Post-closure transfer is not taxable turnover when the sale occurs after business discontinuance under sales tax law.

Transfer of a closed mill after discontinuance of business was held not to be a sale effected in the course of business, so the resulting turnover was outside sales tax under the Gujarat Sales Tax Act, 1969. The court applied the statutory scheme that tax attaches only to sales made during the course of business and followed the prior Division Bench view that a post-closure sale is not exigible to tax. Accordingly, the sale proceeds from the closed undertaking were not liable to tax and the consequential levy could not be sustained.

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Issues: Whether the transfer of the entire mill after closure of business amounted to a sale of goods effected during the course of business and was liable to sales tax under the Gujarat Sales Tax Act, 1969.

Analysis: The transfer was found to have occurred after discontinuance and closure of the business, not as a transfer in the course of an ongoing business. Under the scheme of the Act, sales tax attaches to turnover of sales effected during the course of business, and a sale after closure of business does not constitute such taxable turnover. The prior Division Bench view that a sale made after closure of business is not exigible to tax supported this conclusion.

Conclusion: The transfer of the closed mill was not a sale of goods in the course of business and the sale proceeds were not liable to tax.

Final Conclusion: The reference was answered against the Revenue and the tax and consequential levy could not be sustained.

Ratio Decidendi: A transfer made after the closure of business is not a sale effected in the course of business and is not exigible to sales tax under the Act.

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