TMI Blog1976 (4) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, to the proposed revision of assessment. It was contended by the assessee that the business at Ooty branch as a whole was sold that the branch business was also to be considered as a business as defined under section 2(d) of the Tamil Nadu General Sales Tax Act, 1959, and that the sale value of the stock held was eligible for the exemption from payment of tax under rule 6(d) of the Tamil Nadu General Sales Tax Rules, 1959. The Deputy Commercial Tax Officer did not accept this objection, as he was of the view that only the business sold as a whole was exempted from tax. He took a sum of Rs. 18,929.71 as the sale value of the stock and added it to the turnover for the year and assessed sales tax accordingly. He has not set out the provision under which he acted to revise the assessment. On appeal, the Appellate Assistant Commissioner was also of the opinion that the assessee was not eligible for exemption under rule 6(d) and that even after the sale of the Ooty branch, he was carrying on business in the head office at Coimbatore, so that it could not be considered that the assessee had sold the business as a whole. He confirmed the assessment. On further appeal, the Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above rule does not apply to the present case. In substance, the contention urged for the State is that the assessee had not gone out of the business altogether in order to claim the exemption under rule 6(d). We are not satisfied that this contention is sound having regard to the language of the rule. The words "his business" occurring in the rule do not mean that he must go out of his business altogether. The word "business" has to be understood in a commercial sense, i.e., in the sense understood by commercial men. The commercial men would understand the word "business" as a unit which produces profits. The branch in that sense would be a unit of business. It is a separate unit which could be dealt with, as such, as was done here. When once the Ooty branch is recognised as an independent unit, then vis-a-vis that unit of business, the assessee had closed down his business as a whole. It is not found by any of the authorities that the assessee retained any part of the business at Ooty, so that it cannot be treated as a sale of his business in that branch as a whole. In fact, the finding of the Tribunal is that the entire business including furniture, fittings and stock-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern." The expression "sale" has been defined as follows in section 2(n) of the Act: "'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge." Section 2(r) defines the expression "turnover" as meaning the "aggregate amount for which goods are bought or sold, or supplied or distributed, by a dealer, either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea, grown within the State by himself or on any land in which he has an interest whether as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under section 3. The Allahabad High Court had to consider rule 44(f) of the U.P. Sales Tax Rules corresponding to rule 6(d) of the Tamil Nadu General Sales Tax Rules, 1959, referred to already. While doing so, the court observed: "If a dealer carrying on a business in certain goods sells the entire business, he has not to rely upon this clause and plead that the proceeds of the sale are to be 'deducted' from the turnover for purposes of taxation; they are not to be included in the turnover at all. The heading of rule 44 is 'deductions from turnover'; this means that whatever is to be deducted is a turnover. One cannot deduct from a turnover something which is not a turnover. Therefore, to say that proceeds of the sale of the dealer's entire business are to be deducted from his turnover is meaningless; they are not to be included in the turnover because they never came within its meaning." Though that case dealt with the sale of the entire business and not of a branch of the business, still that decision illustrates the point we are dealing with. The above decision of the Allahabad High Court was followed by the Kerala High Court in C.M. Hamsa Haji v. Sales Tax Officer, Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees were considered in that judgment one related to Thermo Electrics dealing in heating mantles. The assessee was also manufacturing and selling certain standard cells. Under an agreement, the assessee agreed to give the knowhow of manufacturing the standard cells to another manufacturer in consideration of a 10 per cent royalty on the net sale price marketed by the new manufacturer. As part of the agreement the assessee sold all the raw materials in her hands for the price mentioned therein and also the semi-finished products and finished products. The finished products did not exhaust the stocks which she held. In other words, she retained some part thereof for the purpose of sale in other States to which the agreement to give the knowhow did not relate. The contention of the assessee was that the sum of Rs. 1,59,753.85 realised from those sales represented sale of the business as a whole and that the sale was also not in the course of carrying on her business, but in the winding up of the manufacturing unit. The Sales Tax Appellate Tribunal had accepted the assessee's claim for exemption. The second of the cases dealt with was that of Burmah Shell, which was taken over and desig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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