TMI Blog1956 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... to cancel the certificate of registration. Pursuant to this letter the certificate was cancelled on the 21st June, 1952. At the date when the company stopped its business it had assets consisting of first, plant, machinery and other equipment worth Rs. 61,308-2-3, there was laboratory apparatus worth Rs. 1,287-13-6, there were finished goods worth Rs. 5,595-8-0, and there were raw materials worth Rs. 3,548-3-6, and the Sales Tax Authority assessed the company to sales tax on all these assets aggregating to Rs. 71,839-11-3 and they proceeded to levy tax which amounted to Rs. 2,526-11-3, and the plaintiff company filed the suit for a declaration that the levy of tax on these assets was ultra vires. One of the issues that arose in the suit w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, as its very description connotes, is intended only for the purpose of taxing sales which have been effected in the State of Bombay. If any provision of the law goes beyond the ambit of the Act, then unless it is shown that the State Legislature had the competency to enact that particular provision, that provision must be held to be ultra vires. It is not suggested that the Bombay Legislature had the competency to impose a tax on assets. Therefore, if we find that section 18A purports to tax assets, then section 18A must be ultra vires of the Legislature. It is pointed out by the Advocate-General that under section 6 exemption is given to a vendor who sells goods to another if that other buys the goods intending them for res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se were goods which formed part of the stock of goods remaining unsold at the time of the cancellation of the certificate. Therefore, in effect, what the Legislature has done is to postpone taxing the sale till a particular contingency arises and that contingency is the contingency contemplated by section 18A when the purchaser suspends his business and the stock of goods which he had purchased and which is intended to sell remains on his hands.With regard to the other aspect of the matter which concerns plant, machinery and other equipment and laboratory apparatus, the matter stands differently. It is true that with regard to these also the vendor has paid no sales tax. It is equally true that with regard to these also the company has give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by stating "stock of goods remaining unsold", which means that but for the suspension of business and the cancellation of the certificate the goods would have been sold in the ordinary course. Could it possibly be said of plant, machinery etc., that they were goods which would have been sold in the ordinary course and could not be sold because of the contingency that arose? In our opinion, it is impossible to take the view that the language used by the Legislature "stock of goods remaining unsold" could possibly be made applicable to plant, machinery etc. It is not as if this plant, machinery etc. escaped sales tax if the company in the course of its winding up sells this plant, machinery etc. But what is sought to be taxed is not the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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