1960 (8) TMI 77 - HC - VAT and Sales Tax

Issues Involved:
1. Liability for sales tax on the sale of gold ornaments.
2. Assessment method and its reasonableness.
3. Timeliness of the assessment.
4. Applicability of registration status to the assessment process.
5. Limitation period for assessment.

Issue-wise Detailed Analysis:

1. Liability for Sales Tax on the Sale of Gold Ornaments:
The petitioner, a goldsmith, contended that his business was solely manufacturing ornaments and charging for labor, not selling gold. However, the Sales Tax Authorities found that the petitioner purchased gold from sarafs in his name and sold finished ornaments, thus transferring property in gold to customers. Consequently, the petitioner was liable to pay sales tax on the value of the ornaments. The court referenced several precedents, including *State of Madras v. Gannon Dunkerley & Co.*, *Sundaram Motors (Private) Ltd. v. State of Madras*, *Saraswati Printing Press v. Commissioner of Sales Tax*, and *Indralaya Ltd. v. Additional Commissioner, Commercial Taxes*, to affirm that the sale of finished products, including the gold in ornaments, constituted a taxable event.

2. Assessment Method and Its Reasonableness:
The Sales Tax Officer initially assessed the petitioner based on the value of gold purchased. The Assistant Commissioner later enhanced this by adding 10% to the value of gold to determine the value of the ornaments. The court found this method reasonable given the petitioner had not filed any accounts. The court also dismissed the petitioner's argument that the assessment was invalid due to the lack of differentiation between ready-made ornaments and those made to order, as the petitioner was liable for sales tax on both.

3. Timeliness of the Assessment:
The petitioner argued that the assessments were barred by time. The court noted that the assessment process began with a notice in Form XII issued on 29th July 1952, which was within the statutory period. The court referenced *Firm Sheonarayan Matadin v. Sales Tax Officer* to affirm that the assessment proceedings for unregistered dealers commence from the notice in Form XII. The court also discussed the retrospective effect of the 1953 amendment to Section 11(5) of the Act, concluding that the assessment for the third period was timely.

4. Applicability of Registration Status to the Assessment Process:
The court considered whether the petitioner should be treated as a registered dealer, referencing *Hirji Govindji v. Commissioner of Sales Tax*. The court held that the petitioner's registration, following the compounding of the offence of non-registration, related back to the commencement of the Act. Thus, the petitioner was deemed a registered dealer, and the assessment fell under Section 11(4), which has no limitation period for registered dealers.

5. Limitation Period for Assessment:
The court examined whether the limitation period under Section 11(5) applied. It concluded that since the petitioner was to be treated as a registered dealer, Section 11(5) did not apply. The court referenced *Regional Assistant Commissioner of Sales Tax v. Ghanshyamdas* to affirm that there is no limitation period for assessing registered dealers. The court also noted that Section 11-A, which provides for limitation, did not apply to first assessments, as per the decision in *Regional Assistant Commissioner of Sales Tax v. Ghanshyamdas*.

Conclusion:
The court dismissed the petitions, holding that the petitioner was liable for sales tax on the value of the ornaments, the assessment method was reasonable, the assessments were timely, and the petitioner was to be treated as a registered dealer. The petitions were dismissed with costs.

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