1. This matter relates to the year 1957-58. The assessee is the Petitioner. He was originally assessed by an order dated December 15, 1958 on a turnover of Rs. 1,45,264.78 P. But by a subsequent Order dated March 11, 1963 the turnover was revised and enhanced to Rs. 2,05,44064 P. on the ground that the deduction allowed to an extent of 30 per cent for labour charges was erroneous. While so revising, the Joint Commercial Tax Officer, Triplicane Division, subjected a part of the turnover to tax at a certain rate for a part of the period and the rest of the turnover at a higher rate for the remaining period. While dismissing the assessee's Appeal against that order, the Appellate Assistant Commissioner further enhanced the rate, apparently on the view that a lower rate had been applied. The Tribunal declined to interfere and dismissed the further appeal filed by the assessee.
2. It seems to us that the Tribunal was correct in its view that the turnover consisted of sales and did not relate to works contracts. The assessee made bus bodies to order with reference to certain specifications stipulated for, fitted the same to chassis supplied by the customer and supplied the motor vehicles for an agreed consideration. We have been taken through the terms of the contract which have to be spelt out from the correspondence including the invoices. It is clear from them that there is no element of work and labour. The understanding between the parties was that the assessee should supply a finished article as such though it should accord to certain specifications agreed upon and the same supplied to the customer fore certain consideration. The transaction thus seems to answer all the elements of sale of goods. The property in the materials which went to make up the bus-body passed to the customer only on delivery of the bus-body on payment therefore. It is impossible to gather any intention fromthe terms of the contract that the parties understood the transaction to be purely of work and labour.
3. It is next urged that inasmuch as the order of the Appellate Assistant Commissioner was made more than five years next succeeding the year 1957-58, it was, therefore, out of time. Though the Appellate Assistant Commissioner would appear to have acted under section 16 of the Madras General Sales Tax Act, 1959, by the time he made his order, Madras Act 10 of 1963 had come into force. The effect of this amendment was to substitute Section 61 by entirely a new section. The effect of the substituted section is to apply to pending proceedings the provisions of the 1939 Act. That is explicit from the terms of the substituted section. That being the case, it is not section 16 of Madras General Sales Tax Act 1959, but Rule 17 of the Madras General Sales Tax Rules, 1939 that can properly apply to and cover the case on hand. That Rule by Sub-rule (3-A) enables the Appellate Authority to exercise the same powers as the original authority had in respect of reopening of assessments and applying a higher rate as having escaped assessment. The period within which this power can be exercised has been specified, namely, at any time within a period of five years next succeeding that to which the tax relates. It follows that the order of the Appellate Assistant Commissioner dated October 18, 1963 was made beyond the period of five years computed from 1957-58. That means, the order of the Appellate Assistant Commissioner has to be set aside.
4. Another argument was addressed to us as to the validity of Rule 17 itself, as amended with effect from April 1, 1957. By that amendment, the period of limitation was enlarged from three years to five years. The attack upon the Rule is based on the ground that the condition of Sub-section (4) of Section 19 of the 1939 Act has not been complied with. The condition is that any Rule made in exercise of the rule making power under Section 19 (1) or (2) can only be properly made after previous publication for a period of not less than four weeks. The draft of Rule 17 was published in the Fort St. George Gazette dated March 13, 1957. But the Rule as amended was finally published on March 30, 1957. Mr. Balasubramaniam for the assessee contends that the rule violated Section 19 (4). He himself brought to our notice that by an Ordinance published on March 21, 1957, Sub-section (4) of Section 19 was replaced and this was followed by Madras Act I of 1957, which came into force from May 13, 1957. But his argument is that the draft rule published being a step taken, it must be regarded as a pending proceeding, to whichSub-section (4) of Section 19, notwithstanding its repeal, will apply, so that the final publication of the rule on March 30, 1957 contravened Section 19 (4). In support of this contention, learned counsel relied on Universal Imports Agency v. Chief Controller of Imports and Exports, : 1SCR305 . We are unable to accede to the contention. Section 8 of the General Clauses Act, 1897 deals with the effect of the Repealing Act Clause (a) of the section says that the repeal shall not affect anything done or any proceedings begun before the commencement of the repealing Act Learned Counsel for the Assessee takes his stand on this provision and says that draft rules once published will amount to an act done or at least a proceeding begun and if that be so, as he maintains, it is the case. Sub-section (4) of Section 19 will continue to operate with reference to the draft rules. In our opinion, the fallacy in the argument lies in the assumption that once a draft rule is published, its legal consequence is that it should always be followed by final rules and that for that purpose, notwithstanding the repeal of Sub-section (4) of Section 19, its continuity for the purposes of the publication of the rule, even after the repeal, should be taken for granted. We fail to see anything in Sub-section (4) of Section 19 to warrant that view. That sub-section nowhere suggests that once a draft rule is published, even regarding as an act done under that sub-section, after the repeal of the sub-section, the rule making power is prevented from exercising its power after the repeal without any condition and is obliged because the draft rule has been published previous to the repeal to Act under the repealed section as if it were in force. We are unable to accept the contention that the effect of publishing the draft rule is that notwithstanding the repeal of Sub-section (4), its continuity for purposes of the draft rule is saved. It is true, as already held in : 1SCR305 that the expression 'things done' In the General Clauses Act may include legal effects and consequences done prior to the repeal. But we do not regard the publication of the final rules In the instant case as a legal consequence of, or as necessarily following from the draft rules already published. By the time Rule 17 was published on March 30, 1957, Sub-section (4) of Section 19 had been repealed, so that the rule making power was free and untrammelled by any condition to make the rule without previous publication. The very fact that the rule had been published before the expiry of four weeks after the publication of the draft rules shows that the rule making power relied on is the rule making power as it stood after repeal of Sub-section (4) ofSection 19. It may be that the draft rule as a thing done or even as a proceeding stands even after the repeal. But that does not furnish a basis, in our opinion, to the continuity of Sub-section (4) of Section 19 even after its repeal for the purpose of making the rule after the date of the repeal. Our attention has been invited to the English case in The Queen v. Justices of the West Riding of Yorkshire, (1875) 1 QBD 220 which has been referred to in : 1SCR305 and an analogy is sought to be drawn between the position there and the present case. But we fail to recognise any such analogy. In the English case, the notice, before the repeal of the Public Health Act, 1843, had been issued which expressed an intention to levy a rate. The rule there was that even after the repeal, the local body could act upon the notice and proceed to levy the rate. This is because the notice there was an act done before the repeal and that meant that it comprehended all the legal consequences, namely, the levy of rate. We fail to see how this presents any analogy whatever to the instant case, because the publication of a draft rule is not equivalent to the notice expressing an intention to levy a rate. In our opinion, therefore, Rule 17 is not invalid for want of proper publication.
5. Learned Counsel for the assesses then suggested that the assessing authority having formed the opinion that the transactions subjected to tax amounted to works contracts, it was not open to him in exercise of the revision power to reopen the assessment and bring to tax the escaped turnover by a change of his opinion. But Rule 17 which applies clearly says that the power thereunder can be exercised if for any reason the whole or any part of a turnover has escaped assessment. The expression 'for any reason' covers a wide area and certainly includes a change of opinion.
6. The petitioner, in the result, succeeds only in respect of the enhancementof the rate by the Appellate AssistantCommissioner's order dated October, 18,1963 but fails in other respects. Nocosts.