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1990 (11) TMI 349 - HC - VAT and Sales Tax
Issues involved:
The issue in this case revolves around the interpretation of rule 6(d) of the Tamil Nadu General Sales Tax Rules regarding the deduction of amounts realized by a dealer from the total turnover, specifically in the context of a transaction involving the transfer of specific assets of a company. Judgment Details: 1. The Sales Tax Appellate Tribunal had deleted a turnover of Rs. 6,29,700 from assessment for the year 1977-78, considering it as a sale of the assessee's "business as a whole" under rule 6(d) of the Rules. However, the High Court found that the transaction involved only the transfer of specific assets such as plant, machinery, car, furniture, fittings, land, and buildings, and not the entire business. Referring to previous case law, it was established that rule 6(d) contemplates the transfer of the business as a going concern and not just the assets alone. The Tribunal's decision was overturned, and the turnover was deemed chargeable to tax. 2. The Court addressed the absence of money consideration in the transaction, where shares were allotted instead. Citing a previous case, it was clarified that the expression 'valuable consideration' in the definition of 'sale' includes non-monetary forms of consideration, such as the allotment of fully-paid shares. The consideration in this case, represented by the shares given in exchange for assets, was deemed equivalent to cash, as it involved the cancellation of debts in the company's books. This aspect further supported the conclusion that the transaction constituted a sale for tax purposes. 3. Consequently, the tax revision case was allowed, setting aside the Tribunal's deletion of the turnover and affirming its chargeability to tax. No costs were awarded in this matter. This judgment clarifies the application of rule 6(d) in distinguishing between the transfer of specific assets and the sale of a business as a whole, emphasizing the concept of valuable consideration beyond cash payments in determining taxable transactions.
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