GANESH PRASAD DIXIT versus COMMISSIONER OF SALES TAX, MADHYA PRADESH

Citation: [1969] 3 S.C.R. 490 · Decided: 03-02-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

GANESH PRASAD DIXIT 
ll. 
COMMISSIONER OF SALES TAX, MADHYA PRADESH 
February 3, 1969 
[J. C. SH;\11, V. R.AMASWAMI AND A. N. GROVER, JJ.] 
Madhya Pradesh General Sales Tax A.ct (2 of 1959), ss. 2(d) 7, 18(5) 
and Madhya Pradesh General Sales Tax Rules, 1959, r. 33-Notice for 
best judgment assessment-Time given to show cause less than 15 day~­
No prejudice to tax-payer-I/ proceedings liable to be set aside-Purchasu 
of building material-Material not resold but used in construction--
Building contractor if dealer-Purchase price of building maJerial ii liable 
to purchase-tax. 
The appellants were a firm of building contractors and were registered 
as dealers under the Madhya Pradesh General Sales Tax, 1959. They 
were purchasing building materials, 
which were taxable under the Act, 
and were using them in the course of their business. The Sales-tax Olli· 
·cer served notices upon. them under s. 18(5) calling upon them to show 
cause why best judgment assessment should not be made. The appellants 
did not offer any explanation for their failure to submit returns of their 
turnover, and the Sales~tax Officer assessed their turnover in respect of 
sales as nil and assessed them to purchase-tax under s. 7 in respect of goods 
purchased by them for use in their construction business. Rule 33 of the 
Madhya Pradesh General Sales Tax Rules; 1959, provides tbat a notice 
of assessment under s. 18(5) shall not give, ordinarily, less than 15 days 
from the date of the service to show cause, but, the notices in the present 
case did not give the appellants a clear period of 15 days to show cause. 
On the questions : (I) Whether the notices were invalid, and there-
fore, the assessment, on the basis of those notices was bad in law; 
(2) 
Whether the appellants were dealers; and (3) Whether the impositioo elf 
purchase-tax under s. 7 was in order, 
HELD: (1) The terms of r. 33 are not mandatory. Therefore, unlcos 
prejudice has resulted to the tax-payer the pr<reedings are not liable to be 
set aside. In the instant case it was not tht case of the appellants that 
because of the insufficiency of time they We'·• unable to submit their Cl· 
planation. Hence, the notice and assessmeu. could not be held to be in-
valid. [492 B-F; 493 BJ 
~ 
Ml s. Kajorfrnal Kalyanmal v. Commissioner of Income-tax, U.P. 3 
I.T.C: 451 and lamna Dhar Potdar v. C.l.T., Punjab, 3 I.T.R. 112, distin· 
guished. 
(2) Whether in a particular set of circumstances a person may be said 
to be a dealer carrying on business in a commodity must depend upon the 
facts of that case and no general test may be applied for determining the 
question. ·Merely because the turnover of the appellants in respect of 
sales was nil they did not cease to be dealers. A person, to be a dealer 
within the meaning of the Act, need not both purchase and sell goods be-
cause, a person who carries on the business of buying is, by the definition 
of the term in s. 2(d), a dealer. 
[4<13 H; 496 Fl 
State of A..P. v. H. Abdul Bakshi, 15 S.T.C. 644 (S.C.) followed. 
c 
D 
F 
G 
A 
B 
(J 
D 
f 
G 
H 
GANESH PRASAD v. c.s.T. (Shah, I.) 
491 
LM.S. Sadak Thamby & Co. v. State of Madras, 
14 S.T.C. 753, 
approved. 
(3) By using. the expre!'sion 
'either 
consumers such goods in the 
manufacture of the goods for sale or otherwi.se' in s. 7, tho Legislature in-
tended that consumption of goods renders the price paid for their purchase 
taxable, if th~ goods are used in the manufacture of the goods for sale 
or if the gootb are consurned otherwise. Therefore, under s. 7, purchase.. 
tax is payable, where no sales-tax is payable under s. 6 on the sale price 
of the goods, by a dealer who buys taxable goods in the course of his 
business, and, (a) either consumes such goods in the manufacture of 
other goods for sale; or (b) consumes such goods otherwise; or (c) di!-
poses of such goods in any manner other than by way of sale in tho 
State; or ( d) despatches them to a place outside tho State except as ~ 
direct result of sale or purchase in the course of inter-State trade or com-
merce. 
In the present case the assessees were registered as dealers, they 
had purchased taxable material in the course elf their business and bad 
consumed the materials otherwise than in the manufacture of goods for 
sale and for a profit motive. Therefore, the purchase price paid by tho 
appellant. was .taxable. 
[495 E--0; 496 A-BJ 
V. K. S. V. Sangh v. State of Maharashtra, 22 S.T.C. 116, not appli-
cable. 
CIVIL A

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