raw tobacco's nature, aligning with the principle that manufacturing must lead to a commercially different article.
Additionally, a judgment from the Allahabad High Court was considered, emphasizing that a manufacturing process need not change the article's nature but must create a different commercial product. However, in the present case, the focus was on whether the processed tobacco remained raw tobacco under section 5(viii) or became a manufactured product under section 5(vii. The court concluded that the processing steps applied to the tobacco did not alter its classification, upholding tax liability under section 5(viii) and rejecting the respondents' contentions.
Ultimately, the court allowed the petition, setting aside the Tribunal's decision and restoring the authority's ruling without costs. The judgment clarified the distinction between raw tobacco and manufactured products, emphasizing the need for substantial changes to classify a product under specific tax provisions.
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1963 (3) TMI 28
Issues:
Interpretation of section 8(2) of the Central Sales Tax Act, 1956 in relation to exemption under Notification No. 2328 dated 13th December, 1957 issued by the State Government under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957.
Analysis:
The High Court of Andhra Pradesh, comprising Chief Justice Chandra Reddy and Justice Gopalakrishnan Nair, addressed the issue of whether an assessee under section 8(2) of the Central Sales Tax Act, 1956, is entitled to exemption under Notification No. 2328 dated 13th December, 1957. The assessee, a dealer in handloom cloth, claimed exemption for a specific turnover period based on this notification. The turnover in question involved interState sales governed by section 8 of the Central Sales Tax Act, 1956. The Court primarily focused on interpreting section 8(2) which states the tax calculation for inter-State sales not falling under sub-section (1). The Court highlighted that the assessee, dealing with unregistered dealers, falls under sub-section (2) and cannot claim benefits under sub-section (1. The Court analyzed the notification granting exemption under section 9(1) of the Andhra Pradesh General Sales Tax Act, emphasizing that the exemption is only applicable to goods taxable under the State Act.
The Court delved into the argument presented by the petitioner's counsel, contending that the dealer under section 8(2) should be treated as governed by the Andhra Pradesh General Sales Tax Act for all purposes. However, the Court disagreed, stating that the fiction created by section 8(2) is limited to tax rate calculation only. The Court emphasized that the deeming provision does not equate the dealer's position under the Central Sales Tax Act to that under the State Act for all purposes. The Court highlighted that the intention of the Legislature was to tax sales to unregistered dealers at a higher rate, ensuring no advantage for such transactions over sales to registered dealers. The Court concluded that the assessee is deemed a dealer under the State Act solely for rate calculation, not for all purposes, and the notification can only grant exemption for goods taxable under the State Act, not the Central Act.
In light of these interpretations, the Court dismissed the tax revision case, aligning with the majority view of the Sales Tax Appellate Tribunal. The Court emphasized that the State lacks the power to grant exemption for goods subject to tax under the Central Sales Tax Act. The judgment reiterated the dismissal of related tax revision cases, with no order as to costs, based on the principles established in prior cases.
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1963 (3) TMI 27
Issues:
Jurisdiction of Deputy Commissioner to revise assessment orders under the Sales Tax Act and the legality of his actions in doing so.
Analysis:
The judgment by the Kerala High Court addressed the issue of the Deputy Commissioner's jurisdiction to revise assessment orders under the Sales Tax Act. The court considered whether the Deputy Commissioner had acted within his jurisdiction in revising the assessment orders. Initially, the writ petitioners contended that the Deputy Commissioner lacked jurisdiction due to the absence of a necessary notification empowering him to act under the relevant section of the Madras General Sales Tax Act. The court noted that an amendment to the Act conferred retrospective jurisdiction on the revisional authority, rendering the jurisdictional challenge invalid based on a previous decision. The court then focused on the main ground raised in the writ applications, emphasizing that the revisional authority could only base its orders on the material and records of assessment, as established in previous court decisions.
The court highlighted that the revisional authority should limit its examination to ensuring the assessment order's compliance with the law, as outlined in relevant legal precedents. The State did not argue that the Deputy Commissioner acted under a specific rule, and it was noted that the revisional authority's actions were influenced by a Sales Tax Appellate Tribunal's decision regarding wholesale merchants in a specific area being commission agents. The court scrutinized the reasons behind the revisional authority's decisions and found that relying on external material not present in the assessment records was improper.
Moreover, the court emphasized that determining whether sellers were commission agents should be based on individual transactions rather than a blanket assumption for all sellers in a particular area. The court concluded that the revisional authority erred in reopening assessments based on external factors not supported by the assessment records. Despite dismissing the appeals, the court directed the appellants to bear the costs of the respondents. Additionally, a separate judgment in Tax Revision Case No. 25 of 1962 highlighted the authority's jurisdiction based on a subsequent amendment to the General Sales Tax Act, leading to the allowance of the tax revision case and the need for further consideration by the Tribunal on the merits of the appeal.
In summary, the Kerala High Court's judgment delved into the intricacies of the Deputy Commissioner's jurisdiction to revise assessment orders, emphasizing the need for adherence to legal principles and reliance solely on the assessment records in such proceedings. The court's analysis underscored the importance of procedural fairness and adherence to legal standards in tax assessment matters, ultimately leading to the dismissal of the appeals and a directive on costs.
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