T.C. Shrivastava, J.
1. This order governs the disposal of Miscellaneous Petition No. 13 of 1959 also. Both these petitions under Articles 226 and 227 of the Constitution have been filed by the petitioner impugning the assessments by the Sales Tax Authorities. The present case refers to the period 1st June, 1947, to nth October, 1948, and the connected case refers to the period 1st November, 1948, to 31st October, 1949.
2. The undisputed facts in these petitions are these. The petitioner is working as a goldsmith. He sells either ready-made ornaments or ornaments made on the orders of customers after purchasing gold from gold dealers. He sometimes prepares ornaments for customers out of the gold supplied by them and adding some of his own gold, if necessary. The petitioner did not get himself registered as a dealer and the Sales Tax Authorities issued a notice to him on 17th May, 1950, to show cause why he should not be prosecuted under Section 8 of the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter referred to as the Act). He compounded the offence after paying a composition fee. Thereafter, on 20th April, 1951, a notice was issued to him for effecting assessment for the years 1st June, 1947 to 12th November, 1947, 13th November, 1947 to 31st October, 1948, and 1st November, 1948 to 31st October, 1949. As no returns were filed by the petitioner, the Sales Tax Authorities proceeded to assess tax on him on the basis of what is known as 'the best judgment assessment'.
3. Shri R. K. Pandey for the petitioner contends that the business which the petitioner carried on was only of manufacturing ornaments. He used to purchase gold at the instance of the customers, though the gold vendors used to recover the price thereof from him alone. He asserts that he did not make any profit on the gold used in the ornaments and therefore he did not carry on the business of selling gold. As he was only charging the price for his labour in making the ornaments, he is not liable to pay any sales tax.
4. In the order of the Sales Tax Officer passed on 10th October, 1952, the business carried on by the petitioner is described as follows:-
The assessee makes credit purchases from local sarafs, the extract copies of the khatas of whom are attached, and manufactures ornaments for sale to his customers on their orders. Credit purchases, as is evident from the statements of those who sold to the dealer, are made by the assessee in his name. The customers for whom the purchases are said to be made no longer come in the picture of the transaction between the sarafs and the assessee.
Later, the Sales Tax Officer referred to the admission of the petitioner before him that : 'He keeps in stock manufactured ornaments for sale in order to meet the demands of the people in marriage or festival season'. The Assistant Commissioner of Sales Tax also observed similarly:-
It is apparent from the facts as admitted by the appellant himself that he purchased bullion in each year for the manufacture of ornaments in order to comply with the orders placed by his regular and periodical customers.
The Assistant Commissioner referred to the statements of two of the sarafs who sold gold to the appellant. They said that although sometimes the customers also accompanied the petitioner, the responsibility for paying for the bullion was of the petitioner alone. On these facts, both the Sales Tax Officer and the Assistant Commissioner held that the property in the bullion passed to the petitioner when he purchased it from the sarafs and at the time of selling the ornaments, the property in the gold along with the ornaments passed to the customers. The finding of the Sales Tax Authorities thus is that the petitioner was dealing in ornaments, that is, a finished product which he made out of the raw material purchased by himself.
5. Shri R. K. Pandey pointed out that in State of Madras v. Gannon Dunkerley & Co. A.I.R. 1958 S.C. 560, the essential ingredients of a sale of movables have been stated to be (i) an agreement to sell movables for a price, and (ii) property passing pursuant to that agreement. In that case, it was held that in the case of a building contract, the materials supplied by the contractor in erecting the building did not pass to the owner of the building as movables and could not therefore be subjected to sales tax. The decision in this case does not, however, lay down that in the execution of a works contract the sale of movables cannot take place at any time. This decision was considered in Sundaram Motors (Private) Ltd. v. State of Madras A.I.R. 1959 Mad. 33, and it was observed :-
Although the effect of the judgment is to negative the power of the State to tax a works contract as such, there is no impediment in the State levying a tax on the sale of goods properly so called. If therefore a works contract includes sale of goods the levy would be proper. If, on the other hand, the contract is only a works contract with no element of sale of goods it would not be taxable.
6. In Saraswati Printing Press v. Commissioner of Sales Tax  10 S.T.C. 286, it was held that a printer who supplied stationery for executing the printing work given to him by a customer was liable to pay sales tax on the value of the stationery supplied by him, as the contract in such a case was essentially for the sale of the finished goods. In Indralaya Ltd. v. Additional Commissioner, Commercial Taxes  9 S.T.C. 633, it was held that the transaction of the supply of ready-made cloth made by the tailoring department as well as garments made by the assessee on the order of customers from cloth taken from their selling department was a sale of the finished clothes and the establishment was liable to sales tax. Incidentally, in that case it was observed that the fact that the customer approved the cloth made no difference.
