R.S. Pathak, J.
1. This is a reference under Section 11(1) of the U. P. Sales Tax Act, 1948, made at the instance of the applicant. The applicant is a limited company, the Mining and Chemical Industries Limited, Agra. It carried on the business of manufacturing and selling chemicals.
2. It appears that the applicant sold some machinery, packing materials and other articles, and was taxed on the sale proceeds by the Sales Tax Officer for the assessment year 1953-54.
3. The applicant preferred an appeal, and the Judge (Appeals) found that the applicant had decided to close its business on account of losses and debts, and that the factory and mines were actually closed and a decision was taken to sell off the assets. He held that the sale of the machinery, which was a part of the capital assets of the business, was not effected with a view to carry on any business but merely for the purpose of liquidating the debts, and that the transfer of such machinery could not be treated to be a 'sale' within the meaning of the Act. He accordingly allowed the appeal and set aside the assessment order.
4. The Commissioner of Sales Tax applied in revision to the Judge (Revisions) who held that even though the machinery was not 'ordinarily intended for regular sale' there was no doubt that the company was a dealer in respect of this sale. He also repelled the contention that because the applicant had closed its business it had now ceased to be a dealer, and he held that the applicant must be deemed to be a dealer as long as it was disposing of its goods even though for the purpose of winding up its business.
5. Upon application by the company this reference has been made to this Court for its opinion on the following questions :-
(1) Whether on the facts and in the circumstances of the case, the sale of machinery and packing materials etc. can be included in the turnover ?
(2) Whether the turnover ceased to be liable to tax, as the business of the sale of chemicals had been discontinued and only machinery and packing materials were disposed of ?
6. We may state at the outset that learned counsel for the applicant has confined his submissions to the applicant's tax liability on the sale proceeds of the machinery and has stated that he does not press for an answer to the question in respect of the packing materials and other articles.
7. Learned counsel for the applicant contends that the applicant was not a dealer in respect of the sale of machinery as that transaction was not in the course of carrying on of the applicant's business, that the definition of 'dealer' in Section 2(c) of the Act must be related to the specific commodities in which business is being done, and that the applicant was never engagedin the business of dealing in machinery. He further contended that inasmuch as the applicant had closed down its manufacturing activity, it had ceased to do any business and could no longer be said to be a 'dealer' under the Act.
8. On behalf of the Commissioner of Sales Tax, it is urged that inasmuch as the applicant was admittedly a dealer, being enagaged in the business of manufacturing and selling chemicals, it was a dealer in respect of all commodities sold by it, whether they were sold in the ordinary course of its business or outside such business. In any event he contends, the machinery was connected with the applicant's business, being part of the assets of the business, and, therefore, the sale proceeds could be included in the turnover. It is also urged that there is no finding by the Judge (Revisions) that the applicant-company had stopped its business, that even assuming that the manufacturing activity had stopped, the business of selling chemicals continued and the applicant would continue to be a 'dealer'.
9. Having given the matter our anxious consideration, we are of the view that the sale proceeds of the machinery cannot be said to be taxable under the Act. A dealer has been denned under Section 2(c) of the Act as a person 'carrying on the business of buying or selling goods'. The Legislature intended to tax only those transactions which fell within the scope of the business of the dealer. Any other interpretation would be inconsistent with the object of the Act. Could it be said that a bookseller when selling his old car could be taxed on the sale proceeds of that car Would a dealer in cars be liable to sales tax if he sold a fountain pen The answer is obviously in the negative.
10. In Commissioner of Sales Tax v. Mohanlal Ramkisan Nathani  6 S.T.C. 136 Mudholkar, J., held :
A person can be regarded as a dealer only in relation to the goods which it is his business to sell or supply. So, where a person, though a dealer in respect of certain commodities effects a sale of a commodity which it is not his business to sell, he is not liable to be taxed under the Act...A casual sale would not attract the provisions of the Sales Tax Act.
