1963 (3) TMI 32 - HC - VAT and Sales Tax

Summary

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.