7. It is apparent from these decisions that the question whether the petitioner was liable to pay sales tax on the goods sold by him will depend upon the intention which the parties to the sale had with reference to the gold contained in the ornaments. In other words, it has to be seen whether it was the intention of the customer to have the ornaments prepared by the petitioner and to pay him only wages for his labour, or whether he intended to pay for the finished product. On the findings of the Sales Tax Authorities there can be no doubt that in those cases where the petitioner manufactured ornaments out of gold purchased by him from the sarafs, the intention was to sell the finished product and the gold contained in the ornaments was thus also sold along with the ornaments. The petitioner was, therefore, liable to pay sales tax on the value of the ornaments.
8. The contention that the petitioner was not making any profit on the gold which he was using for the ornaments does not help the petitioner. In the case of a manufacturer, who sells goods prepared out of raw materials purchased by him from the market, it cannot be said that he is not liable for the price of the raw materials as he never intended to make any profit on them as such. The transaction has to be considered as a whole and the factors which entered into bringing the finished product in existence cannot be separated.
9. The Sales Tax Officer had assessed the petitioner on the value of the gold which he had purchased from the sarafs. The Assistant Commissioner, however, determined the value of the ornaments by adding 10 per cent, of the value of the gold and thus enhanced the assessment. As the petitioner had filed no accounts, this method of finding out the value of the finished products on the basis of the gold purchased cannot be considered unreasonable. Shri R. K. Pandey concedes that so far as the ornaments which were sold as ready-made ornaments were concerned, the petitioner was liable to pay tax. He, however, contends that as no attempt has been made by the Sales Tax Authorities to separate the value of such ornaments and the ornaments which were prepared on the orders of customers, the whole assessment is bad. As we have stated, the petitioner was liable for the sales tax on the sale price of ornaments which were prepared at the instance of customers, this point does not arise. What has been done by the Sales Tax Authorities is to ascertain the sale price of the finished products in which the gold purchased by the petitioner must have been used. It was for the petitioner to show that the gold purchased by him was used in a particular manner and in the absence of such proof, the Sales Tax Authorities were entitled to presume that the whole of it was used for preparing ornaments which were sold to customers. Under these circumstances, the assessment of sales tax on the estimated value of the ornaments based on the purchases of gold was correct.
10. In the connected petition (M. P. No. 13 of 1959) an additional argument was raised that the assessment for the year 1948-49 on the basis of the sales in the previous years was incorrect. We find that the petitioner did not go up in appeal against the assessment made by the Sales Tax Officer. If the manner of assessment was wrong, the appellate authority could have corrected it. As the petitioner has not exhausted the remedies which were open to him in law, we do not think that the assessment for 1948-49 can be questioned on that ground.
11. Shri R. K. Pandey next contends that the assessments could not be made as they are barred by time. In this case, three notices were issued to the petitioner. The first notice was issued on 17th May, 1950. This was for showing cause why the dealer should not be held liable to a penalty under Section 24(1) (a) of the Sales Tax Act for not having registered himself as a dealer. This notice has nothing to do with assessment. The dealer compounded the offence by paying Rs. 200 on 4th October, 1950, and he was then registered under Section 8 (5) of the Act on 31st October, 1950.
12. A notice in Form VI was then issued on 20th April, 1951, to him under Section 10 (1) calling for a return. The petitioner did not file a return and then the last notice in Form XII was issued on 29th July, 1952. He submitted a blank return and the Sales Tax Officer then proceeded to assess him under Section 10(4) to the best of his judgment.
13. Shri Pandey contends that the process of assessment did not commence till 20th July, 1952, when the third notice in Form XII was issued. We may observe that a notice in Form VI is issued under Section 10(1) calling for returns from an unregistered dealer only. Such a notice is not issued to a registered dealer, who is under an obligation to file a return suo motu. If the dealer concerned files return, then assessment is made as provided in Section 11 (1). If no return is filed, then the procedure for registered and unregistered dealers is different. Action is taken against a registered dealer under Sub-section (4) and against an unregistered dealer under Sub-section (5). In both cases, a notice in Form XII is necessary. It appears that the notice in Form VI is only for calling returns from unregistered dealers and the process of assessment does not commence against them with that notice. Sub-section (5) provides that after the Commissioner is satisfied about the liability of the unregistered dealer to pay tax, he has to give a notice in Form XII to him to afford a reasonable opportunity to be heard. In Firm Sheonamyan Matadin v. Sales Tax Officer  7 S.T.C. 623, it has been held that for the purpose of the limitation under Section 11 (5), the material date is the notice (Form XII) issued after the Commissioner is satisfied about the necessity for action. We agree that in the case of unregistered dealers, the proceedings for assessment commence from this notice.
