- (1.) S. L. SARAF, J. The applicant is engaged in several commercial activities. He had a leather industrial units at Akrampur, Unnao and Panki, Kanpur, besides manufacturing of machines, machinery parts, yarns at Panki. Some time during the assessment year 1981-82, the applicant decided to sell the leather units situate at Akrampur and Panki to one M/s. Haque Sons Leather Complex, as they were finding if difficult to run the said leather business. The price quoted was Rs. 27,30,000 which included the plants, machineries, spare parts, etc. , including the land and building at Akrampur, Unnao and plants and machineries and accessories lying at Panki Industrial Estate connected with leather only. No portion of the land and building at Panki was sold. During the assessment proceedings the applicant claimed that the sale amount of leather unit should be excluded from the turnover and no tax be levied on the said sale as provided under rule 44 (e ). It was urged that amounts realised by the dealer of his business of leather unit as a whole shall be deducted from the total turnover. According to the petitioner's counsel the leather business of the applicant-corporation was sold as a whole to M/s. Haque Sons Leather Complex including the land and building at Akrampur and as such the question of including the said sale proceeds within the total turnover does not arise.
(2.) FOR this purpose Mr. Bharat Ji Agrawal, learned counsel for the applicant, has relied on a decision of the Madras High Court reported in [1982] 51 STC 278 [monsanto Chemicals of India (P.) Limited v. State of Tamil Nadu] wherein it has been observed that a person might carry on several lines of business and each line of business would be a unit of business by itself. If there was a sale of that unit of the business as a whole, then the assessee would not be liable to be taxed either on the general principle that there was no sale in the course of business as closure of a line of business could not be incidental or ancillary to its carrying on or on the alternative basis of application of rule 6 (d) of the Tamil Nadu General Sales Tax Rules, 1959. On the facts of the case, the assessee was eligible for the exemption. Another decision referred to by Sri Bharat Ji Agrawal strongly supports the case of the applicant. In the case of Deputy Commissioner (C. T.) v. K. Behanan Thomas [1977] 39 STC 325 (Mad.) wherein it was held that the assessee sold his plant at Ooty as a whole. The same would amount to sale of the business as a whole. It was observed in the said judgment as follows : ". . . . . . . . . . . it is not necessary that the assessee should go out of the business altogether, nor need there be a separate registration certificate with reference to the branch so as to make it a unit of business. Even the sale proceeds of a branch which is an independent unit by itself would qualify for the exemption. The learned Additional Government Pleader stressed that the goodwill had not been sold. We are of the view that so long as the bona fides of the transaction is not in question and so long as the business has been sold as a going concern, the mere fact that the goodwill has not been sold is not material. " Mr. Misra, Standing Counsel appearing for the department, has argued that though land and building at Akrampur was sold there was no sale of land and building at Panki. Secondly, he argued that the goodwill of the business was not sold as such there was not a sale of business as a whole within the meaning of rule 44 (e) of the Rules. Mr. Misra further relied on the decision reported in AIR 1963 SC 1489 (Anakapalle Co-operative Agricultural and Industrial Society Ltd. v. Workmen ). I have gone through the said decision and find that the decision relates to an industrial dispute and has nothing to do with the sales tax nor it has any application whatsoever in the instant case. Further, the decision of the Orissa High Court, though referred to in the Tribunal's order, the same was not placed before this Court.
(3.) I have carefully considered the submissions of the counsel for the parties and held that business as a whole means "business as a whole of a particular unit". An industrial conglomerate which may have more than one type of business. Particular industrial undertakings may have ten different businesses within a single umbrella but completely separate business of different nature and character. An industrial house in the modern world is having all types of business under the single umbrella like textile, steel, leather, computer, yarn, etc. That closure of one unit will not amount to the closure of all the units nor would it affect the other business and as such an industrial house can sell and dispose of leather or any one of the businesses as a whole without affecting the other businesses of the industrial house. In the instant case leather unit as a whole was sold by the petitioner to one M/s. Haque Sons Leather Complex and the same would amount to selling of the business as a whole and will fall under the exception to rule 44 (e) of the Rules. The argument of Mr. Misra that since land and building was not sold, the same would not amount to selling of business as a whole. The argument is fallacious. A particular business may or may not own a particular land or building. In Akrampur the entire plant and machineries including the land was sold but in the Panki the same could not have been sold as other businesses of the industrial house was continuing at the said premises. Moreover, in the given case a business may not own a particular land and building as such selling of land building cannot form a part of business of an industrial house. Moreover, rule 44 (e) does not say anything regarding land and building, it only refers to business. Moreover, goodwill in a given case may or may not form part of a particular business and once bigger industrial unit sells a small unit, the question of goodwill will not arise. Further rule 44 (e) also does not mention anything regarding goodwill.;