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

The appellants, the assessee required the Board of Revenue to refer to the High Court under Section 15 (1) of the Act as many as four questions but the Board declined to refer those questions to the High Court. Thereupon the assessee moved the High Court to call upon the Board to state a case and refer to the High Court the questions of law formulated by it. The High Court rejected that reference summarilylearned counsel for the parties. We agree with the view taken by the Boards of Revenue. The decisions in State of Gujarat v. M/s. Raipur Manufacturing Co. Ltd. AIR 1967 SC 1066 ; State of Madras v. M/s. K. C. P. Ltd. AIR 1969 SC 348  are not applicable as the expression business has been defined retrospectively in the Rajasthan Sales Tax Act so as to include any transaction in connection with or incidental or ancillary to the ordinary business of the dealer. The business of the assessee is manufacturing of cotton yarn with the aid of machinery and the sale of old and discarded machinery is incidental to the business carried on by the trader and is taxable.Rejected summarily".These appeals are directed against the said order.3. The appellant is a registered dealer under the Act. The Commercial Tax Officer, Kota passed separate assessment orders on November 13, 1964 for the period1. In that order in computing the assessees turnover he took into consideration the price received by the assessee in respect of the sales effected by it of iron and steel defectives, machinery and spare parts etc. The assessee is a dealer in cotton yarn and cotton goods. It is not a dealer in iron and steel defectives or machinery or spare parts. Some of the machinery used by it had become antiquated, and some of the parts of its machinery had worn out. In order to modernise his mills, it sold its old machinery and spare parts during the period in question. The question for consideration was whether the price of those articles is liable to be included in the turnover of the assessee.4. The authorities under the Act as well as the High Court have come to the conclusion that the disputed turnover is also liable to be taken into consideration in computing the total assessable turnover of the assessee. The question of law that arose for decision is whether that part of the turnover is liable to be taken into consideration in computing the turnover of the assessee. Prima facie this question is a question of law as contemplated by Section 15 (1) of the Act. The Board 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.

Reasoning: 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).