14. Such a notice was given to the petitioner on 29th July, 1952. The three assessment periods ended respectively on 12th November, 1947, 31st October, 1948, and 21st October, 1949. If Section 11(5) applies to the case, the assessment has to commence 'within three calendar years from the expiry of the periods'. In Kanhayyalal v. Deputy Commissioner, Sales Tax  9 S.T.C. 503, it was held that the three calendar years have to be calculated from the first of January following the date of expiry of the period of assessment. On this interpretation, the assessment for the first two periods only would be out of time. Shri Pandey, however, contends that the assessment for the third period is also beyond time under Section 11(5) as it stood before the amendment made in 1953.
15. Before the amendment, the Commissioner could make an assessment 'at any time within three calendar years from the commencement of this Act and thereafter within twelve months from the expiry of such period'. The words underlined were omitted in 1953 and this amendment was given retrospective effect from 1st April, 1947. The effect of the amendment was considered by the Full Bench in Kanhayyalal's case,  9 S.T.C. 503 thus :
The liability to pay the tax is created by the charging section, and that liability remains. All that the rule of limitation which is introduced in a taxing statute does is to take away the right of the Department to claim the tax. If the law is at any time amended, then the rule of limitation disappears, more so, when the law itself makes the new rule of limitation applicable from the commencement of the parent Act.
It was held that the amendment must be given effect to for the earlier years also. In view of this decision, the contention raised by Shri Pandey must fail. Thus, the assessment for the third period is in time.
16. Shri R.J. Bhave, Government Advocate for the State, contends that Sub-section (5) of Section 11 applies only to unregistered dealers. The assessment of registered dealers is made under Sub-sections (1) and (4) of that section. The assessment against the petitioner has been made under Sub-section (4) treating him as a registered dealer and not under Sub-section (5). His argument that the petitioner must be treated as a registered dealer is based on the provisions in Sub-sections (1), (2), (3) and (5) of Section 8 of the Act.
17. This contention was considered by a Division Bench of this Court in Hirji Govindji v. Commissioner of Sales Tax  6 S.T.C. 370. In that case, a dealer B had been registered after he compounded the offence of non-registration. Another dealer A had sold goods to B during the period he was unregistered. A claimed that under Section 8(5) of the Act the registration related back to the commencement of the Act and so the sales made by him were exempted from tax as being made to a registered dealer. This contention was upheld. The reason given was that under Sub-section (5) the registration 'shall take effect as if it had been made under Sub-section (3) of this section on dealer's application'. The contention that the fiction created by Sub-section (5) should be limited to Section 8 only was repelled as would appear from the following passage:
The fiction in the instant case is being limited to the purposes indicated by the context. The fiction is that a certificate, issued by the Commissioner under Sub-section (5) on registration, shall be deemed to be a certificate issued under Sub-section (3), i.e., it shall be deemed to be a certificate issued on an application under Sub-section (2) which was in order. The application, to be in order, must, as already stated, satisfy the conditions laid down in Sub-section (1) and Sub-section (2) and must, as in the instant case, be made before the 31st August, 1947. In the event of a composition, the making of such an application is dispensed with ; and the dealer is registered as if he had made the application required by law, i.e., before the prescribed date, and had thus not contravened Sub-section (1). The certificate issued under Sub-section (5) thus takes effect in a case like the present from the commencement of the Act.
The fiction was actually extended to interpret Section 2(j) (a) (ii) and the sales made to B were exempted from tax. Following this decision, we must hold that the registration related back to the commencement of the Act and the petitioner must be treated as a registered dealer all along. That being so, Section 11(5) had no application to the case. The matter fell to be governed by Sub-section (4) as in the case of any other registered dealer.
18. In Regional Assistant Commissioner of Sales Tax v. Ghanshyamdas  9 S.T.C. 179, it has been held that there is no limitation prescribed for making an assessment against a registered dealer. Accordingly, the assessment with respect to all the three periods is in time.
19. Although during the course of arguments Shri R.K. Pandey stated that he did not rely on Section 11-A of the Act, we may refer to it as we have held that the amendment introducing that section has retrospective effect. According to the view taken in Regional Assistant Commissioner of Sales Tax v. Ghanshyamdas  9 S.T.C. 179, the limitation provided by Section 11-A cannot be read back into Section 11 as the case of 'first assessment' does not fall within any of the four contingencies for which limitation is provided in Section 11-A. A contrary view has been taken in Bisesar House v. State of Bombay  9 S.T.C. 634, but we prefer to follow the view of the Division Bench of this Court and hold that Section 11-A does not apply.
20. Accordingly, the assessment for all the three periods is in time.
21. In the light of the above discussion, the petitioner is not entitled to any relief in both the cases. The petitions are, therefore, dismissed with costs. Counsel's fee in this case is fixed at Rs. 100 and in the connected case at Rs. 50 only. The balance of security deposit, after deducting the costs payable, shall be refunded.