TMI Blog1958 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... in the petitioner's books of Rs. 14,57,880-5-4 for the year 1949-50 but no orders were passed by him. In the order subsequently passed by the Sales Tax Officer under rule 35(1) of the rules made under the Mysore Sales Tax Act, 1948, the validity of which is in question in this reference, it is stated that the said statement was enclosed to the assessee's letter dated 12th July, 1950, and this letter with the statement of turnover was mixed up with the assessment record of 1950-51 and escaped his notice. The Sales Tax Officer, however, made the said assessment according to his best judgment under section 12(2)(b) of the Sales Tax Act. It is not disputed that the return of the turnover for the year 1949-50 had not been filed by the assessee in the prescribed form. The Sales Tax Officer proceeded on the basis that no return was submitted by the dealer and he made his order of assessment according to his best judgment as already mentioned. It is said that subsequent thereto it came to the notice of the Sales Tax Officer that there was on the record a statement filed by the assessee according to which the turnover of the assessee for that year was Rs. 14,57,880-5-4. The Sales Tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he garments. 2.. (i) Whether out of the total turnover of Rs. 14,57,880-5-4 an amount of Rs. 4,85,099-1-4 which represents turnover relating to sale of goods which has taken place outside the State within the meaning of Article 286(1) of the Constitution of India between the period 26th January, 1950, to 31st March, 1950, is chargeable to sales tax; and (ii) Whether the President's C.O. No. 7 Sales Tax Continuance Order, 1950, dated 26th January, 1950, under Article 286(2) enables the Government to continue to levy the sales tax until 31st March, 1951, notwithstanding that such levy offends Article 286(1) of the Constitution and as such is void. 3.. Whether in the circumstances of this case as set out in para 2 of this statement it was lawful and competent for the assessing authority to have revised the assessment dated 22nd March, 1952, made on the petitioner and whether rule 35 of the Mysore Sales Tax Rules, 1948, can be invoked for that purpose." I shall take up the last of the said questions first. It was contended before us on behalf of the assessee that in the circumstances of this case, to which I have referred, the Sales Tax Officer had no jurisdiction and could not pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be made under the said rule. It appears from the final order passed by the Sales Tax Officer himself on 28th October, 1952, that in making the said final order the said officer not only looked into materials which were already existing on the record but also examined new materials which were not on the record. For instance, it is stated by him in his said order that he examined the accounts for the year 1950-51 and also the accounts for the year 1949-50. The accounts for the year 1950-51 were not on the record of the previous assessment. They are, therefore, new materials which the assessing authority took into consideration in making the new order of assessment. This, in my opinion, the assessing authority was not permitted to do under rule 35 of the said rules. He is entitled under the said rule to rectify a mistake which may be found out from the record itself, that is to say, from the materials which are already on the record. He cannot under rule 35 take into consideration new materials and then come to a conclusion that there has been a mistake and proceed to rectify the said mistake. In a case reported in Arvind N. Mafatlal v. Income-tax Officer, North Satara[1957] 32 I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to come to that conclusion. It appears from the final assessment order of the Sales Tax Officer passed under the said rule that he based his said decision on the materials which he took into consideration at the said proceedings. The position, therefore, is that the previous assessment was a best judgment assessment made under section 12(2)(b) of the Sales Tax Act on the basis that no return had been submitted by the dealer. What, however, the Sales Tax Officer did, purporting to proceed under rule 35 of the said rules, was to re-open the whole assessment and make a new assessment not according to his best judgment but according to the materials which he discovered and which he examined at the hearing of the said matter. In other words, he proceeded to make a new assessment on an entirely different basis. This, in my opinion, he was not justified to do under the said rule. All that he is empowered under the said rule is to rectify any mistake which was apparent from the record of the said proceedings and not to re-open the previous proceedings and make a new assessment order on an entirely new basis. On a full consideration of the matter I have come to the conclusion that the answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax upon the turnover of his business in the sale of ready-made clothes under section 3 of the Hyderabad General Sales Tax Act. It was contended on behalf of the petitioner that this order of the Sales Tax Officer was without jurisdiction. One of the contentions of the learned Advocate for the petitioner in that case was that ready-made clothes or garments are exempt from tax as they were made out of exempted articles specified in item 17 of Schedule I read with the Notification of Government No. 75 dated 2nd August, 1950. In dealing with that contention their Lordships observed that "Ex facie it would appear that the Legislative intent of the above exemption is only to exempt cloth which costs less than Rs. 3 per yard and it can hardly be said that ready-made garments can be sold per yard or that they can be described as cloth costing less than Rs. 3 per yard". Their Lordships came to the conclusion that readymade garments made of cloth did not come within the exemption specified in item 17 of Schedule I of the Hyderabad General Sales Tax Act. The view which I am taking in this matter also finds support from a decision of the Calcutta High Court reported in Ishwardas Kapoor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the pieces can be used as saris, bed covers, lihafs (quilt covers) etc., and then to print them so that they can be readily used for the purpose for which they are meant. It is quite obvious that the articles in which the applicant deals are 'clothes' or garments and not 'cloth' within the meaning of the notification." These observations, in my opinion, also support the view which I am taking in this matter. The learned Advocate for the assessee, however, referred us to a decision of the Supreme Court in Kailash Nath and Another v. The State of U.P. and Others[1957] 8 S.T.C. 358. In that case the question arose whether although the colour of the cloth had changed by printing and processing, the cloth exported was the same cloth and whether the petitioners were entitled to the exemption under the notification in question. In dealing with that contention their Lordships no doubt held that the export which had taken place was of such cloth and negatived the contention that the thing exported is not the same. Their Lordships held that by using the word "such" in the notification what the Legislature has laid down is not that the identical thing should be exported in bulk and quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed of such amount representing the usual proportion of the cost of labour to the cost of materials used in carrying out such contract." It was urged before us that the goods in this case are goods sold in relation to a works contract and, therefore, deductions allowable under the said clause should be allowed to the assessee in this case. The first question to be determined in order to adjudicate upon this contention is whether or not the goods in question can be said to have been sold in relation to a works contract. The "works contract" has been defined as meaning "any agreement for carrying out for cash or for deferred payment or other valuable consideration, the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property or the fitting out, improvement or repair of any movable property". It was urged that the sale in the present case was in relation to a works contract as defined above. I am wholly unable to accept this contention. It appears from the definition of "works contract" that there must be an agreement for carrying out of the matters mentioned therein. In this case there is nothing to show that there was any agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceded before us that he is unable to maintain that view and he stated that the President's order related to clause (2) of Article 286 and it has nothing to do with clause (1) of the said article. That being so, these two subquestions of question No. 2 should be answered in favour of the assessee. The said answers would be: 2(i) Out of the total turnover amount which represents the turnover relating to sale of goods which has taken place outside the State within the meaning of Article 286(1) of the Constitution between the period 26th January, 1950, and 31st March, 1950, is not chargeable to sales tax. 2(ii) The President's order C.O. No. 7 Sales Tax Continuance Order, 1950, dated 26th January, 1950, under Article 286(2) does not enable the Government to continue to levy sales tax until 31st March, 1951, notwithstanding that such levy offends Article 286(1) of the Constitution, and such levy is void. This reference is disposed of in the manner indicated above. Having regard to the fact that the assessee has only partly succeeded in this reference, he will bear his own costs of this reference. The fee deposited by him will be refunded. SOMNATH IYER, J.-I agree. Order. Civil Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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