Disposal of scrap and new parts by the assessee did not constitute business and the assessee could not be treated as a dealer in respect of such transactions.

JUDGMENT

MISRA, C.J. - The Member, Additional Sales Tax Tribunal, Orissa, has stated such of these cases for opinion of the Court under section 24(1) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the "Act").

2. In S.J.C. Nos. 90 and 175 of 1977, the following question has been referred :

"Whether, on the facts and in the circumstances of the case, the Member, Additional Sales Tax Tribunal, was legally correct in holding that in respect of the transactions in spare parts and sale of fuel, oil, etc., at cost the assessee is not a dealer as per section 2(c) of the Orissa Sales Tax Act, 1947 ?"

In S.J.C. Nos. 194-196 of 1977, two questions have been referred, namely :

"(1) Whether, on the facts and in the circumstances of the case, the Member, Additional Sales Tax Tribunal, is correct to hold that purchases of new spare parts and assessories of such vehicles as Ford, Chevrolet, Desoto, Dodge, etc., were not made with an intention to carry on business of selling the same ?

(2) Whether, on the facts and in the circumstances of the case, the Member, Additional Sales Tax Tribunal, is legally correct to hold that the assessee is not a dealer as per section 2(c) of the Orissa Sales Tax Act, 1947, in respect of the sales turnover of unutilised new spare parts ?"

3. The assessee is a public limited company engaged in transport business and the State of Orissa held the major interest therein. The assessee, therefore, is a Government company within the meaning of the Companies Act, 1956.

S.J.C. No. 90 of 1977 relates to the year 1969-70; S.J.C. No. 175 of 1977 relates to the period 1965-66; and S.J.C. Nos. 194-196 of 1977 relate to the periods 1966-67, 1967-68 and 1968-69.

The assessee is not a registered dealer and all the assessments have been completed under section 12(5) of the Act. The Sales Tax Officer found that the assessee had different units for convenience of business. For accounting purposes, fuel and lubricants when utilised from one unit by another were adjusted against the accounts by treating the same to be sale. The Sales Tax Officer, therefore, treated this as sale and raised demand of tax. He found that the assessee had sold away unutilised spare parts from its stores when it found that there was no demand for the same for its vehicles. That turnover was also treated to be sale price exigible to sales tax. The Sales Tax Officer further found that at annual intervals the assessee had disposed of scrap and other unwanted motor parts for a price. He treated the amount received by the assessee as sale price and raised demand of tax on it.

4. The quantum was not disputed as the Sales Tax Officer adopted the book figures. The assessee, however, did not accept the Sales Tax Officer's assessments by contending that none of these constituted business and amounted to sale. The assessee, therefore, was not a dealer under the Act and could not have been assessed to tax. The first appellate authority sustained the demand. The Additional Tribunal is second appeal, however, held that the assessee was not a dealer and there was no scope for raising any tax demand. Out of these second appellate orders, the two sets of questions arise.

5. It is not disputed that the units of the assessee-company adjusted the value of fuel and lubricants drawn from different units by treating them as sale. It was, however, a case of book adjustment. It is also not disputed that the units belong to the company. Whatever may have been the mode of adjustment, unless sale takes place, tax is not exigible. Under the scheme of the statute, in order to raise liability for tax under the Act, there must have been an event within the ambit of section 4. Unless there be sale, the liability under the statute would not arise. The Supreme Court in the case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353 (SC); AIR 1958 SC 560, quoted with approval the observations of Benjamin on sale where it was said :

"Hence it follows that, t