1980 (7) TMI 241 - HC - VAT and Sales Tax

Summary

Issues:
1. Reopening of assessment under section 19(1) of the M.P. General Sales Tax Act.
2. Exigibility of purchase tax on wheat and juwar purchased from unregistered dealers and supplied to the Food Corporation of India.

Analysis:

Issue 1: Reopening of assessment under section 19(1) of the M.P. General Sales Tax Act
The case involved a dealer who supplied wheat and juwar to the Food Corporation of India under Levy Orders. Initially, the sales were not treated as taxable, and the turnover was deducted from the taxable turnover of the dealer. However, the assessing officer sought to reassess the turnover under section 19(1) of the Act, contending that the dealer was liable to purchase tax on the purchase price of the grain supplied. The dealer argued that the purchases were not taxable due to various reasons, including the compulsory acquisition of foodgrain and communication from the Commissioner of Sales Tax. The court held that the assessing officer could reassess the escaped turnover under section 19(1) as it constituted "escaped assessment," not a mere change of opinion.

Issue 2: Exigibility of purchase tax on grain supplied to Food Corporation of India
The dealer contended that the supplies made to the Food Corporation of India did not constitute sales and, therefore, were not liable to purchase tax under section 7 of the Sales Tax Act. The court analyzed the nature of the transaction and the applicability of section 7. It was established that the supplies made to the Food Corporation of India were not considered sales under the Sales Tax Act, making section 7 applicable. The court emphasized that the dealer would be liable to pay purchase tax on the purchase price of the grain supplied, as the goods were disposed of in a manner other than by way of sale. The court also highlighted that government instructions exempting tax on such supplies were not binding on the assessing authority.

In conclusion, the court answered both issues in favor of the department, holding that the dealer was liable to pay purchase tax under the M.P. General Sales Tax Act. The judgment clarified the distinction between sales tax and purchase tax, emphasizing the taxability of goods disposed of in a manner not constituting a sale under the relevant tax laws.