K.K. Dube, J.
1. The following questions have been referred to us for our decision under Section 44 of the M. P. General Sales Tax Act, 1958 :
(i) Whether, under the facts and circumstances of the cases, they could be reopened under Section 19(1) of the Act ?
(ii) Whether wheat and/or juwar purchased from unregistered dealers and supplied under the Foodgrains Levy Orders to the Food Corporation of India from time to time is exigible to purchase tax under Section 7 of the Act ?
2. The applicant carries on business in grains and is a dealer registered under the M. P. General Sales Tax Act. During the assessment year 1968-69, the dealer purchased wheat and juwar from unregistered dealers and supplied to the Food Corporation of India under the Levy Orders in pursuance of a scheme 'procurement of wheat and/or juwar'. In accordance with the view prevailing at the time of assessment, such sales under the Levy Orders were not treated as sales and the amount of turnover in respect thereof was deducted from the taxable turnover of the dealers. The assessing authority allowed the deduction on the turnover of sales made to the Food Corporation of India. The assessing authority said nothing as to whether or not the dealer was liable to purchase tax under Section 7 of the Sales Tax Act on the purchase price of grain supplied to the Food Corporation of India. Exercising powers under Section 19(1) of the Act, the assessing officer sought to reassess the turnover which had escaped assessment. The dealer was noticed why he should not be assessed to purchase tax on the purchase price of grain bought from the unregistered dealers and supplied to the Food Corporation of India under the Levy Orders. The dealer contended that the purchases were not liable to be taxed as (1) the foodgrain was acquired compulsorily ; (2) sales tax was paid by the Food Corporation of India; and (3) the Commissioner of Sales Tax had clarified, vide his letter dated 17th September, 1968, that no tax was leviable on such transactions. The assessing authority was of the view now that though the supply to the Food Corporation did not constitute 'sale', the dealer would be liable to purchase tax under Section 7(1) of the Act. It was held that the communication from the Commissioner of Sales Tax was not binding on the assessing authority. For the year 1968-69, the petitioner was, therefore, levied purchase tax amounting to Rs. 10,460 on the purchase price amounting to Rs. 5,23,000.
3. The petitioner filed an appeal against the order wherein he contended that the reassessment under Section 19(1) was illegal and unwarranted and that the purchase price of the grain purchased from the unregistered dealers which was supplied to the Food Corporation of India under the Levy Orders was not exigible to purchase tax and that the turnover could not be said to have escaped assessment. The contentions did not prevail before the first appellate authority and a second appeal before the Board of Revenue was preferred. It was contended that Section 19(1) of the Act was provided to meet the cases where the turnover had escaped assessment. When the assessee had been assessed for the first time, the Sales Tax Officer was clearly of the opinion that the sale to the Food Corporation of the grain under the Levy Orders could not be taxed as the transaction was not a 'sale' within the meaning of the Act and, therefore, no such activity was liable to purchase tax and, accordingly, no purchase tax was levied. Subsequently, a change in the opinion of the Sales Tax Officer that the transaction would be exigible to purchase tax did not empower the Sales Tax Officer to reassess the same.
4. Before we proceed to discuss the first question referred, it may be emphasised that the dealer had, in his returns, shown the impugned turnover as supplies made to the Food Corporation of India. The dealer claimed deduction in regard to this turnover on the ground that the supply made to the Food Corporation of India did not constitute 'sale' within the meaning of the M. P. General Sales Tax Act. In New India Sugar Mills Ltd. v. Commissioner of Sales Tax A.I.R. 1963 S.C. 1207 and Andhra Sugars Limited v. State of Andhra Pradesh A.I.R. 1968 S.C. 599, the Supreme Court considering the question whether the sales made under the Sugar Supply Act were sales as could be taxed under the respective Sales Tax Acts held that in such cases there was no consensus and the supplies could not be considered 'sales'. What is important is that both the Sales Tax Officer and the dealer were claiming deduction on the footing that the supplies to the Food Corporation of India under the Procurement and Levy Orders would not be sales as would be exigible to sales tax. It was not the case of the dealer that though they were sales liable to be taxed under the Sales Tax Act, they were exempted under some provision of the Act or even under the Government instructions. Therefore, when the Sales Tax Officer first assessed the dealer he merely considered whether the turnover of supplies to the Food Corporation of India be taxed or not, and relying on the New India Sugar Mitts' case A.I.R. 1963 S.C. 1207 and the Andhra Sugars' case A.I.R. 1968 S.C. 599 came to the conclusion that the supplies to the Food Corporation of India were not sales within the meaning of Sales Tax Act and, therefore, could not be taxed. The question whether the transaction would attract levy of purchase tax was lost sight of.
