Purchase tax on machinery bought outside Karnataka applied where acquisition formed part of existing trading business

Purchase of machinery by an already registered dealer was treated as part of an existing trading activity, not a casual isolated transaction. The governing test for "business" was whether dealings show volume, frequency, continuity, regularity, and ordinarily a profit motive; on the facts, the dealer was already engaged in resale of machinery and machinery parts, so the Karnataka purchase retained its business character. Non-registration in Karnataka did not change that character, and the machinery had not suffered tax in the State. Purchase tax under section 6(2) was therefore payable, and the challenge failed.

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Issues: Whether the purchase of machinery by a registered dealer outside Karnataka, followed by transfer to Gujarat, was a purchase in the course of business so as to attract purchase tax under section 6(2) of the Karnataka Sales Tax Act, 1957.

Analysis: The governing test for "business" is whether there is a course of dealings marked by volume, frequency, continuity, regularity, and ordinarily a profit motive. A casual or solitary transaction, by itself, does not ordinarily make a person a dealer or constitute business. On the facts, however, the purchaser was already a registered dealer in Gujarat carrying on resale of machinery and machinery parts. The Karnataka purchase was therefore not treated as an isolated casual purchase by a non-trader, but as an acquisition made in the course of an existing trading activity. The fact that the dealer was not registered in Karnataka did not alter the character of the transaction, because the Act includes a non-resident dealer within the definition of dealer and the machinery had not suffered tax in Karnataka.

Conclusion: The purchase was held to be in the course of business and purchase tax under section 6(2) was payable. The challenge failed.

Final Conclusion: The statutory liability to purchase tax was sustained, and the revision was rejected at the threshold.

Ratio Decidendi: A purchase made by an already established dealer in the course of an existing business of resale is not excluded from purchase tax merely because the purchase in the forum State is a single transaction or the dealer is not registered there.

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