NEW BHARAT CONFECTIONERY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE assessee in this case is a dealer in confectionery. THE turnover in dispute related to the sale of machine parts which were considered by the assessee as redundant and no longer useful. That the impugned transactions are inter-State sales is not in dispute. THE only question for consideration was whether the turnover is liable to Central sales tax. THE appellate Assistant Commissioner held that the turnover is not liable to sales tax on the ground that the assessee cannot be held to be carrying on business in selling this redundant capital stock. For that view the Appellate Assistant commissioner relied on the decision of the Supreme Court in State of Gujarat v. Raipur Manufacturing Co. Ltd. It was a case decided under the Bombay Sales Tax act. THE Supreme Court held with reference to the definitions in that Act that in the turnover of a person carrying on business of selling one commodity will not be included the price received by him by sale of another commodity unless he carries on the business of selling that other commodity.

(2.) IN suo motu revision, after following the prescribed procedure, the Board of Revenue was of the view that in the absence of a definition of "business" in the Central Sales Tax Act, the definition in the Tamil Nadu General Sales Tax Act can be applied in respect of the transactions falling under the Central Sales Tax Act. On that reasoning and in view of the decision of the Supreme Court in State of Tamil Nadu v. Burmah shell Co. Ltd. wherein it was held that all incidental sales are also liable to tax, it held that the disputed turnover was liable for Central sales tax. The assessment order now in question is in respect of 1974-75. At the relevant time the Central Sales Tax Act did not have any definition of "business". But under section 6, every dealer shall be liable to pay tax under the Act on all sales effected by him in the course of inter-State trade or commerce. The central Sales Tax Act was amended by Central Act No. 103 of 1976, by inserting a definition of "business" and also substituting a definition of "dealer". With reference to the position prevailing prior to the amendment, the Supreme Court in State of Madras v. K. C. P. Ltd. held that in order to attract liability to sales tax under the Central Sales Tax Act the sale should have been effected by a person who carries on business in that commodity. That was a case where the assessee-company, whose main business was manufacture and sale of machinery and parts of machinery and accessories, imported in 1952, two are furnaces for the purpose of having them installed as a part of the plant in its foundry. When it found those furnaces to be unsuitable for the purpose for which they had been purchased, it sold them to a person in Calcutta. The question for consideration was whether the turnover relating to this sale should be included in the turnover of inter-State sales of the company. The Supreme Court held that although the assessee was dealing in the sale of machinery and machinery parts it was not a dealer in the arc furnaces which were found to be unserviceable and unsuitable and sold by it. It may be mentioned that this decision was given with reference to the definition under section 2 (b) of the Central Act which read "'dealer'means any person who carries on the business of selling goods, and includes a Government which carries on such business" *