S. 16(1) of the Tamil Nadu General Sales Tax Act, 1959 allows the reopening of assessment where the whole or any part of the turnover of business of a dealer has escaped assessment to tax or has been assessed at a rate lower than the rate at which it is assessable.

Ismail, J.

The common facts that arise in T.C. Nos. 117 and 118 of 1973 are as follows : In the original assessment the petitioner herein claimed that 'technical grade urea' which it purchased from Neyveli Lignite Corporation and subsequently sold constituted chemical fertilizers coming within the scope of entry 21(3) of the First Schedule to Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act) and consequently the sales by it being second sales were not liable to tax. This contention was accepted by the assessing authority and therefore the turnover referable thereto was excluded. Subsequently the assessment was reopened under S. 16 of the Act and the turnover was included. The petitioner put forward two contentions against the reopening. One was S. 16 did not warrant such reopening of the assessment under such circumstances and secondly that 'technical grade urea' was nothing but urea coming within the scope of entry 21(3) of the First Schedule and therefore was entitled to be excluded from the taxable turnover. Both those contentions were rejected and the reopening and the consequential assessment were sustained by the Tribunal. It is this conclusion that is challenged in the present tax revision petitions.

2. We shall first deal with the case of the petitioner on merits. When the Neyveli Lignite Corporation sold the goods to the petitioner, the goods were shown as 'technical grade urea' and charged sales tax only at 2 1/2 per cent at the multi point rate and when the petitioner in turn sold the same to various persons, it described the goods as 'technical grade urea' and the bills themselves stated that it was not intended for use or sale as fertilizer. Consequently it is clear that even the petitioner did not treat the goods in question as chemical fertilizers falling under entry 21(3) but treated them only as chemical. Therefore it is patent that the earlier exclusion of the turnover was erroneous and the subsequent inclusion thereof in the turnover was correct.

3. As far as T.C. Nos. 149, 150 and 151 of 1973 are concerned, they relate to canteen sales. The exemption of the canteen sales from the liability to sales tax is provided for by a notification of the Government in G.O.Ms. No. 2238 Revenue dated 1st September 1964 as amended subsequently. That notification provides :

"..... All sales by canteens run by an employer or by employees on co-operative basis on behalf of the employer, under statutory obligation without profit motive, provided that the employer subsidises atleast twenty-five per cent of the total expenses including the expenses towards the purchases incurred in running the canteen." *

T.C. No. 149 of 1973 is concerned with an assessment made for the first time under S. 12 of the Act. T.C. Nos. 150 and 151 of 1973 deal with the assessment as a result of reopening under S. 16 of the Act since the canteen sales were previously exempted. Consequently, on merits, the common question that arises in respect of these three cases is whether the petitioner was entitled to the exemption in respect of canteen sales in terms of the notification of the Government referred to above. There is no controversy in these cases that the 25 per cent of the expenses provided for in the notification will be satisfied only if the depreciation allowance in respect of canteen equipments other than furniture used in the canteen are taken into account. If the depreciation is excluded, certainly the requirement of twenty five per cent of the total expenses by way of subsidy is not satisfied. The learned counsel for the petitioner contended that the depreciation allowance will have to be taken into account. We are unable to accept this argument in the light of the language used in the notification referred to above. The notification contemplates the actual incurring of expenditure while the depreciation allowance is only a notional allowance and not an expenditure actually incurred. Consequently the concl