11. The point arose also before the Bombay High Court in Steelage Industries Ltd. v. State of Bombay  8 S.T.C. 376 There the assessee was carrying on business as a dealer in steel furniture. It sold a motor-car. The question which fell to be determined was whether the price received for the sale of the motor-car could be included in the taxable turnover of the assessee for the purpose of determining its sales tax liability. Shah, J., who delivered the judgment of the Court, observed :
But the sale of the motor-car purchased by them initially for the use of their managing director was not a sale in the course of the business of the assessees. The expression 'dealer' having been denned by the Legislature as meaning a person who carries on the business of selling or supplying goods and the person liable to pay tax being a dealer, in our judgment, the liability to pay sales tax is of a dealer in respect of sales effected by him in the course of his business.
12. In State of M. P. v. Bengal Nagpur Cotton Mills Ltd.  12 S.T.C. 333 a question arose whether an assessee-company, carrying on the business of manufacturing textiles, which had supplied steel and cement to its contractors who were constructing buildings for the assessee and debited the price of the materials to the contractors' account, was liable to sales tax on the price of the materials supplied to the contractors. The High Court of Madhya Pradesh held that the assessee was not a dealer carrying on the business of selling or supplying steel and cement and it was, therefore, not liable to sales tax. While there is no doubt that the applicant is a dealer, it is a dealer in respect of the chemicals manufactured and sold by it. It carries on the business of selling and supplying chemicals and is, therefore, a dealer in chemicals. It is not a dealer in machinery.
13. Sri H. N. Seth, learned Junior Standing Counsel contended that even if it was not the business of the applicant to sell machinery, inasmuch as the machinery was connected with the business of the company it was liable to be included in the turnover. He urged that the present case was analogous to that decided by the High Court of Maharashtra in A. Ebrahim and Company v. State of Bombay  13 S.T.C. 877 The dealer in that case did wholesale and retail business of selling separated parts of ship machinery and other articles. A ship was purchased by the dealer with an option of either using the ship for trading or breaking it and selling it as separated parts. Thereafter, the applicant entered into an agreement with a company of Costa Rica to sell that ship to that company and one of the clauses in the agreement enabled the Costa Rica Company either to use the vessel for trading or to break it up. It was held that the activity of the dealer selling the ship to the foreign company was closely connected with and was akin to the normal course of his business activity. At page 888, Tambe, J., observed:
These circumstances clearly indicate that the applicant had purchased the ship in the course of his usual business activity of purchasing ship, breaking it up and selling separated parts thereof, though no doubt an option was also reserved by him to use the ship for trading purposes. It is true that the normal business activity of breaking up the ship and selling separated parts had not been followed by the applicant, but he has sold the ship leaving an option to the purchaser to break it up. The circumstances show that soon after the purchase of the ship, the applicant found a purchaser who possibly was in need of separated parts of the ship, and therefore instead of breaking up the ship and selling separated parts, he had sold the entire ship to the Costa Rica Company giving it an option to break it up.
14. Upon these observations, the Court was of the opinion that the transaction of selling the ship was in the course of the dealer's business activity. Having regard to the facts of the case before us, we fail to see how this decision is of any assistance to the respondent. We cannot accede to the contention that the sale proceeds of the machinery were liable to be included in the applicant-company's turnover.
15. In this view of the matter, it is unnecessary to consider the submission that the applicant ceased to be a 'dealer' when it had decided to stop its business.
16. In the circumstances, we are of the view that the first question should be answered in the negative so far as it relates to the sale of machinery. As mentioned earlier, learned counsel for the applicant has not pressed for an answer to the first question so far as it relates to the packing materials and other commodities.
17. In view of our answer to the first question, the second question does not arise. The question was framed with reference to the contention of the applicant that the sale of machinery and of packing materials were not liable to be taxed as the business had been closed.
18. The applicant is entitled to its costs which we assess at Rs. 100.
19. A copy of this judgment under the seal of the Court and the signature of the Registrar shall be sent to the Commissioner of Sales Tax, U. P., and the Judge (Revisions) Sales Tax, as required by Section 11(6) of the U. P. Sales Tax Act, 1948.