The judgment of the Court was delivered by

S. D. SHAH, J. - By this reference under section 69(1) of the Gujarat Sales Tax Act, 1969, the Tribunal has referred the following question for our opinion :

"Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the sales of machinery of plant No. 2 and stock-in-trade in dispute were liable to tax under the Gujarat Sales Tax Act, 1969 ?"

2. The facts giving rise to the present reference, shortly stated, are as under :

(1) The appellant is a textile mill engaged in the business of manufacturing and selling cloth. It incurred heavy loss and according to it the activity of manufacturing was closed from 1st April 1968. At the instance of one of the creditors, under the liquidation proceedings which were commenced in the High Court of Gujarat, official liquidator was appointed. Later, on an application being made under section 391 of the Companies Act between the appellant-company and its creditors a compromise scheme was sanctioned by the Gujarat High Court by its order, dated 8th April, 1970. Under the said scheme the plant and machinery of unit No. 2 of the appellant-company were