1965 (9) TMI 47 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of notice under the Central Sales Tax Act for escaped turnover assessment.
2. Liability of the petitioner for Central sales tax.
3. Interpretation of the notification specifying taxable turnover for glass bangles.
4. Determination of whether the petitioner is the manufacturer of the glass bangles sold.

Analysis:
1. The petitioner, a partnership firm dealing in glass bangles, was served a notice for escaped turnover assessment under the Central Sales Tax Act. The petitioner challenged the notice's validity, arguing it appeared to be under the U.P. Sales Tax Act. The court held that the notice's purpose is to inform the assessee clearly, and if the recipient understands its intent, the notice is valid. Referring to a Supreme Court case, the court emphasized that the notice's contents should convey its purpose unambiguously. The notice in this case sufficiently indicated its connection to the Central Sales Tax Act assessment, despite mentioning the U.P. Sales Tax Act. Therefore, the court dismissed the petitioner's claim regarding the notice's invalidity.

2. The petitioner contended that they were not liable for Central sales tax under section 8 and section 9 of the Central Sales Tax Act. However, the court deferred this issue for the assessment proceedings before the Sales Tax Officer. The court highlighted that the Sales Tax Officer, as the assessing authority, is best suited to determine the petitioner's liability based on factual evidence presented during the assessment process. Therefore, the court did not delve into the petitioner's liability under the Central Sales Tax Act in this petition.

3. The notification specified that the turnover of glass bangles would be taxed at a single point based on whether they were imported or manufactured in Uttar Pradesh. The petitioner argued that since the glass bangles purchased and sold belonged to the same class, they should not be liable for sales tax. However, the court clarified that the critical factor is whether the petitioner can be considered the manufacturer of the article sold. The court emphasized that the commercial distinction between the purchased and sold articles determines liability for sales tax. It cited precedents and discussed the concept of manufacturing a commercially different article, highlighting that this determination is a question of fact best addressed during assessment proceedings.

4. The crucial issue was whether the glass bangles sold by the petitioner were manufactured by them, impacting their liability for sales tax. The court emphasized that the question of whether the petitioner is the manufacturer of the sold glass bangles should be decided based on factual evidence before the Sales Tax Officer. The court noted that the petitioner's claim regarding the glass bangles' manufacturing status would be appropriately addressed during the assessment proceedings, where evidence can be presented to establish the commercial distinction between the purchased and sold articles. The court dismissed the petitioner's argument that they were not the manufacturer based on the contents of the notice and counter-affidavit, emphasizing that this determination requires a factual assessment.