AMAR HOSIERY WORKS Vs. STATE OF PUNJAB

JUDGEMENT

(1.) Facts giving rise to this petition may briefly be stated as under: Messrs Amar Hosiery Works (Regd.), Ludhiana (hereinafter referred to as the petitioner) carry on the business of the manufacture of the hosiery goods. It is registered as a dealer under the Punjab General Sales Tax Act (hereinafter referred to as the Punjab Act). The petitioner has a branch at Delhi, which, of course, is registered under the Delhi Sales Tax Act (hereinafter referred to as the Delhi Act). For the purposes of manufacture of the goods, the petitioner purchased woollen yarn and other raw material, which are specified in the certificate of registration under the Punjab Act. Some of the goods manufactured from the raw material so purchased were sold in the State of Punjab and the petitioner was assessed to pay the sales tax on the same and there is no dispute about that. The remaining manufactured goods were sent to the petitioner's branch at Delhi and were sold there, and, it is stated that for such sales in Delhi, the petitioner's branch was assessed to the Delhi sales tax. Under the Punjab Act, return was filed by the petitioner for the year 1960-61 and on 20th of January, 1962, the Assessing Authority passed an assessment order. The petitioner brought it to the notice of the Assessing Authority that out of the manufactured goods, the petitioner had despatched to its branch at Delhi goods worth Rs. 1,09,130-74 nP. during the assessmnent year. After allowing the deductions of the amount already paid by him, the assessment order directed the petitioner to pay Rs. 8-81 nP., which amount was duly deposited. This order was passed by Mr. Vidya Parkash, Assessing Authority, Ludhiana. Subsequently, on 17th of August, 1962, Mr. A.L. Bhatnagar, who succeeded Mr. Vidya Parkash as the Assessing Authority, sent a notice (annexure C) to the petitioner to the following effect:Whereas, in consequence (of) definite information in my possession, (I) have reason (to) believe that turnover of your business assessable to sales tax for the year ending the 31st of March, 1961, has escaped levy of the appropriate fee, I, therefore, propose to reassess the said turnover that has escaped levy of appropriate (fee). I hereby require you to show cause on 31st August, 1962, at 7.00 a.m. days of service of this notice on you why the contemplated action should not be taken in your case.

(2.) It may be mentioned here that the words reproduced by me above in brackets are not there in the original notice but should be there, and the words underlined by me should have been scored out, to make sense. This is only an indication of the slipshod manner in which the work is apparently being done. Anyway, the petitioner appeared before the Assessing Authority and vehemently submitted that there was no other information with the Assessing Authority that was not before that Authority at the time of the first assessment and that no part of the turnover of the business had escaped the levy of tax and no action could be taken under Section 11-A of the Punjab Act. However, the Assessing Authority repelled this contention and this is what is stated by him :... whereas in the case before me, the transfer of goods to the Delhi branch have escaped assessment....In the instant case...the Assessing Authority (Shri Vidya Parkash) did not even discuss the item of transfer of goods to Delhi branch by his dealer while framing assessment. It completely escaped assessment as he never said in his assessment order that such transfer by the dealer to his Delhi branch had taken place but were not to be taxed. Had he made this mention, the question of reassessment at this stage would have been taken up suo motu by the Commissioner under Section 21 of the Act...but a reference to the assessment order passed by Shri Vidya Parkash...would reveal that he has neither taken into account the branch sales made by this dealer, nor the dealer included this huge amount in his gross turnover at the time of filing his four quarterly returns for 1960-61. The Assessing Authority has also not included this amount in the gross turnover and allowed its deduction as transfer of goods to its branch at Delhi nor he has specifically stated in his assessment order whether he considered the branch sales as tax-free or he proposed to exempt the branch sales as such. He only made a passing reference to it while justifying the fall in sales of the dealer....This clearly shows that the huge amount of Rs. 1,09,130-74 nP. on account of sales of manufactured goods made to Delhi branch has definitely escaped assessment....I, therefore, hold that I can reopen the case under Section 11-A of the Punjab General Sales Tax Act, 1948, and this is a definite information which has come in my possession subsequently.

(3.) He then considered the second proviso to Section 5(2)(a)(ii) of the Act and observed as follows :In the instant case the dealer purchased goods on the strength of his registration certificate, manufactured hosiery goods from it and instead of making sale thereof whether in Punjab or elsewhere he transferred the goods to his branch at Delhi and thereby infringed the specific condition of sale. The transfer of goods by a head office to its branch does not constitute a sale.