Directory notice period and nil sales turnover do not defeat dealer status or purchase-tax liability under sales tax law.

Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959 states that show-cause notice under section 18(5) should ordinarily allow at least 15 days, but the period is directory rather than mandatory; a shorter notice does not by itself invalidate the notice or assessment unless prejudice is shown. The commentary also explains that a person may still be a dealer under section 2(d) of the Madhya Pradesh General Sales Tax Act, 1958 where business involves buying goods for an integrated profit-oriented activity, and nil sales turnover does not prevent purchase-tax liability where taxable goods are bought in the course of business under section 7.

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Issues: (i) Whether a notice in Form XVI issued under the assessment provisions was invalid because it allowed less than 15 days to the assessee under Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959. (ii) Whether a person whose turnover of sales was nil during the assessment period could nevertheless be a dealer and be liable to purchase tax on goods purchased in the course of business under the Madhya Pradesh General Sales Tax Act, 1958.

Issue (i): Whether a notice in Form XVI issued under the assessment provisions was invalid because it allowed less than 15 days to the assessee under Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959.

Analysis: Rule 33 provided that ordinarily not less than 15 days' time should be given to show cause on a notice under section 18(5) of the Madhya Pradesh General Sales Tax Act, 1958. The use of the word "ordinarily" showed that the period was not mandatory in an absolute sense. A notice giving less than 15 days did not by itself invalidate either the notice or the assessment proceeding based on it, unless prejudice was shown.

Conclusion: The notice was not invalid merely because it afforded less than 15 days, and the assessment based on it was valid.

Issue (ii): Whether a person whose turnover of sales was nil during the assessment period could nevertheless be a dealer and be liable to purchase tax on goods purchased in the course of business under the Madhya Pradesh General Sales Tax Act, 1958.

Analysis: The definition of "dealer" in section 2(d) of the Madhya Pradesh General Sales Tax Act, 1958 included a person carrying on the business of buying, selling, supplying or distributing goods. A business of buying could exist where goods were purchased in the course of business for use in the integrated activity of buying and disposal with a view to profit, including use in execution of contracts. Section 2(t) defined turnover by reference to sale prices and did not govern purchase-tax liability. Liability under section 7 arose where taxable goods were purchased in the course of business in circumstances attracting purchase tax, and nil sales turnover did not negate dealer status.

Conclusion: A person could be a dealer and incur purchase-tax liability even though his sales turnover for the period was nil; the assessee was liable to purchase tax.

Final Conclusion: The reference was answered by rejecting the challenge to the notice and by upholding the levy of purchase tax on the assessee.

Ratio Decidendi: A notice period described as ordinarily sufficient is directory rather than mandatory, and a person who purchases goods in the course of business for use in an integrated profit-oriented activity may be a dealer for purchase-tax purposes even if his sales turnover for the period is nil.

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