1987 (7) TMI 550 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of taxable turnover under the Kerala General Sales Tax Act for the assessment year 1978-79.
2. Determination of whether the petitioner, a hotelier, should be considered a dealer in automobile spare parts.
3. Adjudication of the plea raised in the cross objections by the assessee regarding being assessed as a dealer.

Analysis:
The judgment by the Kerala High Court, delivered by Justice Paripoornan, revolves around the assessment of taxable turnover under the Kerala General Sales Tax Act for the assessment year 1978-79. The petitioner, a hotelier, purchased the entire stock-in-trade in automobile parts from a recalcitrant tenant to gain possession of the premises. The petitioner then sold the goods to M/s. Surendra Automobiles for Rs. 36,000. The assessing authority initially rejected the plea that the petitioner was not a dealer in automobile parts, but the Appellate Assistant Commissioner accepted this argument. The Revenue appealed to the Sales Tax Appellate Tribunal, which upheld the decision to reduce the turnover to Rs. 36,000. However, the Tribunal failed to address the cross appeal filed by the assessee, leading to a legal error.

The crux of the issue lies in determining whether the petitioner should be considered a dealer in automobile spare parts. The counsel for the assessee argued that the petitioner's sale of automobile parts was an isolated transaction unrelated to his hotel business. The Revenue contended that the petitioner's application for registration as a dealer indicated an intention to deal in goods. The Court held that the sale of automobile parts was a one-time occurrence to settle accounts and did not constitute regular business activity. The Court emphasized that the petitioner's actions did not align with the definition of a dealer, and the assessment of the turnover was deemed unjustified and illegal.

In conclusion, the High Court allowed the petition, declaring the assessment of the turnover as unjustified and modifying any existing assessments accordingly. The judgment clarifies that the petitioner, a hotelier, should not be classified as a dealer in automobile spare parts based on the isolated nature of the transaction and the lack of evidence supporting regular business activity in this regard.