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TMI Blog1971 (7) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... came up whether Sivakasi Matches Exporting Company, Sivakasi, were entitled to registration under the Income-tax Act and in that action the Supreme Court perused the agreement between the Sivakasi Matches Exporting Company and the petitioner and other documents and found that the exporting company was entitled to a commission on the entire production of the matches by the petitionerfactory, whether sales were effected through that firm or not, and an extra commission of 1/2 anna per gross on the sales effected through the exporting firm. I have only referred to this to show that the exporting company had recognition in the eye of law as an independent legal entity. For the assessment year 1961-62, the Commercial Tax Officer, Ramanathapuram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees for the following reasons: 1.. The conditions laid down in rule 26(6)(a) of the Madras General Sale Tax Rules were not observed. 2.. The alleged agents independently entered into contract with upcountry buyers for the supply of safety-matches and looked to the manufacturers for goods. The goods so produced were utilised to fulfil the forward contracts entered into. 3.. There has been no written contract between the alleged principals and the alleged commission agents. 4.. Sales were effected in the course of inter-State transactions by the Sivakasi Matches Exporting Company, and the tax due thereon has been paid. The provisions of the Central Sales Tax Act or the Rules framed thereunder do not recognise any commission trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which the petitioner as manufacturer entrusted the goods to the marketing company as its commission agent but he would state that as the reopening is being sought on the foot that there was a deemed sale of the products by the manufacturing concern to its commission agent that by itself is sufficient to indicate that the commission agent might not have acted strictly in accordance with the prescriptions in explanation (4) to section 2(n) of the Act. It is, no doubt, by now well-settled that the power to reopen a closed assessment under the Act can be undertaken by the prescribed authority for any reason. The field for the exercise of such power is wide enough; but it is circumscribed by one important and singular fact, namely, that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y recognised and accepted the character of such inter-State sales as if done by the commission agent, exemption was granted under the Madras General Sales Tax Act. When this order is sought to be upset on information or otherwise, the authority which assumed jurisdiction under section 16 failed to give any reason for reopening such a closed assessment based on scrutiny of all available material by the first original authority. Excepting for the statement that the exporting company independently entered into contracts with upcountry buyers, it is not even stated as to how and wherefrom this information about the contracts were obtained or what was the price at which the commission agent sold these goods to the up-country buyers. From the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a non obstante clause, a fiction is created whereby two independent sales or purchases are assumed in cases where the goods are transferred from a principal to his selling agent provided the agent sold the goods at one rate and passed the sale proceeds to his principal at another rate. It is not even suggested in the notice that such was the situation and that was the reason for reopening the assessment in question. I am not satisfied that either on record which I have perused or in the text of the impugned notice which is challenged, there is any material which could be characterised as a reason for the exercise of the power under section 16 of the Act. Whatever may be the wide range of such power, yet it must be exercised only if ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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