TMI Blog1987 (8) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... n referred to above was the same in respect of all the three years, a common statement of the case was drawn up by the Tribunal. These three cases came up for hearing before a Division Bench of this Court which, by an order dated 27th July, 1985, referred them to a larger Bench. It is thus that these three cases have come up before this Bench. 4.. Before dealing with the submissions made by learned counsel for the parties, it would be useful to give in a nutshell the necessary facts. The assessee carries on the business of manufacture of cloth and yarn and was assessed to sales tax by the Assistant Commissioner of Sales Tax. The assessing authority found as a fact that the assessee had made sales of miscellaneous items such as discarded machineries, colours, chemicals, iron hoops and other materials. The case of the assessee in respect of sale of these materials was that these sales had not been made in the course of business of the assessee and consequently it could not be treated as a dealer in respect of sale of the said goods. According to it, these sales were casual sales and consequently were not liable to tax. The case set up by the assessee, however, did not find favour w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, 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." In view of the said definition, firstly, the motive to make gain or profit and the circumstance whether or not any profit accrued from such trade, commerce, manufacture, adventure or concern as contemplated by sub-clause (i) of clause (bb) of section 2 of the Act, was not relevant. Likewise, the term "business" now, in view of sub-clause (ii) of section 2(bb), includes any transaction in connection with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern as contemplated by sub-clause (i) thereof. 8.. It has not been disputed that sale of the various goods mentioned in the question referred to this Court, was made by the assessee. According to the Tribunal, sale of these goods came within the purview of "any transaction in connection with, or incidental or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision of the Calcutta High Court in Cementation Patel (Durgapur) v. Commissioner of Commercial Taxes, West Bengal, Calcutta [1981] 47 STC 385 where it was held that if the main business of the person concerned is such that he cannot be held to be a "dealer" within the meaning of the sales tax statute in respect of such business, then the transactions connected with or ancillary to such business, though in the nature of sale, will not make the person concerned a dealer. In our opinion, this decision is clearly distinguishable inasmuch as the assessee's main business in that case was that of a contractor who could not be said to be doing the business of selling goods and consequently he may not have fallen within the definition of the term "dealer". It does not, however, appear to be so in so far as the assessee in the instant case is concerned. 12.. The term "business" now stands defined in section 2(bb) of the Act. Since the assessee has admittedly been carrying on manufacture of cloth, there is no doubt that it is carrying on business as contemplated by sub-clause (i) of section 2(bb) of the Act. It is also not disputed that the assessee sells the cloth manufactured by it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act prescribes, inter alia, that return by registered dealer (assessee is admittedly a registered dealer) shall be furnished in form VIII. This form contains various serial numbers. S. No. 1 of Part A contemplates mentioning of gross turnover in respect of sales of goods during the period under return less cost of freight, etc., mentioned under clause (b) of item 1. At S. No. 2 is to be mentioned the amount of turnover. At S. No. 3, on the other hand, are to be mentioned the various amounts of deductions. One such item is deduction on account of sales of goods exempted under section 10 of the Act. At S. No. 4 are to be mentioned deductions under section 50, whereas at S. No. 5 is to be stated the total deduction claimed at S. Nos. 3 and 4. S. No. 6 is to contain taxable turnover which is to represent the balance after deducting the amount at S. No. 5 from the amount of turnover mentioned at S. No. 2. At S. No. 7 is to be stated the ratewise break up of taxable turnover. Rest of the three S. Nos. are not relevant for the instant cases. 15.. If a registered dealer enters into any transaction in connection with or incidental or ancillary to such trade, commerce, manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Commercial Taxes [1981] 47 STC 385 was noted and distinguished on the ground that the main business of the assessee in that case was such that he could not be held to be a dealer in respect of such business. As already pointed out above, the assessee in the Calcutta case was a contractor obviously not falling within the definition of the term "dealer" inasmuch as his main business in the very nature of things, was not of selling any goods. 18.. Reliance was also placed by learned counsel for the assessee on Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 STC 290 where it was held by the Supreme Court that if a person is not liable for payment of tax at all at any time, the collection of tax from him with a possible contingency of refund at a later stage will not make the original levy valid; because if the sales or purchases are exempt from taxation altogether, they can never be taken into account at any stage for the purpose of calculating or arriving at the taxable turnover and for levying tax. In our opinion, that decision does not, in any manner, advance the argument of learned counsel for the assessee that the assessee in the instant case, was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Sales Tax, Gujarat State, Ahmedabad v. K.B. Mehta Co., Ahmedabad [1971] 28 STC 47 and the decision of the Bombay High Court in the case of Commissioner of Sales Tax v. D.V. Save [1975] 36 STC 47 are also distinguishable. 21.. Reliance was then placed by learned counsel for the assessee on a decision of the Andhra Pradesh High Court in the Base Repair Organisation (Now Naval Dock Yard), Visakhapatnam v. State of Andhra Pradesh [1983] 53 STC 223. On the facts of that case, it was held that the Naval Dock Yard was not a dealer. In view of our finding that on the facts and circumstances of the instant case, the assessee was a dealer, this decision is also distinguishable. 22.. Lastly reliance was placed on the Full Bench decision of this Court in Govindji Jamunadas v. Commissioner of Sales Tax, M.P. [1983] 53 STC 120 where it was held that iron hoops which are steel strips of different sizes rivetted and painted and used for tying bales of cloth, are declared goods falling within section 14(iv)(d)(iv) of the Central Sales Tax Act, 1956, and are taxable at 3 per cent under entry 5 of Part I of Schedule II of the M.P. General Sales Tax Act, 1958. So far as this case is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the assets and entry 54 of List II of the Seventh Schedule to the Constitution which deals with taxes on sale or purchase of goods other than newspapers subject to the provisions of entry 92-A of List I operate in different fields. The sale price of goods which in the broader context would constitute assets, cannot, therefore, be treated as capital value of the assets for purposes of entry 86 of List I, but shall have to be treated as sale price of goods for purposes of taxation under entry 54 of List II. 27.. In this context, the decision of this Court in the case of Commissioner of Sales Tax v. Project Automobiles [1978] 42 STC 279 is of significance. In that case, the assessee, who was a distributor of Ambassador cars and a registered dealer in automobiles and their accessories, had sold an Ambassador car which had been purchased for its office use. Technically speaking, this car had to be treated as a capital asset and not as stock in trade, the same not having been purchased for sale as a part of business, but having been purchased for office use. It was held that the sale of such a car was not only incidental, but also ancillary to and connected with the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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