Transfer of goods between two firms having identical partners does not constitute a 'sale' under the Bengal Finance (Sales Tax) Act, 1941, as there is no transfer between two different persons.

MANASH NATH ROY, J.

( 1 ) THIS appeal under Clause 15 of the Letters Patent is directed against the Judgment and order dated 13th May, 1973, whereby P. K. Banerjee, J. , discharged Civil Rule No. 4279 (W) of 1968.

( 2 ) THE appellants at all material times, as co-partners of Howrah Wire Industries (hereinafter referred to as the said Wire Industries) carried on business amongst others in the manufacture of wire, wire-nettings and different kinds of machineries for the purpose of manufacture of machineries for making barbed wire, wire nail, staple, panel pin and wire drawing at 59, Canning Street and held certificate of registration No. AT/3347a under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act ). They were also co-partners in another business under the name and style of Howrah Steel and Wire Products (hereinafter referred to as the said Wire Products) at the said address of 59, Canning Street, under registration certificate No. AT/3755a issued under the said Act and employed amongst others in the manufacture of mild steel wire and galvanised wire.

( 3 ) IN or about 1960, the appellants transferred machineries on diverse dates worth about Rs. 79,318. 11 from the said Wire Industries to the said Wire Products and the Commercial Tax Officer concerned treated the said transfers as sales and by his order in annexure C dated 29th March, 1963, assessed them to tax. It is an admitted fact that the appellants filed a return showing the gross turnover at Rs. 6,21,821. 32. Thereafter, at the assessment stage, they filed a revised return for the month of December, 1960, reducing the gross turnover from Rs. 1,87,074. 35 to Rs. 1,08,336. 34 claiming that machinery worth Rs. 72,478. 61 and Rs. 6,830. 50, which were transferred to the said Wire Products is an allied concern of the partners of the said Wire Industies. The relevant bills Nos. 73/60 and 74/60 were wrongly shown as sales in the original return and contending further that those were mere transfers and not sales. It was also contended that those transfers were shown as sales by mistake. It is also an admitted fact that taking those transfers as sales, the appellants preferred claims for deduction of the amounts, as mentioned hereinbefore, under Section 5 (2) (a) (ii) of the said Act. It is also apparent from the records of this proceeding that bill No. 73/60 as aforesaid was for Rs. 38,900 and the appellants have shown Rs. 32,060. 50 out of the same on account of sales of machineries and the balance of Rs. 6,839. 50, on account of transfer to the said Wire Products. It was contended on behalf of the appellants that the transfer of machineries being from the same partners of our partnership business to another partnership business, could not constitute "sale" within the meaning of the said Act.

( 4 ) THE respondent, Commercial Tax Officer, by his determination dated 29th March, 1963, found that the concerns as mentioned hereinbefore were owned by the same partners but the said concerns were two distinct and separate entities and the transfers between such separate entities cannot be made except on sale. Apart from the above, on the basis of the initial admission of the appellants and more particularly in view of the fact that the transactions were claimed to be sales, the contentions of the appellants were rejected. It was also found by the said Commercial Tax Officer that the connected vouchers as produced being partly for sale and partly for transfer, they could not be considered anything but for sales and furthermore the appellants made whimsical entries showing the sales as transfers. The taking out of separate licences by two concerns, filing of separate returns by them and over and above the claim for exemptions as mentioned hereinbefore were also made grounds for rejecting the contentions of the appellants and the determination of sale and levy of demand in the instant case.

( 5 ) FROM such determination, the appellants preferred an

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