5. Now, Section 19(1) does not give power to the assessing authority to reopen the case in the sense that he can reconsider the whole assessment or revise his previous assessment. The power given is only to tax the escaped assessment. In Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax A.I.R. 1964 S.C. 766, their Lordships of the Supreme Court laid down that the expression 'escaped assessment' includes that of a turnover which has not been assessed at all, because for one reason or other no assessment proceedings were initiated and therefore no assessment was made in respect thereof. 'Escaped assessment' would, therefore, be not an assessment for correcting a mistake but to tax that part of turnover which did not attract attention earlier at the time of assessment. In the present case, what was considered was whether deduction could be claimed in respect of the turnover of supplies made to the Food Corporation of India under the Procurement and Levy Orders. The sales tax assessment stopped there and, therefore, what had escaped attention of the assessing officer was whether the purchases of grain made by the dealer from unregistered dealers would attract assessment under Section 7 of the Sales Tax Act. We, therefore, think that it is a case of 'escaped assessment' and not a question of change of opinion or any mistake which was tried to be corrected in the assessment order by the Sales Tax Officer. We would, therefore, answer the first question by saying that the Sales Tax Officer could proceed to reassess the escaped assessment under Section 19(1) of the Act. The expression 'to reopen' would convey a revision of the whole assessment which, of course, was not permitted under Section 19.
6. At the time the assessment was made the Government had issued certain letters to various persons indicating that no tax would be charged on sales made to the Food Corporation of India when supplies were made under the Procurement and Levy Orders. These letters had absolutely no binding effect as they were not notifications made under Section 12 of the M. P. General Sales Tax Act. Shri Sahastrabuddhe, the learned counsel for the applicant, fairly stated that at no point it had been the stand of the dealer that the supplies made to the Food Corporation of India under the Levy Orders were, in fact, sales and have wrongly been treated as supplies not falling within the definition of 'sale' under the Sales Tax Act. This is important because if the above supplies were taken as sales, the question of purchase tax would not arise. Also, if they were, in fact, sales and the Government had exempted the tax on such sales, Section 7 would not be attracted and no purchase tax could be charged on the purchase price of the grain supplied. This is clear from Section 7. For the purposes of answering the above question, we have necessarily to take up the position which the assessee had taken before the Sales Tax Officer. It is with reference to the nature of the transaction that it was not 'sale' within the definition of 'sale' that the question has to be answered.
7. The material portion of Section 7 as in force at the relevant time reads as under:
7. (1) Every dealer who in the course of his business purchases any taxable goods...from any other person and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate, at which it would have been leviable on the sale price of such goods under Section 6.
We are not concerned with the proviso and other clauses of this section. The expression 'disposes of such goods in any manner other than by way of sale' is intended to be wide enough to cover the disposal of goods in a variety of ways which do not amount to 'sale' within the definition of the Sale of Goods Act. In the instant case, the supplies made to the Food Corporation of India were not considered to be 'sales' within the definition of the M. P. General Sales Tax Act and, therefore, Section 7 was attracted. We have already stated before that no arguments could be addressed in this case that the transaction, when the grain was supplied to the Food Corporation, was in fact sale and, therefore, liable to sales tax rather than purchase tax. This, Shri Sahastrabuddhe has fairly conceded, had never been the line of argument. The question before us is simply when the transaction supplying grain to the Food Corporation of India was not held to be sale, whether or not Section 7 would be attracted and the dealer would be liable to pay tax on the purchase price of the grain supplied. The answer is clearly that he would be so liable. The grain in question was purchased from unregistered dealers and were disposed of in a manner other than by way of sale. No sales tax on the supply could be levied but the dealer in such goods would be liable to pay purchase tax on the purchase price of the goods supplied. Entry 64 of the Seventh Schedule of the Constitution authorises the State Government to make laws to tax the purchasing activity.
8. Since the instructions issued by the Government could not be held to be notifications under Section 12 of the M. P. General Sales Tax Act the instructions not to levy tax on supplies to the Food Corporation of India could not be held to be binding on the assessing authority. The scheme of purchase tax appears to be where a tax cannot be charged on the sale price of taxable goods, by the help of Section 7 its purchase price could be taxed. In the instant case, the goods had been purchased from unregistered dealers. Therefore, at that point no sales tax could be charged. When the same goods were either consumed by the dealer or disposed of in a manner that it would not strictly amount to 'sale' within the meaning of the Sales Tax Act, no sales tax could be levied at this point. The goods, therefore, though consumed by a registered dealer or had been disposed of to a third person who has eventually consumed them, would remain untaxed. It is here that Section 7 comes in and the purchase price of such goods are taxed in the hands of the dealer.
9. We, therefore, answer the question in favour of the department and hold that Section 7 would be attracted and the dealer would be liable to pay purchase tax under the M. P. General Sales Tax Act. The reference is answered accordingly. There shall be no order as to costs.