1978 (4) TMI 215 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sale price of the Ambassador car should be included in the taxable turnover of the assessee.

Issue-wise Detailed Analysis:

1. Inclusion of Sale Price in Taxable Turnover

Facts and Contention:
The assessee, M/s. Project Automobiles, Bhilai, a registered dealer in automobiles, purchased an Ambassador car for office use after paying full Central sales tax at 10%. The car was later sold for Rs. 10,500. The assessee contended that this sale was a casual sale, not connected with its business.

Lower Authorities' Findings:
The Assistant Commissioner of Sales Tax and the Deputy Commissioner of Sales Tax, Raipur, held the sale taxable, reasoning that the sale was connected with the assessee's business since the assessee was a dealer in motor cars. However, the Board of Revenue in the second appeal held that this sale was not taxable.

Board of Revenue's Observations:
The Board of Revenue noted that the 'connection' in the definition of 'business' should be proximate, not remote. It compared the sale of discarded assets to the sale of by-products in manufacturing, concluding that the sale of the office car was not closely connected with the main business. The Board referenced the Supreme Court ruling in State of Gujarat v. Raipur Manufacturing Co. Ltd., which stated that the sale of discarded goods does not imply a business of selling such goods.

Court's Analysis:
The court examined the enlarged definition of 'business' under section 2(bb) of the M.P. General Sales Tax Act, 1958, which includes any transaction incidental or ancillary to the main business, regardless of profit motive. The court referenced the Supreme Court decisions in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. and District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer, which held that sales of unserviceable material and scrap-iron were exigible to sales tax under similar statutory definitions.

Conclusion:
The court concluded that the sale of the office car by the assessee, a dealer in automobiles, was not only incidental but also ancillary to and connected with its business. Therefore, the sale price should be included in the taxable turnover. The reference was answered in favor of the Commissioner of Sales Tax and against the assessee, holding that the Board of Revenue was not justified in excluding the sale price from the taxable turnover.

Final Judgment:
The sale price of the Ambassador car purchased for office use and subsequently sold by the assessee should be included in its taxable turnover. The Board of Revenue's decision was overturned, and the reference was answered accordingly. There was no order as to costs.