Going-concern sale of a branch falls outside taxable turnover and supports exclusion under business-transfer rules.

A branch sold as a running concern, with its furniture, fittings and stock-in-trade, was treated as a sale of a distinct business unit. On that basis, rule 6(d) of the Tamil Nadu General Sales Tax Rules, 1959 applied because "his business" can include an independent branch, and the sale proceeds were outside taxable turnover since a going-concern transfer is not a sale of goods in the course of business or incidental to trade. The revisional assessment was also held unauthorised because the correction was not supported by any permissible statutory power, such as revision, rectification of an apparent error, or escaped assessment.

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Issues: Whether the sale proceeds of the Ooty branch transferred as a running concern were liable to be excluded from turnover or deducted under rule 6(d) of the Tamil Nadu General Sales Tax Rules, 1959, and whether the assessing authority had power to revise its earlier assessment in the manner adopted.

Analysis: The branch was found to have been transferred as a complete unit, with its furniture, fittings and stock-in-trade, and the transaction was treated as a sale of the business as a whole in relation to that branch. On that footing, rule 6(d) applied because the expression "his business" in the rule does not require the dealer to cease all business activities altogether; a branch that functions as an independent commercial unit may itself be the subject of a sale of business as a whole. Independently, the Court held that the proceeds of such a transfer did not fall within the statutory concept of "turnover" at all, because the sale of a running business or a branch as a going concern is not a sale of goods in the course of business and is not incidental or ancillary to the trade. The Court also held that the revisional assessment was illegal, since the attempted correction was not shown to be under any permissible statutory power such as revision, rectification of an apparent error, or escaped assessment.

Conclusion: The assessee was entitled to exclusion of the disputed amount, and the revenue's challenge to the exemption failed. The reassessment action was also held to be without authority.

Final Conclusion: The revision was unsuccessful, and the exemption in respect of the sale of the Ooty branch was upheld on both the construction of rule 6(d) and the broader ground that the transaction did not constitute taxable turnover.

Ratio Decidendi: A sale of a distinct business unit as a going concern is not necessarily a sale of the dealer's entire business, and the proceeds of such a transfer are outside taxable turnover because they are not sale proceeds arising in the course of business.

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