A dealer is liable to pay sales tax only in respect of sales effected by him in the course of his business.

Headnote:
BOMBAY SALES TAX ACT, 1946 - SECTION 2(C), 2(G), 2(H), 2(J), 5, 6 - SALE OF MOTOR CAR BY DEALER REGISTERED UNDER THE ACT - WHETHER LIABLE TO SALES TAX - HELD, NO.
Fact of the Case:

The assessee, a registered dealer under the Bombay Sales Tax Act, 1946, purchased a motor car for the use of its Managing Director. The car was later sold at a small profit. The Sales Tax Officer included the sale price of the car in the assessee's taxable turnover and subjected it to sales tax. The assessee challenged the assessment, contending that the sale was a casual transaction and not part of its business.
Finding of the Court:

The court held that the sale of the motor car was not a sale in the course of the assessee's business and, therefore, the sale price was not liable to be included in the taxable turnover. The court observed that a dealer is liable to pay sales tax only in respect of sales effected by him in the course of his business.
Issues: Whether the sale of a motor car by a dealer registered under the Bombay Sales Tax Act, 1946, is liable to sales tax, even if the sale is not in the course of the dealer's business.
Ratio Decidendi: The court interpreted the definition of "dealer" in Section 2(c) of the Bombay Sales Tax Act, 1946, to mean a person who carries on the business of selling or supplying goods. The court held that the sale of the motor car was not a sale in the course of the assessee's business because it was a casual transaction and not part of the assessee's regular business activities.
Final Decision: The court answered the question referred to it by the Tribunal in the negative, holding that the assessee was not liable to pay sales tax on the sale of the motor car.

Judgment -1. Messrs. Steelage Industries, Ltd., whom we will refer to as "the assessees" are registered dealers Under the Bombay Sales Tax Act, 1946, and also under the Bombay Sales Tax Act, 1953. The assessees carry on the business of manufacturing end Belling steel furniture. In the application submitted by the assessees for registration as dealers, Bales in motor cars was not mentioned as one of the lines in which they were dealing or intended to deal. On 15th July, 1948, the assessees purchased a motor car and paid Rs. 604/- as sales tax on. the purchase. The motor car was purchased for the use of the Managing Director of the assessees. This motor car was subsequently sold by the aseessees on 14th December, 1951, at a small profit. The Sales Tax Officer, Bombay, included the sale price pf the motor car in the assessment of the assessees for the period between 1st April, 1951, and 31st October 1952, as part of the taxable turnover and subjected the price to sales tax. Against that order an appeal was preferred to the Assistant Collector and that order was confirmed in appeal. An application in revision was filed by the assessees before the Sales Tax Tribunal at Bombay. The Sales Tax Tribunal held that the motor car having been purchased for the use of the Managing Director of the assessees, and the cost of its purchase and the proceeds of its sale having been debited and credited in the assessees books of account, and the motor car having been actually shown as part of the assets of the asses-sees, the price was liable to be included in the taxable turnover and subjected to payment of sales tax. An application was submitted to the Sales-Tax Tribunal for referring three questions to this Court under Section 23 of the Bombay Sales Tax Act, 1946. The Tribunal by their judgment, dated 20th August, 1956. have referred the following question to this Court:

"Whether the applicants (assessees) are liable to pay sales tax in respect of the re-sale of the car purchased by them for the use of their Managing Director after it had been used by the said officer for more than 3 years."

2. It is undisputed that the assessees deal only in steel furniture. Sale of motor cars, newt or second-hand, is not a part of their business. It is also undisputed that the sale of the motor-car was a casual transaction of a part of their assets. The question which falls to be determined in this Reference is whether the price received for sale of the motor car can be included in the taxable turnover of the assessees.

3. The expression "dealer" is defined by Section 2 (c) of the Bombay Sales Tax Act, 1946, in so far as it is material, as

"any person who carries on the business of selling or supplying goods in the State of Bombay, whether for commission, remuneration or otherwise. ....."

The expression "sale" is defined by Section 2 (g), as "any transfer of property in goods for cash or deferred payment or other valuable consideration...." and the expression "sale price is defined by Section 2 (h) as

"the amount payable to a dealer as valuable consideration for the sale or supply of any goods, less any sum allowed us cash discount according to trade practice .... .".

Section 5 of the Act, which is the charging section, renders every dealer, whose gross turnover exceeds the amount specified, in the year immediately preceding the commencement of the Act, liable to pay sales tax under the Act, and Section 6 provides for the levy and the rates of general and special taxes on the taxable turnover of the dealer. The expression "turnover" is denned in Section 2 (j) as

"the aggregate of the amounts of sale prices received and receivable by a dealer in respect of sale or supply of goods effected or made during a given period. . . . ".

It is evident from the terms of Sections 5 and 6 that the liability to pay sales tax is of a dealer whose gross turnover exceeds the amount specified and the rate of tax is computed on the "taxable turnover" of the dealer. That the assessees in

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