Business-sale relief denied where only assets were sold and second sales exemption failed for untaxed body construction.

Disposal of a few transport assets while the assessee continued its business was not a sale of the business as a whole or of any part of it, so the benefit of Explanation 3 to section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 was unavailable. The court accepted the Tribunal's factual finding that only some assets were sold and the business remained ongoing. A claim for second sales exemption on lorries was also rejected because the body was built on the chassis on job-work basis and the body had not earlier suffered tax, so the relevant schedule entry did not permit exemption.

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Issues: (i) Whether the sale of three lorries amounted to sale of business as a whole or part of the business so as to attract the benefit of Explanation 3 to section 2(r) of the Tamil Nadu General Sales Tax Act, 1959; (ii) Whether the assessee was entitled to second sales exemption in respect of the lorries on the ground that the chassis had already suffered tax.

Issue (i): Whether the sale of three lorries amounted to sale of business as a whole or part of the business so as to attract the benefit of Explanation 3 to section 2(r) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The Tribunal found that the assessee had continued its transport business after the sale and had only disposed of some assets in the course of business. The balance sheet and surrounding materials did not show that any part of the business itself had been sold. The court found no material to disturb that factual finding, and the statutory benefit was therefore unavailable.

Conclusion: The assessee was not entitled to relief under Explanation 3 to section 2(r) of the Tamil Nadu General Sales Tax Act, 1959.

Issue (ii): Whether the assessee was entitled to second sales exemption in respect of the lorries on the ground that the chassis had already suffered tax.

Analysis: The assessee had constructed the body on the chassis on job-work basis, and the body had not suffered tax earlier. In view of the relevant entry in Part D, entry 36 of the Schedule, the court held that the transaction did not qualify for second sales exemption.

Conclusion: The claim for second sales exemption was rejected.

Final Conclusion: The revision failed on both the main claim for business-sale relief and the alternative claim for exemption, and the tax assessment was sustained.

Ratio Decidendi: Disposal of assets while the business continues is not a sale of business as a whole, and second sales exemption is unavailable where the taxable article has not earlier borne single-point tax in the manner required by the relevant schedule entry.

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