R. Bayapu Reddy, Chairman -
(1.) THIS appeal is filed questioning the revisional orders of the Dy. Commissioner (CT) Punjagutta Division, Hyderabad in R.R. No. 16/87 -88 dt. 28 -6 -88 by which the orders of the assessing authority (Commrl. Tax Officer, Company circle -III, Hyderabad) in G.I. No. 3522/81 -82 APGST dt. 3 -3 -86 were revised u/s. 14(4) subjecting the disputed turnover of Rs. 94,10,000/ - to tax. The appellant is M/s. E.I.D. Parry (India) Ltd., which is a dealer on the rolls of Commrl. Tax Officer, Company Circle -III and which is having its Head Office at Madras. It is a dealer in fertilizers pesticides, sanitary ware, confectionary etc., and was also doing business in marine products during the relevant period. The assessing authority subjected a net turnover of Rs. 5,45,33,250/ - to tax on the basis of the reported turnovers and the books of account maintained by the appellant. The Dy. Commissioner however revised the said orders of the assessing authority u/s. 14(4) observing that the present disputed turnover, which relates to sales of four fishing trawlers along with their spare parts effected by the appellant during the present assessment year 81 -82, was not reported to the assessing authority and has escaped assessment, and such turnover was therefore subjected to tax. The appellant his preferred the present appeal questioning such orders of the Dy. Commissioner mainly contending that the sale of trawlers and their spare parts effected by him during the relevant assessment year was not in the course of business in marine products and such sales were effected after its business in the marine products was closed and while winding up the business operation in that regard and that therefore the Dy. Commissioner was not justified in treating such sales as amounting to sales in the course of business and subjecting the same to tax under the APGST Act.
(2.) THE point for consideration therefore is whether the disputed turnover relating to sales of fishing trawlers and their spare parts effected by the appellant is not exigible to tax under the APGST Act? The appellant which is M/s. E.I.D. Parry (India) Ltd., is engaged in various kinds of business activities such as fertilizers, pesticides, sanitary ware, confectionary etc., and for some time prior to the present assessment year, it was also engaged in carrying on business in marine products which was a separate business entity carried on by the appellant had purchased the four fishing trawlers from foreign countries and such business in marine products was continued for some time. But on account of certain circumstances the appellant had decided to close down such business in the marine products and steps were also taken for winding up such business in pursuance of the resolutions passed by the Board of Directors in the General Body Meeting. The appellant has also produced the annual report of the Board of Directors of E.I.D. Parry (India) Ltd, which is the appellant, relating to 1978 and it is seen from the said annual report that such Decision was taken to wind up and close down the marine products which was in fact suspended from October, 1978. The appellant has also produced similar annual reports relating to 1979, 1980 & 1981 before this Tribunal and it is clear from the said reports that the Board of Directors were being authorised to sell away the fishing trawlers to M/s. Navabharath Ferro Alloys Ltd., Hyderabad after fulfilling the required formalities. It is an admitted fact that in pursuance of such circumstances, the appellant sold away the said four fishing trawlers with its spare parts to M/s. Navabharath Ferro Alloys Ltd., Hyderabad during the assessment year 1981 -82, and the appellant has also filed the instruments of sale (four in number) under which such sales were effected, it is clear from such circumstances and the materials placed on record, which is not very much disputed, that the appellant who had previously purchased the fishing trawlers for the purpose of making use of them in its business in marine products division had chosen to sell away such trawlers after such business in marine products was closed and steps ware taken for winding up of such business. The contention of the appellant in this connection is that in as much as it had close down its business in the marine products and steps were taken for winding up such business completely, the sales of fishing trawlers, which were its only assets in such business effected by its subsequent to the closure of such business cannot be said to be in the course of any business or ancillary or incidental to such business and that such sales cannot be said to be exigible to tax. Such contention was specifically raised before the Dy. Commissioner also. But the Dy. Commissioner has chosen to reject such contention having observed that the assessee has not established that except the four trawlers, the entire business of the appellant as a whole was transferred and that the sale of trawlers shall, therefore, be said to have been effected in the course of their business and as such exigible to tax. The Dy. Commissioner has also tried to rely upon some decisions of the Supreme Court and some High Courts in support of his revision and he refused to accept the contention of the appellant based on various Judgments cited and relied upon by him. During the course of arguments, the learned State Representative appearing for the respondent has also tried to contend that M/s. E.I.O. Parry (India) Ltd, which is the appellant is having number of other business concerns such as pesticides sanitaryware, confectionary etc., besides the business in marine, products, that the business in marine products alone was closed, while the other businesses were being carried on by the appellant even now and that therefore the sale of trawlers effected by the appellant can be said to be in the course of its business and therefore liable to be taxed. A perusal of the material on record and the decisions sought to be relied upon by the learned counsel for the appellant as well as the decisions relied upon by the Dy. Commissioner and the learned State Representative appearing for the respondent in this appeal shows that the orders of the Dy. Commissioner cannot be sustained and the contention of the learned State Representative for the Respondent cannot also be accepted.
(3.) AS already stated above, it is now proved and is also not disputed that the appellant which was carrying on a separate business in marine products had closed down such business prior to the present assessment year. After the closure of such business the appellant did not feel the necessity of retaining the fishing trawlers which were purchased for carrying on such business in marine products and which were not required by it, when once such business in marine products was closed down, The sale of the fishing trawlers effected by the appellant in favour of M/s. Navabharat Farro Alloys Ltd., Hyderabad during the assessment year 81 -82 was subsequent to such closure of the business in marine products. When once the Appellant had closed down such business in marine products for which purpose alone the fishing trawlers were purchased and were being used, it did not have the necessity of retaining such fishing trawlers as they will not be of any use for it. As such the appellant sold away such fishing trawlers and such sale is subsequent to the closure of the business in marine products. Under such circumstances the sale effected by the appellant cannot be said to be in the course of business nor can it even be said to be incidental or ancillary to carrying on business in as much as the business concern, which is in marine products was already closed down. Such sale effected by him cannot be said to be incidental or ancillary to the business of the appellant merely on account of the fact that the appellant is still carrying on some other business such as pesticides, fertilisers, confectionary etc. such view is clearly held by the various courts, as to be discussed below. Therefore the Dy. Commissioner was not justified in treating such sales in the course of business and subjecting the same to tax.;