COMMISSIONER OF SALES TAX Vs. MADHU CHEMICAL WORKS

JUDGEMENT

(1.) By this sales tax revision the Commissioner of Sales Tax, U. P., has raised the following two questions for the decision of this Court:

(2.) In the assessment year 1972-73, S/s. Madhu Chemical Works, Bareilly, was engaged in manufacture and sale of saccharin. Originally under Rule 41(5) the disclosed turnover of the assessee was taxed at 3.5 per cent. Subsequently, proceedings under Section 21 of the U. P. Sales Tax Act (for short "the Act") were initiated against the assessee and the turnover was assessed to tax at 7 per cent. The justification for taking proceedings under Section 21 of the Act, as stated in the reassessment order, is to the following effect:

(3.) From the above, it is evident that the action for reassessment was necessitated as after the original assessment and on reconsideration of the matter the Sales Tax Officer felt that assessee's turnover should have been taxed at 7 per cent as "chemical". This was so, because in manufacturing saccharin the assessee adds soda-bi-carb and the product obtained thereby is a fresh chemical compound which was sold by the assessee. In the original assessment, the turnover of saccharin was taxed as unclassified commodity whereas in the reassessment order it was treated as classified item which at the relevant time was taxable at a higher rate, namely, at 7 per cent.