COMMISSIONER OF SALES TAX Vs. PREM HOSIERY STORES

JUDGEMENT

(1.) In compliance with the direction of this Court the Additional Judge (Revisions), Sales Tax, Kanpur Range I, Kanpur, had referred the following two questions of law for the opinion of this Court:

(2.) In view of the amendment made in the U.P. Sales Tax Act, this reference was converted into a revision under Sub-section (6-A) of Section 11. It came up for hearing before a learned Judge of this Court who, being of the opinion that there is conflict in two decisions of this Court, viz., Commissioner of Sales Tax v. Mulri Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234 and British India Corporation Ltd. v. Commissioner of Sales Tax (page 47 infra) 1980 UPTC 1078, referred the case to a larger Bench. That is how the revision has come up before us.

(3.) In order to appreciate the controversy involved in the case and the respective submissions made before us, it would be necessary to refer to the facts giving rise to this revision in some detail. M/s. Prem Hosiery Stores, Kanpur, the assessee was a wholesale dealer in cotton hosiery, umbrella cloth, woollen and nylon hosiery. For the assessment year 1971-72 it disclosed its gross turnover at Rs. 7,63,859 and net at Rs. 7,27,462.35. For various reasons the accounts and the disclosed turnover were rejected by the assessing authority. Apart from that on scrutiny of the details of purchases the assessing authority found that the assessee had purchased handloom goods worth Rs. 7,825 but had not paid any tax on sales of the same. On examining the bijaks it found that the assessee had purchased handloom mufflers from outside the State and scarfs from Kanpur Woollen Mills, Kanpur. Excise duty had been charged in the bijaks relating to scarfs but had not been so charged on purchases of mufflers. The assessing authority hence treated scarfs as woollen goods for purposes of charging sales tax on sales of the same and not as mufflers. It was also of the opinion that otherwise also handloom mufflers had not been exempted from tax by any notification. However, following the decision of this Court in Commissioner of Sales Tax v. Verma Hosiery Stores [1972 UPTC 258 it took the view that sales of handloom mufflers were liable to be treated as woollen hosiery. The assessing authority, accordingly, estimated the sales at Rs. 9,00,000.