COMMISSIONER OF SALES TAX Vs. TATA EXPORTS LTD

JUDGEMENT

(1.) BY this reference under Section 44 (1) of the M. P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act"), the Board of Revenue has referred the following question of law to this Court for its opinion:

(2.) THE material facts giving rise to this reference briefly, are as follows: The assessee carries on the business of manufacture of shoe uppers in its factory at Dewas. During the period from 1st April, 1976, to 31st March, 1977, the assessee purchased certain goods for maintenance of office and garden. The Assistant Commissioner of Sales Tax held that the assessee was liable to pay purchase tax on the purchase price of these goods. Aggrieved by that order, the assessee preferred an appeal before the Deputy Commissioner of Sales Tax, Ujjain. The assessee contended that the goods in question were not purchased by the assessee for the purpose of manufacture and the assessee was, therefore, not liable to pay any purchase tax. This contention was rejected by the Deputy Commissioner of Sales Tax and the appeal was dismissed. Hence, the assessee preferred a second appeal before the Board of Revenue. The Board held that the assessee was not liable to pay purchase tax. The Board accordingly allowed the appeal. Hence, at the instance of the department, the Board has referred the aforesaid question of law to this Court for its opinion.

(3.) HAVING heard learned Counsel for the parties, we have come to the conclusion that this reference has to be answered in the affirmative and against the department. The liability to pay purchase tax arises when a dealer, in the course of his business, purchases goods specified in Schedule II to the Act. As held by a Division Bench of this Court in Commissioner of Sales Tax v. Synthetics Limited [1982] 49 STC 22, the transaction of purchase contemplated by Section 7 must have a direct nexus with the business of the assessee, which in the instant case was manufacture of shoe uppers at the material time. The learned Counsel for the department was unable to point out that the purchase of goods in the instant case constituted transactions connected with or incidental or ancillary to the business of the assessee. The Tribunal was, therefore, right in holding that purchase of the goods in question did not attract the liability to pay purchase tax.