TMI Blog1963 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... 35,700. On an application made by the company to the Deputy Commissioner of Sales Tax to determine whether the company was a dealer within the meaning of the Sales Tax Act, 1953, in respect of the said sale, the Deputy Commissioner held that the company would be a dealer and the sale would be liable to be taxed. The company then took an appeal to the Sales Tax Tribunal. The Tribunal held that the sale could not be said to be in the course of the business activity of the company and, therefore, the company would not be a dealer in respect of the said sale. Then, at the instance of the Commissioner of Sales Tax the Tribunal has drawn up a statement of the case and referred to this Court the following question: " Whether on the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowered it to sell or dispose of the undertaking of the company or any part thereof. In view of these clauses of the memorandum of association, it is contended by Mr. Banaji that the sale of its old machinery could as well form part of the business of the company. He has then pointed out that it is not an isolated transaction of sale which the company has effected of its old machinery, but there has been a continuous course of transaction extending over several years during which period old machinery worth considerable amount has been disposed of by the company. Thus, in 1953-54 the company has disposed of old machinery of the value of Rs. 26,570-14-0. In 1954-55 it has again sold old machinery worth Rs. 36,960 and in the subsequent two y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )[1936] 20 Tax Cas. 736 at page 748., "the mere fact that a company has power to sell a particular asset, or all its assets, does not in the least imply that it is part of the business of the company to sell that particular asset or its assets. Most people of sound mind and understanding have power to dispose of their property. It does not follow from that that they carry on the business of buying and reselling property such as that which they possess." In Seksaria Biswan Sugar Factory Ltd. v. Commissioner of Income-tax (Central), Bombay [1950] 18 I.T.R. 139., this Court observed "Every act which is intra vires of a company is not necessarily done in the course of its business. Whether a particular Act done is in the course of business or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-firm which was registered as a dealer in dairy products sold away a part of its live-stock and replaced the same by fresh live-stock, The question that arose for consideration was whether the annual sale of live-stock could be treated as part of the turnover of the assessee liable to sales tax, and it was held by the Full Bench of the Kerala High Court that the frequency, regularity and the volume of sales of cattle by the assessee were such that they could be regarded as an activity in the course of the business of the assessee and therefore the assessee's sales of cattle were part of its business, constituting it a dealer within the meaning of the Sales Tax Act, and attracted liability to taxation in respect thereof. The sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these features they constituted an activity coming within the definition of a dealer given in the Act. It was held that while these features were no doubt relevant for the consideration of the question, they were by no means conclusive and the true test was whether the selling activity was with a view to earn profit. In A. Ebrahim and Company v. State of Bombay [1962] 13 S. T. C. 877. , this Court pointed out: " The test, in our opinion, then is to ascertain whether in the circumstances and on the facts of the case it can be said that a particular sale is a sale in the course of business of a dealer. If the sale has a reasonable connection with the nature of the business carried on by a dealer, then the sale would be in the course of h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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