Case: Ganesh Prasad Dixit Vs. Commissioner Of Sales Tax, Madhya Pradesh

selling and supplying the same commodity. Mere buying for personal consumption, i. e., without a profit motive will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer; the definition merely requires that the buying of the commodity mentioned in Rule 5 (2) must be in the course of business, i. e., must be for sale or use with a view to make profit out of the integrated activity of buying and disposal. The commodity may itself be converted into another saleable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable commodity."This Court agreed with the view expressed in L. M. S. Sadak Thamby and Co. v. The State of Madras, (1963) 14 STC 753 (Mad) in which a similar question was decided by the High Court of Madras. In that case the assessee had purchased tanning bark and had consumed it in tanning raw hides. The Madras High Court held that the buying of goods was in the course of business since it was associated with the business of tanning of hides carried on with a profit-making motive. These decisions support the contention of the State that price paid for goods bought for consumption in manufacturing an article for sale is exigible to purchase-tax even if the goods purchased are either destroyed or transformed into another species of goods.7. Counsel for the appellants urged that in the cases of H. Abdul Bakshi and Bros., 15 STC 644 = (AIR 1965 SC 531 ) and L. M. S. Sadak Thamby and Company, (1963) 14 STC 753 (Mad) the assessees were carrying on the business of selling goods manufactured by them and for the purpose of manufacturing those goods certain other goods were purchased and consumed in the process of manufacture, but here the goods are not consumed in producing another commodity for sale and on that account the two cases are distinguishable. The answer to that argument must be sought in the terms of Section 7. The phraseology used in that Section is somewhat involved, but the meaning of the Section is fairly plain. Where no sales tax is payable under Section 6 on the sale, price of the goods, purchase-tax is payable by a dealer who buys taxable goods in the course of his business, and (1) either consumes such goods in the manufacture of other goods for sale, or (2) consumes such goods otherwise; or (3) disposes of such goods in any manner other than by way of sale in the State, or (4) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. The assessees are registered as dealers and they have purchased building materials in the course of their business: the building materials are taxable under the Act, and the appellants have consumed the materials otherwise than in the manufacture of goods for sale and for a profit motive. On the plain words of Sec. the purchase price is taxable.8. Mr. Chagla for the appellants urged that the expression "or otherwise" is intended to denote a conjunctive introducing a specific alternative to the words "for sale" immediately preceding. The clause in which it occurs means, says Mr. Chagla, that by S. 7 the price paid for buying goods consumed in the manufacture of other goods intended to be sold or otherwise disposed of, alone is taxable.We do not think that that is a reasonable interpretation of the expression "either consumes such goods in the manufacture of other goods for sale or other wise". It is intended by the Legislature that consumption of goods renders the price paid for their purchase taxable, if the goods are used in the manufacture of other goods for sale or if the goods are consumed otherwise.9. The decision in Versova Koli Sahakari Vahatuk Sangh Ltd. v. The State of Maharashtra, (1968) 22 STC 116 (Bom) on which reliance was placed by Mr. Chagla has, in our judgment, no application. In that case a society registered under the Bombay Co-operative Societies Act, 1925, carried on the business of transporting fish belonging to its members from fishing centres to the markets and vice versa. For preserving fish in the course of transport, the society used to purchase ice, and the members, whose fish was transported, were charged for the quantity of ice required in respect of their baskets of fish. The difference between the price paid by the society for ice purchased and the charge made by the society for ice supplied was brought to tax by the Sales Tax Officer under the Bombay Sales Tax Act, 1959. The High Court of Bombay held that the society was not supplying ice with the intention of carrying on business in ice, and on that account the society was not a "dealer" within the definition of that term in Section 2 (11) of the Act in regard to the supply of ice by it to its members. In that case the taxing authority did not seek to impose purchase-tax: he sought to bring to tax the difference between the price paid by the society for purchasing ice and the charges which it made from its members for supplying ice, and the High Court held that in supplying ice the society was not carrying on business in ice, and on that account was not a "dealer."Whether in a particular set of circumstances a person may be said to be carrying on business in a commodity must depend upon the facts of that case and no general test may be applied for determining that question.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]3. Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959, provides that a notice of assessment under Section 18 (5) shall be in Form XVI, and ordinarily it shall give not less than 15 days from the date of the service to the assessee to show cause why he should not be assessed or reassessed to tax and/or to pay penalty.The notices served upon the appellants did not give them a clear period of 15 days to show cause. But we are unable to hold on that account that the notices and the assessments were invalid. We agree with the High Court that the rule is not intended to be "either invariable or rigid", and unless prejudice has resulted to the tax-payer the proceedings are not liable to be set aside".It is not even suggested that because of the insufficiency of time the appellants were unable to submit their explanation for failure to make their returns ofBut the terms of Rule 33 of the Madhya Pradesh General Sales Tax Rules are plainly not mandatory. The answer given by the High Court on the first question must bedo not think that that is a reasonable interpretation of the expression "either consumes such goods in the manufacture of other goods for sale or other wise". It is intended by the Legislature that consumption of goods renders the price paid for their purchase taxable, if the goods are used in the manufacture of other goods for sale or if the goods are consumed otherwise.