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TMI Blog1990 (10) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. The petitioner-company prepares designs for advertisement in newspapers, magazines, periodicals and also undertakes to get blocks manufactured in that behalf from the block-makers. The company was carrying 10,000 copies of brochures to Hindustan Aeronautics Ltd., and the same was checked by the Check-post Officer. The matter was referred to the Intelligence Wing for needful action. The company got printed 10,000 copies of booklets for an amount of Rs. 57,750 from M/s. B.N.K. Press, Madras, and the same had been sold to Hindustan Aeronautics Ltd. for a sum of Rs. 63,000. As such activities involved the element of "purchase" and "sale" by the petitioner-company, the assessing authority issued notice to produce the books of accounts for the previous years, i.e., from 1969-70 to 1974-75. On verification of such books of accounts which were produced, the assessing authority, namely, the Commercial Tax Officer, IV Circle, Bangalore-9, noticed that the company was doing the business of selling printed materials and blocks and bills raised clearly showed that the contract for art and design was distinct from the contract for sale of printed materials and blocks. The assessing autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the present petitions. 5.. The questions formulated in S.T.R.P. No. 23 of 1985 read as follows: "Whether, on the facts and in the circumstances of the case- (a) the petitioner's supply of blocks and printed materials to its advertisers amounted to sales? (b) the petitioner was a dealer under section 2(k) of the Act so as to be liable to tax? and (c) in any case, the assessment was not bad in law because the proceedings to assess commenced after the expiry of the statutory period of five years from the close of the year under issue? 6.. It is convenient to take up question (b) for decision first. 7.. Under section 2(k) of the Act a "dealer" is defined to include: "any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes- (i) an industrial, commercial or trading undertaking of the Government of Karnataka, the Central Government, a State Government of any State other than the State of Karnataka, a local authority, company, a Hindu undivided family, an Aliyasanthana family, a firm, a socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cote art paper in two colours throughout containing 8 pages. As per the quotation offered by the petitioner therein, namely, Dattaram Advertising Private Ltd., the printing charge was Rs. 2,950 and Rs. 4,250 for 1,000/2,000 copies, respectively subject to escalation of the supply price if market fluctuation of stocks of paper and other materials came about. After the quotation was accepted by the customer client, it placed orders on printer, M/s. B.N.K. Press Private Limited, Madras, and secured the same at a net cost of Rs. 2,845.70. But from M/s. New Government Electric Factory Limited, it realised a sum of Rs. 3,200 which included their original quotation of Rs. 2,950 for 1,000 booklets plus Central sales tax at Rs. 250.75. In fact, the last mentioned document at page 45 of the Paper Book itself indicates that the transaction between the petitioner and the New Government Electric Factory was considered to be an inter-State sale and tax thereon was charged and collected from the customer. Having regard to these undisputed facts which appeared to be more or less the same in the other petitions, the question is, whether the work carried out in the relevant assessment years was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts the parties had clearly stipulated separately for the production cost, the language version and the supply of prints, no argument could arise about their severability." In other words, if the contract was such which could not be separated into a pure works contract and supply of incidental material, then the resultant activity of the advertising agency would be a sale in favour of the customer. As we have set out the facts, what attracts tax is the sale of printed material and blocks made for purpose of printing the contents of the printed material. It was, however, argued with the assistance of some other decisions of the High Court of Allahabad and the High Court of Madras that the activities of advertising agency would not constitute sale exigible to sales tax. We must with utmost respect to the learned Judges of those High Courts in those cases state that those cases were decided on the facts placed before them and in the light of the provisions contained in the respective sales tax laws of those States and we personally feel they have no relevance to the facts of the cases we are dealing with. 13.. It was pointed out by Mr. Kumar for King and Partridge that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinction is not there in law, the definition of the term "dealer" takes care of it. Therefore, the activities of even a commission agency on behalf of the principal are liable to tax as the turnover of the commission agent himself. Therefore, the petitioner is liable to pay the tax. In the result, we must answer the question against the petitioner and hold that under section 12-A of the Act, the escaped turnover could be brought to tax within the specified period. 14.. What remains now is the question of limitation raised in S.T.R.P. No. 23 of 1985. 15.. As a rule, proceedings for escaped assessment or reassessment, as the case may be, commence with the notice required to be issued under section 12-A(1). In the instant case, the notice was issued for the purpose of assessment on October 18, 1975, that would be some six months after the end of the previous assessment year, i.e., March 31, 1975. Therefore, the case would clearly be barred by time and it would be beyond five years provided for in the section itself. However, Mr. H.L. Dattu, learned High Court Government Pleader for the Revenue, strenuously contended that as far back as February, 1974, notice was issued to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not contravene the provisions of article 14 of the Constitution inasmuch as the registered dealer and the unregistered dealer belong to different classes." 17.. Though what has been said above in the context of article 14 of the Constitution, we must not fail to notice in the scheme of the Karnataka Act, section 12(1) deals with the returns required to be filed by the registered dealers and it is only when they fail to file such returns that under sub-section (3) thereof, a notice is required to be issued. That notice cannot be equated with the notice which is issued under section 12-A(1) to bring to tax the turnover which has escaped assessment or which has been underassessed if assessed or which has been subjected to a lesser rate of tax than what really must have been charged or in case of deduction permitted which in law ought not to have been permitted. Therefore, when a specific provision is made following the earlier provision, the provision subsequently made must lead us to read the intention of the Legislature that they were aware of the provision made in the earlier section and as against that provided under section 12-A to cover the situations mentioned therein oth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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