Case: M/s. Shree Gopal Industries Limited Vs. State of Rajasthan and Another

of Revenue refused to submit that question on the ground that question is covered by a decision of the Division Bench. The High Court as mentioned earlier rejected it on the ground that turnover in question comes within the definition of "business" in Cl. (c) of Section 2 of the Act.5. The expression "turnover" is defined in S. 2 (t). It says :Turnover means the aggregate of the amount of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of the sale or supply of goods in the carrying out of any contract."(Proviso to that clause is not relevant for our present purpose).6. "Sale Price" is defined thus in Section (p):" Sale price means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery of the cost of installation in case where such cost is separately charged and the expression purchase price shall be construed accordingly."7. The charging section is Section 3. But before going to that section, it is necessary to refer to two other definitions in the Act. Dealer is defined in Section 2 (f) as meaning :"any person who carries on the business of buying, selling supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes..........."8. The expression business is defined in Section 2 (cc) as follows:""business" includes-(i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce, manufacture, adventure or concern is carried on with motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and(ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture adventure or concern............"Now we may turn to Section 3. That section says:"(1) Subject to the provisions of the Act, every dealer whose turnover in the previous year in respect of sales or supplies of goods exceeds-(a) in the case of a dealer who imports goods or manufactures any goods other than cooked food or deals in cereals and pulses in any of their forms. . . . . . . . .... ... Rs. 5,000/-(b) in the case of a dealer being a co-operative society registered under any law for the time being in force relating to co-operative societies, dealing exclusively in goods produced or manufactured by such society without the aid of hired labour ...... ... Rs. 25,000/-(c) in the case of a dealer not falling in Cl. (a) or Cl. (b)... ... ... Rs. 20,000/-shall be liable to pay tax under this Act on his taxable turnover ... ... "(the remaining portion of the section is not relevant for our present purpose).9. Now the question is whether the sale of machinery or iron and steel defectives or the spare parts was a part of the "business" of the assessee who undoubtedly was a dealer under the Act. The authorities under the Act as well as the High Court have come to the conclusion that it was a part of his business because of Section 2 (cc) (ii). The correctness of this conclusion is in issue.10. The corresponding provisions of the Madras General Sales Tax Act 1959 (Act 1 of 1959) as amended by Act 15 of 1964 are similar to the provisions in the Act referred to earlier. Interpreting a provision identical to Section 2 (cc) (ii) of the Act, the Madras High Court in Dy. Commr. of Commercial Taxes, Coimbatore Division, Coimbatore v. Sri Thirumangal Mills Ltd., (1967) 20 STC 287 (Mad) , came to the conclusion that unless a transaction is connected with the trade, that is to say, it has something to do with trade or has the incidence or elements of trade, it will not be within the definition of "business." Therein the assessee, a limited liability company manufacturing cotton yarn, in order to provide amenity to its workmen, had opened a fair price shop so that commodities might be made available to the workmen at fair prices. The question that arose for decision was whether that activity of the assessee could be said to be in connection with or incidental or ancillary to the business of the assessee. The High Court answered that question in the negative. We are mentioning this fact to show that in interpreting the words "any transaction in connection with, of incidental or ancillary to, such trade, commerce, manufacture, adventure or concern", the Madras High Court has accepted the contention of the assessee. Therefore in our view the High Court of Rajasthan was in error in refusing to call upon the Board of Revenue to state a case on the question of law arising for consideration. The only thing the High Court had to see was whether a question of law did arise out of the order of the Board of Revenue. There can be no doubt that a fairly important question of law arises from out of that order. The Board of Revenue was not justified in refusing to refer that question to the High Court. Further the High Court erred in summarily dismissing the application made by the assessee. Without a reference from the Board of Revenue the High Court had no jurisdiction to decide that question of law.11. The questions formulated by the assessee are not only imprecise but they are repetitive as well. The only question of law arising out of the order of the Board of Revenue is whether the sale of the machinery or iron or steel defectives or spare parts can be considered as "business" within the meaning of Section 2 (cc).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We are mentioning this fact to show that in interpreting the words "any transaction in connection with, of incidental or ancillary to, such trade, commerce, manufacture, adventure or concern", the Madras High Court has accepted the contention of the assessee. Therefore in our view the High Court of Rajasthan was in error in refusing to call upon the Board of Revenue to state a case on the question of law arising for consideration. The only thing the High Court had to see was whether a question of law did arise out of the order of the Board of Revenue. There can be no doubt that a fairly important question of law arises from out of that order. The Board of Revenue was not justified in refusing to refer that question to the High Court. Further the High Court erred in summarily dismissing the application made by the assessee. Without a reference from the Board of Revenue the High Court had no jurisdiction to decide that question of law.11. The questions formulated by the assessee are not only imprecise but they are repetitive as well. The only question of law arising out of the order of the Board of Revenue is whether the sale of the machinery or iron or steel defectives or spare parts can be considered as "business" within the meaning of Section 2 (cc).