Identical partners in two firms mean no sale arises on machinery transfer for sales tax purposes.

Transfer of machinery between two partnership concerns with identical partners was held not to constitute a sale under the Bengal Finance (Sales Tax) Act, 1941. The governing principle applied was that a sale requires transfer of property between two distinct persons, and a partnership firm, for this purpose, is not a separate legal person from its partners. Because the partners in both concerns were the same, the transaction was treated as a transfer by the same persons to themselves and therefore fell outside the statutory concept of sale. The assessee succeeded.

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Issues: Whether transfer of machinery from one partnership concern to another concern composed of the same partners constituted a sale liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The two concerns were treated by the department as separate entities on the basis of their registrations, returns and tax treatment. However, the controlling question was whether there were in law two different persons capable of effecting a sale. The governing principle applied was that a sale requires transfer of property between two distinct persons, and a partnership firm, in this context, does not acquire a separate legal personality apart from its partners. Where the partners in both concerns are identical, the transfer is in substance a transfer by the same persons to themselves and cannot answer the statutory concept of a sale.

Conclusion: The transfer of machinery was not a sale within the meaning of the Act and the assessee succeeded.

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