UNITED MOTOR WORKS MADRAS Vs. STATE OF MADRAS

JUDGEMENT

(1.) THIS matter relates to the year 1957-58. The assessee is the Petitioner. He was originally assessed by an order dated December 15, 1958 on a turnover of Rs. 1,45,264. 78 P. But by a subsequent Order dated March 11, 1963 the turnover was revised and enhanced to Rs. 2,05,44064 P. on the ground that the deduction allowed to an extent of 30 per cent for labour charges was erroneous. While so revising, the Joint Commercial Tax Officer, Triplicane Division, subjected a part of the turnover to tax at a certain rate for a part of the period and the rest of the turnover at a higher rate for the remaining period. While dismissing the assessee's appeal against that order, the Appellate Assistant Commissioner further enhanced the rate, apparently on the view that a lower rate had been applied. The Tribunal declined to interfere and dismissed the further appeal filed by the assessee.

(2.) IT seems to us that the Tribunal was correct in its view that the turnover consisted of sales and did not relate to works contracts. The assessee made bus bodies to order with reference to certain specifications stipulated for, fitted the same to chassis supplied by the customer and supplied the motor vehicles for an agreed consideration. We have been taken through the terms of the contract which have to be spelt out from the correspondence including the invoices. It is clear from them that there is no element of work and labour. The understanding between the parties was that the assessee should supply a finished article as such though it should accord to certain specifications agreed upon and the same supplied to the customer fore certain consideration. The transaction thus seems to answer all the elements of sale of goods. The property in the materials which went to make up the bus-body passed to the customer only on delivery of the bus-body on payment therefore. It is impossible to gather any intention from the terms of the contract that the parties understood the transaction to be purely of work and labour.

(3.) IT is next urged that inasmuch as the order of the Appellate Assistant commissioner was made more than five years next succeeding the year 1957-58, it was, therefore, out of time. Though the Appellate Assistant Commissioner would appear to have acted under section 16 of the Madras General Sales Tax Act, 1959, by the time he made his order, Madras Act 10 of 1963 had come into force. The effect of this amendment was to substitute Section 61 by entirely a new section. The effect of the substituted section is to apply to pending proceedings the provisions of the 1939 Act. That is explicit from the terms of the substituted section. That being the case, it is not section 16 of Madras General Sales Tax Act 1959, but Rule 17 of the Madras General Sales Tax Rules, 1939 that can properly apply to and cover the case on hand. That Rule by Sub-rule (3-A) enables the appellate Authority to exercise the same powers as the original authority had in respect of reopening of assessments and applying a higher rate as having escaped assessment. The period within which this power can be exercised has been specified, namely, at any time within a period of five years next succeeding that to which the tax relates. It follows that the order of the Appellate Assistant commissioner dated October 18, 1963 was made beyond the period of five years computed from 1957-58. That means, the order of the Appellate Assistant commissioner has to be set aside.