Revisional jurisdiction barred by pending appeal; sales of discarded machinery and scrap were taxable as business turnover.

Section 32(2)(b) of the Tamil Nadu General Sales Tax Act bars the Deputy Commissioner from revising an assessment order once that order has been made the subject matter of an appeal before the appellate hierarchy; the doctrine of merger does not override this statutory restriction, and revisional interference is therefore unavailable. The text also states that turnover from sale of discarded machinery, empty drums and old gunnies is taxable where the goods arise from manufacturing operations and their sale is incidental or ancillary to business, bringing the transactions within the extended definition of business under section 2(d)(ii).

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Issues: (i) whether the Deputy Commissioner had jurisdiction under section 32 of the Tamil Nadu General Sales Tax Act, 1959 to revise an assessment order when that order had already been made the subject matter of an appeal before the Appellate Assistant Commissioner; and (ii) whether the turnover from sale of discarded machinery, empty drums and old gunnies was taxable as a transaction incidental or ancillary to the assessee's business.

Issue (i): whether the Deputy Commissioner had jurisdiction under section 32 of the Tamil Nadu General Sales Tax Act, 1959 to revise an assessment order when that order had already been made the subject matter of an appeal before the Appellate Assistant Commissioner.

Analysis: Section 32(2)(b) expressly bars the Deputy Commissioner from passing a revisional order where the assessment order has been made the subject matter of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal. The fact that the appeal before the Appellate Assistant Commissioner related only to another item did not remove the bar, because the statute turns on the order having been made the subject matter of appeal. The doctrine of merger was held to be irrelevant to this statutory restriction. The appropriate statutory scheme was that once an appeal is filed, correction of the assessment order lies within the appellate hierarchy and, if necessary, the Board's revisional power under section 34.

Conclusion: the revisional order was without jurisdiction and could not stand.

Issue (ii): whether the turnover from sale of discarded machinery, empty drums and old gunnies was taxable as a transaction incidental or ancillary to the assessee's business.

Analysis: The amended definition of business under section 2(d)(ii) treated transactions in connection with, or incidental or ancillary to, trade, commerce, manufacture or concern as transactions in the course of business. The goods sold were acquired in the course of the assessee's manufacturing activity and business operations, and no factual basis was shown to displace the inference that their sale was connected with that business. The rationale applied by the Supreme Court in Burmah Shell was therefore attracted, and the sales fell within the extended business concept.

Conclusion: the turnover was taxable on merits and the assessee's challenge on that issue failed.

Final Conclusion: the revisional assessment was annulled because the Deputy Commissioner lacked jurisdiction under the Act, and the assessee succeeded notwithstanding an adverse view on the taxability of the disputed turnover on merits.

Ratio Decidendi: where a sales tax assessment order has already been made the subject matter of an appeal, section 32(2)(b) bars revisional interference by the Deputy Commissioner, and the statutory bar is not displaced by any limited operation of the doctrine of merger.

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