JEEWANLAL 1929 LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) FOR the assessment year 1969-70, the assessee returned a total and taxable turnover of Rs. 1, 49, 55, 860.54 and Rs. 66, 22, 883.58 respectively. In the return, it had claimed exemption, among orders, of a turnover of Rs. 3, 20, 600 representing sale of old assets as not liable to tax on the ground that they are not dealers in such assets. This was accepted and after making a small addition, taxable turnover was determined at Rs. 66, 41, 195.64 by an assessment order dated 15th March, 1971. Subsequently to this order, the Supreme Court in its judgment in State of Tamil Nadu v. Burmah Shell dated 10th October, 1972, held that the sale of such scraps by a dealer should be treated as transactions which are incidental or ancillary to the trade in spite of the fact that there was no profit-motive or that the dealer was not a dealer in such assets and that the turnover relating to the same is liable to be included in the taxable turnover.

(2.) IN the light of the Supreme Court judgment, on the ground that such sales of old assets were to be included in the taxable turnover, notice under section 55 of the Tamil Nadu General Sales Tax Act, 1959, was issued and served on the dealer on 4th January, 1974, proposing to assess the sales turnover of Rs. 3, 20, 600 and called for objections to the proposed rectification. The assessee submitted their objections to the proposal, and after hearing the objections, on the ground that in view of the Supreme Court judgment the turnover is taxable, the assessing officer included the sum in the taxable turnover by an order dated 6th March, 1974. This order was confirmed in appeal by the Appellate Assistant Commissioner by his order dated 18th June, 1974. The assessee preferred a further appeal to the Tribunal. When the appeal against the rectification order was pending, on 11th March, 1975, the assessing officer issued a notice under section 16 of the Act on the ground that the turnover relating to sale of old assets has escaped assessment to tax and proposing to include that turnover and the assessee was called upon to submit its objection, if any, to such proposal. When this proceeding under section 16 was pending, the Tribunal by its order dated 24th June, 1975, set aside the order of rectification made under section 55 on the ground that the turnover relating to sale of old assets was excluded from assessment accepting the claim of the assessee and that it cannot be construed as a case of any error apparent on the face of the record, which alone can clothe the jurisdiction on the assessing officer to invoke the provisions of section 55 and correct the assessment. Thereafter, the reassessment proceedings were taken up and by an order dated 18th November, 1975, holding that the turnover relating to sale of old assets has escaped assessment, and relying on the judgment of the Supreme Court in State of Tamil Nadu v. Burmah Shell made a reassessment order including the turnover as proposed.

(3.) THREE grounds are raised by the learned counsel for the assessee. The first contention was that the reassessment order made on 18th November, 1975, was beyond the period of limitation prescribed under section 16 and that therefore it was without jurisdiction. According to the learned counsel the noticed dated 11th March, 1975, was issued at a time when the rectification order dated 6th March, 1974, rectifying and including the sales turnover relating to sale of old assets in the taxable turnover was in force and effective and that therefore the notice itself was invalid and had no force. The subsequent notice dated 24th October, 1975, though issued after the Tribunal had allowed the appeal in the rectification proceedings, it beyond the period of five years from the end of the assessment year to which the assessment relates and that, therefore, that notice could not clothe the jurisdiction to the officer. The assessment order dated 18th November, 1975, also was beyond the period of five years. We are unable to accept this argument for more than one reason.