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TMI Blog1969 (2) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... eriods April 1, 1961, to June 30, 1961, and July 1, 1961, to September 30, 1961, the Board of Revenue, Madhya Pradesh, referred the following questions to the High Court of Madhya Pradesh for opinion: "(1) Whether, in the facts and circumstances of the case, the notice in Form XVI that was served on the applicant was invalid and therefore the assessment of the applicant on the basis of that notice was bad in law. (2) Whether, in the facts and circumstances of the case, the applicant was a dealer during the assessment period under the Act and the imposition of purchase tax on him under section 7 of the Act was in order." The High Court answered the first question in the negative, and the second in the affirmative. These appeals are prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axpayer the proceedings are not liable to be set aside". It is not even suggested that because of the insufficiency of time the appellants were unable to submit their explanation for failure to make their returns of turnover. Two cases on which reliance was placed by counsel for the appellants in support of the plea that the notices were invalid have, in our judgment, no bearing. In Kajorimal Kalyanmal v. Commissioner of Income-tax [1930] 3 I.T.C. 451., it was held that a notice under section 22(2) of the Income- tax Act, 1922, giving the assessee 29 days for filing the return was "entirely illegal". In Jamna Dhar Poidar and Co. v. Commissioner of Income-tax [1935] 3 I.T.R. 112., it was held, following the judgment in Kajorimal Kalyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the tax payable by a dealer under the Act shall be levied on his taxable turnover relating to the goods specified in Schedule II. Section 7 provides: "Every dealer who in the course of his business purchases any taxable goods, in circumstances in which no tax under section 6 is payable on the sale price of such goods and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out of the tanning bark purchased by the assessees for consumption in the process of tanning was liable to tax on the footing that the assessees were carrying on the business of buying goods, even though the goods bought were consumed in the process of tanning. In dealing with the question whether an activity of purchase of goods required for consumption in a manufacturing process may be regarded as a business, the court observed (at page 647): "A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression 'business' though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buying of goods was in the course of business since it was associated with the business of tanning of hides carried on with a profit- making motive. These decisions support the contention of the State that price paid for goods bought for consumption in manufacturing an article for sale is exigible to purchase tax even if the goods purchased are either destroyed or transformed into another species of goods. Counsel for the appellants urged that in the cases of H. Abdul Bakshi and Bros. [1964] 15 S.T.C. 644 (S.C.). and L.M.S. Sadak Thamby & Co. [1963] 14 S.T.C. 753., the assessees were carrying on the business of selling goods manufactured by them and for the purpose of manufacturing those goods certain other goods were purchased and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid for buying goods consumed in the manufacture of other goods, intended to be sold or otherwise disposed of, alone is taxable. We do not think that that is a reasonable interpretation of the expression "either consumes such goods in the manufacture of other goods for sale or otherwise". It is intended by the Legislature that consumption of goods renders the price paid for their purchase taxable, if the goods are used in the manufacture of other goods for sale or if the goods are consumed otherwise. The decision in Versova Koli Sahakari Vahatuk Sangh Ltd. v. The State of Maharashtra [1968] 22 S.T.C. 116., on which reliance was placed by Mr. Chagla has, in our judgment, no application. In that case a society registered under the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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