Dominant activity test and taxable business: recurring sales of scrap and unserviceable aircraft material sent for reconsideration.

Recurring sales of unserviceable aircraft, scrap, spare parts and other material by an air transportation company raised the question whether such transactions constituted taxable business under the Delhi Sales Tax Act, 1975. The court noted that the earlier view on the dominant activity test had been applied in a road transport context and involved a statutory corporation, whereas the present assessee was a company with regular sales of scrap and unserviceable assets. Because this raised a substantial issue on the scope of "business" under Section 2(c)(ii) and the continuing correctness of the earlier precedent, the matter was referred to a Full Bench for reconsideration.

---

---

Issues: Whether the sale of unserviceable aircraft, scrap, spare parts and other material by the assessee was amenable to sales tax under the Delhi Sales Tax Act, 1975, and whether the earlier view on the effect of the dominant activity test required reconsideration.

Analysis: The dispute arose in the context of air transportation business, where the assessee also regularly sold scrap and unserviceable assets. The Court distinguished the earlier decision dealing with road transport and noted that the present assessee was a company, not a statutory corporation. It further observed that the recurring sale of scrap and unserviceable material raised a substantial question as to whether the dominant activity test should govern the scope of "business" under Section 2(c)(ii) of the Delhi Sales Tax Act, 1975. Since the issue could require reconsideration of the earlier Division Bench view, the matter was considered fit for reference to a Full Bench.

Conclusion: The question whether such sales are taxable under the Delhi Sales Tax Act, 1975 was referred to a Full Bench for reconsideration of the earlier precedent.

---