Escaped assessment and purchase tax liability upheld for grain bought from unregistered dealers and supplied under Levy Orders.

Reassessment was upheld because section 19(1) of the M.P. General Sales Tax Act, 1958 applies to turnover that had escaped assessment and does not permit reopening of the entire assessment. The earlier assessment had not examined the distinct question of purchase tax on goods bought from unregistered dealers, so that omitted liability was treated as escaped assessment. Wheat and juwar purchased from unregistered dealers and supplied to the Food Corporation of India under Levy Orders were held liable to purchase tax, because the supplies were not treated as sales and the goods were disposed of otherwise than by sale. Government letters without notification status could not override the statutory scheme.

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Issues: (i) Whether the assessment could be reopened under section 19(1) of the M.P. General Sales Tax Act, 1958 on the ground of escaped assessment; (ii) Whether wheat and juwar purchased from unregistered dealers and supplied to the Food Corporation of India under the Levy Orders were liable to purchase tax under section 7 of the Act.

Issue (i): Whether the assessment could be reopened under section 19(1) of the M.P. General Sales Tax Act, 1958 on the ground of escaped assessment.

Analysis: Section 19(1) empowers reassessment only in respect of turnover that had escaped assessment and does not authorise a revision of the whole assessment. The earlier assessment had proceeded only on whether the supplies to the Food Corporation of India were sales and had not examined the separate question whether the dealer's purchases from unregistered dealers attracted purchase tax. That omitted matter was treated as escaped assessment rather than a mere change of opinion.

Conclusion: The reassessment under section 19(1) was valid and the escaped turnover could be brought to tax.

Issue (ii): Whether wheat and juwar purchased from unregistered dealers and supplied to the Food Corporation of India under the Levy Orders were liable to purchase tax under section 7 of the Act.

Analysis: Section 7 charges purchase tax where taxable goods are purchased and then disposed of in any manner other than by way of sale. The supplies to the Food Corporation of India were treated as not amounting to sales under the Act. Government letters not issued as notifications under section 12 did not bind the assessing authority and could not exempt the transaction from the statutory scheme. Since the goods were purchased from unregistered dealers and then disposed of otherwise than by way of sale, the statutory conditions for purchase tax were satisfied.

Conclusion: The transactions were exigible to purchase tax under section 7 and the dealer was liable to pay purchase tax.

Final Conclusion: The reference was answered in favour of the department, upholding reassessment of escaped turnover and liability to purchase tax on the purchase price of the grain.

Ratio Decidendi: Where a dealer's turnover was not examined on the distinct question of purchase tax liability, the omitted liability constituted escaped assessment, and goods purchased from unregistered dealers and disposed of otherwise than by sale attracted purchase tax under the charging provision.

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