Inter-unit transfers are not taxable sales where no property passes between distinct legal persons; reassessment limitation turns on effective issuance.

Transfer of furniture between units of the same wholly owned corporation was not a taxable sale because a sale under the Kerala General Sales Tax Act requires transfer of property between two distinct persons for consideration; separate registration did not create separate legal personalities, so the turnover was wrongly assessed. On limitation for reopening under Section 35, the operative question was whether the reassessment order had been made effective within the prescribed period, since service could follow later; the record was not examined on that point, so the limitation issue was left for fresh consideration by the Tribunal.

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Issues: (i) Whether transfer of furniture by one unit of a wholly owned corporation to its other units constituted a taxable sale under the Kerala General Sales Tax Act, 1963; (ii) Whether the order reopening assessment under Section 35 was barred by limitation because it was communicated after expiry of the prescribed period.

Issue (i): Whether transfer of furniture by one unit of a wholly owned corporation to its other units constituted a taxable sale under the Kerala General Sales Tax Act, 1963.

Analysis: A sale under the Act contemplates transfer of property in goods by one person to another for consideration. The units in question were only parts of the same legal entity and did not have separate juristic existence merely because they were separately registered. Registration enabled tax collection but did not create independent personalities. Since there was no transfer between two distinct persons, there was no sale.

Conclusion: The transfer of furniture between the units was not taxable and the turnover representing such supplies was wrongly brought to assessment.

Issue (ii): Whether the order reopening assessment under Section 35 was barred by limitation because it was communicated after expiry of the prescribed period.

Analysis: The prescribed period was held to govern the effective making of the reassessment order. An order affecting rights is not complete unless it is issued or otherwise made effective within time, though actual service may follow later. The Tribunal had not examined whether the order had been issued from the office within the statutory period, and that factual aspect required scrutiny of the record.

Conclusion: The limitation question was left open for fresh examination by the Tribunal on the basis of the records.

Final Conclusion: The assessee succeeded on the taxability of inter-unit transfers, while the limitation issue relating to the excise-duty-related turnover was remitted for fresh decision.

Ratio Decidendi: A transfer of goods between units of the same legal entity is not a sale unless property passes between two distinct persons, and an assessment order affecting rights must be made effective within the prescribed period to avoid the bar of limitation.

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