Broad dealer definition and taxable sale principles apply to advertising agency supplies, but escaped assessment proceedings were time-barred.

A broad definition of "dealer" under the Karnataka Sales Tax Act covered an advertising agency that procured and supplied printed materials and blocks in its own name, so the petitioner was treated as a dealer. The supply of those blocks and printed materials was regarded as a taxable sale because the agency placed orders directly with printers and block-makers, had no privity between customer and printer, and transferred the finished goods after acquiring them. Escaped-assessment proceedings were held time-barred because reassessment commenced only when the show-cause notice was issued after the assessment year ended; a prior notice seeking books was merely investigative and did not start limitation.

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Issues: (i) whether the petitioner was a dealer under the Karnataka Sales Tax Act, 1957; (ii) whether supply of blocks and printed materials by the advertising agency amounted to sales; and (iii) whether proceedings for escaped assessment were barred by limitation.

Issue (i): whether the petitioner was a dealer under the Karnataka Sales Tax Act, 1957

Analysis: The definition of dealer was of wide amplitude and included not only buying and selling, but also supplying or distributing goods for consideration. The petitioner's business of procuring and supplying printed materials and blocks brought it within the inclusive definition.

Conclusion: The petitioner was a dealer.

Issue (ii): whether supply of blocks and printed materials by the advertising agency amounted to sales

Analysis: The contracts showed that the petitioner placed orders with printers and block-makers in its own right, there was no privity between the customer and the printer, and the petitioner transferred the end-product to the customer only after acquiring it. The transaction was treated as severable from a pure works arrangement and the intermediary character of a commission agent was rejected on the facts.

Conclusion: The supply of blocks and printed materials amounted to sales exigible to tax.

Issue (iii): whether proceedings for escaped assessment were barred by limitation

Analysis: Initiation of proceedings under section 12-A(1) occurred only when the show-cause notice was issued after the close of the assessment year. A prior notice for production of books was only investigative and did not commence reassessment proceedings. The specific machinery under section 12-A could not be equated with the general return provisions under section 12(1).

Conclusion: The proceedings for escaped assessment were barred by limitation.

Final Conclusion: The merits were decided against the assessee, but the escaped-assessment proceedings in the lead matter failed for want of limitation, while the connected matters did not survive on that ground.

Ratio Decidendi: Under a broad statutory definition, an intermediary who procures goods in its own name and transfers the end-product to the customer effects a taxable sale, and a mere investigatory notice does not commence escaped-assessment proceedings.

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